Patreon is defending a new payment structure that critics say hurts smaller artists. The change, which goes into effect on December 18th, adds a processing fee to each individual patron pledge, instead of taking the cut out of creators’ total earnings. Because this fee includes a flat 35-cent charge on top of a percentage, it disproportionately affects people making small pledges, or pledging to multiple artists. Artists have complained that they’re losing patrons after the announcement — but Patreon says it’s an inevitable consequence of some other changes to the platform.
Patreon initially said that this fee made artists’ earnings more predictable, because they’d only have to worry about a single 5 percent cut taken by Patreon. In an update, however, the company said that’s not all that’s going on. It’s apparently linked to a minor-seeming change in when Patreon processes pledges.
Adventures in payment processing
Previously, Patreon charged for most pledges at the start of the month, but also let artists charge first-time backers as soon as they pledged. People seemed to be “double-charged” if they signed up toward the end of a month, so Patreon switched to charging them at the monthly anniversary of their initial pledge. Patreon says that means that more individual transactions are being processed, which jacks up credit card fees. (To make things even more complicated, some people pledge per-video or per-post, adding more rounds of payments.) So rather than dramatically cutting how much money creators get, it’s passing that fee to backers.
Patreon says it spent nearly a year experimenting with different models. “As it turns out, patrons weren’t nearly as sensitive to the amount of the fee as we predicted, but we ultimately chose the lowest service fee that would offset the third party costs in all likely scenarios,” it says. But the negative response has built steadily over the past day, with several major Patreon creators — including Questionable Content creator Jeph Jacques and Hank Green of Vlogbrothers — expressing concern or posting lists of lost patrons. Others, especially people with smaller Patreons, have speculated on how they might reduce their dependance on the platform.
Some critics have characterized this as a deliberately exploitative or bad-faith move from Patreon; a widely cited thread by author Chris Buecheler suggests that the platform is under pressure from investors. But Patreon has also simply spent a long time struggling with its payment system. It introduced upfront payments — the source of the “double-charging” issue — because artists complained that patrons would sign up for perks and cancel before their first payment. Now, it’s apparently trying to solve a problem with that system, and creating another issue in the process.
Author Natalie Luhrs suggested that Patreon would directly make money off this change, because it would charge fees for every transaction but send cheaper bulk payments to actual processing companies. Patreon indicates that it will be processing all these payments individually, though, and that processing $1 fees is just proportionately expensive no matter who’s paying for it. (This is why, for example, brick-and-mortar businesses might require minimum purchases for credit card users.)
If this is the case, then it’s ultimately a question about priorities. Should Patreon focus on encouraging small pledges to multiple artists, sustaining a wider range of users? Or is fixing a payment problem that affects everyone more important? The answer could have a major effect on who sticks with the platform.