Patreon defends new pricing after user uproar

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.

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.

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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.

The fuck why? Patreon was originally smart to lump charges together. That made them a big step up from individual monthly PayPal donations (which were a thing before Patreon).

Sounds like Patreon is shuffling their business model for no clear reason. The "double" charging was pretty minor when it happened, and could be fixed in plenty of ways that didn’t screw over users (tie it to the week rather than day, or just don’t charge immediately).

It could give patrons the option, too…

The fact that it has to defend itself from legit complaints without considering alternatives is a big red flag.

Exactly, just give the creator the option of how they want those fees processed similar to how Eventbrite does. This is just a way for Patreon to make more money & they’re just being bullish about their stance on it. They know some creators currently RELY on Patreon & they have no choice but to accept. They also know they’ll make way more money from the Patrons of that creator who only asks for $1 Patrons and has a thousand of them vs. just taking the same fees from that creators lump sum. It’s fucked up how they’re approaching this instead of just being democratic and giving people the choice. But it’s their company & no one is currently providing an equivalent alternative.

It says it right in the article… "because artists complained that patrons would sign up for perks and cancel before their first payment." I obviously don’t know how widespread this is, but it’s big enough to have hit some radars.

All parties are gunshy about this. With all the frenzied indignation around lootboxes, and anything that even looks like it, even legit models like Patreon are going to have a hell of a time trying to tweak their system.

It seems to me that they’re at least trying to do it right here… having tested different models, doing the homework, etc. Had this been a company like, for example, Uber, they’d have just raised the rates, put out a press release, and ignored the masses.

I cancelled all of my $1 pledges.

How much was patreon taking out of a $1 pledge before this change? If you gave $1, how much did the creator actually get?

I don’t have a direct answer for you (I’m sure someone does), but pretty much every creator I’ve seen stressed the importance of $1 pledges, so even if they were only making $.70 or $.80 cents on the dollar, it’s clear that those small amounts added up.

The creator would get ~$.85 on a dollar donation, IIRC.

Now, the creator will get ~$.95 on a dollar donation, but now the person donating also pays an extra ~$.38 in fees

I’m going off what some of my friends who are creators have told me, as well as some public comments I’ve read.

The creator would get ~$.85 on a dollar donation, IIRC.

Now, the creator will get ~$.95 on a dollar donation, but now the person donating also pays an extra ~$.38 in fees

The math doesn’t add up here. So before Patreon would take $.15 for their trouble, now they will take $.43 for each $~1 donation?

I can see why people would be pulling out.

Or maybe is time for creators and patrons to start using a better platform like Wildspark where there is no middle man and patrons can send money directly to creators and those curating the content.

Or Tipee https://www.tipeee.com/ which I saw mentioned somewhere else.

They’re now processing every fee rather than aggregating them over the month as well?
Some pledges are per video/song/picture/etc. and they can be one a month, one a week, many per week.. they’ve just been collected to a final amount before.
If they’re breaking down each transaction to get their fees, that will make those pledges much more expensive for some of the more prolific producers.

It would depend on how many different pledges you had. If you only had one, the whole fee came out of that one. If you had five, the fee for the single transaction was distributed between your pledges. Now there are five fees.

I’m pretty sure that for $1 pledges, it doesn’t matter if people get charged the full amount for their first partial month. Patreon could easily have changed the way that higher pledge amounts were processed without changing the way that lower pledge amounts work.

Another option would be to (ghasp!) be transparent about the situation, and offer the patron the option to be charged at the beginning of the next month, or, for instant access to content, immediately, and then again at the beginning of the month thereafter.

Sees like the solution is a microcharging system. So you buy $20 of microcharging "tokens", and can spend them in small increments. This works assuming Patreon can process a transaction much cheaper than a credit card company. Ideally, you could buy universal microcharging tokens which could be spent anywhere that accepted them. This is at least a 20 year old concept, but here we are 20 years later, and microcharging currency is not standardized.

Stop using common sense, investors don’t like that.

It’s investor-friendly in that people have to pay up front for money they designate for payout later, so you’re banking on interest.

Ugh. Was considering doing a Patreon for a software project I am going to do anyways. I hope this all settles down.

Wow, I thought the revamped Drip had no chance in hell against Patreon. Who would have thought Patreon would commit fiscal suicide.

There’s also Tipeee https://www.tipeee.com/ and WildSpark https://wildspark.me/ (mentioned upthread)

They fucked really serious. The 1 dollar pledge across multiple creator is the base of Patreon success and now is getting an 30% price increase. Is like the loot box move of Patreon.

(This is why, for example, brick-and-mortar businesses might require minimum purchases for credit card users.)

Right. But you know why large businesses never do that? Because they eat that cost, or they negotiate a lower rate with the processor, because they know that it breeds ill will among their customers if they don’t. It’s only small businesses that do that – because they have to, not because they want to.

And Patreon isn’t a small business. They have more than enough money flowing through their system that they shouldn’t have to be nickel-and-diming patrons like this.

I’m seriously torn here. I very much want to support about a dozen podcasts that I listen to every week. However, I want to punish Patreon for this bullshit money grab that screws donors who want to provide small monthly support too many creators.

"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,"

Translation: Either we’re really bad at analysis, or really bad at lying.

Patreon should eat their own dogfood. If they want to make money, they should make an account on their own website. Then see how they feel about the impact of fees.

Just introduce a "currency" that patrons can purchase in larger amounts and distribute freely. Apply the processing fee to that purchase rather than each individual donation and then take a cut at the time of cashout by the patronized(?).

That way If someone makes a $20 donation or 20 $1 donations, they’re still paying the same to do so and Patreon isn’t paying any extra to process the charges.

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