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I dont understand how these middleman services can charge even 1%. What is the value added? edit: Also, why is it always a percentage? A transaction is a trans

• xyzzyz 8y ago
  Access to people with money, and enabling them to funnel their money into your pocket.
• thsowers 8y ago
  Customer support, maintaining a secure infrastructure for payments etc. This is not something that every creator wants to spend their time on
• lgessler 8y ago
  If you were a content creator with no technical know-how, how else would you set up a system that would let your supporters donate $x periodically, also assuming no technical know-how on your supporters' part?
  • toomuchtodo 8y ago
    PayPal monthly subscription button on Wordpress site. I’m sure there are WP plugins that make this stupid simple.
    • jdietrich 8y ago
      Chargebacks.
      • toomuchtodo 8y ago
        You can’t charge back a Patreon charge? I’m sure you can.
        • lccarrasco 8y ago
          Yeah you can, but what's more likely, PayPal closing your small account due to many chargebacks in a little time, or them closing a big account with close to average number of chargebacks due to volume?
          • toomuchtodo 8y ago
            I don’t think you can make the assumption that Patreon is better simply because you might be able to hide in the chargeback background noise. There will be alternative solutions that exist after Patreon sunsets, simple solutions.
            • jerf 8y ago
              "There will be alternative solutions that exist after Patreon sunsets, simple solutions." There are alternate solutions that exist now. The only truly hard part of creating a Patreon clone is getting the approval to accept credit cards, charge them on a recurring basis, and dealing with the red tape around that. Probably the entire rest of the site is comparable to that in complexity. It's not the legendary "replicate in the weekend" project beloved by HN readers, because that whole credit card thing is nontrivial, but it's no "create a new distributed database backend from scratch and pass the Jepsen suite" either.
              • toomuchtodo 8y ago
                A Stripe token for accepting credit cards isn’t a barrier IMHO.
                • jerf 8y ago
                  ISTR hearing that getting approved for point-in-time credit card transactions isn't that difficult, but subscriptions where the user is not directly approving every individual transaction is a higher bar. The potential for chargebacks is much higher in the latter case.
    • marcinzm 8y ago
      Patreon also provides an easy means for distributing subscriber only content which is more annoying to manage otherwise.
    • johnnyfaehell 8y ago
      Ok, you're a YouTuber with no technical knowledge, how do you get a WordPress site? Pay for hosting, pay for someone to build you one, etc. Then you have to maintain that site, keep it secure etc. Again, you have no technical knowledge. Or you can sign up to a site like Patreon give x% of the money you're not even making yet for no hassle.
      • deleted 8y ago
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      • newnewpdro 8y ago
        This sounds like an obvious business opportunity for the myriad dirt-cheap tiny VPS providers out there: One-click install of your own wordpress-based paypal-coupled panhandling site. I don't understand why paypal doesn't just jump on this directly and kill off Patreon though.
        • deleted 8y ago
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        • naniwaduni 8y ago
          The niche is already filled by shared web hosts.
        • rmc 8y ago
          That exists. And out of date, unpatched, Wordpress sites get hacked to pieces in no time. So now the simple button on your blog gives money to someone else
    • cc81 8y ago
      Patreon is also about enticing people to support you through the tiers. So you will release content through Patreon that is subscriber only.
  • sschueller 8y ago
    https://liberapay.com https://liberapay.com no fees
    • godzillabrennus 8y ago
      If they don’t charge then you must be the product. I wonder how they monetize the data they collect.
      • zzzcpan 8y ago
        It's a non profit that lives of donations on its own platform.
        • Deimorz 8y ago
          It lives off being someone's side project, it's nowhere near being funded by donations: > Liberapay currently receives €154.65 per week, they need your help to reach their funding goal (€700.00 per week). That's only about $9000 USD / year, without accounting for any of the payment processing fees.
          • deleted 8y ago
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      • rubbingalcohol 8y ago
        It's an open source project funded by direct donations...
      • deleted 8y ago
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      • ozzyman700 8y ago
        You should look into open source software, it is a pretty cool field to discover!
• gbear605 8y ago
  Realistically, if Patreon didn’t exist, most of the creators on it wouldn’t be getting any donations, or at least much fewer, and they certainly would not be consistent and monthly. Having a base platform that people trust to put their credit card in is a big deal; that’s basically PayPal’s whole shtick.
  • jerf 8y ago
    "if Patreon didn’t exist, most of the creators on it wouldn’t be getting any donations," You can strengthen your argument more: When Patreon didn't exist, most creators didn't get any donations, or very minimal ones. However, the name of the service doesn't particularly have to be "Patreon", and speaking for myself, I'm not finding it a particular problem to be on 3 of them at once, so I don't see Patreon as having much of a moat here. Over the course of the last couple of years it seems like my creators have been somewhat unstable as Patreon has provided multiple reasons for people to seek competitors out. It's far from disastrous but it also hasn't been as smooth as it should be.
    • stcredzero 8y ago
      It's far from disastrous but it also hasn't been as smooth as it should be. As a customer, I have a certain idea of what a well run web app looks like. Patreon never fit that, but I tolerated them because they were the only viable option. As a company, they give me the impression of being half-competent at most. As a customer, I'm champing at the bit for better competitors to come about!
    • deleted 8y ago
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  • Kye 8y ago
    Patreon is increasingly not that. They made the original fee change in 2017 almost as soon as they earned a reputation as a good place to give creators money. I don't think I know a creator who's happy with it now. They keep moving things around and no one knows what will change on them next. It's unnerving.
