8 ms·

Patreon is a classic VC tragedy. They are already a monopoly. They could be fantastically profitable right now. All the growth that is there to get in their mar

Patreon is a classic VC tragedy. They are already a monopoly. They could be fantastically profitable right now. All the growth that is there to get in their market segment, they are already getting. Instead of realizing just one of these things, they are escalating headcount, exploding costs, manufacturing imaginary growth and squeezing their captive audience for absurd "revenue cuts". Only to wake up one day and realize their audience has left, pivot, straggle and fail.

irq11 8y ago
Not to mention the fact that the product is objectively terrible. It’s unbelievable how slow Patreon is, given that “website that shows images” is a well-solved problem. Couple that with the all-dynamic-all-the-time, continuous-scroll-all-the-things UX, and it’s one of the worst websites I use. There must be serious network effects, if nobody has risen to eat their lunch.
- seanieb 8y ago
  Complaining that their service is terrible while also complaining that they are trying to generate more money to further invest in that service....riiiighhht!
  - sitkack 8y ago
    It isn't linear, they could have spent less to have a more usable service. Just look at the self inflicted mess that is AirBNB, the front end basically crashes if you type too fast on a slow connection. The complaint is about forced inefficiencies that Patreon then foists onto its customers. They are balancing their books by upping their fees, not streamlining their business and they can only do this (in the short term) because they have a fairly captive audience. We are about to see a whole sea of Patreon competitors.
    - stcredzero 8y ago
      We are about to see a whole sea of Patreon competitors. I really hope so! I had been using Patreon as a "poor man's microtransactions" with $1 subscriptions (contingent on actually producing content, if possible) on something like 40 creators. I moved over to SubscribeStar, but they don't have the default $1 option.
      - tedmcory77 8y ago
        The default cost of a transaction is typically ~$.30 cents. Thats just payment processing. Not alot of margin there.
        stcredzero 8y ago
        The default cost of a transaction is typically ~$.30 cents. Thats just payment processing. Not alot of margin there. A web app could aggregate charges to me, and aggregate payments out to content creators. Obviously. That's what Patreon was doing. Others could do it too. (If the allegations of collusion with payment processing are true, this would explain why this isn't done more.)
        stefan_ 8y ago
        He has $40 subscriptions and presumably none of the creators only have his $1 subscription. At no point are they actually eating the fixed cost on a $1 transaction.
        stcredzero 8y ago
        Actually, while Patreon did such aggregation, SubscribeStar seems to do each transaction individually. I wonder if they aren't over a barrel because insiders in the payment processing industry are locking them out.
  - manigandham 8y ago
    Poorly spending money is not a good justification for getting more money.
  - Kye 8y ago
    They actually make it worse with every revision. This isn't a matter of not having enough money. Even their badge to put on websites blasts megabytes of analytics script at you to display a tiny image.
  - trowawee 8y ago
    They have a staff of 90 engineers already out of an overall headcount of ~300. Performantly serving text and images to a userbase of 2 million users/month is not a wild expectation. it's barely even table stakes. And if you fail at that, despite employing 90 engineers, why should anyone trust you when you claim that taking more money out of their pockets will somehow turn that around?
- rjbwork 8y ago
  There are a couple, but they've been squeezed out by those who see them as dealing with undesirable content creators. I forget the name, but one of them just got some alternate payment processor that steps around the whole credit card company/stripe/paypal monopoly somehow.
- stcredzero 8y ago
  There must be serious network effects, if nobody has risen to eat their lunch. YouTuberLaw was working on a complaint to the FTC. There was allegedly some sort of collusion against their competitor SubscribeStar during a recent controversy, where SubscribeStar suddenly lost their payment processing. During that event, people were trying to unsubscribe so they could delete their accounts, but Patreon was removing the pages with the unsubscribe control! (Looked like incompetence, not malice to me.) Based on what I've seen Jack Conte and other Patreon people say online, I don't think the officers of the company have very good control over what employees are actually doing. They actively contradict each other at times.
