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That means they're going to expect a lot of revenue. Which they plan to take on money that people give freely. I don't see that ending well.

charrondev 9y ago
Well luckily for them they don’t have to take no money in order to be the good guys here. They only need to take less than the other methods of monetizing videos (youtube). I’d imagine they’ve expored what kind cut they will need to take to be profitable and how that will affect the decisions of the people paying in.
- zanny 9y ago
  Not really. Youtube is indirect monetization thorugh advertisers. The audiences (that the respective companies care about) are completely different. Patreon wants creators and their fans on their platform moving money through them so they can take their fees. Youtube doesn't care at all about content creators or viewers but about advertisers - as long as advertisers are happy Youtube would cripple the user or creator experience. So the people giving Patreon money are not necessarily satisfied with 1% less fees than Youtube advertisers pay because they aren't advertisers and advertisers aren't using Patreon to fund creators.
  - Retric 9y ago
    I think he was referring to things like selling t-shirts. Basically how sites like xkcd make money without advertising.
jerf 9y ago
I use Patreon on a lot, and I don't have any expectation that they are doing it for free. If they were doing it for free, then that would mean to me that the service would be unstable and would disappear some random month without recourse when its unpaid developer gets a job somewhere else, or someone files some light lawsuit against them and that's enough to take the whole thing down. A bigger problem than that they take a cut is probably some expectations management on why, what that cut does for everyone, and what it would mean to not have it.
- ryguytilidie 9y ago
  "I use Patreon on a lot, and I don't have any expectation that they are doing it for free." That's not really the criticism you're responding to though. It's not "People will be upset Patreon makes money", it is "people will be upset that Patreon will have to take SO MUCH MONEY from people giving it to others to justify their valuation."
  - dmix 9y ago
    I would only be concerned if Patreon didn't have a business model. But they clearly do. I'm seeing Patreon everywhere and I've seen plenty of people making $50k/month... they have a far better opportunity to generate revenue than the majority of tech startups. All they have to do is maintain growth. They don't have to make any weird sacrifices for revenue like a lot of social startups that raised billions under the pretext of making money later.
  - jerf 9y ago
    Well, again, I think people get confused between the idea of "rapacious" profits and just profits in general. Contra the general attitude, profits aren't bad; profits are where the strength comes from. Your favorite Mom & Pop coffee shops go under not just because the big bad corporations come in and steal all their customers, but because their model didn't have enough profit built into it to sustain any headwinds. (Though in their defense, there isn't a lot of evidence that such a model exists. But that doesn't mean they still don't suffer the consequences of lack of profitability.) I think this space is going to be sufficiently competitive over the next few years that I don't expect Patreon to be able to just run away with people's money without consequences. In fact I'm racking my brain here to come up with what Patreon would want to do as a moat and I'm not coming up with anything. (Anything sensible, anyhow. The frequent suggestion that they could do their own YouTube would build a moat, alright, but the evidence is that it would build a moat around a cash flow model in which you guarantee that you'll never make any money, and, well, those don't really need moats very much....)
IshKebab 9y ago
They have a fee of 5%. Let's assume they have a price/earnings ratio of 20, that means they expect people to spend something like $450m/year on Patreon. According to Wikipedia they are at around $150m/year already. I think it is totally feasible that they could increase that to $450m/year and not have to increase their 5% fee. Seems like a reasonable valuation to me.
- creaghpatr 9y ago
  Are they structured as a payfac? If they are facilitating $100M in payments they probably pull in a couple million in revenue just from processing (assuming they charge for processing, I'm not sure)
- buro9 9y ago
  It is 5% on top of payment processing, and averages around 10% for content publishers. I keep telling people just to use a PayPal Donate button. Unless you're in the top 1% of people on Patreon, you would do better just ensuring that more of the donations that exist ends up in your pocket. If Patreon isn't delivering more donors than your content and self-marketing can attract... you are losing out.
  - mdorazio 9y ago
    If you don't have your own website (like the many, many YouTube content creators), it's much easier to promote a Patreon link and get people to support you on a regular basis than it is to drive people to donate with PayPal. Patreon also offers novel ways to support creators, like tiered donations and per-creation donations. This level of nuance (and the management that comes with it) is hard to replicate on your own.
  - dmix 9y ago
    There's a lot more to Patreon that simply being a payment platform...
  - Anderkent 9y ago
    However, a paypal donation gets you a one-off payment, whereas a patreon gets you regular money.
creaghpatr 9y ago
It will be interesting to see how their board changes as a result. I think VCs may be trying to get a grip on controlling the content allowed, in addition to the profitability and scaling potential. If Patreon gets winner-take-all huge, the BoD could literally steer culture by drawing the boundary lines on acceptable content. High amount of intangible value there.
- volkl48 9y ago
  There's not a whole lot of reason to limit the content allowed. Most internet sites run into conflicts with content because they're trying to make a profit through ad revenue. Mainstream advertisers don't want their ad next to porn/controversial things, and may not want to advertise on even the non-controversial part of the site if the site is associated with porn/controversial things in the minds of the public. Patreon's business model doesn't really run into that issue.
deleted 9y ago
[deleted]

charrondev 9y ago

Well luckily for them they don’t have to take no money in order to be the good guys here. They only need to take less than the other methods of monetizing videos (youtube). I’d imagine they’ve expored what kind cut they will need to take to be profitable and how that will affect the decisions of the people paying in.

