28 ms·

Patreon cuts deep inside creators’ pockets

334 points by solospace 4y ago

tootie 4y ago
Apple take 30%. You have to understand that you're not paying just for the service, but the reach. You can DIY your donation platform and the tech side isn't rocket science, the issue that platforms like Patreon and Apple have access to orders of magnitude more users than you can ever generate on your own.
- maxshadurskiy 4y ago
  Article states the opposite is true. Small creators, do not receive decent amount of discoverability on Patreon. I guess same true for Apple AppStore.
  - sokoloff 4y ago
    It’s not just (or even primarily) discoverability. I will never type in my credit card to give some random app developer $1.99. I will frequently click buy on an app in the App Store. Same is likely true for Patreon. Even if I found your videos or podcast by some other means, the fact you can mention “Thank to to my patrons” means I can easily find you (not discover you) on Patreon and subscribe.
    - maxshadurskiy 4y ago
      Let’s assume random website use Stripe checkout or PayPal to process cards. Will you fell better and safe to type in your bank card?
      - sokoloff 4y ago
        It’s about convenience and removing friction more than safety/security. If those are every bit as low friction as the alternatives, I’m willing. (But that includes “I heard a podcast while I was driving mention patron; I should spend 30 seconds and give that creator money.” where I can find and login to Patreon faster than I can find the creator’s random website URL.) For recurring billing, no, I will not give a random website my CC near as easily as I will Apple or Patreon (or any other platform that stands more to lose by biting my hand than an individual site does).
        abnercoimbre 4y ago
        I use DonorBox for supporters of my indie conference [0] and I have a healthy revenue stream (would be healthier if I had a Patreon.) Is that an OK choice given your preferences? It seems low friction, with the caveat that you have to remember my random website URL. [0] https://handmade-seattle.com/donate https://handmade-seattle.com/donate
        sokoloff 4y ago
        I poked at your site's donation functions. For me personally, if I was doing a one-time donation, that flow seems fine and something that wouldn't block me for a one-time. For a recurring donation, the hover over "A donor account is created automatically for recurring donations. Account setup info will be emailed to you." would remind me the hassle of using a random extra account that I need to keep track of, trust that it won't get breached, and be able to find and login to when I want to stop the recurring donations [and trust that the site will actually stop the donations without hassle]. That's going to be enough to block me for recurring (but you probably have data on the people it doesn't block, meaning people's preferences vary).
        abnercoimbre 4y ago
        Thanks for the feedback. Indeed I'm not capturing the supporters with your concerns. However, I get immediate cash access to a donation (recurring or otherwise), and almost everyone covers the transaction fee. This feels less centralized and gimicky than Patreon -- at the cost of losing sokoloff.
        sokoloff 4y ago
        You could A/B test showing Patreon to a subset of your users (or in different positions) and see if Patreon gives you enough incremental lift to cover their higher vig. It’s not about sokoloff. It’s about what gives your group the most net income after all fees and factors.
  - bombcar 4y ago
    There's no discoverability anywhere, save if you get into a new platform super early. There's just too many things. Most creators who have "made it" (whatever that may be) should work on setting up their own website with their own payment processing and encourage fans to use it, less for the additional money and more for the security against single-income flows.
    - kareemsabri 4y ago
      I don't think that's true, there's discoverability on Spotify. I often get suggested artists or podcasts based on what I already listen to, and some of them are very good.
      - bombcar 4y ago
        But how many of them are very small? It's easy to find "big things" on any platform, the question is which are successful for those trying to grow?
- Anx2k 4y ago
  In the case of Apple you’re really paying for access to the platform, as you don’t have a choice. But in the case of Patreon, I don’t think they offer anything in terms of reach - by this I mean I’ve never made the decision to support a creator because they were on the platform. Typically if I decide to support someone, I just go to whatever they point me to - and I think this was the authors point (especially for very narrow/vertical creators). A better example of a more ‘reach’ offering would probably be YouTube’s similar offering (although I don’t know their fee structure), which goes beyond just reach and has very low friction for creators who make content on that platform. Honestly I feel like Patreon as a platform is pretty underwhelming from the donator side of things, nor do I see much in terms of what’s changed to improve the experience over the years as their fees have increased - but I have no idea what has changed on the creator side. I think the big takeaway (no surprise) is that the creator really owns the donator, not the platform - vs someplace like Apple where they have a much stronger relationship with the customer than your typical app developer does.
  - orthoxerox 4y ago
    > I mean I’ve never made the decision to support a creator because they were on the platform. I have. It's nice to have a centralized UI for your donations and I would never enter my payment information just to support a single creator with a dollar or two.
  - tootie 4y ago
    I think whenever HN readers deride a product because it doesn't suit them, that's not an effective argument. Like do you have any idea how strong conversion rates are on email? Or even paper mail? Stuff we all hate can be very effective at growing an audience. I honestly don't use Patreon at all and we rejected it as a platform for content monetization at my company, but I can also tell you that our first-party approach wasn't exactly a slam dunk.
- hendrikrassmann 4y ago
  I would say it's the other way round. Since creators need an income, patreon recieves a huge amount of free advertising from small and big influencers/youtubers/etc
- egypturnash 4y ago
  I make my living off of Patreon and I can confirm that they do jack shit to promote your work unless you are already one of their top earners. “Paying for the reach” is a bullshit excuse for the amount of money they’re sucking off of creators to try and make an immense payout for their VC. My spreadsheet says the total cut of my take that goes to Patreon and payment processing is about 10-15%, but I am an Early Adopter who gets a much better deal from them. For someone like this dude who doesn’t have this deal and has their usurious international fees on top of it, it’s definitely a bad choice. Patreon did one big thing: they took the concept of “monthly donations to support the arts” and repackaged it in a way that took off. I never got support via the old PayPal donation button like I have via Patreon.
  - zdragnar 4y ago
    > I never got support via the old PayPal donation button like I have via Patreon Sounds like Patreon helped you after all. I'm not saying that they promote or market you, but having the name (much like Apple) seems enough to encourage people to pay you. OTOH, I certainty don't think that their cut sounds like a good deal; rather, it sounds more like your options are a bad deal or no deal at all.
    - iseanstevens 4y ago
      Apple also gives a full suite of developer tools, documentation, example code. Built in debugging, testing, simulation. If you have a design/image creation software and XCode you could make almost any app. Patreon doesn’t give any tools to creators to directly create.
      - zdragnar 4y ago
        Aye, that just further reinforces my last paragraph.
      - senojsitruc 4y ago
        ...that I can use for free to build a Mac app that won't run without security warnings, or to test in a simulator -- otherwise I have to pay $100/yr. The 30% tax brings no value.
- jfengel 4y ago
  As a developer I'm terrified of anything that handles payments. There are so many ways to do it wrong, and each exposes me or my clients to massive losses. Even well funded companies with teams for security suffer breaches daily. I'm happy to outsource anything involving money.
  - tootie 4y ago
    There's plenty of middle ground. You outsource just they payment/donate form and pay a small premium on top of merchant fee. You just to do everything on the content and marketing side yourself.
  - cultofmetatron 4y ago
    just use stripe, the fees are small for all the headaches you avoid. refunds are easy and can be handled from a dashbaord
- bell-cot 4y ago
  +1, BUT 's/the reach/the big-name familiarity/' 's/more users/more legitimacy & perceived security for most potential donors/'
- electroly 4y ago
  As a heavy Patreon user (donator side) I don't think this is true for Patreon. It may be true for Apple but it isn't true for Patreon. They do almost nothing as far as helping the creator's reach. The typical funnel is people find creators on YouTube first and then look up their Patreon if they want to support the channel. The discovery happens on YouTube or another platform. It's difficult to find new creators on Patreon's website even if that's literally what you want to do; I use Google to find the Patreon pages! I doubt that having a Patreon has any impact at all on the number of viewers; it's just a convenient solution once your viewers have already decided to pay you. IMO this should be concerning to Patreon: there's no stickiness in their platform; a competitor could easily take over, and the creators can easily switch. On the other hand, switching away from YouTube would be instant channel suicide, because they are actually the ones providing the reach. I think YouTube must see the existence of Patreon as a critical failure. YouTube is doing all the hard work and Patreon is getting paid for it!
- noirbot 4y ago
  I don't think this is exactly right. As other commenters point out, Patreon does nothing to help people find new stuff - what Patreon really provides is a sort of escrow service for subscriptions and payments. The value they offer me as someone who subscribes to things through them is that I know that Patreon doesn't really care that much if I decide to stop supporting something. My $5/month isn't worth them making it hard for me to cancel. The couple apps and podcasts I've subscribed to that did roll their own payments and subscriptions have been hell to cancel or adjust my subscription, riddled with dark patterns, and one seemingly just... removed the unsubscribe button entirely. There was no way to cancel at all.
