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>Many of you lost patrons, and you lost income. I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator.

by jasode 9y ago

>Many of you lost patrons, and you lost income. I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator. A lot of patrons feel like their payment is a donation instead of paying a subscription or water bill. Yes, some patrons+creators have a quid-pro-quo arrangement where payments unlocks content or extra services. However, many payments are just "appreciation" type of money. That is a fragile relationship and it was wrong to tamper with it by charging extra fees to the patron. Jack was/is a creator himself so he should have known this dynamic and therefore predicted the bad outcome ahead of time. Ideally, when you start a multi-sided platform, you want to get the economics correct from the very beginning so you can leave it unchanged. (E.g. Apple iTunes charges 30% since 2008 and it's stayed that way.) However, if you have to readjust the percentages, it's preferable to take it out on the sellers' side and not the buyers' side. When ebay started, the fees for sellers were ~3.25%. Over the last 10 years, it has crept up in increments to ~10%. All of those price increases were absorbed by the sellers. If Patreon needs more than 5% to make the numbers work for a sustainable business, they need to take it from the creators and not the patrons. Patreon was riding on the "good will" of patrons making voluntary payments. It was a terrible miscalculation to destroy that good will and nickel & dime patrons with extra fees.

masklinn 9y ago
> I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator. A lot of patrons feel like their payment is a donation instead of a subscription or water bill. Yes, some patrons+creators have a quid-pro-quo arrangement where payments unlocks content or extra services. However, many payments are just "appreciation" type of money. And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content (e.g. bonus/patron chapters), there's no exclusive/sale type arrangement.
- jasode 9y ago
  >And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content Yes, when I typed out "quid-pro-quo", I was thinking back to the recent HN article about webcam women making money on Patreon. Patrons would pay $10 a month and for that, the women would do private chats, role play, etc. For that particular type of patron who needs to see a particular woman take her clothes off, the 2.9% fee plus 35 cents would be more of a "nuisance" fee and they'd just go ahead and pay it. Let's call this group, the SUBSCRIBERS. However, a lot of Patreon relationships are not quid-pro-quo and it's a totally different psychology when patrons pay a $1 donation to "support an artist" with no direct benefit other than some good feelings or minor things like "early access to content" like you pointed out. In this scenario, Patreon is the online version of throwing money into a hat to show appreciation for the musician at a coffee shop. Inflicting extra fees on patrons damages this type of relationship. (E.g. "Twitter was filled with screenshots of people removing their $1 pledges.") Let's call this tip jar group, the DONATORS. If SUBSCRIBERS are the majority and dominated the platform over the DONATORS, Patreon could have stayed the course to charge extra fees to patrons on December 18. However, it's telling that Patreon aborted that plan which signals to me that the DONATORS are a very large and influential part of the Patreon membership. Jack said they did a bunch of spreadsheet models and surveys before announcing the fee changes but obviously, their assumptions about their members were way off somewhere. (I'm oversimplifying with categories of SUBSCRIBERS vs DONATORS to illustrate a point. It's certainly possible for some patrons to be a blend of both psychologies based on how their pledges are split to various creators.)
gbacon 9y ago
This episode is a good demonstration of how the structure of production works: prices begin with what the consumer is willing to pay and work backward to higher-order goods or factors of production.
rdiddly 9y ago
It makes intuitive sense that if there are costs generated by the arrangement, you go to the ones benefiting from the arrangement (creators) before you go to the ones already providing the funding (patrons). Maybe Jack's being a creator himself is what blinded him to this.
hobofan 9y ago
> Jack was/is a creator himself so he should have known this dynamic and therefore predicted the bad outcome ahead of time. I thank that might exactly be the reason why it happened. From what I recall as a fan of their artistic work, he (& his wife) never asked for straight up donations, but either offered something in direct exchange (via Bandcamp) or the money went towards a specific project (Kickstarter).
MaxBarraclough 9y ago
> ebay started, the fees for sellers were ~3.25%. Over the last 10 years, it has crept up in increments to ~10%. All of those price increases were absorbed by the sellers. Isn't this a false dichotomy? It's just a matter of how you phrase it, no? If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference.
- jasode 9y ago
  >If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference. That would be true but that didn't happen. Final ebay auction values for stable items (e.g. books) did not rise by +7%. The sellers really did end up paying most of the fee increases. Yes, some sellers tried to claw back the extra fee commission by adding extra "handling charges" to the total. That had limited effect because it made prices higher than (1) other ebay sellers that didn't add handling fees and (2) competitive Amazon Marketplace prices. Also, Ebay lets bidders sort search results by "total price including shipping & handling" so adding handling fees just pushes your items down to the bottom of the list.
  - neerkumar 9y ago
    I don't get this. Eventually, it is just taking a cut from a transaction. What does even mean the seller is paying for it or the buyer? Let's say the final price is 100$ and cut is 10%, so seller gets 90$ and buyer pays 100$. You could say the buyer is paying for it since the seller was willing to sell for 90$ and the buyer had to add 10$ to get the item. Or you could say the seller pays for it, since the buyer was willing to buy for 100$ and the seller has to give up on 10$ out of those 100$. I really don't see the difference. It seems just marketing in terms of how you phrase it. I even saw companies saying things like: seller is paying 5% and buyer 5%, which seems just a way to make it look lower for both sides.
    - lukevdp 9y ago
      What the gp is saying is that before, the buyer would pay $100 and the seller would get $97. So in effect, the seller has borne the extra fees
pc86 9y ago
Exactly - I'm thrilled to donate $30-50/mo to the YouTuber FlightChops because he does some amazing, high production value work and I want him to be able to keep doing it. Even still, I only watch 1/3-1/2 of his videos simply because it's rare that I have 25-30 minutes to sit down and watch one. I'm happy to donate the money to him because he's doing good work and I spend a lot more money on much more pointless things. I don't view myself as buying anything from him. I wouldn't be upset if he went 2 months without putting anything out just like I wouldn't be upset if he put out 10 videos in a month (I have a cap on my donation to him as I think most Patrons do).

