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Patreon is about to eat itself

204 points by evv 8y ago

deleted 8y ago
[deleted]
erikpukinskis 8y ago
Yup. Patreon is a Series C company. If you take that amount of money, your strategy becomes Grow Or Die. If they had bootstrapped, they'd be totally sustainable on a hundredth of the revenue. I get it though. When Patreon started it was not clear whether the model would work AT ALL. It could have easily just eaten Jack Conte's savings and he would've been a 30 year old eating ramen for years and then end up with nothing. In retrospect the time was right, and YouTube was the perfect ally, and it could've been easily bootstrapped. It would've been hard to know that up front. Still, $100 Million over 5 years seems like a lot of cash burnt for what they offer. I guess we'll find out where it went when they release their "value services".
- mikekchar 8y ago
  Actually, what did VC give this company that supported their growth (actual question)? I'm a little bit surprised (having not ever looked into it) that it isn't bootstrapped. I mean, you take people's money upfront and then distribute it monthly, taking a cut. All your operations costs are covered because you are paid upfront. In fact, you should be able to squeeze out even 1 or 2 percent more because you're holding on to people's money in advance. It's recurring credit card charges, so relatively easy to manage expectations of operating expenses. Is it mostly the social media side of the business that's eating up the money (i.e., the services for allowing the creator to interact with their patrons)? How is Librepay doing? As they are a non-profit organisation, I suppose that probably means they are boot-strapped (barring a sugar daddy somewhere). I've barely ever heard of anyone using them, so I guess growth is slow, but are they able to fund themselves without volunteers yet? It seems weird to me that this is not a more open playing field -- especially since these guys aren't even doing payment processing internally. Edit: As usual, I can answer some of my own questions right after I post. Here is a statement of the progress of LibrePay: https://liberapay.com/about/stats https://liberapay.com/about/stats They are distributing about 1400 Euros per week now. Interestingly as of the middle of last year, they were distributing up to 4000 Euros a week, but then it precipitously dropped off (presumably because they blocks donations from certain donors... I seem to remember hearing something about that). So, it's not big enough yet to pay anybody a salary.
  - zimpenfish 8y ago
    > mean, you take people's money upfront and then distribute it monthly, taking a cut. I don't think they do that for all creators - there's a bunch who work on an "$N per item" basis and I'm assuming those are charged at the end of the month once those items have been distributed to patrons (otherwise how would you know what to charge?)
    - michaelt 8y ago
      Nonetheless, I doubt Patreon pays out to creators before they're paid by patrons.
      - WesleyLivesay 8y ago
        They definitely get the money before distributing it. They will also pass any payment processing delays onto the creators, which just happened at the beginning of this month.
  - xamuel 8y ago
    I wonder how much VC money was spent on marketing and promotion. You couldn't have just invented Patreon and waited for content creators to find you by going to Google and searching for "companies that serve as middlemen for people to give you patronage money". I bet marketing and promotion was/is a nontrivial percentage of expenses.
  - Changaco 8y ago
    The drop in donations is because our original payment processor backstabbed us. See https://medium.com/liberapay-blog/the-third-year-of-liberapay-636fbe7d95a8 https://medium.com/liberapay-blog/the-third-year-of-liberapa... and the two previous posts linked in there for details.
    - mikekchar 8y ago
      That really sucks. I'm sorry you went through that. What you are doing looks really great and if I get off my arse and start coding I'll probably start using your services. If I have your ear, I'll ask you a quick question if you don't mind. I notice that you only allow donations rather than payment for some service. I'm wondering if that's due to regulatory issues for you or something else. Quick background: I want to explore the idea of people paying for software/services in the same way that they might do with an unattended farm box in the country side. In other words, farmers often put produce in a box on the side of the road and people can freely take the produce, putting the money in a slot. There is nothing at all stopping people from just taking the produce and not paying (literally nobody but the unpaid farmer would notice), but there is a social stigma to doing so. I think there is a general understanding in the public that if you take the produce and don't leave the money that eventually the farmer will stop offering the produce. If you were starving, though, I don't think anyone would hesitate from grabbing some carrots or fruit at the side of the road (nor do I think anyone would mind overly much if it only happened occasionally). Anyway, I want to try to recreate that idea of a farm produce box for software. The idea is that I would write some software (probably a game in my case) and make a web page. On the web page you would have 2 links: pay for software and download software. The two are not connected in any way except that the link would say "Download super game (costs $2)" or whatever. The idea is to explicitly assign a price to the software and then just not enforce it if people don't pay. I might also have an option in the software that says something like "Pay for super game (costs $2)" which just opens the web browser to the box page. I wish to write free (as in freedom) software, so people might download the software from a different location. I suspect that this would run afoul of your rules, so it might not be possible to use your service. Any ideas? Edit: I should point out that in the case of LibrePay, it's a recurring weekly cost, but the idea is that the user is paying $X for a year's worth of my development, potentially paid weekly.
erikig 8y ago
Is this is the famous ouroboros growth model I've heard so much about?
pcstl 8y ago
I think the biggest question here is what did Patreon even need that much money for.
- tjpnz 8y ago
  Same old story. Hire a bunch of people, realize that they lack management so hire managers to manage them, splurge on a nice office, managers out of boredom or laziness hire a bunch more managers, devs start demanding better salaries or they'll walk..
  - mcny 8y ago
    But then we turn around and crap all over Gitlab for trying to pay their engineers as little as possible saying everyone deserves silicon valley salary...
    - tjpnz 8y ago
      Depends on your business model, in the case of Patreon it would be impossible by definition. I don't think it applies as much to GitLab.
- skrebbel 8y ago
  I wonder about this too. The tweetstorm linked here only talks about technology, comparing Patreon to YouTube. Since Patreon handles payments, I can imagine their load on customer support, anti-fraud, abusive behavior etc is significantly higher than that of YouTube. The fact that the OP did not address this belies a simplistic view about what it's like to run a business (that and the fact that he thinks the Patreon founders could've gotten a bank loan). At the same time, $60M? How can a platform like Patreon even begin to spend that much money? On what? I didn't understand it when Medium raised so much and I didn't understand it when Patreon did. Basically my gist is that while this is a fun rant to read against getting VC funding, there's also a middle ground: raise reasonable amounts of VC funding. This might not always fit VC incentives perfectly, after all their business model depends on funding dozens of companies hoping that one is the next Facebook, but in the end it's your call. And hey, if you grow half speed you'll just be the next Facebook 5 years later, no man overboard. VCs can usually veto new sources of funding but if they can force you to raise followon rounds then you've been negotiating wrong.
Waterluvian 8y ago
"Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business" The first and last parts of that quote say it all. It's basically saying, "what you have doesn't satisfy us so go do more things."
ausbah 8y ago
Would it be possible for a nonprofit to step in and fulfill the role Patreon plays? A company like Patreon seeems completely tangential to “endless growth” unless they’re expanding for purely infrastructure reasons..
- dbrgn 8y ago
  There's https://liberapay.com/ https://liberapay.com/. Not sure how well it works though.
  - skinnyasianboi 8y ago
    Thanks, I just made an account and will keep an eye on it. Looks small but great and it's sponsored by my favorite password manager "Bitwarden".
  - andypants 8y ago
    From a donor point of view, it works differently from patreon and IMO far inferior. On patreon, you sign up to a creator for a fixed amount every month. Once you've subscribed, it's like any other online subscription - every month, your card is automatically charged. On liberapay, you have to manually fund your account in advance. If your account runs out of money, you have to log back in and top it up again.
    - Changaco 8y ago
      Some people dislike automatic charges, while others don't want to be bothered with renewals, so it's best to support both. For historical reasons related to payment processor limitations Liberapay was launched with only manual renewals, but we're working on implementing automatic charges now. See our recent blog post “The third year of Liberapay” for more details: https://medium.com/liberapay-blog/the-third-year-of-liberapay-636fbe7d95a8 https://medium.com/liberapay-blog/the-third-year-of-liberapa...
- weinzierl 8y ago
  There is Drip which belongs to Kickstarter which is a Public-benefit corporation. They generated a lot of buzz about a year ago but I've never heard of them since then - not sure if they are going anywhere.
dbrgn 8y ago
People forgot what "sustainable business model" even means. It does not mean "infinite growth and 10 VC funds that want you to crap over your product to make even more money". Sustainable business model means that you can pay your bills from your income (not from investments, since those want payback). It means happy customers and good products. It means that you grow in a reasonable pace, with costs that you'll be able to cover. Investors are a liability, not a feature.
- jcelerier 8y ago
  > People forgot what "sustainable business model" even means. It does not mean "infinite growth" actually, it does. If you want to keep the same revenue, you need to grow because everything around you keeps becoming more and more expensive - taxes, etc
  - JackPoach 8y ago
    Not true. You can remain profitable forever, without growing your revenue. For example, a business with 10 million in revenues and 9 million in expenses can exist 'forever'. They don't need to grow their revenue. Of course, if your revenue is not growing, it's a bad sign.
    - Xylakant 8y ago
      A sustainable business can have 10 million revenues and 10 millions expenses. Expenses contain the salaries of all people employed. As long as the salaries make for a good living for everyone involved that's good enough if you don't have investors that want to extract profits. You'll still want a bit of a rainy-day fund to cover unexpected losses and you'll want sufficient growth to cover inflation. Not growing beyond that is not necessarily a bad sign, it may be a conscious decision. Growth brings its own kinds of problems, stability has its own appeal.
      - nybble41 8y ago
        A business without any capital investments (tools, inventory, human capital, your "rainy-day fund") isn't much of a business at all. As long as you're tying up capital in the business you need to justify that investment by turning an accounting profit; otherwise the business is losing money compared to what could have been earned by investing the same resources in some other venture. Economic profit, which factors in opportunity cost, does tend toward zero. A sustainable business can exist with no economic profit or loss, but the accounting profits would be in line with standard market rates of return. Of course, if the business's investors are also its employees (as is often the case for small, privately-held businesses) then any accounting profits can be distributed in the form of salaries... but in that case the investor-employees will expect higher salaries than they would receive as mere employees elsewhere. Keeping up with inflation does not count as growth. Growth or decline should be calculated in terms of purchasing power (inflation-adjusted dollars), not raw currency.
itronitron 8y ago
well, I can think of one 'product strategy' they might be tossing around but it would be a super bad idea long term. Let's just hope someone bootstraps an alternative, they can name it Parteon.
Traster 8y ago
Lot's of people are basically asking why Patreon ever needed $60m VC money and why couldn't it have just emerged into a sustainable little platform for creators. I think the answer is here: >The new capital will go towards hiring to expand its 80 person team and scaling up growth by recruiting more creators including videographers, political pundits, game developers, illustrators, musicians, and comedians. Patreon was doing a Netflix. Patreon is a platform and it needs content on it's platform to draw people in. So it used the $60m to bribe creators to sign up. Without that $60m someone else could very easily have created the same platform, bought all the big content creators and squished Patreon over night. It was about establishing their network effect. Now they've effectively done that, they're the defacto place for this. So now they need to extract value from the position they're in. It makes perfect sense to me. It's not great for consumers - it's basically buying a network effect driven monopoly, but isn't that basically 80% of what silicon valley is doing today?
- jasode 8y ago
  >Patreon was doing a Netflix. [...] So it used the $60m to bribe creators to sign up. I haven't seen Patreon do this. Can you link to stories where Patreon has paid for original content creation similar to how Netflix/Amazon/HBO funds original content? $60 million would be a very tiny warchest to pay for producing original content. I think the $60 million (~$100 million total) is being used to expand the platform's services for creators' such as backoffice and ecommerce. I wrote in more detail about that strategy in my other comment.
- AnIdiotOnTheNet 8y ago
  This seems weird to me. Patreon isn't really a platform, at least it isn't considered as such by any of the people I patronize. Their platform is youtube, or software. Patreon is just a way they get their work funded by people like me. As was shown during patreon's last big fuck-up, it is pretty easy for people to pack up shop and get their money through some other channel.
  - edanm 8y ago
    That doesn't mean they're not a platform, just that they're a platform with very limited lock-in effects. (I like Patreon, but I kind of agree with this)
keiferski 8y ago
What is the purpose of having this message be via dozens of tweets? Am I the only one that finds this extremely obnoxious? Just write a blog post and summarize it in one tweet. In any case: the Patreon model seems doomed in the long run, regardless. At some point content hosters themselves (YouTube, Instagram, etc.) will introduce a similar payment support system. Just like Instagram ate Vine’s lunch and entire raison d’être. At that point, exactly what benefits or advantages does Patreon offer?
- yaleman 8y ago
  I think it's the modern equivalent of pithy sound bites - it lets people retweet (eg quote) particular parts without any particular effort and allows for infintely scalable promotion of the poster. That, and blogs are so last-month maaaaaan. Medium's dead, long live twitter.
  - CuriouslyC 8y ago
    If twitter becomes the primary way content is shared on the internet, I'm fucking done.
- deckar01 8y ago
  It doesn't have ads, the width of the paragraphs are optimal, it supports rich content, and allows user engagement on each section.
  - pc86 8y ago
    You're right, it's impossible to have a blog without ads, with custom paragraph width, and with images and video.
    - Sean1708 8y ago