  - josteink 8y ago
    > There was allegedly some sort of collusion against their competitor SubscribeStar during a recent controversy A “controversial” Patreon-account was banned over content not posted on Patreon. A Patreon-representative leaked in a tweet that this was done on the request of MasterCard and that there was nothing they could do. As a result he moved to SubscribeStar and asked his followers to move over (which seemed to work). Now this is where things get interesting... SubscribeStar uses PayPal for payment processing. A former paypaler moved to patreon. This person may have called some contacts/favors, because SubscribeStar suddenly found their entire PayPal account locked down and no longer received any payments from or for any accounts. Their business was effectively dead. It’s not a smoking gun, but certainly enough to cause warranted speculation. At best it’s PayPal not having good routines (and we know that already, right?), at worst it’s companies like MasterCard now policing what kind of internet-business or internet-content they will allow to be profitable, globally, unchallenged. Either way, the situation leaves a lot to be desired. Edit: This was actually discussed on HN until flagged (like too many interesting discussions). All I can find now is this link: https://www.jihadwatch.org/2018/08/patreon-and-mastercard-ban-robert-spencer-without-explanation https://www.jihadwatch.org/2018/08/patreon-and-mastercard-ba...
    - stcredzero 8y ago
      A “controversial” Patreon-account was banned over content not posted on Patreon. To be fair, he does try to be controversial, and he says some hair-raising things. Basically, imagine that you went into a den of literal neo-Nazis, and you were trying your best to say things to shock and insult them. I don't think that's very smart of him to do. Edit: This was actually discussed on HN until flagged (like too many interesting discussions). This does seem to be a pattern around here of late. There's a lot of pushing of narratives all across the Internet, which amount to "this person is [something horrible] don't even read their material." Much of that is false. At the same time there are genuine [something horrible] going around in much larger numbers in the past few years than the decades before. I think the real target is rational discourse itself.
- Applejinx 8y ago
  That's not the product, and you're not the customer. If you ever have to go to the Patreon website after having become a patron to your desired creator, you're doing something wrong or they are. There is no reason in the world you should be leaning on patreon to serve content. You're the patron, your creator is your content maker who should be using other means to communicate the content to you (youtube? other web hosting? soundcloud? There are many ways, I use all of those) and your pledge is the product: the creator is the customer, not you. I truly don't care how silly the website is when they pay me my revenue like clockwork without issue. Patreon is not a web hosting service. Patreon collects subscriptions from patrons and manages that stuff, as well as anything else I've used.
  - manigandham 8y ago
    The people paying the money are always the customers. Creators get to use Patreon as a tool for showcasing and delivering content and reward. This is a core part of the platform and why both sides use Patreon in the first place. In fact this whole story is about them raising rates to provide more "services" on top like selling merchandise. If all they're doing is collecting and forwarding money then they're one of the most poorly run businesses and massively overbuilt even with their subpar product.
  - irq11 8y ago
    Patreon is the gateway for content. It has to be, or it doesn’t work. If I subscribe to a creator, then one of the first things I want to do is go through that creator’s content. Patreon makes this exceedingly painful. Sending you the money is the niche use-case. Viewing the content is core to the UX of most Patreon users.
    - Applejinx 8y ago
      You've got it completely backwards. You would never, ever subscribe to a creator unless you're already completely familiar with their content. I'm one of the top-paid creators on Patreon and every pledge is like pulling teeth, just as demanding as selling people stuff out there in the 'real world' in the traditional sell-content model. The difference is, on Patreon I can also give the content away to all and sundry, open-source it, and spend zero time or attention trying to police the digital copying of it. People only being interested in Patreon as a mechanism to send me the money is 99% of my entire userbase, and everybody else's that has a significant revenue from Patreon. That mechanism is NOT as easy or trivial as people make it out to be on Hacker News, and I value it. But you've got it totally backwards, and your type of expectation is what's damaging Patreon and getting them to have dozens of managers and marketing staff. A lot of that headcount is about getting them to do the unwanted, unneccesary and unhelpful.