by jasode 9y ago

masklinn 9y ago

> I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator. A lot of patrons feel like their payment is a donation instead of a subscription or water bill. Yes, some patrons+creators have a quid-pro-quo arrangement where payments unlocks content or extra services. However, many payments are just "appreciation" type of money. And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content (e.g. bonus/patron chapters), there's no exclusive/sale type arrangement.

jasode 9y ago
>And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content Yes, when I typed out "quid-pro-quo", I was thinking back to the recent HN article about webcam women making money on Patreon. Patrons would pay $10 a month and for that, the women would do private chats, role play, etc. For that particular type of patron who needs to see a particular woman take her clothes off, the 2.9% fee plus 35 cents would be more of a "nuisance" fee and they'd just go ahead and pay it. Let's call this group, the SUBSCRIBERS. However, a lot of Patreon relationships are not quid-pro-quo and it's a totally different psychology when patrons pay a $1 donation to "support an artist" with no direct benefit other than some good feelings or minor things like "early access to content" like you pointed out. In this scenario, Patreon is the online version of throwing money into a hat to show appreciation for the musician at a coffee shop. Inflicting extra fees on patrons damages this type of relationship. (E.g. "Twitter was filled with screenshots of people removing their $1 pledges.") Let's call this tip jar group, the DONATORS. If SUBSCRIBERS are the majority and dominated the platform over the DONATORS, Patreon could have stayed the course to charge extra fees to patrons on December 18. However, it's telling that Patreon aborted that plan which signals to me that the DONATORS are a very large and influential part of the Patreon membership. Jack said they did a bunch of spreadsheet models and surveys before announcing the fee changes but obviously, their assumptions about their members were way off somewhere. (I'm oversimplifying with categories of SUBSCRIBERS vs DONATORS to illustrate a point. It's certainly possible for some patrons to be a blend of both psychologies based on how their pledges are split to various creators.)

gbacon 9y ago

This episode is a good demonstration of how the structure of production works: prices begin with what the consumer is willing to pay and work backward to higher-order goods or factors of production.

rdiddly 9y ago

It makes intuitive sense that if there are costs generated by the arrangement, you go to the ones benefiting from the arrangement (creators) before you go to the ones already providing the funding (patrons). Maybe Jack's being a creator himself is what blinded him to this.

hobofan 9y ago

> Jack was/is a creator himself so he should have known this dynamic and therefore predicted the bad outcome ahead of time. I thank that might exactly be the reason why it happened. From what I recall as a fan of their artistic work, he (& his wife) never asked for straight up donations, but either offered something in direct exchange (via Bandcamp) or the money went towards a specific project (Kickstarter).

MaxBarraclough 9y ago

> ebay started, the fees for sellers were ~3.25%. Over the last 10 years, it has crept up in increments to ~10%. All of those price increases were absorbed by the sellers. Isn't this a false dichotomy? It's just a matter of how you phrase it, no? If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference.

jasode 9y ago
>If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference. That would be true but that didn't happen. Final ebay auction values for stable items (e.g. books) did not rise by +7%. The sellers really did end up paying most of the fee increases. Yes, some sellers tried to claw back the extra fee commission by adding extra "handling charges" to the total. That had limited effect because it made prices higher than (1) other ebay sellers that didn't add handling fees and (2) competitive Amazon Marketplace prices. Also, Ebay lets bidders sort search results by "total price including shipping & handling" so adding handling fees just pushes your items down to the bottom of the list.
- neerkumar 9y ago
  I don't get this. Eventually, it is just taking a cut from a transaction. What does even mean the seller is paying for it or the buyer? Let's say the final price is 100$ and cut is 10%, so seller gets 90$ and buyer pays 100$. You could say the buyer is paying for it since the seller was willing to sell for 90$ and the buyer had to add 10$ to get the item. Or you could say the seller pays for it, since the buyer was willing to buy for 100$ and the seller has to give up on 10$ out of those 100$. I really don't see the difference. It seems just marketing in terms of how you phrase it. I even saw companies saying things like: seller is paying 5% and buyer 5%, which seems just a way to make it look lower for both sides.
  - lukevdp 9y ago
    What the gp is saying is that before, the buyer would pay $100 and the seller would get $97. So in effect, the seller has borne the extra fees

pc86 9y ago

Exactly - I'm thrilled to donate $30-50/mo to the YouTuber FlightChops because he does some amazing, high production value work and I want him to be able to keep doing it. Even still, I only watch 1/3-1/2 of his videos simply because it's rare that I have 25-30 minutes to sit down and watch one. I'm happy to donate the money to him because he's doing good work and I spend a lot more money on much more pointless things. I don't view myself as buying anything from him. I wouldn't be upset if he went 2 months without putting anything out just like I wouldn't be upset if he put out 10 videos in a month (I have a cap on my donation to him as I think most Patrons do).