  - onphonenow 4y ago
    I have a "subscription" to support a business. You can signup on a website but have to reach out to them via email to cancel which they only tell you later when you login to try and cancel. It's working I'm still subscribed but will get into it with them and the retention flow they have eventually. With patreon I can click, instead of doing the back and forth email thing.
  - uptime 4y ago
    Yes! I tried to cancel some PRX monthlies and there was no way to do it.
comboy 4y ago
I'm not sure it's that high. They probably have AML regulations in multiple countries on their backs, and they are dealing with tons of tiny payments not a few big ones. For each tiny payment there's some chance of a problem occurring which will require support time.
- colechristensen 4y ago
  Banks take care of an enormous amount of small transactions on credit and debit cards and only charge ~3%, some European countries have fees as low as 0.3%. The high fees of patreon have nothing to do with payment support issues.
  - SpicyLemonZest 4y ago
    At least in the US, banks provide quite a bit less payment support. Chargebacks are a big one: with Stripe or something similar, you have to manually respond and pay a $20+ fee every time someone files a chargeback.
    - TedDoesntTalk 4y ago
      You don’t have to manually respond. But then you lose the chargeback dispute by default.
  - cuteboy19 4y ago
    In India, the cost of instant payments is exactly zero. Additionally, RuPay cards have a Zero MDR which has really really made Visa and MasterCard angry
    - viraptor 4y ago
      So what do you pay with? Your transaction data? Subscription to other services?
      - cuteboy19 4y ago
ghostly_s 4y ago
This article claims Patreon's true cut is not the advertised 8-10%, but *86-83%*?? Surely this can't be true? We would have heard more people complaining about it by now.
- i_like_waiting 4y ago
  No, creator keeps 86-83%, so ~85c from every dollar >the real cut for a creator on Patreon is often a stark ~14-17% depending on the exact scenario. edit: now I get it, seems like you are native speaker and me and author are not, I guess correct way should be "cut from a creator" instead?
  - zuminator 4y ago
    To my ears just rephrasing it as "Patreon's real cut is..." would sound most natural.
- makeitdouble 4y ago
  It might have been corrected ? it currently reads to me as 14~17, which is not great, but not that high either depending on the exact case. > When considering all factors, including standard payout processing fees, the real cut for a creator on Patreon is often a stark ~14-17% depending on the exact scenario.
  - sokoloff 4y ago
    If a creator and a platform are splitting a dollar and “the real cut for a creator is ~15%”, I’d expect that to mean the creator gets $0.15 and the platform $0.85.
    - makeitdouble 4y ago
      Reading your answer I get why the wording is ambiguous. I read it as “the real [revenue] cut for a creator”, keeping the same meaning for “cut” as in the page title.
kareemsabri 4y ago
Patreon is a business and I don't begrudge them the ability to charge customers for their service (though I think it's pretty buggy). Before Patreon, I did not subscribe to a single podcast. After Patreon, I subscribe to 3-5 at various times. I subscribe to a couple other standalone products but the bar is certainly higher as the value they must provide is greater to get over having another subscription on another platform. So I think Patreon likely does help individuals get business, even if they aren't out advertising on your behalf. That said, I agree the fee does seem high, given it is largely payment processing (and a simple media player) and we know what Stripe charges for that. I think they will probably be at risk from higher quality entrants like Substack who is moving into podcasting as well.
- Mc91 4y ago
  The same with me. I gave a little money each month to four different organizations on Patreon, about six months ago I saw LineageOS was on Patreon and started giving a little to them each month too. It makes it easier to get recurring donations, I already send to Patreon once a month, now I just send a few dollars more a month.
- raverbashing 4y ago
  Exactly. And in the end, 80% of something is still something (or better said, 100% of zero is, you guessed, zero) A lot of people have been able to offer niche content through Patreon, so it's a net positive even if they fumble their offer sometimes
WesleyLivesay 4y ago
These articles seem to pop up from time to time, and the persons numbers seem roughly accurate in my experience. In my experience Patreon has been around 11% cut scenario, split very roughly between Payment Fees and Platform fees. But I am on the Founders plan, which is the same 5% platform fees as Patreon Lite, but with the extra features of the 8% Pro plans. I do think it is probably best for creators to diversify their platforms, but I still think that Patreon is worth it just because of it being a very well known platform outside of just tech circles.
- agf 4y ago
  I'm a fan of Patreon, but in my experience, it's not a well known platform outside of tech. I've mentioned it a number of times to a variety of different musicians, music producers, etc., and until maybe the past year none of them had ever heard of it, though recently one had. I think it does have the potential to be like Kickstarter and really broaden the appeal of this type of contribution, but from what I can see, it hasn't actually managed to do that part yet -- both based on articles like this one and my own anecdotal experience.
  - dfinninger 4y ago
    As an anecdotal counterpoint from the people I talk to, anyone who watches YouTube videos regularly seems to know what Patreon is. That might not be a massive section of the population, but it’s not comprised of mainly tech workers.
dubswithus 4y ago
How many engineers does Patreon have?
- jdwithit 4y ago
  According to this article[0], product and engineering was ~150 people at the end of 2021 and they hope to scale to 400. Which...seems like a lot for what the company is? Although the hiring landscape has changed drastically in the last month so who knows how accurate that plan is today. [0] https://techcrunch.com/2021/12/21/patreon-cpo-interview-double-in-size-2022/ https://techcrunch.com/2021/12/21/patreon-cpo-interview-doub...
  - Nextgrid 4y ago
    Yes that's absolutely a lot considering the code to solve Patreon's business problem has been written long ago and works just as well. The core business problem can be boiled down to a set of spreadsheets - based on payments going in and creators subscription timeframes you work out the payout for each creator. If it takes you 150 engineers to do the aforementioned I'd look at you in a funny way or start suspecting ulterior motives (and in this case there indeed are ulterior motives - hint: the objective is not to build a profitable product).
    - dubswithus 4y ago
      Craigslist had 50 employees in 2017. But a lot of companies like to go down the microservices / complicated architecture path which adds to the dev ops burden.
    - unity1001 4y ago
      "Hackernews member could do the same thing with only 5 people"
jelling 4y ago
TFW when white collar professionals complain about the prices businesses charge in order to pay the white collar salaries necessary to make the products they use. And so many of these companies aren't even profitable, either. It's like carnivores being judgmental of hunters.
- wahnfrieden 4y ago
  careful talking about profitability in your point, as most of these companies are reinvesting to chase unicorn/monopoly level growth. some struggle with profit not because it's a tough biz creators should be thankful to them for, but because they're structured/managed for growth over current customer needs. for-profit platforms will always seek to maximize the function, the marginal value of the rent they take. any charity to creators is incidental dynamics along the way
- markstos 4y ago
  Ghost provides similar features for bloggers but does not mark up subscription payments from subscribers. The cut of payments is about 3%.
  - unity1001 4y ago
    Except they don't collect, process and pay international tax like EU VAT. Or California sales tax etc. You have to correctly collect it and file it one by one. So Ghost is not a creator platform. Its a payment platform.
    - markstos 4y ago
      Ghost is a platform for creating content. Ghost partners with Stripe to handle the payments. For a customer who runs a small town Indiana newspaper, who may be a somewhat typical customer, it's not that complicated: They won't have international subscribers and they would pay state and federal taxes-- standard income staff stuff. And doing so with Ghost vs Patreon could save thousands of dollars per year!
AtNightWeCode 4y ago
Maybe it is true, but I think it is somewhat ok. Patreon has enabled business that simply were not there before. Some of these telemarketing companies that raise money for charity takes in the hundreds of percent more of the donations than this in fees btw. That something to be outraged about.
torginus 4y ago
Wait until this guy finds out about the government.
- unity1001 4y ago
  Yep. He writes as if income tax, digital international taxes etc don't exist. Leave aside chargebacks, fraud, refunds.
jeroenhd 4y ago
What I think is something people easily overlook with Patreon and similar platforms is that it's quite hard to make a decent profit on $1 or $5 transactions that most of Patreon's income seems to come from. They're definitely overcharging for more profit, but your margins won't be much lower if you handle payment yourself. Your 3% bank cut to receive money doesn't always work because often there's a minimum fee per transaction. I know most iDeal (Dutch payment provider) transaction costs are 25 cents. It's a flat fee, so buying a €2000 TV will still leave you with 25 cents of fees, which is great for big stores, but when you use them do donate a single euro, the transaction fees are a whole quarter of the donation. Tons of tiny transactions is a pretty terrible way to receive money. It's not "give up >15%" terrible, especially if your patrons tend to donate more, but Patreon needs to spread costs over all creators to make small content creators worth the effort. Having a look at Donorbox, the same issue becomes clear: the cost for receiving payment in .NL is only 1.4%… and a €0,25 payment processor fee. These low processing fees are also only applicable to registered non profits in the NL which the author most definitely isn't. Even with the extra cheap rates and a non profit the fees to the lowest tier (±€3) add up to nearly 10% on a platform that's built around minimising costs for non profit organisations. There is the ability to use bank transfers for real cheap, but that's always a possibility anyway. One thing this site does seem to offer is the ability to offload all the site's cost onto the person who donates rather than subtract it afterwards, but that's just raising the donation price to compensate, not really a decrease in cost.