- danShumway 8y ago
  > There must be serious network effects, if nobody has risen to eat their lunch. Anecdotally, I agree with this. Getting people to donate to stuff is hard. If they have to sign up for a brand new service and share payment information with them to do it, they won't do it. So as a creator, you're incentivized to put proportional amounts of work into proportional platforms. As a user, part of the point of Patreon is to more efficiently distribute micro-payments. There really aren't any good ways to do micro-payments online. Pretty much everything either has fixed fees that make donations of <1$ incredibly inefficient, or it's just a pain to support. So as a user, you're highly incentivized to group as much of your donations as possible onto a single platform so they can be batch processed. If there was a universal, protocol-based way to send someone micro-payments online that didn't come with any fees, I don't believe Patreon would be able to continue existing. It would be so easy for anyone to outcompete them on everything else. But I dunno how close we are to something like that. Even in a magic world where bitcoin becomes stable, cryptocurrency still wouldn't solve that problem -- you still have fees associated with payments that make it advantageous to group payments together. Zelle? Maybe? There was an article a while back about cities starting to ban cashless stores, and while I'm normally fairly libertarian, I looked at that and thought, "wow, we should probably have at least one nationalized digital payment system."
seanieb 8y ago
This comment is classic internet drama.. Is it too much to ask for that people back up their statements with facts? - "They are already a monopoly" False. Youtube is pretty big. And there are more. - absurd "revenue cuts" - break down the costs. The human cost of doing email support and in some cases phone support. Legal, trust and safety, legal, etc. Now add the product development costs of a web service service in San Francisco. And finally add the % for the credit card processors, which isn't small.
- hu3 8y ago
  How is Youtube a Patreon replacement? There's so much more on Patreon than just video creators and I don't think Youtube even supports recurring donations of arbitrary values.
  - mikepurvis 8y ago
    Also, everyone I subscribe to on YouTube who is doing it as their full time gig is supporting themselves... on Patreon.
  - stcredzero 8y ago
    How is Youtube a Patreon replacement? YouTube has their own Patreon-like payment system, but only for YouTube and built into their app.
- manigandham 8y ago
  >> Legal, trust and safety, legal, etc. Why did you list legal twice? Sounds like a way to save money right there. Anyways, the point is that the service is very minimal given the money raised and there's no reason they had to build this in San Francisco. It's definitely a classic case of something that could be wildly profitable but now will never be sustainable because of taking on too much VC.
- treis 8y ago
  >- absurd "revenue cuts" - break down the costs. The human cost of doing email support and in some cases phone support. Legal, trust and safety, legal, etc. Now add the product development costs of a web service service in San Francisco. And finally add the % for the credit card processors, which isn't small. For 2019 they're projecting 25 million in revenue in addition to their 5% transaction fee. I have no idea how they can't build a business out of that. I think the GP has it right. Patreon can easily be a 100-200 million dollar kind of company with steady 10% returns. Since they've raised money at a big valuation that's not good enough. They have to be a billion dollar company for the VCs to get the return they want.
newnewpdro 8y ago
How exactly is Patreon a monopoly?
- rcthompson 8y ago
  They are a monopoly in the sense that pretty much every one of the 20-ish people I support on Patreon has said something along the lines of "Patreon's recent actions make me want to switch to an alternative, but there isn't one, so my only choice is to hunker down and pray they don't keep doing more things to chase away all the people who are generously giving me money." Also, note that when they express a desire to migrate to another similar service, they know full well that such a migration would involve losing a significant fraction of their patrons who don't go with them for a range of reasons. So in a very real sense, they are willing to pay to move off of Patreon, if only they could find somewhere to move to.
  - SilasX 8y ago
    What about accepting donations directly via Paypal?
    - delecti 8y ago