• iovrthoughtthis 8y ago
  How would facilitate this kind of relationship between creators and consumers otherwise?
• gk1 8y ago
  There are other options that charge only a monthly flat fee, such as Podia (https://www.podia.com https://www.podia.com). Anyway, setting up a website and subscription system might seem easy for anyone who’s technical and can read Stripe’s API docs, but for everyone else that’s quite a chore and not what they want to spend their time doing. A small percentage on top of the 2-3% processing fees seems like a small cost of doing business if it means you can sell more subscriptions.
  • jermaustin1 8y ago
    I'm going to have to investigate Podia. It looks pretty slick, and "unlimited" for only $40/mo!? That seems like a no brainer if you are doing online courses or similar.
• dageshi 8y ago
  People know, understand and trust Patreon. That's it really.
• falcolas 8y ago
  Creator and donator friendly UI. A creator doesn't have to worry about chargebacks, balances in paypal, or other payment gateway BS. The donators can manage multiple people in one place, sometimes donating as little as $0.10 per creation (Daily Tech News Show, for example). "Simple" is worth a lot of money to a lot of people. Patreon is simple.
• zzzcpan 8y ago
  Depends on the service. It's more convenient for subscribers to use a single place and a known brand. No need to establish trust and figure out another platform. As a result you get more subscribers, way more than the cut they take.
• kbenson 8y ago
  Well, one advantage is that people that donate (such as me) like to have a single location to manage their subscriptions, see who they are donating to and what they are getting in return, and even discover new and interesting things that might be related. The last thing I want is to look through my CC transactions to be reminded who I'm donating to. I have foregone donating to a project because they didn't go to Patreon, because the extra hassle was enough that I didn't want to. They noted specifically why they weren't using Patreon even though they got constant requests, and their reasons have merit. But that decision also caused enough friction that I never donated, and I would have been happy to send them money monthly if I didn't feel like it was yet another random monthly transaction that I might forget about that I see years later and wonder why I've been paying.
• ekimekim 8y ago
  The single biggest factor is that credit card processors charge flat fees per transaction, which makes donating $1 to a creator in isolation unreasonable - the entire donation will be eaten by processing fees. Patreon allows you to support 20 creators at $1 each, and only make a single transaction of $20. Not to mention ease of use - it's a lot easier to click "pledge $1" for someone whose content you're enjoying than it is to go sign up for some new service or enter your credit card info. Paypal could offer something similar but they don't. Effectively, the value add is network effects. As for the flat fee vs % cut, you're probably right - in terms of costs to the business, transaction costs are a flat fee. That said, a crucial part of their model is making it easy to sign up and get a couple of people backing you for a few dollars each. And it therefore makes sense to effectively subsidise your small users by charging more to your large users who can most afford it (and who are getting the most value out of your service).
  • deleted 8y ago
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  • Deimorz 8y ago
    They're going to stop doing that. From the FAQ at the bottom of their page about the new plans: > Is Patreon still using shared patronage between creators to combine transactions and give creators a break on transaction fees? > Founding creators will still experience the same reduction in payment processing fees from shared patronage. For future creators we will no longer offer savings for shared patronage because it lacks transparency and it’s not equitable. Some creators save money and some don't, depending on a number of factors including how many patrons you share with others. As a new way to create savings for creators that is more fair and transparent, we are introducing the new low micro-transaction rate for pledges under $3.
    • ekimekim 8y ago
      Well, shit. I don't understand why they're so bullish on this. They've tried to get rid of the single-transaction model before. I just don't get it. All they're going to do is give more money to paypal, at the expense of the creators and themselves.
• legitster 8y ago
  https://en.wikipedia.org/wiki/Transaction_cost https://en.wikipedia.org/wiki/Transaction_cost Costs are not always marginal. Imagine growing a company to the point of needing to onboard an HR representative or an accountant: the actual cost of the service would increase. But a percentage gives margin to operate. Also, generally bigger customers generally demand a lot more resources. A percentage seems pretty fair. It also lets small accounts which may not have anything to their name scale up without having to have capital.
  • a_imho 8y ago
    Disagree. Percentages are absolutely unfair and baseless.
    • legitster 8y ago
      So someone who collects millions of dollars a month through Patreon should pay the same amount as someone who collects a couple hundred dollars? I don't see that as fair either. I guess they could charge per-transaction, but then again, that would penalize creators who have a lot of low cost patrons. They would also have to nickel and dime on any extra features they offer.
      • a_imho 8y ago
        The same fee per transaction, not the same amount. If one transaction is $1M and the other is $1 why would the first pay more for the same service? It is not just about Patreon btw.
        • naniwaduni 8y ago
          The cost of processing is more or less constant, but the risk borne scales with the transaction size.
  • Svoka 8y ago
    Why does it matter if Patreon cut does not include transaction cost? https://techcrunch.com/wp-content/uploads/2019/03/Patreon-Compare-Plans.png https://techcrunch.com/wp-content/uploads/2019/03/Patreon-Co...
• macspoofing 8y ago
  >I dont understand how these middleman services can charge even 1%. What is the value added? We live in a middleman economy. This forum is a middleman, since HN doesn't actually put out their own content. Uber, Facebook, Google, ... all middlemen. > Also, why is it always a percentage? More payouts more risk. Looking at it another way, because people are fine with paying a fee based on percentage.