- sorenjan 4y ago
  I think this is one of the problems flattr tries to solve. instead of multiple micro transactions you make one larger transaction each month to flattr, who then divides it up to all the creators you want to support. I don't know how Patreon does it, if they make one charge for each creator you support I guess the transactions fees can become a large part of the total amount. https://flattr.com/ https://flattr.com/
  - DoctorOW 4y ago
    All patreon customers are also only charged once per month no matter how many creators they support. The main difference being that since Patreon has people pledge specific dollar amounts instead of trying to figure it out month-to-month like Flattr the average Patreon customer has much fewer creators.
tolmasky 4y ago
The thing about Patreon is that it sucks for users too (as in, the consumers). Both the website and the app really suck. They look horrible, have few features, and often work poorly. It essentially serves as a notification platform that I then try to bounce out of into YouTube or wherever as soon as possible. It's kind of mind boggling that they seem to leave so much engagement on the table when even a mediocre website would probably keep me on there longer and thus potentially get me introduced to other creators, vs. that being solely through YouTube or something else. Then again, maybe it's a better investment to figure out way to take 17% from creators than to figure out ways to get people to find more creators.
- zippergz 4y ago
  What features should Patreon have? I'm not paying for website features. I am paying to support creators I like. I'd actually be happier if the platform did even less. Just get the money to the people I want to support in a low-friction manner, and get out of the way.
  - kareemsabri 4y ago
    How can they "get out of the way" when you need to use the app to play the content? The player sucks, episode search sucks.
    - Macha 4y ago
      I guess most creators I watch tend to link to unlisted youtube videos to share with their patrons rather than use Patreon's built in uploads.
      - kareemsabri 4y ago
        Oh. I wish more did that.
      - sharatvir 4y ago
        This and private feeds for podcasts
bratwurst3000 4y ago
I know patreon only because of youtube. Are there many creators not connected to youtube on patreon? My impression is if youtube would allow donations to creators, patreon would be dead. Am I wrong?
- plorg 4y ago
  I know quite a number of podcasters who use Patreon. It ends up being pretty convenient, because you can enable a podcast-compatible RSS feed that your users can import into their podcatcher.
- Ekaros 4y ago
  They already have superchats and and memberships(paid, different from subscribing) on Youtube. These are mostly used by streamers. Then again I think you can give superchats on premiers. Not sure if you can limit videos to membership only.
  - Crosseye_Jack 4y ago
    >They already have superchats and and memberships(paid, different from subscribing) on Youtube. And you can have multiple levels od membership. > I think you can give superchats on premiers You can if you enable them on your premieres. However a lot of creators just publish their videos rather than ran run them as premieres. But you can also enable tipping which allows viewers to give a one off tip. > Not sure if you can limit videos to membership only. You can, you can also limit live streams and playback of past live streams to members only. However as not to fragment their Patreon supporters, these videos are normally just uploaded as unlisted and the link is shared on Pateron. As for the cut. On Ad's its typically a 60/40 split with YT taking the 40%. On Superchats, superstickers, superthanks (yt's one off tippings) and memberships its a 70/30 split (yt's cut being 30%).
- noirbot 4y ago
  Depends on two things - does Youtube give a better cut? Presumably they would, but Google doesn't have a good track record. Second, do they want to trust Google not to both ban their channel _and_ take all their income away. If you have a YT page, but get your money from Patreon, you have a fallback if either of them drops you for whatever reason. That's before you get into podcasts on Patreon, which seems to make up a lot of their userbase, if you look at their most patronized stuff. There's no particularly good podcast monetization platform, rightfully, because of its decentralized protocol.
lazypenguin 4y ago
I never understood Patreon taking a % of money earned from creators. Seems unreasonable to me. I use Ko-Fi which has an optional “gold tier” with a fixed monthly price for more features. It also has an option for you to contribute a % of proceeds to Ko-Fi if you want. I happily paid for gold. https://ko-fi.com/ https://ko-fi.com/
- unity1001 4y ago
  > I never understood Patreon taking a % of money earned from creators Possibly because you are not processing and remitting EU VAT and other digital international taxes which you should. Actually, its doubtful that a lot of people who engage in such creator activities are even aware that they should need to file taxes for that kind of income in the first place, leave aside process digital tax. Patreon handles all of that and reports and pays it to legitimate authorities, removing all the legal and financial responsibilities from the creators' hands. As international digital tax schemes proliferate (Japan already has one or planning one, other OECD countries also), this is going to become even more important. Not that its not important right now. This is before the fact that all chargeback, fraud etc are handled by Patreon. ... A lot of these people, including you, confuse Patreon and similar platforms with payment platforms like Paypal. They aren't the same. At Paypal, Stripe etc, not only they don't handle digital tax for you, but also you are on your own regarding chargebacks, fraud and refunds. And if you have more than 5% of them, they can just disable your account. You don't have those issues with Patreon.
  - crtasm 4y ago
    Patreon could also decide to disable your account. What % of problem payments will they accept before wanting to speak to you about it? I don't imagine it's a massive amount higher than 5%.
ajhurliman 4y ago
Forex and PayPal’s international payments aren’t free, Patreon doesn’t see those profits.
- Finnucane 4y ago
  Sure, though my credit union credit card only charges 1% for forex, so presumably it could be done for less.
  - ajhurliman 4y ago
    That’s a great rate, but Patreon doesn’t have any control over customers’ desire to use PayPal (it’s a thorn in the side of the entire payments industry).
reiichiroh 4y ago
It still amusing to be that the founder of Patreon is the novelty band Pomplamoose.
ericvanular 4y ago
A solution to this is for creators to make the same move as ecommerce businesses going from Etsy to Shopify. Getting closer to the money and having patrons pay them through their own domain. I believe in this idea so much that I built a solution for creators who want to do exactly that -> https://jetpeak.co https://jetpeak.co
- owlbynight 4y ago
  Verification process is insanely intrusive and a non-starter. Good luck, though. Your UI/UX is good.
krnlpnc 4y ago
15% is not a deep cut. That’s a totally a reasonable cost for smoothly running the infrastructure necessary to support a creator with a monthly subscription model.
- fartcannon 4y ago
  That's about 10x more that I'd consider reasonable for what is effectly hosting a static website and bulletin board. I think we've all just had our expectations blown out of the water by Steam (and the subsequent app stores).
  - deadbunny 4y ago
    A static website that shows/hides content depending on your subscription level dynamically?
    - fartcannon 4y ago
      I don't know how to respond to that. That's not a complicated thing to do. Patreon gets to take the money they take because they've found a good niche, not because their website can do something that all websites have been able to do since the 1990s. I personally think they take too much for what they provide. That's all. I am very happy they exist, though, because otherwise everyone would just be chasing the algorithm.
      - newbie2020 4y ago
        “Not because their website can do something that all websites have been able to do since the 1990s”. That is describing most money-making websites in existence
        deleted 4y ago
        [deleted]
  - conradfr 4y ago
    There's nothing static about processing payments and providing support.
tpurves 4y ago
What many people don't realize is that the operational and customer service costs of payments don't scale with payment amount. Customers will cost almost just as frequently dispute, have questions, have problems, ask for help, attempt to defraud etc with a $1 transaction as they will a $100 or $1000 transaction. This is the real killer with micro payment schemes. Customer service costs scale more with number of payments than payment volume. And these real costs are born by Patreon, by the networks and by the banks which is why min txn costs exist. The crypto bros totally miss the point in understanding this too. Source: 25yrs experience building payment networks
- onlyrealcuzzo 4y ago
  Charge backs should also be less of an issue if the purchase is $1. Same with fraud. The stakes are lower the lower the amount. Who cares? It's not worth disputing. Fire the customer if it crosses a threshold.
  - JumpCrisscross 4y ago
    > stakes are lower the lower the amount. Who cares? OP mentioned customer service. Pretty much any American can create 50+ hours of customer support and legal work for no reason at all in payments. Even an irate, clueless customer will waste an hour of your support staffs’ time.
    - mensetmanusman 4y ago