      It's just not realistic to expect the level of dedication from supporters making manual monthly donations that it would take to match what automatic pledges accomplish.
      - tapland 8y ago
        PayPal does monthly payments and have done so for ages.
      - nkkollaw 8y ago
        PayPal has been doing subscriptions for years.
    - manigandham 8y ago
      It's a lot more work for both creator and contributor. Patreon also aggregates payments so you can fund small amounts (like $1) to several contributors without it all being eaten by processor fees, although they're removing that now and other channels are starting to build better UX so maybe it'll change.
egypturnash 8y ago
I am a creator who is using Patreon and I am so damn worried about the fact that 5% of the revenue they crow about processing every year apparently isn't enough. If there's anything that ought to be a "lifestyle business" it's Patreon.
- jjeaff 8y ago
  With a 5% cut, at their scale, they are likely paying less than 2.5% in processing fees. So they are claiming they can't make a profitable business on a higher cut than all of the other credit processing component companies combined. They have the potential to make way more than a lifestyle business at scale. The idea that they can't is either disingenuous (i.e. greedy) on their part or complete incompetence.
  - egypturnash 8y ago
    That 5% was on top of the fees to the payment processor. When I went to Patrecon and asked Conte "so what happens if the VC decides it wants a return on its investment" and I think the tl;dr of his reply was "our VC is a bunch of wonderful supporters of the arts who are perfectly fine with not making big bucks off us". I felt like he was blowing sunshine up my ass then and I kinda feel like that even more now. I wonder what's going on with Kickstarter, Drip, and KS's handing Drip off to XOXO. I would be a lot more comfortable using a membership site that's run by a Public Benefit Corporation instead of a corporation that's got VC to pay back.
    - ysavir 8y ago
      I'm currently working on a similar idea to what you just described. It's still a work in progress, but with no investors and no shareholders, so no pressure to maximize profits. I'd love to get your input as a creator and hear your thoughts. If interested, send me an email at yaniv@mynexus.io.
      - egypturnash 8y ago
        Will do.
buboard 8y ago
i doubt patreon has a grip on creators. There just aren't enough alternatives, but the bigger it gets the more likely it is a bank/crypto company/credit card company will create a solution for microtransactions that eats all of their lunch. They exist because they benefit from the current unfortunate situation in finance that microtransactions are not worth it due to cost. They are one change in regulation away from being rendered obsolete. They don't have any network effect: their creators instantly take their audience with them wherever they go.
- eeeeeeeeeeeee 8y ago
  I'm not that familiar with Patreon, only that some of the YouTube channels I watch solicit donations on it. Do the creators on Patreon get access to an email list of their "patreons"? Obviously they could blast out a new payment site on their YouTube channel, but I'm just curious what an exfiltration would look like. I do think you're probably right that if Patreon oversteps and upsets their creators, those people will move to another service (and I'm sure someone will be waiting to offer the same thing cheaper). I don't see why even Kickstarter or Gofundme couldn't offer this very service without much work. It looks like YouTube already is experimenting with paid channel subscriptions.
  - stcredzero 8y ago
    It looks like YouTube already is experimenting with paid channel subscriptions. I think their cut is many times that of Patreon's, though.
  - rcthompson 8y ago
    As a creator on Patreon, you can always make posts that are sent to all of your patrons. So you can just make a post on Patreon saying "Hey, I'm shutting this down and moving to [other platform] instead" and all your patrons will see it. Whether they follow you to the new platform is up to them, of course. I've seen at least one creator that I support do exactly this, moving to Ko-Fi. I followed them, but I don't think Ko-Fi publicly shows the total monthly donations a person receives, so I have no idea what the attrition rate was on the migration.
avinium 8y ago
> Patreon is a classic VC tragedy. They are already a monopoly. They could be fantastically profitable right now. All the growth that is there to get in their market segment, they are already getting. The $64,000 is - would they have reached this position without the initial venture capital? I assume they burned a lot of money to get initial mindshare/awareness amongst creators. Without that, they may have died on the vine (or had a competitor swoop in to cut their lunch).