      To be fair it's not really worth setting up a blog just for a single post, and OP probably didn't know about things like threadreaderapp.
    - 8y ago
jasode 8y ago
The thread's title points to a CNBC story by Brandon Gomez. However, the journalism is very light and is missing a lot of context about what CEO Jack Conte is talking about. However, a better story that Dan Olson linked to (scroll down his twitter feed) is the September 2017 announcement of the $60 million round by Jack Conte himself[0]. In that blog, JC laid out in more detail the new products Patreon was trying to build to increase revenue. Excerpt of the bullet points: 1. Business Infrastructure - Think of this as the back office — the tools, workflows, dashboards, and information that you need to get your business cranking. [...] analytics [...] financials [...] 2. Rewards to Energize Patrons This is everything you need to entice and keep your patrons, [...] Actual goods, whether digital or physical, like a signed poster or an extra episode [...] Patreon doesn't want to be just a simple "paypal/stripe" payment middleman that takes a 5% cut of subscribers payments. As a rough analogy, they also want to be a "SalesforceCRM/QuickenAccounting" backoffice and a "Amazon/WooCommerce" for merchandise -- for their creators. JC is hoping that creators will give up more than 5% (e.g. maybe 30% cut) to pay for those services. So when people ask "what does Patreon need all that VC money for?", JC basically told you. The question remains if the creators are willing to pay for those extra "value-added" services to manage the creators' backoffice + storefront. (Examples of those "new features".[1]) I think we can assume that the bullet points laid out in JC's blog post roughly match the Powerpoint slides he showed to the VCs to convince them to invest more money. In fact, if you look at their Crunchbase profile[2], you'll notice that in the 3 rounds A & B & C, he had the same VCs repeatedly investing more money: Thrive Captial and Index Ventures in 3 of the rounds. And StartX and Accomplice in 2 out of 3 rounds. Not only did JC convince a VC to invest more money, he convinced the same VCs multiple times. Both JC and the investors did not think of Patreon's business as a "simply take 5% cut of payments and that's all we do forever". Maybe they will be proven wrong in expanding the Patreon platform ambitions but I think we can at least see why the $100 million investment doesn't look "illogical" to them. [0] https://patreonhq.com/new-round-funding-816d5a592477 https://patreonhq.com/new-round-funding-816d5a592477 [1] https://blog.patreon.com/new-membership-features https://blog.patreon.com/new-membership-features [2] https://www.crunchbase.com/organization/patreon#section-funding-rounds https://www.crunchbase.com/organization/patreon#section-fund...
Grue3 8y ago
The problem with these sort of predictions is that they never include falsifiable criteria, which would render the entire analysis false depending on the outcome. Here's a sample quote: "It's not going to die overnight, Patreon will still be here in 2020, it'll just be, you know, worse to actually use." Of course it will be "worse", users tend to complain about every single product change that ever happened. No objective criteria of the worsening are provided. This is the author backtracking: "oh, contrary to what I said in the first tweet, it's not like it would die or anything, but it'll be like "worse", y'know?".
no1youknowz 8y ago
Patreon will fail and thankfully it will be purely down to the marketplace. You see the marketplace does not have the same ideology as Patreon. > More than $1 billion will be paid out to creators since the company's inception in 2013. Patreon does not pay out (it's own money) to creators, although they act like they do. They are merely a middle man. That's it. However, Patreon sees themselves as some sort of moral compass policing the internet and choosing whether or not to payout to a creator whether or not they have broken their terms of service. Now that other competitors like bitPatreon and SubscribeStar have come into view and actively taking payments on-behalf of creators that would otherwise not be allowed to under Patreon. This will be seen as the start of a shift for creators overall. One last thing. Last I heard, Patreon has over 140 employees. Seriously, for what. Fraud should be down to Stripe. Paying out, again to Stripe. Their platform could be built over a week using Vue. Oh right, those 140 employees. It's for policing the content creators... I gotcha. Needless to say. I'm not happy about this situation. Maybe I'll do something about it.
- mac_was 8y ago
  If you know how to run a company which raises 1 billion, why not set up your own? :) Jokes aside, once you become such a big company it is not as easy as we might think, these are investors money, not your company, and you do what they say...
  - no1youknowz 8y ago
    > these are investors money, not your company, and you do what they say... 100% agreed.
  - ric2b 8y ago
    It didn't raise 1B, it processed 1B in payments since inception.
- Nursie 8y ago
  So what content creators have been denied service?
dpau 8y ago
I've been wondering why I even needed Patreon in the first place. My users who choose to donate via Paypal can choose either a one-time donation or recurring. So all I need is a supporter mailing list and blog (perhaps with member-only section) to send out updates to. And I've found that most of my users (many of whom are older and not as trendy) prefer to donate via Paypal rather than signing up for yet another service.
- noxToken 8y ago
  This model of recurring micro-payments wasn't always the norm from the outset. Patreon wasn't the first to do micro-payments nor subscriptions, but they became the de facto platform for audiences to support content creators. Banks and other financial institutions have been doing payments, micro-paymenst, and subscriptions for years via bill pay and autopay services. It would make sense that someone like PayPal would add a monthly subscription option. They already have much of the infrastructure in place. You might not need Patreon for your subscribers to support you, but you probably wouldn't have subscribers under this model if Patreon hadn't established this as a norm.
sschueller 8y ago
How is Patreon not already very good "sustainable business model"? To me there is nothing better than what they have. Taking a cut for doing almost nothing. All the freemium SaaS business out there trying to break even are wishing they had the business model patreon has.
- ConceptJunkie 8y ago
  It's sustainable as far as Patreon goes. Their company is doing fine and looks like it will continue to do fine. But in the world of investing, sustainability means more than that. It means perpetual double-digit growth and other probably unrealistic expectations. It seems to me that they have a good thing going, although I disagree with their policy of policing the content and speech of the projects they support. However, there should be room in the market for competition and hopefully a competitor will arise who doesn't try to enforce his morality and/or politics (good or bad) on the fund-raising projects he facilitates. That is all.
Nursie 8y ago
Ugh, it's painful reading what looks like a few paragraphs or a short article, split up into tweets.
travisoneill1 8y ago
A lot of good $50 million dollar companies have turned into $0 companies by trying to be billion dollar companies. The VC model seems to encourage this.
mschuster91 8y ago
@dang/mods: please replace with https://threadreaderapp.com/thread/1092846201374892032.html https://threadreaderapp.com/thread/1092846201374892032.html for readability.
dalbasal 8y ago
"Sustainable" is an interesting choice of words. What is sustainability for Toyota? It's some combination of sales volume at profit margin such that they can afford to pay for their fixed costs, factories and such. IE, earn more by selling cars than it takes to make cars. The financial definition is derived from the business one, because debt. Car companies borrow money to build/tool factories. Toyota would need to earn a return greater than interest to be sustainable. For a facebook (or a patreon), what does sustainability mean? Facebook don't have factories. Costs are what the CEO decides they should be and the CEO decides based on how much revenue is coming in. Currently, FB is on about $60bn pa. If you look at their current cost structure, even critically, you'll probably conclude that facebook needs tens of billions to be sustainable. Except.... You obviously don't need $50bn pa to make a social networking site. If the ass fell out of online advertising (not likely), fb might collapse, but social betworking would continue to exist. If you told patreon toda that: "your revenue is $15m forever, no matter what you do," would they conclude that patreon is unsustainable and must be shut? Toyota would. I suspect Patreon would find a way to sustain the service.
