Patreon changes and brand stability


(Nick) #1

I was wondering just now, has anyone here been following the Patreon changes? It strikes me as to how what they’ve done is a very clear contrast to how Monzo do this.

If you’re not already aware, they changed their fee structure with no warning, and the new one shifts the charges from the creator to the donator (until now, dontating $1 meant you have the creator $1 and the charge was cut from that, to give the creator $1-charges. The revised structure results in the donator paying the charges, so their payment increases to $1+charges. There’s more complexity, but that’s the nutshell).

Part of the problem appears to be that Patreon weren’t open about the changes, and dropped them out of the blue with no transparency. The other part is the fact that they have and still seem to be lying about the reasons for the changes. Originally it was “to improve things for the creators”, most recently it’s that they need more money to “keep the lights on”.

The former is a flat-out lie, as it doesn’t improve anything for creators. The latter is implausible, given the amount of VC funding that they’ve received.

I’ve seen two suggestions for the real reason:

  1. Their VC funding has overvalued the company, and they need to increase their revenue. Shifting charges to the donator and unbundling them is the easiest way to achieve that.

  2. They’re concerned that bundling charges means that they’re effectively a bank and should therefore be subjected to increased regulation, and most of the mess is a result of avoiding this.

Bundling: Up til now, if you donate $1 to ten creators, Patreon will take $10 from you in one transaction, and then distribute it among the creators for you. Unbundling means that Patreon won’t hold the money themselves as instead ten $1 donations will be processed a ten separate transactions direct to each creator - so you can see where the increased fees are now, ten fees instead of one in this example.

I find this an interesting situation on two levels. One, it’s an example of how original aims can run up hard against laws and regulations around the handling of money. Two, it’s an example of how making one bad PR move can massively damage a brand, perhaps critically.

We’ve seen some of the former here in how Monzo found that foreign ATM transactions were costing them too much, and again in how card top-ups have hidden costs. The difference being that in both cases so far, Monzo have been open and transparent and not just dropped any changes on us. We haven’t yet seen the latter, as while some people so far seem to have been unhappy about some changes, they don’t seem to have been in the majority. But how long can this last? What if Monzo does make a brand-killing mistake at some point? How possible or likely is it that this could happen?

Anyway, I was wondering if any people had any thoughts, especially those (if any) who use Patreon.


(Eve) #2

I use Patreon to support two of my favourite artists, but I wasn’t aware of the changes (since it just comes out of my bank and I don’t really look at it. I guess that’s a warning flag already. I think some artists are encouraging people to buy them a “coffee” (Ko-fi)instead of a regular Patreon, since subscriptions tend to put people off.


#3

Just had a quick look at this ko-fi thing. Doesn’t seem that they have anyone that’s getting much in the way of donations from it. On the “most coffees bought this week” page that lists the 10 most popular accounts (https://www.ko-fi.com/home/trending), the breakdown of coffees bought this week is: 2 x 1, 5 x 2, 1 x 3, 1 x 6 and 1 x 10.

Some of the people I know of with Patreon accounts are using it as their primary income now that youtube advertising revenue has been slashed so much.


(Andre Borie) #4

They’re concerned that bundling charges means that they’re effectively a bank and should therefore be subjected to increased regulation, and most of the mess is a result of avoiding this.

I find this unlikely - if they were in breach of regulations they’d be long gone or would’ve done this since a long ago; not to mention I don’t think taking a lump sum from a donator and then splitting it across artists makes you a “bank” anymore than taking separate payments from donators and sending them to artists; in both cases money from donators goes to Patreon’s account and then some money (minus their fees) goes from their account to artists.

I agree they’ve been way overvalued by VCs - Patreon is essentially a very simple system, just some software that once written can run itself for ages with pretty much zero manual intervention. I can’t believe investors actually put $107M into software that just takes payments in from one side and sends them out the other.