irq11 8y ago

Not to mention the fact that the product is objectively terrible. It’s unbelievable how slow Patreon is, given that “website that shows images” is a well-solved problem. Couple that with the all-dynamic-all-the-time, continuous-scroll-all-the-things UX, and it’s one of the worst websites I use. There must be serious network effects, if nobody has risen to eat their lunch.

seanieb 8y ago
Complaining that their service is terrible while also complaining that they are trying to generate more money to further invest in that service....riiiighhht!
- sitkack 8y ago
  It isn't linear, they could have spent less to have a more usable service. Just look at the self inflicted mess that is AirBNB, the front end basically crashes if you type too fast on a slow connection. The complaint is about forced inefficiencies that Patreon then foists onto its customers. They are balancing their books by upping their fees, not streamlining their business and they can only do this (in the short term) because they have a fairly captive audience. We are about to see a whole sea of Patreon competitors.
  - stcredzero 8y ago
    We are about to see a whole sea of Patreon competitors. I really hope so! I had been using Patreon as a "poor man's microtransactions" with $1 subscriptions (contingent on actually producing content, if possible) on something like 40 creators. I moved over to SubscribeStar, but they don't have the default $1 option.
    - tedmcory77 8y ago
      The default cost of a transaction is typically ~$.30 cents. Thats just payment processing. Not alot of margin there.
      - stcredzero 8y ago
        The default cost of a transaction is typically ~$.30 cents. Thats just payment processing. Not alot of margin there. A web app could aggregate charges to me, and aggregate payments out to content creators. Obviously. That's what Patreon was doing. Others could do it too. (If the allegations of collusion with payment processing are true, this would explain why this isn't done more.)
      - stefan_ 8y ago
        He has $40 subscriptions and presumably none of the creators only have his $1 subscription. At no point are they actually eating the fixed cost on a $1 transaction.
        stcredzero 8y ago
        Actually, while Patreon did such aggregation, SubscribeStar seems to do each transaction individually. I wonder if they aren't over a barrel because insiders in the payment processing industry are locking them out.
- manigandham 8y ago
  Poorly spending money is not a good justification for getting more money.
- Kye 8y ago
  They actually make it worse with every revision. This isn't a matter of not having enough money. Even their badge to put on websites blasts megabytes of analytics script at you to display a tiny image.
- trowawee 8y ago
  They have a staff of 90 engineers already out of an overall headcount of ~300. Performantly serving text and images to a userbase of 2 million users/month is not a wild expectation. it's barely even table stakes. And if you fail at that, despite employing 90 engineers, why should anyone trust you when you claim that taking more money out of their pockets will somehow turn that around?
rjbwork 8y ago
There are a couple, but they've been squeezed out by those who see them as dealing with undesirable content creators. I forget the name, but one of them just got some alternate payment processor that steps around the whole credit card company/stripe/paypal monopoly somehow.
stcredzero 8y ago
There must be serious network effects, if nobody has risen to eat their lunch. YouTuberLaw was working on a complaint to the FTC. There was allegedly some sort of collusion against their competitor SubscribeStar during a recent controversy, where SubscribeStar suddenly lost their payment processing. During that event, people were trying to unsubscribe so they could delete their accounts, but Patreon was removing the pages with the unsubscribe control! (Looked like incompetence, not malice to me.) Based on what I've seen Jack Conte and other Patreon people say online, I don't think the officers of the company have very good control over what employees are actually doing. They actively contradict each other at times.
- josteink 8y ago
  > There was allegedly some sort of collusion against their competitor SubscribeStar during a recent controversy A “controversial” Patreon-account was banned over content not posted on Patreon. A Patreon-representative leaked in a tweet that this was done on the request of MasterCard and that there was nothing they could do. As a result he moved to SubscribeStar and asked his followers to move over (which seemed to work). Now this is where things get interesting... SubscribeStar uses PayPal for payment processing. A former paypaler moved to patreon. This person may have called some contacts/favors, because SubscribeStar suddenly found their entire PayPal account locked down and no longer received any payments from or for any accounts. Their business was effectively dead. It’s not a smoking gun, but certainly enough to cause warranted speculation. At best it’s PayPal not having good routines (and we know that already, right?), at worst it’s companies like MasterCard now policing what kind of internet-business or internet-content they will allow to be profitable, globally, unchallenged. Either way, the situation leaves a lot to be desired. Edit: This was actually discussed on HN until flagged (like too many interesting discussions). All I can find now is this link: https://www.jihadwatch.org/2018/08/patreon-and-mastercard-ban-robert-spencer-without-explanation https://www.jihadwatch.org/2018/08/patreon-and-mastercard-ba...