zanny 9y ago
Not really. Youtube is indirect monetization thorugh advertisers. The audiences (that the respective companies care about) are completely different. Patreon wants creators and their fans on their platform moving money through them so they can take their fees. Youtube doesn't care at all about content creators or viewers but about advertisers - as long as advertisers are happy Youtube would cripple the user or creator experience. So the people giving Patreon money are not necessarily satisfied with 1% less fees than Youtube advertisers pay because they aren't advertisers and advertisers aren't using Patreon to fund creators.
- Retric 9y ago
  I think he was referring to things like selling t-shirts. Basically how sites like xkcd make money without advertising.

jerf 9y ago

I use Patreon on a lot, and I don't have any expectation that they are doing it for free. If they were doing it for free, then that would mean to me that the service would be unstable and would disappear some random month without recourse when its unpaid developer gets a job somewhere else, or someone files some light lawsuit against them and that's enough to take the whole thing down. A bigger problem than that they take a cut is probably some expectations management on why, what that cut does for everyone, and what it would mean to not have it.

ryguytilidie 9y ago
"I use Patreon on a lot, and I don't have any expectation that they are doing it for free." That's not really the criticism you're responding to though. It's not "People will be upset Patreon makes money", it is "people will be upset that Patreon will have to take SO MUCH MONEY from people giving it to others to justify their valuation."
- dmix 9y ago
  I would only be concerned if Patreon didn't have a business model. But they clearly do. I'm seeing Patreon everywhere and I've seen plenty of people making $50k/month... they have a far better opportunity to generate revenue than the majority of tech startups. All they have to do is maintain growth. They don't have to make any weird sacrifices for revenue like a lot of social startups that raised billions under the pretext of making money later.
- jerf 9y ago
  Well, again, I think people get confused between the idea of "rapacious" profits and just profits in general. Contra the general attitude, profits aren't bad; profits are where the strength comes from. Your favorite Mom & Pop coffee shops go under not just because the big bad corporations come in and steal all their customers, but because their model didn't have enough profit built into it to sustain any headwinds. (Though in their defense, there isn't a lot of evidence that such a model exists. But that doesn't mean they still don't suffer the consequences of lack of profitability.) I think this space is going to be sufficiently competitive over the next few years that I don't expect Patreon to be able to just run away with people's money without consequences. In fact I'm racking my brain here to come up with what Patreon would want to do as a moat and I'm not coming up with anything. (Anything sensible, anyhow. The frequent suggestion that they could do their own YouTube would build a moat, alright, but the evidence is that it would build a moat around a cash flow model in which you guarantee that you'll never make any money, and, well, those don't really need moats very much....)

IshKebab 9y ago

They have a fee of 5%. Let's assume they have a price/earnings ratio of 20, that means they expect people to spend something like $450m/year on Patreon. According to Wikipedia they are at around $150m/year already. I think it is totally feasible that they could increase that to $450m/year and not have to increase their 5% fee. Seems like a reasonable valuation to me.

creaghpatr 9y ago
Are they structured as a payfac? If they are facilitating $100M in payments they probably pull in a couple million in revenue just from processing (assuming they charge for processing, I'm not sure)
buro9 9y ago
It is 5% on top of payment processing, and averages around 10% for content publishers. I keep telling people just to use a PayPal Donate button. Unless you're in the top 1% of people on Patreon, you would do better just ensuring that more of the donations that exist ends up in your pocket. If Patreon isn't delivering more donors than your content and self-marketing can attract... you are losing out.
- mdorazio 9y ago
  If you don't have your own website (like the many, many YouTube content creators), it's much easier to promote a Patreon link and get people to support you on a regular basis than it is to drive people to donate with PayPal. Patreon also offers novel ways to support creators, like tiered donations and per-creation donations. This level of nuance (and the management that comes with it) is hard to replicate on your own.
- dmix 9y ago
  There's a lot more to Patreon that simply being a payment platform...
- Anderkent 9y ago
  However, a paypal donation gets you a one-off payment, whereas a patreon gets you regular money.

creaghpatr 9y ago

It will be interesting to see how their board changes as a result. I think VCs may be trying to get a grip on controlling the content allowed, in addition to the profitability and scaling potential. If Patreon gets winner-take-all huge, the BoD could literally steer culture by drawing the boundary lines on acceptable content. High amount of intangible value there.

volkl48 9y ago
There's not a whole lot of reason to limit the content allowed. Most internet sites run into conflicts with content because they're trying to make a profit through ad revenue. Mainstream advertisers don't want their ad next to porn/controversial things, and may not want to advertise on even the non-controversial part of the site if the site is associated with porn/controversial things in the minds of the public. Patreon's business model doesn't really run into that issue.

deleted 9y ago

[deleted]