(Allie) #5

I’m not sure the new model is totally legal, it is in effect a payment service provider surcharge…


(Eve) #6

Sorry to dig up an old thread but I recently pledged another artist- I asked her about the charges and I think they take 10%, and on top of bank/PayPal charges, about 80% goes to the artist.

She told me she doesn’t mind paying those charges, since even a $1 pledge over 12 months is still more stable than one-off donations. Most artists think the same and see it as a better company for them than YouTube etc. So I don’t think it has done much PR damage, if at all- maybe keeping quiet about it has worked in their favour- but as mentioned before there isn’t a reliable alternative yet for artists. Still, I think it’s annoying- it reminds me of buy-and-sell apps like Depop that take so much of the cut when they don’t have to.


(Andre Borie) #7

buy-and-sell apps like Depop

I’m offended as I work for them now. :joy:

In case of Depop you can’t imagine the number of questions I get from some users that can be resolved by a quick read through the FAQ (or even the app’s UI), and that’s as being a software engineer, so imagine what our community support team has to deal with. I know it’s not your fault but someone has to pay for that.

In the case of Patreon I’m not sure how their customer service works and I hope they don’t have as much queries as us, but if they do then I totally understand their fees. To be honest I just wish people would just take a few more minutes trying to figure things out before wasting customer service’s time. I guess this is the double-edged sword of great CS - it helps people out but it also trains them to be lazy and asking you to do everything instead of researching stuff for themselves.


(Eve) #8

Oh I had no idea! Just comparing the several buy-and-sell apps I have tried, Depop has the highest fees which puts me off a little- I use eBay too, which is 3% ish and Mecari, which is free and pretty reliable. How do they make money then? :thinking:

A lot of people often crosspost between platforms (like I do) and I can afford to lower the price on Mecari since I don’t have to pay 13%. I think high charges encourage people to try to make payment in less secure ways too.


(Andre Borie) #9

I honestly have no idea how Mercari makes money yet, but I wouldn’t be surprised if it’s a similar strategy to Monzo - operate at a loss during the beginning to attract as much people as possible before starting to charge fees and/or IPO or get bought out by a bigger fish.

Yep those kinds of payments are unfortunately very common (we call them OOA for out-of-app) and my ban button gets a lot of use as a result :joy: however I’m not sure if this has anything to do with the amount of fees - personally I sure know a lot of people (including my family) who would do anything not to pay fees no matter how small they are, so it could be that even with 1% fees we’d still get that.


(Allie) #10

Me, frankly, I’m allergic to paying fees as a consumer. Costs of doing business should be included in the headline price. Card acceptance (it doesn’t truly cost a company more really, cash isn’t free…), recycling, service, heck even a venue fee on a show - now, you can’t exactly have a show without a venue, can you?

Now, I’ve never used your service, if the seller has to pay the fee, that’s totes fair. It’s like any other marketing service, then.


(Andre Borie) #11

Yep, at least in the case of my service, the seller bears the fee. The displayed price is always the final price the buyer would be paying including all fees. What I was talking about was some sellers are tempted to bypass the normal payment flow to save the fees and as a result put everyone at risk as buying outside the app is not covered by any buyer protections we have in place. :sob:


(Allie) #12

I will never, ever buy from a seller attempting that on any platform. If they’re willing to steal from their marketing company (which is what these platforms really are, the payment and shopping cart tech alone isn’t worth the fees), why wouldn’t they steal from their customers?


(Eve) #13

Idk, for me there are loads of different platforms and I’d prefer not to make a sale on Depop (or raise the price to cover costs) because it’s more expensive than any other platform.

The reporting feature is also flawed, I purchased something that ended up being fake and you go through PayPal to resolve this- but you have to pay £6+ for tracking and recorded return at your own cost, when Mecari covers the cost for you. PayPal is annoying for both sellers and buyers imo, I’ve heard horror stories of sellers getting scammed out of items AND the money, but as a buyer if you want to get anything resolved there is no way of contacting an agent (calls to an automated system, no emails, just a community forum).