  - stcredzero 8y ago
    A “controversial” Patreon-account was banned over content not posted on Patreon. To be fair, he does try to be controversial, and he says some hair-raising things. Basically, imagine that you went into a den of literal neo-Nazis, and you were trying your best to say things to shock and insult them. I don't think that's very smart of him to do. Edit: This was actually discussed on HN until flagged (like too many interesting discussions). This does seem to be a pattern around here of late. There's a lot of pushing of narratives all across the Internet, which amount to "this person is [something horrible] don't even read their material." Much of that is false. At the same time there are genuine [something horrible] going around in much larger numbers in the past few years than the decades before. I think the real target is rational discourse itself.
Applejinx 8y ago
That's not the product, and you're not the customer. If you ever have to go to the Patreon website after having become a patron to your desired creator, you're doing something wrong or they are. There is no reason in the world you should be leaning on patreon to serve content. You're the patron, your creator is your content maker who should be using other means to communicate the content to you (youtube? other web hosting? soundcloud? There are many ways, I use all of those) and your pledge is the product: the creator is the customer, not you. I truly don't care how silly the website is when they pay me my revenue like clockwork without issue. Patreon is not a web hosting service. Patreon collects subscriptions from patrons and manages that stuff, as well as anything else I've used.
- manigandham 8y ago
  The people paying the money are always the customers. Creators get to use Patreon as a tool for showcasing and delivering content and reward. This is a core part of the platform and why both sides use Patreon in the first place. In fact this whole story is about them raising rates to provide more "services" on top like selling merchandise. If all they're doing is collecting and forwarding money then they're one of the most poorly run businesses and massively overbuilt even with their subpar product.
- irq11 8y ago
  Patreon is the gateway for content. It has to be, or it doesn’t work. If I subscribe to a creator, then one of the first things I want to do is go through that creator’s content. Patreon makes this exceedingly painful. Sending you the money is the niche use-case. Viewing the content is core to the UX of most Patreon users.
  - Applejinx 8y ago
    You've got it completely backwards. You would never, ever subscribe to a creator unless you're already completely familiar with their content. I'm one of the top-paid creators on Patreon and every pledge is like pulling teeth, just as demanding as selling people stuff out there in the 'real world' in the traditional sell-content model. The difference is, on Patreon I can also give the content away to all and sundry, open-source it, and spend zero time or attention trying to police the digital copying of it. People only being interested in Patreon as a mechanism to send me the money is 99% of my entire userbase, and everybody else's that has a significant revenue from Patreon. That mechanism is NOT as easy or trivial as people make it out to be on Hacker News, and I value it. But you've got it totally backwards, and your type of expectation is what's damaging Patreon and getting them to have dozens of managers and marketing staff. A lot of that headcount is about getting them to do the unwanted, unneccesary and unhelpful.
danShumway 8y ago
> There must be serious network effects, if nobody has risen to eat their lunch. Anecdotally, I agree with this. Getting people to donate to stuff is hard. If they have to sign up for a brand new service and share payment information with them to do it, they won't do it. So as a creator, you're incentivized to put proportional amounts of work into proportional platforms. As a user, part of the point of Patreon is to more efficiently distribute micro-payments. There really aren't any good ways to do micro-payments online. Pretty much everything either has fixed fees that make donations of <1$ incredibly inefficient, or it's just a pain to support. So as a user, you're highly incentivized to group as much of your donations as possible onto a single platform so they can be batch processed. If there was a universal, protocol-based way to send someone micro-payments online that didn't come with any fees, I don't believe Patreon would be able to continue existing. It would be so easy for anyone to outcompete them on everything else. But I dunno how close we are to something like that. Even in a magic world where bitcoin becomes stable, cryptocurrency still wouldn't solve that problem -- you still have fees associated with payments that make it advantageous to group payments together. Zelle? Maybe? There was an article a while back about cities starting to ban cashless stores, and while I'm normally fairly libertarian, I looked at that and thought, "wow, we should probably have at least one nationalized digital payment system."

