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. @ULTRAGOTHA
    Thanks for the link. That makes a lot of sense. I’m baffled that they still deduct 5% from the author, though. If they applied all of the fees to the donor and pitched it as “we’re changing the amount from what you pay to what the author gets” I think it might have gone over a little better. But this weird hybrid where they’re hitting both sides seems to me to be hard to explain.

  2. Hopefully, enough people will kick and scream to force them to rethink. I’ve already left a note on their Facebook page explaining that I had signed up for a monthly print subscription to Apex Magazine through them, but after the news broke I cancelled the pledge and bought the subscription direct from Apex instead. (It may not be cheaper in the end, but I don’t care.)

  3. @Greg Hitting both sides wouldn’t be a problem if the overall take was small enough, and in line with costs incurred. It is really hard to justify a 35c charge per pledge. That is a reasonable amount for a CC processing fee, but there is only one of those per donor. Database maintenance isn’t that hard/expensive.
    In addition to Patreon, I also subscribe to a couple of podcasts via annual subscription. I can handle the lump sum, but of course many can’t.

  4. I’m not sure I’d describe myself as “outraged,” exactly. But if a platform or service (or person) deals with money, they need to represent themselves very carefully with regard to how they handle that money.

    How Patreon described its changes has not come across as honest or trustworthy. (The “95%!” figure they were touting at creators is a very strong misrepresentation at best, though I should prefer to call a spade a spade, and term it an outright lie.)

  5. Ultragotha, I don’t completely understand the article you linked, too much MarketSpeak.

    But more importantly, what this change does is eliminate low-dollar *donors*, those of us who take $10 or $20 a month and make small donations to a whole bunch of creators. This has been the strength of Patreon, and it’s MUCH better for creators to get a whole bunch of small donations than a few big ones, as in the patronage days. With a lot of small, regular donations the creator isn’t dependent on the fortune or whims of a single large donor, it makes their money flow much more reliable.

    I saw one Twitter thread suggesting that the actual problem Patreon is trying to solve is the “donor signs up and drops before payment is due” — but that they’ve chosen to solve it by breaking the whole payment system.

    Frankly, it looks to me as though what the creative-arts-patronage system needs is a 501c-3 organization, one that doesn’t have to worry about venture capital or investors.

  6. Doctor Science, you appear to be correct. They claim that people subscribing, downloading content, and then unsubscribing again before being charged is a big enough problem to make them invalidate the biggest advantage they used to bring: bundling smaller donations to multiple people into one lump sum with one fee. Breaking that up means that fees paid skyrocket to where I believe it is actually cheaper to just paypal a list of people individually every month.
    Also, if they are going to move the fees onto the patrons rather than the creators, why not move all the fees? If I pledge $1 it used to mean I paid $1, now it’ll mean I pay more than that and the creator gets less. Why not go that extra step at least and give the creator $1? That way the pledge total would have some bearing on a reality.

  7. I’m so angry about this predatory scheme that I’m about ready to ditch Patreon entirely, and just set up a system whereby I send the people I want to support $6 each, every 6 months on PayPal, on a staggered schedule. And if you say that you’re “sending money to family or friends” instead of “for goods or services”, then PayPal doesn’t charge a fee to either of you (they make their money on the interest that the money earns for the 2-3 days it sits in their account).

  8. I only back one person via Patreon, but I completely misunderstood the e-mail I, er, skimmed (blush, should’ve read it more closely). I won’t drop it, but if I had a bunch of people, my annoyance would increase a ton here.

    @Doctor Science & @Penn: If they mostly just don’t want folks signing up & cancelling prematurely, then they shouldn’t let them do that. They could require the payment up front for the first cycle, or limit access to backer-only posts/assets until the first payment hits, or whatever. Or, hey, novel concept – let the creator determine how it works (ISTM they should care as much or more about this type of ripping off). What they’re doing doesn’t address people signing up & cancelling quickly, does it?

    Ugh, sigh. And apologies if in my haste I’ve misunderstood.

  9. Liz Bourke: If I didn’t hit the target with “outraged” I’m open to picking another word. I was thinking there must be an emotional component included in the decision to choose such a self-sacrificing form of protest.

  10. Important additional information from Patreon (update to their blog post). Patreons will now be charged each pledge on sign-up and on each monthly anniversary thereafter. So the fees charged semi-reflect the cost to them, as there isn’t an aggregated charge at the end of each month.
    https://blog.patreon.com/updating-patreons-fee-structure/

    It is telling that in their justification they say

    To do that, we need all creators to get the benefits of charge up front.