      Just give them their money back and shadow ban them from using your store.
      - pixl97 4y ago
        And then you get the HN post about you banning some rather well known tech figure because when your system created the issue in the first place.
        4y ago
pessimizer 4y ago
Patreon shouldn't even exist. They're here because government(s) have failed so badly that they haven't put any effort into the infrastructure to trivialize the transfer of its paper between the people holding it. It's as useful a function as highways and the internet, but government failures (that lobbyists pay individuals in government to continue failing at) create room for deeply entrenched trusts paypal to be established. There's no moral amount they should charge imo; it's completely arbitrary. If you think it should be less, vote for better people, advocate for better things, make crypto that works and isn't exclusively an attraction for criminals and rent-seekers, or pour money into marketing a competitor. You can switch to another service, but I might not want to give your other service my card info. Well if your other service takes paypal I'll use it, so they'll start 5% behind.
- nvahalik 4y ago
  To be fair there is a lot of non-infrastructure stuff on Patreon. They have been successful.
- mertd 4y ago
  I don't think Patreon's reason to exist is because "sending money p2p is hard". There is a lot of room for competition though. As a supporter, my loyalty is to the creator not to the platform.
  - cowtools 4y ago
    >I don't think Patreon's reason to exist is because "sending money p2p is hard". Why do you think that? Sending money p2p is hard in a world where cryptocurrency is treated like an investment vehicle and not a payment system. >There is a lot of room for competition though. As a supporter, my loyalty is to the creator not to the platform. You don't clearly speak on behalf of most users here. "Using multiple platforms" in the fiat/traditional system effectively means giving your credit card information to multiple businesses and increasing your risk for fraud, overcharging and identity theft. It's the reason why these intermediaries like PayPal and Patreon operate in the first place.
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stevenjgarner 4y ago
So the article criticizes Patreon for having "additional charges for non-US PayPal payments as well as separate currency conversion fees that are mysteriously high at 2.5%", offering donorbox.org as a respite, yet no-where can I seem to find what donorbox charges for non-US PayPal payments and currency conversion?
- unity1001 4y ago
  Donorbox doesn't even seem to process international VAT. It seems to be geared for non-profits, which I really doubt the author's writing gig qualifies as. So basically he is just dodging tax and all legal responsibilities.
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eterevsky 4y ago
YouTube takes 30% for "joining" the channel.
- Barrin92 4y ago
  Youtube is also a genuine platform that gets you an audience and discoverability, gets you ad revenue, and hosts your content (which in the case of streaming video is very much non-trivial technically). Patreon is a donation button with a feed. It's effectively a payment processor and in most of the world the margins in that industry are a fraction of a percent. This is Youtube vs Patreon (https://www.pymnts.com/subscriptions/2022/vimeo-raises-rates-on-creators-many-of-them-patreon-users/ https://www.pymnts.com/subscriptions/2022/vimeo-raises-rates...) "She says she began making subscriber-only Patreon content in 2020 and hosting it on Vimeo. Then came the notice from Vimeo on March 11 that van Baarle’s bandwidth usage was in the top 1% of Vimeo’s users. So if she wanted to keep hosting her content on the site, she’d need to upgrade to a custom plan that could run her as much as $3,500 a year, given a week to make changes or leave the site. The Verge noted that her experience was just one of many — numerous Patreon creators received the notice, which has resulted in “confusion and panic.”
  - aahortwwy 4y ago
    Before Patreon people had direct links to donate to them on PayPal. You can still that (or use Stripe, or Ko-Fi, or whatever). So why do people use Patreon? The answer to that is why Patreon can charge what they do.
    - deleted 4y ago
      [deleted]
  - unity1001 4y ago
    That's Vimeo, not Patreon. I heard that Patreon already solved that issue by working with Vimeo. And you can't post member-only videos at Youtube. Also, Youtube is just Youtube - you can't monetize your presence in other platforms with it.
noasaservice 4y ago
Lets not be disingenuous. CAPITALISM cuts deep inside creator's profits. Patreon is only one such that relies on the creative works of humans, and gatekeep while charging usurious rates for "access". Patreon DOES cut deep, for little benefit. But so does every company that hires people. By definition, we do not get the full surplus of our labor. We get scraps, and the "job creators" (read: capitalist scam) get the lion's share of our work. That's how capitalism works - it's a scheme where only a few at the top get the benefits of the rest of us, all the while they tell us that they deserve our benefits of work.
shimiya 4y ago
“~14-17%. This is too high for a platform essentially only acting as a middle manager for supporting recurring payments.” Patreon is not just asking this fee, because it’s middle men for recurring payments. If that was the case, you could use Stripe for your payment. You could easily cut these fees by providing donors a stripe link. I guess the writer wouldn’t do that, because there is value in the donation platform. Argumentation is not grounded. If we compare the case with Between Epic games and Apple, where Apple was forcing high % for literally payments which could be done much cheaper at any other payment provider.
wly_cdgr 4y ago
A "14-17%" cut seems very reasonable for the suite of services Patreon provides. Generous, if anything. I wouldn't fault them for taking 20%
whartung 4y ago
I appreciate there may be some international issues with this, but at least for U.S. domestic, what's wrong with folks using services such as Zelle? At least for direct gifting, vs "ordering" where you want the payment tied to the transaction.
- noirbot 4y ago
  That's unrelated to what Patreon does? I'm not even sure it's possible to do "ordering" via Patreon - it's a subscription platform, and as far as I know, most of your p2p payment platforms don't offer subscription options.
rossdavidh 4y ago
Typical credit card fees might be 25 cents/transaction plus 3%. What transaction size would give you the 17% cut that the writer complains about Patreon taking? .25 + .03x = .17x .25 = .14x x = .25/.14 = 1.79 So, for these numbers (exact rates vary but are in this ballpark), a transaction size of $1.79 will result in a cut of 17%. There is a non-zero cost per transaction, with any credit card company, with paper checks (built into the cost of the check), with any payment scheme other than "give me the cash in person". The smaller the transaction size, the larger the cost will be as a percentage. The numbers described here seem pretty typical.
carapace 4y ago
It's not exactly in the same niche, but I like https://www.podia.com/ https://www.podia.com/ in no small part because they charge a flat rate, not percentage.
PaulDavisThe1st 4y ago
There's an awful lot of comments here from people who seem totally unaware that PayPal offers a micropayment account type, with a completely different fee structure from a standard account. For US$1 transactions, a micropayment account saves 23c in fees. If you're talking about or doing many transactions below US$12 and paying the standard fee structure, you're doing it wrong.
ezekiel68 4y ago
The alternative platform suggested in OP, Donorbox [0], seems to require a project to be governed by a non-profit organization. At least, all of their top-level landing pages only mention this type of org. Is this true? And if so, does Patreo require the same? [0] https://donorbox.org/memberships https://donorbox.org/memberships
JackFr 4y ago
Honestly, quit bitching about a voluntary transaction you’ve agreed to. “Ooooh. My rent is too high. People should stop renting from Marsid Realty.”
kache_ 4y ago
Hopefully we eventually get a platform that solves this, cutting out (enough) of the middlemen. creator <> Patreon <> stripe/square <> visa/mastercard <> your money Should be creator <> one entity to rule them all (possibly decentralized) <> your money
frakkingcylons 4y ago
I think this article is missing the real network effect of Patreon. Anyone who uses Patreon will be much more likely to support you because they already have a Patreon account. They don't have to setup an account on some other platform and add their CC details again.
tatertots1234 4y ago
Crypto presents a real solution to this problem despite HN’s hate for it. Users who want to achieve Patreon style donations and gated access to digital media can use stablecoin payments on a high-throughput layer two network. Cost per transaction would be minimal, allowing micropayments without cutting into artist profits. The protocol could be fully open source as well.
unity1001 4y ago
What part of ~14%-17% is 'stark' is hard to understand. Other creator subscription platforms have 20%-30% cut even from the start. He is confusing a creator membership platform with payment processors. Which means that he also is not aware of the below: Patreon handles all fraud, chargebacks, scams, and on top of that it also handles international tax schemes like EUVAT. Which is a GIGANTIC help for any creator because otherwise you will have to process and file the tax from all those sales one by one yourself or have an accountant do it for you. He seems to have missed that part of the cost. Donorbox seems to be for non-profits, which, I very much doubt the author's writing qualifies as. He may get away with it since he is from India and India may not be cracking on such things yet, but as the international VAT schemes proliferate and India jumps on board, it will be a different story.
xtat 4y ago
Oof those are some brutal fees
account42 4y ago
I don't know your audience but calling $25/year or $3/month "Symbolic support" on your "Donorbox" seems a bit ungrateful. I do support creators moving off the sluggish excuse for a website that Patreon is though - especially if they can't even provide the main advantage of a centralized patronage platform: to keep fees low by aggregating smaller amounts distributed to many creators in one credit card/bank transaction.