seanieb 8y ago

This comment is classic internet drama.. Is it too much to ask for that people back up their statements with facts? - "They are already a monopoly" False. Youtube is pretty big. And there are more. - absurd "revenue cuts" - break down the costs. The human cost of doing email support and in some cases phone support. Legal, trust and safety, legal, etc. Now add the product development costs of a web service service in San Francisco. And finally add the % for the credit card processors, which isn't small.

hu3 8y ago
How is Youtube a Patreon replacement? There's so much more on Patreon than just video creators and I don't think Youtube even supports recurring donations of arbitrary values.
- mikepurvis 8y ago
  Also, everyone I subscribe to on YouTube who is doing it as their full time gig is supporting themselves... on Patreon.
- stcredzero 8y ago
  How is Youtube a Patreon replacement? YouTube has their own Patreon-like payment system, but only for YouTube and built into their app.
manigandham 8y ago
>> Legal, trust and safety, legal, etc. Why did you list legal twice? Sounds like a way to save money right there. Anyways, the point is that the service is very minimal given the money raised and there's no reason they had to build this in San Francisco. It's definitely a classic case of something that could be wildly profitable but now will never be sustainable because of taking on too much VC.
treis 8y ago
>- absurd "revenue cuts" - break down the costs. The human cost of doing email support and in some cases phone support. Legal, trust and safety, legal, etc. Now add the product development costs of a web service service in San Francisco. And finally add the % for the credit card processors, which isn't small. For 2019 they're projecting 25 million in revenue in addition to their 5% transaction fee. I have no idea how they can't build a business out of that. I think the GP has it right. Patreon can easily be a 100-200 million dollar kind of company with steady 10% returns. Since they've raised money at a big valuation that's not good enough. They have to be a billion dollar company for the VCs to get the return they want.

newnewpdro 8y ago

How exactly is Patreon a monopoly?

rcthompson 8y ago
They are a monopoly in the sense that pretty much every one of the 20-ish people I support on Patreon has said something along the lines of "Patreon's recent actions make me want to switch to an alternative, but there isn't one, so my only choice is to hunker down and pray they don't keep doing more things to chase away all the people who are generously giving me money." Also, note that when they express a desire to migrate to another similar service, they know full well that such a migration would involve losing a significant fraction of their patrons who don't go with them for a range of reasons. So in a very real sense, they are willing to pay to move off of Patreon, if only they could find somewhere to move to.
- SilasX 8y ago
  What about accepting donations directly via Paypal?
  - delecti 8y ago
    It's just not realistic to expect the level of dedication from supporters making manual monthly donations that it would take to match what automatic pledges accomplish.
    - tapland 8y ago
      PayPal does monthly payments and have done so for ages.
    - nkkollaw 8y ago
      PayPal has been doing subscriptions for years.
  - manigandham 8y ago
    It's a lot more work for both creator and contributor. Patreon also aggregates payments so you can fund small amounts (like $1) to several contributors without it all being eaten by processor fees, although they're removing that now and other channels are starting to build better UX so maybe it'll change.