- bluGill 8y ago
  While I don't know how much Facebook needs to exist, it isn't zero. All those server have to be bought - just like Toyota can get a loan to build a new factory, facebook can get a loan to build servers and the building to put them in (note can, in both cases there are non loan options for funding as well). Facebook needs to pay people to wire all those servers up. Facebook needs to pay people to mitigate all the attacks on their servers. Facebook needs to pay power bills for those servers. The CEO doesn't get to decide any of the above costs - they are what they are and not paying them will put Facebook out of business. The CEO can decide how much to put into new features, and what those features are. Not putting enough into R&D is a path to disaster long term.
Sir_Cmpwn 8y ago
I rely on donations for about 30-40% of my total income, and Patreon makes up about 50% of that. But I've always been fearful of its inevitable decline for the very reasons laid out here, and I don't like putting my livelihood in the hands of a VC-backed company whose interests might not align with my own. To that end I diversified my donation-based income sources, by using LiberPay[0] and by building fosspay[1] myself, which together make up the other half of my donation income. [0] https://liberapay.com/SirCmpwn https://liberapay.com/SirCmpwn [1] https://github.com/ddevault/fosspay https://github.com/ddevault/fosspay Anyone who is in a similar boat should feel free to reach out to me and I'll happily provide free hosting for a fosspay instance. A model whose incentives align with the people who depend on it and the people who support them is crucial, and it probably isn't a business model. If necessary and useful, I'd be happy to build this into a general purpose service.
- toomuchtodo 8y ago
  Have you made any efforts to transition your Patreon patrons to Liberapay?
  - Sir_Cmpwn 8y ago
    No, because Liberapay is just another basket where I don't feel comfortable leaving all of my eggs. Even Liberapay has a history of problems.
gotthealgo12 8y ago
New @ this, but my comment is our President was no politician and is challenged by not thinking before speaking but if you are t proud to be American where Donald Trump can win the presidency and frankly be hard working and learning -evolving daily Please keep eating and wandering but twin towers weren't in WASHINGTON state
qgsrw3fd 8y ago
Average Twitter users https://twitter.com/rabbitmyrabbit/status/1092864619876515840 https://twitter.com/rabbitmyrabbit/status/109286461987651584... https://twitter.com/PuddiCure/status/1093042166379745281 https://twitter.com/PuddiCure/status/1093042166379745281
- lasagnaphil 8y ago
  They aren't your typical average Twitter users, they're artists (although not the industry-professional kind; one is making small indie games, and the other is drawing fanart). Those small-scale artists (who are earning barely enough money for their skills) are probably gonna look down pretty harshly at the investors who seem to look at dollar signs as the ultimate goal... I guess the language is a bit harsh but I could understand. (Maybe HN isn't that sympathetic to those type of people, so I might get downvoted to oblivion - but you still can't generalize them as average Twitter users...)
cslarson 8y ago
This is a great use case for Ethereum and there is an excellent application live for it - gitcoin grants (https://gitcoin.co/grants/ https://gitcoin.co/grants/). It is really slick and defaults to use a USD pegged stablecoin (DAI).
bastawhiz 8y ago
I don't work at Patreon and I don't be intimate knowledge of their problems. But I can say for sure, they have an awfully difficult problem on their hands. The first is content. If they want to do business in Germany, they need to make sure there's no Nazi content coming from Germans. They need to make sure there's no child porn. They need to respond to DMCA notices and other types of disputes. They need to keep an eye open to ensure they're not hosting content that violates SESTA/FOSTA. They need to be sure that creators aren't saying they're providing therapeutic ASMR audio but actually selling synthetic marijuana behind the scenes. They need to handle folks doing obviously risky (or regulated) things, like recommending pharmaceuticals or helping addicts doctor shop. They need to comply with regional KYC/CDD requirements and verify the identities of the folks on their service. They need to do this in many languages and with local identity documents from around the world. All of these things cost money to do, even if it's outsourced. And in many cases, the cost grows faster than user acquisition. Patreon could be criticized for censoring content, but they still need to avoid being dragged into court or even shut down. And it seems that they're learning quickly that being compliant and managing risk is not an inexpensive thing to do at scale.
- criddell 8y ago
  > If they want to do business in Germany [...] Does Visa have that same problem? If I understand Patreon, they aren't producing or distributing content. They are just acting as a middleman between fans and producers.
  - bastawhiz 8y ago
    I'm no expert on German law, but Patreon is providing the marketplace. The user is selling access behind an identity on Patreon's site.
  - CydeWeys 8y ago
    Patreon hosts content. Visa does not. Every single thing on https://visa.com https://visa.com is Visa's content only. Whereas every single creator's page on https://www.patreon.com/ https://www.patreon.com/ is created by the creator. This imposes a large moderation/liability burden that Visa doesn't have.
rblion 8y ago
The CNBC article says this and I now get why... > "We don't allow hate speech, which other platforms say they don't as well and Patreon really means it," Conte said. "You can't just say anything you want in the world and we don't want to build that platform." > The company also revised its content policy in 2017 to eliminate the site's use for the exchange of adult-themed photos, videos and content. You can't have your cake and eat it too.
kevin_b_er 8y ago
The language is insidious. "Patreon's generous 90 percent pay-out model". That Patreon takes only 10% is seen as generous when the entire model is people sending money to a creator. This is declaration that they intend to grift the patrons and creators for more money soon, because making 5% isn't "sustainable" for a service that has a few pictures and links to youtube along with money transfer.
kup0 8y ago
Part of the issue involved surrounding the whole content/censorship/etc controversy is that Patreon hosts content. If they were strictly a pay-creators platform that took a percentage, it would be sustainable, they could run more efficiently, not spend money on content policing, etc. If they still wanted to deny certain types of customers on their platform- that is their right, but their decision to also host content adds a level of complexity that when scaled, can become a problem, and probably a pretty costly one. Now, I still don't know for sure that this makes the level of funding make more sense. Going the investing route is going to introduce a lot of expectations and changes in the way the business handles itself that could doom it- that could have been avoidable
Kye 8y ago
The CEO did a thread in response: https://mobile.twitter.com/jackconte/status/1093223206805106688 https://mobile.twitter.com/jackconte/status/1093223206805106... I'll just say here what I said there: "You lost the plot. No one outside your VCs are asking why you struggle to scale. Everyone wants to know why you're scaling before getting the fundamentals right. You can't even manage feature #1: paying creators reliably."