334 points by solospace 4y ago

Apple take 30%. You have to understand that you're not paying just for the service, but the reach. You can DIY your donation platform and the tech side isn't rocket science, the issue that platforms like Patreon and Apple have access to orders of magnitude more users than you can ever generate on your own.

maxshadurskiy 4y ago
Article states the opposite is true. Small creators, do not receive decent amount of discoverability on Patreon. I guess same true for Apple AppStore.
- sokoloff 4y ago
  It’s not just (or even primarily) discoverability. I will never type in my credit card to give some random app developer $1.99. I will frequently click buy on an app in the App Store. Same is likely true for Patreon. Even if I found your videos or podcast by some other means, the fact you can mention “Thank to to my patrons” means I can easily find you (not discover you) on Patreon and subscribe.
  - maxshadurskiy 4y ago
    Let’s assume random website use Stripe checkout or PayPal to process cards. Will you fell better and safe to type in your bank card?
    - sokoloff 4y ago
      It’s about convenience and removing friction more than safety/security. If those are every bit as low friction as the alternatives, I’m willing. (But that includes “I heard a podcast while I was driving mention patron; I should spend 30 seconds and give that creator money.” where I can find and login to Patreon faster than I can find the creator’s random website URL.) For recurring billing, no, I will not give a random website my CC near as easily as I will Apple or Patreon (or any other platform that stands more to lose by biting my hand than an individual site does).
      - abnercoimbre 4y ago
        I use DonorBox for supporters of my indie conference [0] and I have a healthy revenue stream (would be healthier if I had a Patreon.) Is that an OK choice given your preferences? It seems low friction, with the caveat that you have to remember my random website URL. [0] https://handmade-seattle.com/donate https://handmade-seattle.com/donate
        sokoloff 4y ago
        I poked at your site's donation functions. For me personally, if I was doing a one-time donation, that flow seems fine and something that wouldn't block me for a one-time. For a recurring donation, the hover over "A donor account is created automatically for recurring donations. Account setup info will be emailed to you." would remind me the hassle of using a random extra account that I need to keep track of, trust that it won't get breached, and be able to find and login to when I want to stop the recurring donations [and trust that the site will actually stop the donations without hassle]. That's going to be enough to block me for recurring (but you probably have data on the people it doesn't block, meaning people's preferences vary).
        abnercoimbre 4y ago
        Thanks for the feedback. Indeed I'm not capturing the supporters with your concerns. However, I get immediate cash access to a donation (recurring or otherwise), and almost everyone covers the transaction fee. This feels less centralized and gimicky than Patreon -- at the cost of losing sokoloff.
        sokoloff 4y ago
        You could A/B test showing Patreon to a subset of your users (or in different positions) and see if Patreon gives you enough incremental lift to cover their higher vig. It’s not about sokoloff. It’s about what gives your group the most net income after all fees and factors.
- bombcar 4y ago
  There's no discoverability anywhere, save if you get into a new platform super early. There's just too many things. Most creators who have "made it" (whatever that may be) should work on setting up their own website with their own payment processing and encourage fans to use it, less for the additional money and more for the security against single-income flows.
  - kareemsabri 4y ago
    I don't think that's true, there's discoverability on Spotify. I often get suggested artists or podcasts based on what I already listen to, and some of them are very good.
    - bombcar 4y ago
      But how many of them are very small? It's easy to find "big things" on any platform, the question is which are successful for those trying to grow?
Anx2k 4y ago
In the case of Apple you’re really paying for access to the platform, as you don’t have a choice. But in the case of Patreon, I don’t think they offer anything in terms of reach - by this I mean I’ve never made the decision to support a creator because they were on the platform. Typically if I decide to support someone, I just go to whatever they point me to - and I think this was the authors point (especially for very narrow/vertical creators). A better example of a more ‘reach’ offering would probably be YouTube’s similar offering (although I don’t know their fee structure), which goes beyond just reach and has very low friction for creators who make content on that platform. Honestly I feel like Patreon as a platform is pretty underwhelming from the donator side of things, nor do I see much in terms of what’s changed to improve the experience over the years as their fees have increased - but I have no idea what has changed on the creator side. I think the big takeaway (no surprise) is that the creator really owns the donator, not the platform - vs someplace like Apple where they have a much stronger relationship with the customer than your typical app developer does.
- orthoxerox 4y ago
  > I mean I’ve never made the decision to support a creator because they were on the platform. I have. It's nice to have a centralized UI for your donations and I would never enter my payment information just to support a single creator with a dollar or two.
- tootie 4y ago
  I think whenever HN readers deride a product because it doesn't suit them, that's not an effective argument. Like do you have any idea how strong conversion rates are on email? Or even paper mail? Stuff we all hate can be very effective at growing an audience. I honestly don't use Patreon at all and we rejected it as a platform for content monetization at my company, but I can also tell you that our first-party approach wasn't exactly a slam dunk.
hendrikrassmann 4y ago
I would say it's the other way round. Since creators need an income, patreon recieves a huge amount of free advertising from small and big influencers/youtubers/etc
egypturnash 4y ago
I make my living off of Patreon and I can confirm that they do jack shit to promote your work unless you are already one of their top earners. “Paying for the reach” is a bullshit excuse for the amount of money they’re sucking off of creators to try and make an immense payout for their VC. My spreadsheet says the total cut of my take that goes to Patreon and payment processing is about 10-15%, but I am an Early Adopter who gets a much better deal from them. For someone like this dude who doesn’t have this deal and has their usurious international fees on top of it, it’s definitely a bad choice. Patreon did one big thing: they took the concept of “monthly donations to support the arts” and repackaged it in a way that took off. I never got support via the old PayPal donation button like I have via Patreon.
- zdragnar 4y ago
  > I never got support via the old PayPal donation button like I have via Patreon Sounds like Patreon helped you after all. I'm not saying that they promote or market you, but having the name (much like Apple) seems enough to encourage people to pay you. OTOH, I certainty don't think that their cut sounds like a good deal; rather, it sounds more like your options are a bad deal or no deal at all.
  - iseanstevens 4y ago
    Apple also gives a full suite of developer tools, documentation, example code. Built in debugging, testing, simulation. If you have a design/image creation software and XCode you could make almost any app. Patreon doesn’t give any tools to creators to directly create.
    - zdragnar 4y ago
      Aye, that just further reinforces my last paragraph.
    - senojsitruc 4y ago
      ...that I can use for free to build a Mac app that won't run without security warnings, or to test in a simulator -- otherwise I have to pay $100/yr. The 30% tax brings no value.
jfengel 4y ago
As a developer I'm terrified of anything that handles payments. There are so many ways to do it wrong, and each exposes me or my clients to massive losses. Even well funded companies with teams for security suffer breaches daily. I'm happy to outsource anything involving money.
- tootie 4y ago
  There's plenty of middle ground. You outsource just they payment/donate form and pay a small premium on top of merchant fee. You just to do everything on the content and marketing side yourself.
- cultofmetatron 4y ago
  just use stripe, the fees are small for all the headaches you avoid. refunds are easy and can be handled from a dashbaord
bell-cot 4y ago
+1, BUT 's/the reach/the big-name familiarity/' 's/more users/more legitimacy & perceived security for most potential donors/'
electroly 4y ago
As a heavy Patreon user (donator side) I don't think this is true for Patreon. It may be true for Apple but it isn't true for Patreon. They do almost nothing as far as helping the creator's reach. The typical funnel is people find creators on YouTube first and then look up their Patreon if they want to support the channel. The discovery happens on YouTube or another platform. It's difficult to find new creators on Patreon's website even if that's literally what you want to do; I use Google to find the Patreon pages! I doubt that having a Patreon has any impact at all on the number of viewers; it's just a convenient solution once your viewers have already decided to pay you. IMO this should be concerning to Patreon: there's no stickiness in their platform; a competitor could easily take over, and the creators can easily switch. On the other hand, switching away from YouTube would be instant channel suicide, because they are actually the ones providing the reach. I think YouTube must see the existence of Patreon as a critical failure. YouTube is doing all the hard work and Patreon is getting paid for it!
noirbot 4y ago
I don't think this is exactly right. As other commenters point out, Patreon does nothing to help people find new stuff - what Patreon really provides is a sort of escrow service for subscriptions and payments. The value they offer me as someone who subscribes to things through them is that I know that Patreon doesn't really care that much if I decide to stop supporting something. My $5/month isn't worth them making it hard for me to cancel. The couple apps and podcasts I've subscribed to that did roll their own payments and subscriptions have been hell to cancel or adjust my subscription, riddled with dark patterns, and one seemingly just... removed the unsubscribe button entirely. There was no way to cancel at all.
- onphonenow 4y ago
  I have a "subscription" to support a business. You can signup on a website but have to reach out to them via email to cancel which they only tell you later when you login to try and cancel. It's working I'm still subscribed but will get into it with them and the retention flow they have eventually. With patreon I can click, instead of doing the back and forth email thing.
- uptime 4y ago
  Yes! I tried to cancel some PRX monthlies and there was no way to do it.