    To do that, we need to eliminate the “double charge” scenario that harms patrons today.

    To do that, we need to move our payments system to treat your pledges like any other subscription service.

    They seem to have forgotten that they are different from nearly every other subscription service, hence have been doing things differently for a reason!

  11. Following up on what Errolwi says above, it does seem that the new scheme means the extra fees are going to PayPal etc rather than Patreon, so it’s not a purely money grabbing exercise for them.
    It’s just something monumentally stupid that screws a lot of creators over and they couldn’t be bothered to explain at first.
    So that’s fine then.

    They claim that they are introducing the new charging strategy at the request of some creators – well, people may have been asking for it, because people always have ideas about how to improve things, but would they still want it if they knew what the price was going to be? I very much doubt the problem they are solving is a bigger problem than the one they’ve just created.

    I also see speculation that the biggest breakout stars on the platform, esp the YouTubers who get paid per-video, are the ones who will mainly benefit from this “fix” and they are the ones Patreon now want to concentrate on, while the long tail of small creators isn’t of so much concern to them.

  12. Even if they were to back off from this particular plan, they have irrevocably hurt their brand. I was planning on using Patreon to support more creators in the new year, but I won’t be now. And I’ll be looking to move my current support from Patreon to other avenues. I can afford the increase, but this has completely soured my feelings toward them.

  13. They claim that they are introducing the new charging strategy at the request of some creators

    This reminds me of many unwelcome internal changes in Soviet Union. Those changes were almost always ‘due to request from workers’.

  14. “Important additional information from Patreon (update to their blog post). Patreons will now be charged each pledge on sign-up and on each monthly anniversary thereafter. So the fees charged semi-reflect the cost to them, as there isn’t an aggregated charge at the end of each month.”

    But they don’t have to do it that way to solve the problem they cite. Here’s what they could be doing instead:

    — The *first* time you sponsor artists on Patreon, you are charged on sign-up, and on each monthly anniversary thereafter. One transaction, and one transaction fee per month.

    — If you later sponsor more artists, you are charged upon sponsorship for a full month, but then your subsequent charges are on your established monthly anniversary, pro-rated for that first month. (in other words, if you sign up on day 20 of the month aligned to your first sponsorships, payment 1 is for a full month, payment 2 is for ~10 days, and payments 3 and later are for full months) So there’s an extra transaction (and transaction fee) up front, but after that you still only have one transaction to Patreon (and one transaction fee) per month, rather than an ongoing series of multiple transactions and transaction fees per month.

    This solves the problems of freeloaders just signing up and cancelling right away to quickly grab any sponsor bonuses at cut rates. Everyone still has to pay for at least a month up front, and possibly 1 extra transaction fee on initial sponsorship. But as soon as possible after that, you’re back to 1 transaction per month, and Patreon only has to (and you only should have to) pay for 1 financial transaction, no matter how many artists you’re continuing to sponsor.

    I’m sure Patreon could have thought of this (or been told this) themselves if they’d planned this properly. (There are certainly plenty of people mentioning alternatives like this now.) The fact that they haven’t done this, or mentioned it as a possibility, does not make me confident that they’re being both clueful and honest.

  15. My four donations to podcast creators have been zeroed out. It’s going to be hard for me to go back to Patreon after this.

    Regards,
    Dann

  16. Mike Glyer: I’m not sure there is a better word. (I don’t mean to quibble semantics, not really.) I don’t feel outraged, just hideously disappointed and disinclined to contribute to Patreon’s revenue flow anymore, even in the tiny amount that my very moderate income through that site would do so.

    Can’t trust ’em with my money, basically, on the basis of their demonstrated dishonesty in rolling this change out. So they don’t get it – or get me encouraging anyone else to trust them with their money. (This is probably precisely what their corporate strategy wants: big pledges to big earners, everyone else to go away. I don’t think they understand healthy creative ecosystems or long tail distribution at all.)

  17. Just switched my Apex Magazine ebook subscription from Patreon to Apex’s own store. Same price as *before* Patreon’s changes. So there’s one of my creators receiving my patronage without Patreon.

  18. My husband is finally working after 2 years. I had intended the eased pressure on my income to mean I would boost my Patreon pledges and add a couple more.