egypturnash 8y ago

I am a creator who is using Patreon and I am so damn worried about the fact that 5% of the revenue they crow about processing every year apparently isn't enough. If there's anything that ought to be a "lifestyle business" it's Patreon.

jjeaff 8y ago
With a 5% cut, at their scale, they are likely paying less than 2.5% in processing fees. So they are claiming they can't make a profitable business on a higher cut than all of the other credit processing component companies combined. They have the potential to make way more than a lifestyle business at scale. The idea that they can't is either disingenuous (i.e. greedy) on their part or complete incompetence.
- egypturnash 8y ago
  That 5% was on top of the fees to the payment processor. When I went to Patrecon and asked Conte "so what happens if the VC decides it wants a return on its investment" and I think the tl;dr of his reply was "our VC is a bunch of wonderful supporters of the arts who are perfectly fine with not making big bucks off us". I felt like he was blowing sunshine up my ass then and I kinda feel like that even more now. I wonder what's going on with Kickstarter, Drip, and KS's handing Drip off to XOXO. I would be a lot more comfortable using a membership site that's run by a Public Benefit Corporation instead of a corporation that's got VC to pay back.
  - ysavir 8y ago
    I'm currently working on a similar idea to what you just described. It's still a work in progress, but with no investors and no shareholders, so no pressure to maximize profits. I'd love to get your input as a creator and hear your thoughts. If interested, send me an email at yaniv@mynexus.io.
    - egypturnash 8y ago
      Will do.

buboard 8y ago

i doubt patreon has a grip on creators. There just aren't enough alternatives, but the bigger it gets the more likely it is a bank/crypto company/credit card company will create a solution for microtransactions that eats all of their lunch. They exist because they benefit from the current unfortunate situation in finance that microtransactions are not worth it due to cost. They are one change in regulation away from being rendered obsolete. They don't have any network effect: their creators instantly take their audience with them wherever they go.

eeeeeeeeeeeee 8y ago
I'm not that familiar with Patreon, only that some of the YouTube channels I watch solicit donations on it. Do the creators on Patreon get access to an email list of their "patreons"? Obviously they could blast out a new payment site on their YouTube channel, but I'm just curious what an exfiltration would look like. I do think you're probably right that if Patreon oversteps and upsets their creators, those people will move to another service (and I'm sure someone will be waiting to offer the same thing cheaper). I don't see why even Kickstarter or Gofundme couldn't offer this very service without much work. It looks like YouTube already is experimenting with paid channel subscriptions.
- stcredzero 8y ago
  It looks like YouTube already is experimenting with paid channel subscriptions. I think their cut is many times that of Patreon's, though.
- rcthompson 8y ago
  As a creator on Patreon, you can always make posts that are sent to all of your patrons. So you can just make a post on Patreon saying "Hey, I'm shutting this down and moving to [other platform] instead" and all your patrons will see it. Whether they follow you to the new platform is up to them, of course. I've seen at least one creator that I support do exactly this, moving to Ko-Fi. I followed them, but I don't think Ko-Fi publicly shows the total monthly donations a person receives, so I have no idea what the attrition rate was on the migration.

avinium 8y ago

> Patreon is a classic VC tragedy. They are already a monopoly. They could be fantastically profitable right now. All the growth that is there to get in their market segment, they are already getting. The $64,000 is - would they have reached this position without the initial venture capital? I assume they burned a lot of money to get initial mindshare/awareness amongst creators. Without that, they may have died on the vine (or had a competitor swoop in to cut their lunch).