comboy 4y ago

I'm not sure it's that high. They probably have AML regulations in multiple countries on their backs, and they are dealing with tons of tiny payments not a few big ones. For each tiny payment there's some chance of a problem occurring which will require support time.

colechristensen 4y ago
Banks take care of an enormous amount of small transactions on credit and debit cards and only charge ~3%, some European countries have fees as low as 0.3%. The high fees of patreon have nothing to do with payment support issues.
- SpicyLemonZest 4y ago
  At least in the US, banks provide quite a bit less payment support. Chargebacks are a big one: with Stripe or something similar, you have to manually respond and pay a $20+ fee every time someone files a chargeback.
  - TedDoesntTalk 4y ago
    You don’t have to manually respond. But then you lose the chargeback dispute by default.
- cuteboy19 4y ago
  In India, the cost of instant payments is exactly zero. Additionally, RuPay cards have a Zero MDR which has really really made Visa and MasterCard angry
  - viraptor 4y ago
    So what do you pay with? Your transaction data? Subscription to other services?
    - cuteboy19 4y ago

ghostly_s 4y ago

This article claims Patreon's true cut is not the advertised 8-10%, but *86-83%*?? Surely this can't be true? We would have heard more people complaining about it by now.

i_like_waiting 4y ago
No, creator keeps 86-83%, so ~85c from every dollar >the real cut for a creator on Patreon is often a stark ~14-17% depending on the exact scenario. edit: now I get it, seems like you are native speaker and me and author are not, I guess correct way should be "cut from a creator" instead?
- zuminator 4y ago
  To my ears just rephrasing it as "Patreon's real cut is..." would sound most natural.
makeitdouble 4y ago
It might have been corrected ? it currently reads to me as 14~17, which is not great, but not that high either depending on the exact case. > When considering all factors, including standard payout processing fees, the real cut for a creator on Patreon is often a stark ~14-17% depending on the exact scenario.
- sokoloff 4y ago
  If a creator and a platform are splitting a dollar and “the real cut for a creator is ~15%”, I’d expect that to mean the creator gets $0.15 and the platform $0.85.
  - makeitdouble 4y ago
    Reading your answer I get why the wording is ambiguous. I read it as “the real [revenue] cut for a creator”, keeping the same meaning for “cut” as in the page title.

kareemsabri 4y ago

Patreon is a business and I don't begrudge them the ability to charge customers for their service (though I think it's pretty buggy). Before Patreon, I did not subscribe to a single podcast. After Patreon, I subscribe to 3-5 at various times. I subscribe to a couple other standalone products but the bar is certainly higher as the value they must provide is greater to get over having another subscription on another platform. So I think Patreon likely does help individuals get business, even if they aren't out advertising on your behalf. That said, I agree the fee does seem high, given it is largely payment processing (and a simple media player) and we know what Stripe charges for that. I think they will probably be at risk from higher quality entrants like Substack who is moving into podcasting as well.

Mc91 4y ago
The same with me. I gave a little money each month to four different organizations on Patreon, about six months ago I saw LineageOS was on Patreon and started giving a little to them each month too. It makes it easier to get recurring donations, I already send to Patreon once a month, now I just send a few dollars more a month.
raverbashing 4y ago
Exactly. And in the end, 80% of something is still something (or better said, 100% of zero is, you guessed, zero) A lot of people have been able to offer niche content through Patreon, so it's a net positive even if they fumble their offer sometimes

WesleyLivesay 4y ago

These articles seem to pop up from time to time, and the persons numbers seem roughly accurate in my experience. In my experience Patreon has been around 11% cut scenario, split very roughly between Payment Fees and Platform fees. But I am on the Founders plan, which is the same 5% platform fees as Patreon Lite, but with the extra features of the 8% Pro plans. I do think it is probably best for creators to diversify their platforms, but I still think that Patreon is worth it just because of it being a very well known platform outside of just tech circles.

agf 4y ago
I'm a fan of Patreon, but in my experience, it's not a well known platform outside of tech. I've mentioned it a number of times to a variety of different musicians, music producers, etc., and until maybe the past year none of them had ever heard of it, though recently one had. I think it does have the potential to be like Kickstarter and really broaden the appeal of this type of contribution, but from what I can see, it hasn't actually managed to do that part yet -- both based on articles like this one and my own anecdotal experience.
- dfinninger 4y ago
  As an anecdotal counterpoint from the people I talk to, anyone who watches YouTube videos regularly seems to know what Patreon is. That might not be a massive section of the population, but it’s not comprised of mainly tech workers.

dubswithus 4y ago

How many engineers does Patreon have?

jdwithit 4y ago
According to this article[0], product and engineering was ~150 people at the end of 2021 and they hope to scale to 400. Which...seems like a lot for what the company is? Although the hiring landscape has changed drastically in the last month so who knows how accurate that plan is today. [0] https://techcrunch.com/2021/12/21/patreon-cpo-interview-double-in-size-2022/ https://techcrunch.com/2021/12/21/patreon-cpo-interview-doub...
- Nextgrid 4y ago
  Yes that's absolutely a lot considering the code to solve Patreon's business problem has been written long ago and works just as well. The core business problem can be boiled down to a set of spreadsheets - based on payments going in and creators subscription timeframes you work out the payout for each creator. If it takes you 150 engineers to do the aforementioned I'd look at you in a funny way or start suspecting ulterior motives (and in this case there indeed are ulterior motives - hint: the objective is not to build a profitable product).
  - dubswithus 4y ago
    Craigslist had 50 employees in 2017. But a lot of companies like to go down the microservices / complicated architecture path which adds to the dev ops burden.
  - unity1001 4y ago
    "Hackernews member could do the same thing with only 5 people"

jelling 4y ago

TFW when white collar professionals complain about the prices businesses charge in order to pay the white collar salaries necessary to make the products they use. And so many of these companies aren't even profitable, either. It's like carnivores being judgmental of hunters.

wahnfrieden 4y ago
careful talking about profitability in your point, as most of these companies are reinvesting to chase unicorn/monopoly level growth. some struggle with profit not because it's a tough biz creators should be thankful to them for, but because they're structured/managed for growth over current customer needs. for-profit platforms will always seek to maximize the function, the marginal value of the rent they take. any charity to creators is incidental dynamics along the way
markstos 4y ago
Ghost provides similar features for bloggers but does not mark up subscription payments from subscribers. The cut of payments is about 3%.
- unity1001 4y ago
  Except they don't collect, process and pay international tax like EU VAT. Or California sales tax etc. You have to correctly collect it and file it one by one. So Ghost is not a creator platform. Its a payment platform.
  - markstos 4y ago
    Ghost is a platform for creating content. Ghost partners with Stripe to handle the payments. For a customer who runs a small town Indiana newspaper, who may be a somewhat typical customer, it's not that complicated: They won't have international subscribers and they would pay state and federal taxes-- standard income staff stuff. And doing so with Ghost vs Patreon could save thousands of dollars per year!