    Now it looks like the reverse will happen and I will drop the majority of my patronage.

    I’m not cancelling today. I’m waiting to see if the outcry will cause them to change their proposal at all before the 18th. I DID write them a letter of complaint.

  19. On “outraged”: I’ve stated more than once lately, and more than once *here* that I am growing to hate this word, as it’s a blanket term for pretty much every negative reaction to pretty much every scenario. It almost fits this, as I tend to reserve outrage for situations that get people killed, permanently damaged, or left to starve, and at least one of the creators I patronized has admitted that her Patreon income is accounted for in the household budget, and at least one nearly – literally, and not literally as in figuratively – lost her home until her patrons stepped up.

    But the fact that this time it’s actually close enough doesn’t prevent my figurative hives at the word itself.

  20. I currently support only two creators and I’m not going to cancel for now because I don’t want to harm either one of them. (Both have posted that they’ve already lost several supporters.) If either or both move to a different platform or give me a different way to support them, however, I’ll have no hesitation in wiping the dust of Patreon off my feet.

  21. Jeff Jacques creator of the science fiction webcomic Questionable Content, said he lost a hundred subscribers in the first day. This is pretty much a disaster for webcomic creators and freelance artists.

  22. Currently I’m not cancelling any of the patronage I provide, it’s not the fault of the creators and they still need to eat. Short term I’ve upped my pledge to a minimum $3 to each creator so Patreon gets a smaller percentage, and I’m not supporting anyone new there. I’ll happily move to any other platform as soon as possible, medium term. Long term, Patreon has made themselves irrelevant to me as I no longer trust them.

  23. Apparently, Kickstarter has a service called Drip that is very Patreon like. No idea what the fee structure looks like other than it is deducted after donation rather than tacked on top as the new Patreon plan states.

    Drip is “invite only” right now. But maybe a little bit of competition will help creators and contributors by minimizing the amount dedicated to funding the donation service.

    Regards,
    Dann

  24. Correction: Jeph Jaques has lost 272 patrons. As an example. This is a huge blow to the low – income artists out there.

    I need to review my Patron subscriptions now. I’ll keep contributing to James Nicoll, but I’m going to prune back the other ones.

  25. This open letter to Patreon is particularly good.

    From the ongoing discussions, especially here, I’m now starting to see what that Patreon piece Ultragotha linked to is about.

    This is about *vidders*. Patreon doesn’t want the long tail of vidders because hosting a vidder costs several orders of magnitude more than hosting an artist or writer. And it’s hi-profile vidders who came to Patreon from Youtube who want this change, because they’re the creators who are being burned by people signing up, downloading all the content, then cancelling before they pay.

    I really think the text and 2D-art communities need to think about having a non-profit version of Patreon.

  26. @Gene Turnbow–

    That’s a wonderfully careful explanation that the new fee structure works–exactly the way I understood it to work from previous explanations.

    And that, as previously mentioned, it’s just not cost-effective for small donors anymore, and is a disaster for small creators dependent on small donors.

    So, yeah, every bit as bad as I thought.

  27. Julie Dillon has tweeted:

    From Patreon: “We’d rather have our GMV be made up of fewer, but truly life-changed creators rather than a lot of creators making a few dollars.” Well that tells me all I need to know about how much they actually care abt creators.

    As you wish, Patreon! And just like magic, all of my pledges disappear — transformed into individual PayPal payments to my creators of choice.

  28. When creatives and those that support them are choosing PayPal rather than dealing with your company, you are doing it so wrong.

  29. Ugh! But “truly life-changed creators” probably don’t really need a platform like Patreon once that happens. And even a few dollars can still be life-changing for smaller creators. As a patron, I’m most interested in supporting those for whom a few dollars is what keeps them creating.

  30. Apparently, Patreon doesn’t get that an extra fifty or hundred US-dollars per month can be life-changing for many people.

  31. Patreon’s desire to assist most those who need it least reminds me, somehow, of a letter Samuel Johnson sent to Lord Chesterfield, who had written a couple of letters of commendation of his Dictionary after his signal failure to help Johnson during its writing.