204 points by evv 8y ago

deleted 8y ago

[deleted]

Yup. Patreon is a Series C company. If you take that amount of money, your strategy becomes Grow Or Die. If they had bootstrapped, they'd be totally sustainable on a hundredth of the revenue. I get it though. When Patreon started it was not clear whether the model would work AT ALL. It could have easily just eaten Jack Conte's savings and he would've been a 30 year old eating ramen for years and then end up with nothing. In retrospect the time was right, and YouTube was the perfect ally, and it could've been easily bootstrapped. It would've been hard to know that up front. Still, $100 Million over 5 years seems like a lot of cash burnt for what they offer. I guess we'll find out where it went when they release their "value services".

mikekchar 8y ago
Actually, what did VC give this company that supported their growth (actual question)? I'm a little bit surprised (having not ever looked into it) that it isn't bootstrapped. I mean, you take people's money upfront and then distribute it monthly, taking a cut. All your operations costs are covered because you are paid upfront. In fact, you should be able to squeeze out even 1 or 2 percent more because you're holding on to people's money in advance. It's recurring credit card charges, so relatively easy to manage expectations of operating expenses. Is it mostly the social media side of the business that's eating up the money (i.e., the services for allowing the creator to interact with their patrons)? How is Librepay doing? As they are a non-profit organisation, I suppose that probably means they are boot-strapped (barring a sugar daddy somewhere). I've barely ever heard of anyone using them, so I guess growth is slow, but are they able to fund themselves without volunteers yet? It seems weird to me that this is not a more open playing field -- especially since these guys aren't even doing payment processing internally. Edit: As usual, I can answer some of my own questions right after I post. Here is a statement of the progress of LibrePay: https://liberapay.com/about/stats https://liberapay.com/about/stats They are distributing about 1400 Euros per week now. Interestingly as of the middle of last year, they were distributing up to 4000 Euros a week, but then it precipitously dropped off (presumably because they blocks donations from certain donors... I seem to remember hearing something about that). So, it's not big enough yet to pay anybody a salary.
- zimpenfish 8y ago
  > mean, you take people's money upfront and then distribute it monthly, taking a cut. I don't think they do that for all creators - there's a bunch who work on an "$N per item" basis and I'm assuming those are charged at the end of the month once those items have been distributed to patrons (otherwise how would you know what to charge?)
  - michaelt 8y ago
    Nonetheless, I doubt Patreon pays out to creators before they're paid by patrons.
    - WesleyLivesay 8y ago
      They definitely get the money before distributing it. They will also pass any payment processing delays onto the creators, which just happened at the beginning of this month.
- xamuel 8y ago
  I wonder how much VC money was spent on marketing and promotion. You couldn't have just invented Patreon and waited for content creators to find you by going to Google and searching for "companies that serve as middlemen for people to give you patronage money". I bet marketing and promotion was/is a nontrivial percentage of expenses.
- Changaco 8y ago
  The drop in donations is because our original payment processor backstabbed us. See https://medium.com/liberapay-blog/the-third-year-of-liberapay-636fbe7d95a8 https://medium.com/liberapay-blog/the-third-year-of-liberapa... and the two previous posts linked in there for details.
  - mikekchar 8y ago
    That really sucks. I'm sorry you went through that. What you are doing looks really great and if I get off my arse and start coding I'll probably start using your services. If I have your ear, I'll ask you a quick question if you don't mind. I notice that you only allow donations rather than payment for some service. I'm wondering if that's due to regulatory issues for you or something else. Quick background: I want to explore the idea of people paying for software/services in the same way that they might do with an unattended farm box in the country side. In other words, farmers often put produce in a box on the side of the road and people can freely take the produce, putting the money in a slot. There is nothing at all stopping people from just taking the produce and not paying (literally nobody but the unpaid farmer would notice), but there is a social stigma to doing so. I think there is a general understanding in the public that if you take the produce and don't leave the money that eventually the farmer will stop offering the produce. If you were starving, though, I don't think anyone would hesitate from grabbing some carrots or fruit at the side of the road (nor do I think anyone would mind overly much if it only happened occasionally). Anyway, I want to try to recreate that idea of a farm produce box for software. The idea is that I would write some software (probably a game in my case) and make a web page. On the web page you would have 2 links: pay for software and download software. The two are not connected in any way except that the link would say "Download super game (costs $2)" or whatever. The idea is to explicitly assign a price to the software and then just not enforce it if people don't pay. I might also have an option in the software that says something like "Pay for super game (costs $2)" which just opens the web browser to the box page. I wish to write free (as in freedom) software, so people might download the software from a different location. I suspect that this would run afoul of your rules, so it might not be possible to use your service. Any ideas? Edit: I should point out that in the case of LibrePay, it's a recurring weekly cost, but the idea is that the user is paying $X for a year's worth of my development, potentially paid weekly.

erikig 8y ago

Is this is the famous ouroboros growth model I've heard so much about?

pcstl 8y ago

I think the biggest question here is what did Patreon even need that much money for.

tjpnz 8y ago
Same old story. Hire a bunch of people, realize that they lack management so hire managers to manage them, splurge on a nice office, managers out of boredom or laziness hire a bunch more managers, devs start demanding better salaries or they'll walk..
- mcny 8y ago
  But then we turn around and crap all over Gitlab for trying to pay their engineers as little as possible saying everyone deserves silicon valley salary...
  - tjpnz 8y ago
    Depends on your business model, in the case of Patreon it would be impossible by definition. I don't think it applies as much to GitLab.
skrebbel 8y ago
I wonder about this too. The tweetstorm linked here only talks about technology, comparing Patreon to YouTube. Since Patreon handles payments, I can imagine their load on customer support, anti-fraud, abusive behavior etc is significantly higher than that of YouTube. The fact that the OP did not address this belies a simplistic view about what it's like to run a business (that and the fact that he thinks the Patreon founders could've gotten a bank loan). At the same time, $60M? How can a platform like Patreon even begin to spend that much money? On what? I didn't understand it when Medium raised so much and I didn't understand it when Patreon did. Basically my gist is that while this is a fun rant to read against getting VC funding, there's also a middle ground: raise reasonable amounts of VC funding. This might not always fit VC incentives perfectly, after all their business model depends on funding dozens of companies hoping that one is the next Facebook, but in the end it's your call. And hey, if you grow half speed you'll just be the next Facebook 5 years later, no man overboard. VCs can usually veto new sources of funding but if they can force you to raise followon rounds then you've been negotiating wrong.