AtNightWeCode 4y ago

Maybe it is true, but I think it is somewhat ok. Patreon has enabled business that simply were not there before. Some of these telemarketing companies that raise money for charity takes in the hundreds of percent more of the donations than this in fees btw. That something to be outraged about.

torginus 4y ago

Wait until this guy finds out about the government.

unity1001 4y ago
Yep. He writes as if income tax, digital international taxes etc don't exist. Leave aside chargebacks, fraud, refunds.

jeroenhd 4y ago

What I think is something people easily overlook with Patreon and similar platforms is that it's quite hard to make a decent profit on $1 or $5 transactions that most of Patreon's income seems to come from. They're definitely overcharging for more profit, but your margins won't be much lower if you handle payment yourself. Your 3% bank cut to receive money doesn't always work because often there's a minimum fee per transaction. I know most iDeal (Dutch payment provider) transaction costs are 25 cents. It's a flat fee, so buying a €2000 TV will still leave you with 25 cents of fees, which is great for big stores, but when you use them do donate a single euro, the transaction fees are a whole quarter of the donation. Tons of tiny transactions is a pretty terrible way to receive money. It's not "give up >15%" terrible, especially if your patrons tend to donate more, but Patreon needs to spread costs over all creators to make small content creators worth the effort. Having a look at Donorbox, the same issue becomes clear: the cost for receiving payment in .NL is only 1.4%… and a €0,25 payment processor fee. These low processing fees are also only applicable to registered non profits in the NL which the author most definitely isn't. Even with the extra cheap rates and a non profit the fees to the lowest tier (±€3) add up to nearly 10% on a platform that's built around minimising costs for non profit organisations. There is the ability to use bank transfers for real cheap, but that's always a possibility anyway. One thing this site does seem to offer is the ability to offload all the site's cost onto the person who donates rather than subtract it afterwards, but that's just raising the donation price to compensate, not really a decrease in cost.

sorenjan 4y ago
I think this is one of the problems flattr tries to solve. instead of multiple micro transactions you make one larger transaction each month to flattr, who then divides it up to all the creators you want to support. I don't know how Patreon does it, if they make one charge for each creator you support I guess the transactions fees can become a large part of the total amount. https://flattr.com/ https://flattr.com/
- DoctorOW 4y ago
  All patreon customers are also only charged once per month no matter how many creators they support. The main difference being that since Patreon has people pledge specific dollar amounts instead of trying to figure it out month-to-month like Flattr the average Patreon customer has much fewer creators.

tolmasky 4y ago

The thing about Patreon is that it sucks for users too (as in, the consumers). Both the website and the app really suck. They look horrible, have few features, and often work poorly. It essentially serves as a notification platform that I then try to bounce out of into YouTube or wherever as soon as possible. It's kind of mind boggling that they seem to leave so much engagement on the table when even a mediocre website would probably keep me on there longer and thus potentially get me introduced to other creators, vs. that being solely through YouTube or something else. Then again, maybe it's a better investment to figure out way to take 17% from creators than to figure out ways to get people to find more creators.

zippergz 4y ago
What features should Patreon have? I'm not paying for website features. I am paying to support creators I like. I'd actually be happier if the platform did even less. Just get the money to the people I want to support in a low-friction manner, and get out of the way.
- kareemsabri 4y ago
  How can they "get out of the way" when you need to use the app to play the content? The player sucks, episode search sucks.
  - Macha 4y ago
    I guess most creators I watch tend to link to unlisted youtube videos to share with their patrons rather than use Patreon's built in uploads.
    - kareemsabri 4y ago
      Oh. I wish more did that.
    - sharatvir 4y ago
      This and private feeds for podcasts

bratwurst3000 4y ago

I know patreon only because of youtube. Are there many creators not connected to youtube on patreon? My impression is if youtube would allow donations to creators, patreon would be dead. Am I wrong?

plorg 4y ago
I know quite a number of podcasters who use Patreon. It ends up being pretty convenient, because you can enable a podcast-compatible RSS feed that your users can import into their podcatcher.
Ekaros 4y ago
They already have superchats and and memberships(paid, different from subscribing) on Youtube. These are mostly used by streamers. Then again I think you can give superchats on premiers. Not sure if you can limit videos to membership only.
- Crosseye_Jack 4y ago
  >They already have superchats and and memberships(paid, different from subscribing) on Youtube. And you can have multiple levels od membership. > I think you can give superchats on premiers You can if you enable them on your premieres. However a lot of creators just publish their videos rather than ran run them as premieres. But you can also enable tipping which allows viewers to give a one off tip. > Not sure if you can limit videos to membership only. You can, you can also limit live streams and playback of past live streams to members only. However as not to fragment their Patreon supporters, these videos are normally just uploaded as unlisted and the link is shared on Pateron. As for the cut. On Ad's its typically a 60/40 split with YT taking the 40%. On Superchats, superstickers, superthanks (yt's one off tippings) and memberships its a 70/30 split (yt's cut being 30%).
noirbot 4y ago
Depends on two things - does Youtube give a better cut? Presumably they would, but Google doesn't have a good track record. Second, do they want to trust Google not to both ban their channel _and_ take all their income away. If you have a YT page, but get your money from Patreon, you have a fallback if either of them drops you for whatever reason. That's before you get into podcasts on Patreon, which seems to make up a lot of their userbase, if you look at their most patronized stuff. There's no particularly good podcast monetization platform, rightfully, because of its decentralized protocol.

lazypenguin 4y ago

I never understood Patreon taking a % of money earned from creators. Seems unreasonable to me. I use Ko-Fi which has an optional “gold tier” with a fixed monthly price for more features. It also has an option for you to contribute a % of proceeds to Ko-Fi if you want. I happily paid for gold. https://ko-fi.com/ https://ko-fi.com/

unity1001 4y ago
> I never understood Patreon taking a % of money earned from creators Possibly because you are not processing and remitting EU VAT and other digital international taxes which you should. Actually, its doubtful that a lot of people who engage in such creator activities are even aware that they should need to file taxes for that kind of income in the first place, leave aside process digital tax. Patreon handles all of that and reports and pays it to legitimate authorities, removing all the legal and financial responsibilities from the creators' hands. As international digital tax schemes proliferate (Japan already has one or planning one, other OECD countries also), this is going to become even more important. Not that its not important right now. This is before the fact that all chargeback, fraud etc are handled by Patreon. ... A lot of these people, including you, confuse Patreon and similar platforms with payment platforms like Paypal. They aren't the same. At Paypal, Stripe etc, not only they don't handle digital tax for you, but also you are on your own regarding chargebacks, fraud and refunds. And if you have more than 5% of them, they can just disable your account. You don't have those issues with Patreon.
- crtasm 4y ago
  Patreon could also decide to disable your account. What % of problem payments will they accept before wanting to speak to you about it? I don't imagine it's a massive amount higher than 5%.

ajhurliman 4y ago

Forex and PayPal’s international payments aren’t free, Patreon doesn’t see those profits.

Finnucane 4y ago
Sure, though my credit union credit card only charges 1% for forex, so presumably it could be done for less.
- ajhurliman 4y ago
  That’s a great rate, but Patreon doesn’t have any control over customers’ desire to use PayPal (it’s a thorn in the side of the entire payments industry).

reiichiroh 4y ago

It still amusing to be that the founder of Patreon is the novelty band Pomplamoose.

ericvanular 4y ago

A solution to this is for creators to make the same move as ecommerce businesses going from Etsy to Shopify. Getting closer to the money and having patrons pay them through their own domain. I believe in this idea so much that I built a solution for creators who want to do exactly that -> https://jetpeak.co https://jetpeak.co

owlbynight 4y ago
Verification process is insanely intrusive and a non-starter. Good luck, though. Your UI/UX is good.

krnlpnc 4y ago

15% is not a deep cut. That’s a totally a reasonable cost for smoothly running the infrastructure necessary to support a creator with a monthly subscription model.

fartcannon 4y ago
That's about 10x more that I'd consider reasonable for what is effectly hosting a static website and bulletin board. I think we've all just had our expectations blown out of the water by Steam (and the subsequent app stores).
- deadbunny 4y ago
  A static website that shows/hides content depending on your subscription level dynamically?
  - fartcannon 4y ago
    I don't know how to respond to that. That's not a complicated thing to do. Patreon gets to take the money they take because they've found a good niche, not because their website can do something that all websites have been able to do since the 1990s. I personally think they take too much for what they provide. That's all. I am very happy they exist, though, because otherwise everyone would just be chasing the algorithm.
    - newbie2020 4y ago
      “Not because their website can do something that all websites have been able to do since the 1990s”. That is describing most money-making websites in existence
      - deleted 4y ago
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- conradfr 4y ago
  There's nothing static about processing payments and providing support.

tpurves 4y ago

What many people don't realize is that the operational and customer service costs of payments don't scale with payment amount. Customers will cost almost just as frequently dispute, have questions, have problems, ask for help, attempt to defraud etc with a $1 transaction as they will a $100 or $1000 transaction. This is the real killer with micro payment schemes. Customer service costs scale more with number of payments than payment volume. And these real costs are born by Patreon, by the networks and by the banks which is why min txn costs exist. The crypto bros totally miss the point in understanding this too. Source: 25yrs experience building payment networks

onlyrealcuzzo 4y ago
Charge backs should also be less of an issue if the purchase is $1. Same with fraud. The stakes are lower the lower the amount. Who cares? It's not worth disputing. Fire the customer if it crosses a threshold.
- JumpCrisscross 4y ago
  > stakes are lower the lower the amount. Who cares? OP mentioned customer service. Pretty much any American can create 50+ hours of customer support and legal work for no reason at all in payments. Even an irate, clueless customer will waste an hour of your support staffs’ time.
  - mensetmanusman 4y ago
    Just give them their money back and shadow ban them from using your store.
    - pixl97 4y ago
      And then you get the HN post about you banning some rather well known tech figure because when your system created the issue in the first place.
      - 4y ago

pessimizer 4y ago

Patreon shouldn't even exist. They're here because government(s) have failed so badly that they haven't put any effort into the infrastructure to trivialize the transfer of its paper between the people holding it. It's as useful a function as highways and the internet, but government failures (that lobbyists pay individuals in government to continue failing at) create room for deeply entrenched trusts paypal to be established. There's no moral amount they should charge imo; it's completely arbitrary. If you think it should be less, vote for better people, advocate for better things, make crypto that works and isn't exclusively an attraction for criminals and rent-seekers, or pour money into marketing a competitor. You can switch to another service, but I might not want to give your other service my card info. Well if your other service takes paypal I'll use it, so they'll start 5% behind.

