Patreon Changes Fee Structure and Unleashes Chaos

Widespread outrage greeted Patreon’s announcement of a new fee structure that will charge patrons (donors) for making donations, too, on top of the existing 5% fee paid by creators.

Now patrons will be charged processing and transaction fees (2.9% + $0.35) on each individual pledge. If you pay a dollar, Patreon will charge you $0.38 to pay that dollar, so you’ll now pay $1.38.

The news was rolled out through creators yesterday, and today Patreon sent donors a justification:

In order to continue our mission of funding the creative class, we’re always looking for ways to do what’s best for our creators. With that, we’re writing to tell you of a change we’re making so that all Patreon creators take home exactly 95% of every pledge, with no additional fees.

Aside from Patreon’s existing 5% fee, a creator’s income on Patreon varies because of processing fees every month. They can lose anywhere from 7-15% of their earnings to these fees. This means creators actually take home a lower percentage of your pledge than you may realize. Our goal is to make creators’ paychecks as predictable as possible, so we’re restructuring how these fees are paid.

Natalie Luhrs’ detailed analysis of the change, “Funny Money, Patreon Style”, illustrates how the new fee structure will affect various levels of donations.

I know this is going to read like the world’s worst word problem, but bear with me–there will be a data table, I promise….

After running the numbers, Luhrs speculated about the motives for the change:

As I said before, this seems calculated to reduce the number of people pledging at sub-$5/month tiers. This has the added bonus of putting more cash right into Patreon’s bank accounts. Which will certainly make the investors happy, as this improves Patreon’s cash flow and improves the chances for a successful IPO.

And the other thing it does? It tells all of Patreon’s users–creators and patrons alike–exactly who is calling the shots and what the real priorities are. And they’ve chosen to do it in a disgustingly predatory fashion.

Sandra Tayler criticized the fee implementation for the way it damages the creator/donor social dynamic:

Patreon has also scripted a FAQ creators can put on their pages to aid in handling queries from donors, with melancholy but inevitable entries like —

Q: How much time do I have to change my pledge before the change?

A: You have until December 31st, 2017 to edit a monthly pledge. If you are pledging to a per-creation creator who makes a post between December 18th and December 31st, then you will see the service fee added to those posts.

Q: How can I cancel my pledges? 

A: You can find the steps to cancel your pledges here.

Indeed, a lot of creators are tweeting about casualties among their donors. For example, here’s a gaming podcast that says it’s taking a hit:

Douglas MacKrell further observed —

And what’s worrisome is that supporters who leave the @Patreon platform aren’t going somewhere else. That audience isn’t hopping over to support other artists at the same level – they’re leaving the world of microdonating all together.

The webcomics blog Fleen has a great summary of the online reaction. And they conclude —

What’s really surprised me (apart from the ham-handedness about the entire rollout that I noted yesterday) is that I couldn’t find one person with an interest in Patreon that’s even neutral on this change. I’ve spent all my free time since last night trying to find one person — creator or backer — whose irritation went no higher than meh, whatcha gonna do? But no; literally everybody whose email address doesn’t end in @patreon.com hates everything about this change.

Outraged author Liz Bourke, Tor.com columnist and past Best Fan Writer Hugo nominee, has taken the extreme step of interrupting her Patreon activities and cutting off donations in protest — “On Hiatus Because Of Patreon’s (Gaslighting) Changes To Fee Structure”.

If Patreon wanted to increase that commission in order to cover their costs and make a reasonable profit, I’d understand. (I’d be annoyed, but I’d understand: commission of 10-20% is not unreasonable for services that connect people who make things to people with the money to pay for them.)

Instead, what they’re doing is changing the entire system. They’re now charging you for accessing a service that benefits me, and telling both you and me lies to make us believe this is a good change.

People who lie about money are not people who can be trusted to handle your money.

So. I’m on hiatus. Funding status has been switched over to per-post, so you shouldn’t be charged at the end of the month. I’m not going to do any work here, and I encourage other creators to take the same stance. If Patreon makes sufficient efforts towards honesty and transparency, I may return.

But I’m not holding my breath.

Bourke isn’t the only one taking this approach –

Will Patreon’s competitors benefit from the controversy? Catherine Shu at Tech Crunch looked at the big picture:

Patreon, which was founded in 2013 and has raised about $107 million in funding so far, says it has more than one million subscribers who pay an average of $12 per month to more than 50,000 creators. Its success prompted Kickstarter to retool Drip, its subscription service for independent musicians, to compete more directly with Patreon. Other rival crowdfunding platforms for creators include Flattr and Steady.

While creators can ask supporters for pledges on their own using PayPal, Stripe and other payment services, Patreon’s ease of use, thanks to tools like its API, and popularity helps many make an income (or at least not lose money) from their art. This is especially important for creators who rely on YouTube, but saw their revenue plunge this year as a result of changes to its advertising policies—(an event known as the “adpocalypse“). For them, Patreon’s new service fees represent a potential double whammy and are yet another reminder that the online platforms that help them make a livelihood can also very quickly take it away.

[Thanks to ULTRAGOTHA, JJ, and Camestros Felapton for the story.]

54 thoughts on “Patreon Changes Fee Structure and Unleashes Chaos

  1. Jacques has reported more thoroughly (twitter thread).

    It sounds like Patreon at least understand what the problem is, but don’t really intend to change course. I predict they’ll do some fiddling around the edges plus a whole lot of ‘splaining why their customers are just not seeing the big picture.

  2. (Waves enthusiastically at Tasha Turner.)

    The value of a Patreon to me is the ability to be a part of crowdfunding creators in a way that is simple and economically predictable. That value is pretty limited, so the price I’m willing to pay for the service is also pretty limited. That’s my big picture, even if it isn’t theirs. Creators have a bigger investment, because this is part of their livelihood, so they might be willing to pay a bigger price.

    I’ve eliminated my magazine subscriptions, funneling the money through Amazon instead, and donating directly where there’s a difference between that cost and my pledge. I’ve also cancelled my only two $1 pledges. I’ll stop there for now, while I see what happens next.

  3. Of every dollar I give to creators, they will now only be getting 68 cents. That’s usurious, and I’m not going to do it. I have received messages from many of the people I support saying that they are currently figuring out the best crowdfunding platform to which they can transfer. One has set up a subscription service on their website.

  4. Pingback: AMAZING NEWS FROM FANDOM: 12/10/17 Double Edition - Amazing Stories

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