Waterluvian 8y ago

"Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business" The first and last parts of that quote say it all. It's basically saying, "what you have doesn't satisfy us so go do more things."

ausbah 8y ago

Would it be possible for a nonprofit to step in and fulfill the role Patreon plays? A company like Patreon seeems completely tangential to “endless growth” unless they’re expanding for purely infrastructure reasons..

dbrgn 8y ago
There's https://liberapay.com/ https://liberapay.com/. Not sure how well it works though.
- skinnyasianboi 8y ago
  Thanks, I just made an account and will keep an eye on it. Looks small but great and it's sponsored by my favorite password manager "Bitwarden".
- andypants 8y ago
  From a donor point of view, it works differently from patreon and IMO far inferior. On patreon, you sign up to a creator for a fixed amount every month. Once you've subscribed, it's like any other online subscription - every month, your card is automatically charged. On liberapay, you have to manually fund your account in advance. If your account runs out of money, you have to log back in and top it up again.
  - Changaco 8y ago
    Some people dislike automatic charges, while others don't want to be bothered with renewals, so it's best to support both. For historical reasons related to payment processor limitations Liberapay was launched with only manual renewals, but we're working on implementing automatic charges now. See our recent blog post “The third year of Liberapay” for more details: https://medium.com/liberapay-blog/the-third-year-of-liberapay-636fbe7d95a8 https://medium.com/liberapay-blog/the-third-year-of-liberapa...
weinzierl 8y ago
There is Drip which belongs to Kickstarter which is a Public-benefit corporation. They generated a lot of buzz about a year ago but I've never heard of them since then - not sure if they are going anywhere.

dbrgn 8y ago

People forgot what "sustainable business model" even means. It does not mean "infinite growth and 10 VC funds that want you to crap over your product to make even more money". Sustainable business model means that you can pay your bills from your income (not from investments, since those want payback). It means happy customers and good products. It means that you grow in a reasonable pace, with costs that you'll be able to cover. Investors are a liability, not a feature.

jcelerier 8y ago
> People forgot what "sustainable business model" even means. It does not mean "infinite growth" actually, it does. If you want to keep the same revenue, you need to grow because everything around you keeps becoming more and more expensive - taxes, etc
- JackPoach 8y ago
  Not true. You can remain profitable forever, without growing your revenue. For example, a business with 10 million in revenues and 9 million in expenses can exist 'forever'. They don't need to grow their revenue. Of course, if your revenue is not growing, it's a bad sign.
  - Xylakant 8y ago
    A sustainable business can have 10 million revenues and 10 millions expenses. Expenses contain the salaries of all people employed. As long as the salaries make for a good living for everyone involved that's good enough if you don't have investors that want to extract profits. You'll still want a bit of a rainy-day fund to cover unexpected losses and you'll want sufficient growth to cover inflation. Not growing beyond that is not necessarily a bad sign, it may be a conscious decision. Growth brings its own kinds of problems, stability has its own appeal.
    - nybble41 8y ago
      A business without any capital investments (tools, inventory, human capital, your "rainy-day fund") isn't much of a business at all. As long as you're tying up capital in the business you need to justify that investment by turning an accounting profit; otherwise the business is losing money compared to what could have been earned by investing the same resources in some other venture. Economic profit, which factors in opportunity cost, does tend toward zero. A sustainable business can exist with no economic profit or loss, but the accounting profits would be in line with standard market rates of return. Of course, if the business's investors are also its employees (as is often the case for small, privately-held businesses) then any accounting profits can be distributed in the form of salaries... but in that case the investor-employees will expect higher salaries than they would receive as mere employees elsewhere. Keeping up with inflation does not count as growth. Growth or decline should be calculated in terms of purchasing power (inflation-adjusted dollars), not raw currency.

itronitron 8y ago

well, I can think of one 'product strategy' they might be tossing around but it would be a super bad idea long term. Let's just hope someone bootstraps an alternative, they can name it Parteon.

Traster 8y ago

Lot's of people are basically asking why Patreon ever needed $60m VC money and why couldn't it have just emerged into a sustainable little platform for creators. I think the answer is here: >The new capital will go towards hiring to expand its 80 person team and scaling up growth by recruiting more creators including videographers, political pundits, game developers, illustrators, musicians, and comedians. Patreon was doing a Netflix. Patreon is a platform and it needs content on it's platform to draw people in. So it used the $60m to bribe creators to sign up. Without that $60m someone else could very easily have created the same platform, bought all the big content creators and squished Patreon over night. It was about establishing their network effect. Now they've effectively done that, they're the defacto place for this. So now they need to extract value from the position they're in. It makes perfect sense to me. It's not great for consumers - it's basically buying a network effect driven monopoly, but isn't that basically 80% of what silicon valley is doing today?

jasode 8y ago
>Patreon was doing a Netflix. [...] So it used the $60m to bribe creators to sign up. I haven't seen Patreon do this. Can you link to stories where Patreon has paid for original content creation similar to how Netflix/Amazon/HBO funds original content? $60 million would be a very tiny warchest to pay for producing original content. I think the $60 million (~$100 million total) is being used to expand the platform's services for creators' such as backoffice and ecommerce. I wrote in more detail about that strategy in my other comment.
AnIdiotOnTheNet 8y ago
This seems weird to me. Patreon isn't really a platform, at least it isn't considered as such by any of the people I patronize. Their platform is youtube, or software. Patreon is just a way they get their work funded by people like me. As was shown during patreon's last big fuck-up, it is pretty easy for people to pack up shop and get their money through some other channel.
- edanm 8y ago
  That doesn't mean they're not a platform, just that they're a platform with very limited lock-in effects. (I like Patreon, but I kind of agree with this)

keiferski 8y ago

What is the purpose of having this message be via dozens of tweets? Am I the only one that finds this extremely obnoxious? Just write a blog post and summarize it in one tweet. In any case: the Patreon model seems doomed in the long run, regardless. At some point content hosters themselves (YouTube, Instagram, etc.) will introduce a similar payment support system. Just like Instagram ate Vine’s lunch and entire raison d’être. At that point, exactly what benefits or advantages does Patreon offer?