nvahalik 4y ago
To be fair there is a lot of non-infrastructure stuff on Patreon. They have been successful.
mertd 4y ago
I don't think Patreon's reason to exist is because "sending money p2p is hard". There is a lot of room for competition though. As a supporter, my loyalty is to the creator not to the platform.
- cowtools 4y ago
  >I don't think Patreon's reason to exist is because "sending money p2p is hard". Why do you think that? Sending money p2p is hard in a world where cryptocurrency is treated like an investment vehicle and not a payment system. >There is a lot of room for competition though. As a supporter, my loyalty is to the creator not to the platform. You don't clearly speak on behalf of most users here. "Using multiple platforms" in the fiat/traditional system effectively means giving your credit card information to multiple businesses and increasing your risk for fraud, overcharging and identity theft. It's the reason why these intermediaries like PayPal and Patreon operate in the first place.

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stevenjgarner 4y ago

So the article criticizes Patreon for having "additional charges for non-US PayPal payments as well as separate currency conversion fees that are mysteriously high at 2.5%", offering donorbox.org as a respite, yet no-where can I seem to find what donorbox charges for non-US PayPal payments and currency conversion?

unity1001 4y ago
Donorbox doesn't even seem to process international VAT. It seems to be geared for non-profits, which I really doubt the author's writing gig qualifies as. So basically he is just dodging tax and all legal responsibilities.

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eterevsky 4y ago

YouTube takes 30% for "joining" the channel.

Barrin92 4y ago
Youtube is also a genuine platform that gets you an audience and discoverability, gets you ad revenue, and hosts your content (which in the case of streaming video is very much non-trivial technically). Patreon is a donation button with a feed. It's effectively a payment processor and in most of the world the margins in that industry are a fraction of a percent. This is Youtube vs Patreon (https://www.pymnts.com/subscriptions/2022/vimeo-raises-rates-on-creators-many-of-them-patreon-users/ https://www.pymnts.com/subscriptions/2022/vimeo-raises-rates...) "She says she began making subscriber-only Patreon content in 2020 and hosting it on Vimeo. Then came the notice from Vimeo on March 11 that van Baarle’s bandwidth usage was in the top 1% of Vimeo’s users. So if she wanted to keep hosting her content on the site, she’d need to upgrade to a custom plan that could run her as much as $3,500 a year, given a week to make changes or leave the site. The Verge noted that her experience was just one of many — numerous Patreon creators received the notice, which has resulted in “confusion and panic.”
- aahortwwy 4y ago
  Before Patreon people had direct links to donate to them on PayPal. You can still that (or use Stripe, or Ko-Fi, or whatever). So why do people use Patreon? The answer to that is why Patreon can charge what they do.
  - deleted 4y ago
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- unity1001 4y ago
  That's Vimeo, not Patreon. I heard that Patreon already solved that issue by working with Vimeo. And you can't post member-only videos at Youtube. Also, Youtube is just Youtube - you can't monetize your presence in other platforms with it.

noasaservice 4y ago

Lets not be disingenuous. CAPITALISM cuts deep inside creator's profits. Patreon is only one such that relies on the creative works of humans, and gatekeep while charging usurious rates for "access". Patreon DOES cut deep, for little benefit. But so does every company that hires people. By definition, we do not get the full surplus of our labor. We get scraps, and the "job creators" (read: capitalist scam) get the lion's share of our work. That's how capitalism works - it's a scheme where only a few at the top get the benefits of the rest of us, all the while they tell us that they deserve our benefits of work.

shimiya 4y ago

“~14-17%. This is too high for a platform essentially only acting as a middle manager for supporting recurring payments.” Patreon is not just asking this fee, because it’s middle men for recurring payments. If that was the case, you could use Stripe for your payment. You could easily cut these fees by providing donors a stripe link. I guess the writer wouldn’t do that, because there is value in the donation platform. Argumentation is not grounded. If we compare the case with Between Epic games and Apple, where Apple was forcing high % for literally payments which could be done much cheaper at any other payment provider.

wly_cdgr 4y ago

A "14-17%" cut seems very reasonable for the suite of services Patreon provides. Generous, if anything. I wouldn't fault them for taking 20%

whartung 4y ago

I appreciate there may be some international issues with this, but at least for U.S. domestic, what's wrong with folks using services such as Zelle? At least for direct gifting, vs "ordering" where you want the payment tied to the transaction.

noirbot 4y ago
That's unrelated to what Patreon does? I'm not even sure it's possible to do "ordering" via Patreon - it's a subscription platform, and as far as I know, most of your p2p payment platforms don't offer subscription options.

rossdavidh 4y ago

Typical credit card fees might be 25 cents/transaction plus 3%. What transaction size would give you the 17% cut that the writer complains about Patreon taking? .25 + .03x = .17x .25 = .14x x = .25/.14 = 1.79 So, for these numbers (exact rates vary but are in this ballpark), a transaction size of $1.79 will result in a cut of 17%. There is a non-zero cost per transaction, with any credit card company, with paper checks (built into the cost of the check), with any payment scheme other than "give me the cash in person". The smaller the transaction size, the larger the cost will be as a percentage. The numbers described here seem pretty typical.

carapace 4y ago

It's not exactly in the same niche, but I like https://www.podia.com/ https://www.podia.com/ in no small part because they charge a flat rate, not percentage.

PaulDavisThe1st 4y ago

There's an awful lot of comments here from people who seem totally unaware that PayPal offers a micropayment account type, with a completely different fee structure from a standard account. For US$1 transactions, a micropayment account saves 23c in fees. If you're talking about or doing many transactions below US$12 and paying the standard fee structure, you're doing it wrong.

ezekiel68 4y ago

The alternative platform suggested in OP, Donorbox [0], seems to require a project to be governed by a non-profit organization. At least, all of their top-level landing pages only mention this type of org. Is this true? And if so, does Patreo require the same? [0] https://donorbox.org/memberships https://donorbox.org/memberships

JackFr 4y ago

Honestly, quit bitching about a voluntary transaction you’ve agreed to. “Ooooh. My rent is too high. People should stop renting from Marsid Realty.”

kache_ 4y ago

Hopefully we eventually get a platform that solves this, cutting out (enough) of the middlemen. creator <> Patreon <> stripe/square <> visa/mastercard <> your money Should be creator <> one entity to rule them all (possibly decentralized) <> your money

frakkingcylons 4y ago

I think this article is missing the real network effect of Patreon. Anyone who uses Patreon will be much more likely to support you because they already have a Patreon account. They don't have to setup an account on some other platform and add their CC details again.

tatertots1234 4y ago

Crypto presents a real solution to this problem despite HN’s hate for it. Users who want to achieve Patreon style donations and gated access to digital media can use stablecoin payments on a high-throughput layer two network. Cost per transaction would be minimal, allowing micropayments without cutting into artist profits. The protocol could be fully open source as well.

unity1001 4y ago

What part of ~14%-17% is 'stark' is hard to understand. Other creator subscription platforms have 20%-30% cut even from the start. He is confusing a creator membership platform with payment processors. Which means that he also is not aware of the below: Patreon handles all fraud, chargebacks, scams, and on top of that it also handles international tax schemes like EUVAT. Which is a GIGANTIC help for any creator because otherwise you will have to process and file the tax from all those sales one by one yourself or have an accountant do it for you. He seems to have missed that part of the cost. Donorbox seems to be for non-profits, which, I very much doubt the author's writing qualifies as. He may get away with it since he is from India and India may not be cracking on such things yet, but as the international VAT schemes proliferate and India jumps on board, it will be a different story.

xtat 4y ago

Oof those are some brutal fees

account42 4y ago

I don't know your audience but calling $25/year or $3/month "Symbolic support" on your "Donorbox" seems a bit ungrateful. I do support creators moving off the sluggish excuse for a website that Patreon is though - especially if they can't even provide the main advantage of a centralized patronage platform: to keep fees low by aggregating smaller amounts distributed to many creators in one credit card/bank transaction.