    Seven years, My lord have now past since I waited in your outward Rooms or was repulsed from your Door, during which time I have been pushing on my work through difficulties of which it is useless to complain, and have brought it at last to the verge of Publication without one Act of assistance, one word of encouragement, or one smile of favour. Such treatment I did not expect, for I never had a Patron before. … Is not a Patron, My Lord, one who looks with unconcern on a Man struggling for Life in the water and when he has reached ground encumbers him with help. The notice which you have been pleased to take of my Labours, had it been early, had been kind; but it has been delayed till I am indifferent and cannot enjoy it, till I am solitary and cannot impart it, till I am known, and do not want it.

    Is not a Patreon, my Lords and Ladies, one who puts difficulty in the way of helping the one now floundering in the water, and bustles about to do every service for them once they are already receiving help abundant?

  32. I’m certainly not outraged, but I think Patreon might be a little confused about how much value they add for patrons, on whom the cost increases fall. For people like me who do small dollar contributions to multiple creators, the gain to Patreon’s bottom line just isn’t justified by the small incremental benefit to creators either.

    I’m still thinking about what I want to do, but I’ll definitely change something.

  33. This change greatly decreases the number of creators I can help. This is going to be true for the majority of Patrons – not because we want to decrease but our budget forces us to do so.

    This is the kind of change to discuss with the community several months before implementing. Find out if it’s the right solution to the problem trying to solve.

    The small creators getting under $500/month are getting life changing money. It encourages them to keep creating. It helps cover the cost of materials and tools. It may give them more time to create because they don’t have to take a 2nd job or can say no contract work to do their own original stuff.

  34. Hey, Tasha, long time no see. I may have missed your recent comments if you’ve made them, but if not, welcome back!

    I recently cancelled my one patreon contribution, but due to financial issues. I’m canceling various recurring services right now. This recent move by Patreon is a bummer, though.

  35. A couple more of my creators have said they are looking at setting up alternate ways to support them.

    Strange Horizons will continue to send you an ebook if you let them know that you’ve set up a recurring Paypal payment. (Currently a reward for $4/month and up.)

  36. @Liz Bourke:

    I don’t think they understand healthy creative ecosystems or long tail distribution at all.

    I suspect Patreon understands them as economic phenomenon, but no longer gives a damn (if they ever did) about “healthy creative ecosystems” and doesn’t see enough money in the long tail to make it worth their while — especially if they’re trying to attract new money, which is notoriously uninterested in the long term. There have always been Vanderbilts who didn’t acknowledge what they owed the public for being legally sheltered from business debts, but ISTM that the trend in recent years has been to glorify such people as “job creators” rather than damning their cream-skimming.

  37. This is reminding me of the point the fanfic-writing community came to in 2006, when we realized that having fanfic on commercial platforms meant that we’d have to keep moving, time after time. In response, we set up The Organization for Transformative Works as a 501c3, to host the Archive of Our Own in nonprofit stability, and also Dreamwidth.org for journaling.

    I really think SFWA and similar orgs (are there any for webcomic creators?) should talk about setting up a 501c3 to connect patrons & writers/artists. Moving from Patreon to Drip or whatever won’t solve the problem long-term, because ANY for-profit system will, sooner or later, stop doing what’s best for the long tail and do whatever gets the C-level execs the most money.

    In the SFF ecosystem, Seanan McGuire is the Patreon!Star and lynchpin. Where she goes, the bulk of the community will (eventually) follow, I predict.

    But holy shit, what a pain. If they don’t change their minds, I’m going to have to do some re-distributing.

  38. I’m down to supporting three creators on Patreon. The rest have been given support in other ways and I’ve canceled the Patreon pledges.

    The three that are left haven’t figured out what they’re going to do yet and I’m waiting until they do to support them there and then I’m gone.

  39. Jack Conte, who I presume is the CEO of Patreon, posted on Twitter:

    Jack Conte @jackconte
    Hi creators and patrons — I’m hearing and seeing all the feedback. I spent the day on phone calls with creators. I’m reading the tweets and emails. I’m collecting my thoughts and will share more next week.

    Perhaps things will be addressed. (Not being purposely gnomic, but I am not up on events, particularly.)

  40. @Kip W

    I saw Jeph Jacques (of Questionable Content) mention on twitter that he was due to have a call with the CEO, so they seem to have belatedly realised they need to talk to the creators properly. Whether it leads them to change anything, only time will tell. I’m planning to go through my pledges tomorrow and see which ones have feasible alternatives set up to switch to.

  41. The guy I back on Patreon lives in the same city as their HQ and has been talking with them, apparently. It sounds like they’re waking up – we’ll see what happens.

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