yaleman 8y ago
I think it's the modern equivalent of pithy sound bites - it lets people retweet (eg quote) particular parts without any particular effort and allows for infintely scalable promotion of the poster. That, and blogs are so last-month maaaaaan. Medium's dead, long live twitter.
- CuriouslyC 8y ago
  If twitter becomes the primary way content is shared on the internet, I'm fucking done.
deckar01 8y ago
It doesn't have ads, the width of the paragraphs are optimal, it supports rich content, and allows user engagement on each section.
- pc86 8y ago
  You're right, it's impossible to have a blog without ads, with custom paragraph width, and with images and video.
  - Sean1708 8y ago
    To be fair it's not really worth setting up a blog just for a single post, and OP probably didn't know about things like threadreaderapp.
  - 8y ago

jasode 8y ago

The thread's title points to a CNBC story by Brandon Gomez. However, the journalism is very light and is missing a lot of context about what CEO Jack Conte is talking about. However, a better story that Dan Olson linked to (scroll down his twitter feed) is the September 2017 announcement of the $60 million round by Jack Conte himself[0]. In that blog, JC laid out in more detail the new products Patreon was trying to build to increase revenue. Excerpt of the bullet points: 1. Business Infrastructure - Think of this as the back office — the tools, workflows, dashboards, and information that you need to get your business cranking. [...] analytics [...] financials [...] 2. Rewards to Energize Patrons This is everything you need to entice and keep your patrons, [...] Actual goods, whether digital or physical, like a signed poster or an extra episode [...] Patreon doesn't want to be just a simple "paypal/stripe" payment middleman that takes a 5% cut of subscribers payments. As a rough analogy, they also want to be a "SalesforceCRM/QuickenAccounting" backoffice and a "Amazon/WooCommerce" for merchandise -- for their creators. JC is hoping that creators will give up more than 5% (e.g. maybe 30% cut) to pay for those services. So when people ask "what does Patreon need all that VC money for?", JC basically told you. The question remains if the creators are willing to pay for those extra "value-added" services to manage the creators' backoffice + storefront. (Examples of those "new features".[1]) I think we can assume that the bullet points laid out in JC's blog post roughly match the Powerpoint slides he showed to the VCs to convince them to invest more money. In fact, if you look at their Crunchbase profile[2], you'll notice that in the 3 rounds A & B & C, he had the same VCs repeatedly investing more money: Thrive Captial and Index Ventures in 3 of the rounds. And StartX and Accomplice in 2 out of 3 rounds. Not only did JC convince a VC to invest more money, he convinced the same VCs multiple times. Both JC and the investors did not think of Patreon's business as a "simply take 5% cut of payments and that's all we do forever". Maybe they will be proven wrong in expanding the Patreon platform ambitions but I think we can at least see why the $100 million investment doesn't look "illogical" to them. [0] https://patreonhq.com/new-round-funding-816d5a592477 https://patreonhq.com/new-round-funding-816d5a592477 [1] https://blog.patreon.com/new-membership-features https://blog.patreon.com/new-membership-features [2] https://www.crunchbase.com/organization/patreon#section-funding-rounds https://www.crunchbase.com/organization/patreon#section-fund...

Grue3 8y ago

The problem with these sort of predictions is that they never include falsifiable criteria, which would render the entire analysis false depending on the outcome. Here's a sample quote: "It's not going to die overnight, Patreon will still be here in 2020, it'll just be, you know, worse to actually use." Of course it will be "worse", users tend to complain about every single product change that ever happened. No objective criteria of the worsening are provided. This is the author backtracking: "oh, contrary to what I said in the first tweet, it's not like it would die or anything, but it'll be like "worse", y'know?".

no1youknowz 8y ago

Patreon will fail and thankfully it will be purely down to the marketplace. You see the marketplace does not have the same ideology as Patreon. > More than $1 billion will be paid out to creators since the company's inception in 2013. Patreon does not pay out (it's own money) to creators, although they act like they do. They are merely a middle man. That's it. However, Patreon sees themselves as some sort of moral compass policing the internet and choosing whether or not to payout to a creator whether or not they have broken their terms of service. Now that other competitors like bitPatreon and SubscribeStar have come into view and actively taking payments on-behalf of creators that would otherwise not be allowed to under Patreon. This will be seen as the start of a shift for creators overall. One last thing. Last I heard, Patreon has over 140 employees. Seriously, for what. Fraud should be down to Stripe. Paying out, again to Stripe. Their platform could be built over a week using Vue. Oh right, those 140 employees. It's for policing the content creators... I gotcha. Needless to say. I'm not happy about this situation. Maybe I'll do something about it.

mac_was 8y ago
If you know how to run a company which raises 1 billion, why not set up your own? :) Jokes aside, once you become such a big company it is not as easy as we might think, these are investors money, not your company, and you do what they say...
- no1youknowz 8y ago
  > these are investors money, not your company, and you do what they say... 100% agreed.
- ric2b 8y ago
  It didn't raise 1B, it processed 1B in payments since inception.
Nursie 8y ago
So what content creators have been denied service?

dpau 8y ago

I've been wondering why I even needed Patreon in the first place. My users who choose to donate via Paypal can choose either a one-time donation or recurring. So all I need is a supporter mailing list and blog (perhaps with member-only section) to send out updates to. And I've found that most of my users (many of whom are older and not as trendy) prefer to donate via Paypal rather than signing up for yet another service.

noxToken 8y ago
This model of recurring micro-payments wasn't always the norm from the outset. Patreon wasn't the first to do micro-payments nor subscriptions, but they became the de facto platform for audiences to support content creators. Banks and other financial institutions have been doing payments, micro-paymenst, and subscriptions for years via bill pay and autopay services. It would make sense that someone like PayPal would add a monthly subscription option. They already have much of the infrastructure in place. You might not need Patreon for your subscribers to support you, but you probably wouldn't have subscribers under this model if Patreon hadn't established this as a norm.

sschueller 8y ago

How is Patreon not already very good "sustainable business model"? To me there is nothing better than what they have. Taking a cut for doing almost nothing. All the freemium SaaS business out there trying to break even are wishing they had the business model patreon has.

ConceptJunkie 8y ago
It's sustainable as far as Patreon goes. Their company is doing fine and looks like it will continue to do fine. But in the world of investing, sustainability means more than that. It means perpetual double-digit growth and other probably unrealistic expectations. It seems to me that they have a good thing going, although I disagree with their policy of policing the content and speech of the projects they support. However, there should be room in the market for competition and hopefully a competitor will arise who doesn't try to enforce his morality and/or politics (good or bad) on the fund-raising projects he facilitates. That is all.

Nursie 8y ago

Ugh, it's painful reading what looks like a few paragraphs or a short article, split up into tweets.

travisoneill1 8y ago

A lot of good $50 million dollar companies have turned into $0 companies by trying to be billion dollar companies. The VC model seems to encourage this.

mschuster91 8y ago

@dang/mods: please replace with https://threadreaderapp.com/thread/1092846201374892032.html https://threadreaderapp.com/thread/1092846201374892032.html for readability.

dalbasal 8y ago

"Sustainable" is an interesting choice of words. What is sustainability for Toyota? It's some combination of sales volume at profit margin such that they can afford to pay for their fixed costs, factories and such. IE, earn more by selling cars than it takes to make cars. The financial definition is derived from the business one, because debt. Car companies borrow money to build/tool factories. Toyota would need to earn a return greater than interest to be sustainable. For a facebook (or a patreon), what does sustainability mean? Facebook don't have factories. Costs are what the CEO decides they should be and the CEO decides based on how much revenue is coming in. Currently, FB is on about $60bn pa. If you look at their current cost structure, even critically, you'll probably conclude that facebook needs tens of billions to be sustainable. Except.... You obviously don't need $50bn pa to make a social networking site. If the ass fell out of online advertising (not likely), fb might collapse, but social betworking would continue to exist. If you told patreon toda that: "your revenue is $15m forever, no matter what you do," would they conclude that patreon is unsustainable and must be shut? Toyota would. I suspect Patreon would find a way to sustain the service.

bluGill 8y ago
While I don't know how much Facebook needs to exist, it isn't zero. All those server have to be bought - just like Toyota can get a loan to build a new factory, facebook can get a loan to build servers and the building to put them in (note can, in both cases there are non loan options for funding as well). Facebook needs to pay people to wire all those servers up. Facebook needs to pay people to mitigate all the attacks on their servers. Facebook needs to pay power bills for those servers. The CEO doesn't get to decide any of the above costs - they are what they are and not paying them will put Facebook out of business. The CEO can decide how much to put into new features, and what those features are. Not putting enough into R&D is a path to disaster long term.

Sir_Cmpwn 8y ago

I rely on donations for about 30-40% of my total income, and Patreon makes up about 50% of that. But I've always been fearful of its inevitable decline for the very reasons laid out here, and I don't like putting my livelihood in the hands of a VC-backed company whose interests might not align with my own. To that end I diversified my donation-based income sources, by using LiberPay[0] and by building fosspay[1] myself, which together make up the other half of my donation income. [0] https://liberapay.com/SirCmpwn https://liberapay.com/SirCmpwn [1] https://github.com/ddevault/fosspay https://github.com/ddevault/fosspay Anyone who is in a similar boat should feel free to reach out to me and I'll happily provide free hosting for a fosspay instance. A model whose incentives align with the people who depend on it and the people who support them is crucial, and it probably isn't a business model. If necessary and useful, I'd be happy to build this into a general purpose service.

toomuchtodo 8y ago
Have you made any efforts to transition your Patreon patrons to Liberapay?
- Sir_Cmpwn 8y ago
  No, because Liberapay is just another basket where I don't feel comfortable leaving all of my eggs. Even Liberapay has a history of problems.

gotthealgo12 8y ago

New @ this, but my comment is our President was no politician and is challenged by not thinking before speaking but if you are t proud to be American where Donald Trump can win the presidency and frankly be hard working and learning -evolving daily Please keep eating and wandering but twin towers weren't in WASHINGTON state

qgsrw3fd 8y ago

Average Twitter users https://twitter.com/rabbitmyrabbit/status/1092864619876515840 https://twitter.com/rabbitmyrabbit/status/109286461987651584... https://twitter.com/PuddiCure/status/1093042166379745281 https://twitter.com/PuddiCure/status/1093042166379745281

lasagnaphil 8y ago
They aren't your typical average Twitter users, they're artists (although not the industry-professional kind; one is making small indie games, and the other is drawing fanart). Those small-scale artists (who are earning barely enough money for their skills) are probably gonna look down pretty harshly at the investors who seem to look at dollar signs as the ultimate goal... I guess the language is a bit harsh but I could understand. (Maybe HN isn't that sympathetic to those type of people, so I might get downvoted to oblivion - but you still can't generalize them as average Twitter users...)

cslarson 8y ago

This is a great use case for Ethereum and there is an excellent application live for it - gitcoin grants (https://gitcoin.co/grants/ https://gitcoin.co/grants/). It is really slick and defaults to use a USD pegged stablecoin (DAI).

bastawhiz 8y ago

I don't work at Patreon and I don't be intimate knowledge of their problems. But I can say for sure, they have an awfully difficult problem on their hands. The first is content. If they want to do business in Germany, they need to make sure there's no Nazi content coming from Germans. They need to make sure there's no child porn. They need to respond to DMCA notices and other types of disputes. They need to keep an eye open to ensure they're not hosting content that violates SESTA/FOSTA. They need to be sure that creators aren't saying they're providing therapeutic ASMR audio but actually selling synthetic marijuana behind the scenes. They need to handle folks doing obviously risky (or regulated) things, like recommending pharmaceuticals or helping addicts doctor shop. They need to comply with regional KYC/CDD requirements and verify the identities of the folks on their service. They need to do this in many languages and with local identity documents from around the world. All of these things cost money to do, even if it's outsourced. And in many cases, the cost grows faster than user acquisition. Patreon could be criticized for censoring content, but they still need to avoid being dragged into court or even shut down. And it seems that they're learning quickly that being compliant and managing risk is not an inexpensive thing to do at scale.

criddell 8y ago
> If they want to do business in Germany [...] Does Visa have that same problem? If I understand Patreon, they aren't producing or distributing content. They are just acting as a middleman between fans and producers.
- bastawhiz 8y ago
  I'm no expert on German law, but Patreon is providing the marketplace. The user is selling access behind an identity on Patreon's site.
- CydeWeys 8y ago
  Patreon hosts content. Visa does not. Every single thing on https://visa.com https://visa.com is Visa's content only. Whereas every single creator's page on https://www.patreon.com/ https://www.patreon.com/ is created by the creator. This imposes a large moderation/liability burden that Visa doesn't have.

rblion 8y ago

The CNBC article says this and I now get why... > "We don't allow hate speech, which other platforms say they don't as well and Patreon really means it," Conte said. "You can't just say anything you want in the world and we don't want to build that platform." > The company also revised its content policy in 2017 to eliminate the site's use for the exchange of adult-themed photos, videos and content. You can't have your cake and eat it too.

kevin_b_er 8y ago

The language is insidious. "Patreon's generous 90 percent pay-out model". That Patreon takes only 10% is seen as generous when the entire model is people sending money to a creator. This is declaration that they intend to grift the patrons and creators for more money soon, because making 5% isn't "sustainable" for a service that has a few pictures and links to youtube along with money transfer.

kup0 8y ago

Part of the issue involved surrounding the whole content/censorship/etc controversy is that Patreon hosts content. If they were strictly a pay-creators platform that took a percentage, it would be sustainable, they could run more efficiently, not spend money on content policing, etc. If they still wanted to deny certain types of customers on their platform- that is their right, but their decision to also host content adds a level of complexity that when scaled, can become a problem, and probably a pretty costly one. Now, I still don't know for sure that this makes the level of funding make more sense. Going the investing route is going to introduce a lot of expectations and changes in the way the business handles itself that could doom it- that could have been avoidable

Kye 8y ago

The CEO did a thread in response: https://mobile.twitter.com/jackconte/status/1093223206805106688 https://mobile.twitter.com/jackconte/status/1093223206805106... I'll just say here what I said there: "You lost the plot. No one outside your VCs are asking why you struggle to scale. Everyone wants to know why you're scaling before getting the fundamentals right. You can't even manage feature #1: paying creators reliably."