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Patreon’s new service fee spurs concern that creators will lose patrons (techcrunch.com)
406 points by slyall 4 days ago | hide | past | web | favorite | 304 comments





It's worth remembering that less than three months ago, Patreon raised $60M in a series C (https://patreonhq.com/new-round-funding-816d5a592477):

I’ve got some exciting news! Patreon has just secured an additional round of financing ($60M!), which means we will be scaling our team, building faster, and building more — all in service of getting you paid what you deserve to be paid, for the value you give the world. YESSS!

So why is Patreon changing their fees now, when they just got a ton of money and can basically do whatever they want in order to grow? Their Zendesk article (https://patreon.zendesk.com/hc/en-us/articles/115005631963) isn't much help:

Q: Why is Patreon doing this now?

A: Patreon exists to allow creators to get paid what they deserve to be paid, for the value they give the world. This is awesome and to continue this vision, we need to constantly evaluate our processes. As we work to deliver bigger and better features for creators and patrons in 2018, we felt like sooner than later made sense to put this change into effect.

This doesn't actually answer the question: why do the fees need to be changed at all, whether sooner or later? Were creators asking for this change? What was wrong with the way it worked before?

The obvious answer is that Patreon needs more money for some reason. But… they just raised a bunch of money. So I really don't understand how this change makes sense or helps anyone.


Probably too late in the thread to be noticed, but I have the real answer for you. This change doesn't make Patreon more money, it just costs patrons a bunch in Paypal and Stripe fees effectively. Patreon proposes to charge every donation to different projects or even each release of per-release things as separate charges, thus wasting everyone's money. It doesn't make them much profit.

They are doing it because a large portion of creators use Patreon as a paywall service not a donation platform. Using it as a paywall is the source of the demands for instant charge (not waiting until 1st of the month). The changes are just Patreon bumbling through stupid decisions trying to deal with that issue.

More details https://wiki.snowdrift.coop/market-research/other-crowdfundi...


Patreon is a startup which is a conduit for and yet a leech upon the incomes of struggling people[0]. An service of its kind should not be a for-profit operation, the incentives are perverse.

Kickstarter is a Public Benefit Corporation, so I'm slightly more enthusiastic about the potential of their offering (Drip).

[0] https://theoutline.com/post/2571/no-one-makes-a-living-on-pa...


One of the divisions here is that while Kickstarter is a public benefit corp, they've also had an extremely negative view of adult related material, something that a lot of us on patreon base our campaigns on. This is why a lot of adult product campaigns end up on indiegogo.

I'm sort of suspecting the same will happen with drip. While the sentiment of a PBC is nice, it doesn't really do many of us much good since we figure we have no chance to host there anyways. Even at the current fee structure, Patreon is still far better than past tries at adult related crowdfunding services, like Offbeatr (which you had to pay to even be considered for).


Post-C-VC Patreon is trending away from NSFW too...

An Open Letter to Patreon | https://news.ycombinator.com/item?id=15547801


Thats a pretty insightful article - I has always assumed that Patrons that could live off Patreon were concentrated at the top, but I never realized just how few of them there were. It's soured me a bit on Patreon, especially as it garners more comparisons to YouTube's ad related model. To acheive minimum wage on YouTube, you have to earn between 300,000 - 1,000,000 views per month (depending on how much the algorithm likes you). Comparing some of my favorite YouTubers to the data on Graphtreon, it seems to me YouTube is still more lucrative while Patrion does contribute a non-negligible amount of money.

IMO Patreon is better for more niche creators who have a smaller but more passionate audience. Sure, you can make a ton of money off of YT ad revenue if you're pulling in a few million views per video and putting out multiple videos a week, but there are a lot of YT creators who don't pull in those kinds of numbers and can make a lot more via Patreon.

HBomberguy is a favorite of mine - he publishes high-quality, researched, edited videos, an average of once every few weeks, gets 100k-350k views per video, and via Patreon makes $6k/video. There's no way he'd make even close to that much via YouTube.

edit: Nice, you're 'nemothekid' - part of my last name is in your username :D


Nothing that is a utility should be for-profit (relating to basic survival and quality of life), however the VC model requires such fast scaling (as part of this VC money can help kill what would otherwise become a successful service through copying and scaling faster/competition); this is ultimately why subway systems, which started off as individual privately owned lines, were bought by the public. The issue is always capitalism and competitive factors, people who want to get ahead in the world - to make the world a better place - without having a collaborative mindset or understanding their actions. Facebook would be in the best position in the world to facilitate this, however current leadership hasn't ever shown the compassion necessary to understand and guide this. Part of the issue is that such a platform or ecosystem requires understanding that you need to share - meaning that value created can't all be captured/controlled or measured. Short-term scarcity vs. long-term abundance thinking.

Where is that article getting their hourly wage estimate from? It sure sounds like they are just basing it on the monthly numbers, and assuming that all creators on Patreon are working full time (or some particular number of hours). If so, that's obviously ludicrous.

What perverse incentives are you talking about?


Speaking of Kickstarter, do you think this change will push creators over to Drip[0]? Is Drip a PBC as well?

0. https://d.rip/


> Ⓒ2017 Drip U.S., LLC. By Kickstarter, PBC.

Drip was acquired by Kickstarter, maybe 2 years ago.

You can use liberapay (https://en.liberapay.com)

even better than a Public Benefit Corporation, could be run as open-source project like Librepay, Gratipay, or FOSSPay:

https://github.com/liberapay https://github.com/gratipay https://github.com/SirCmpwn/fosspay


Liberapay unforutnately isn't able to handle USD as cheap as EUROS...according to https://liberapay.com/about/faq:

What are the payment processing fees? The fees depend on the payment method as well as the currency. When adding money into Liberapay the fees are:

Card (EURO): 2.106% + €0.21

CARD (USD): 2.925% + $0.35

Bank wire (USD/EURO): 0.585%

Direct debit (EURO): €0.59

Direct debit (USD): not supported

Withdrawing euros to a SEPA bank account is free, transfers to other countries cost €2.93 each.

Withdrawing US dollars costs $3.51 per transfer regardless of the destination country.


> Were creators asking for this change?

Nope. And the absolutely universal response, from tiny artists all the way up to Chapo Trap House (the largest Patreon creator by far) has been firmly against this change.

But investors put in money expecting to get more money out. That's the only credible explanation I can see. They're lucky that Drip isn't up and running yet so there can't be an immediate reaction.


This was likely the strategy. The board wanted more profit, knew they needed to change some things, and decided to do it before a real competitor made it to the scene.

Amen. Like always it is all about the Benjamin's. They are a for profit business. The best thing you can do is switch to another service with better rates. Most people wont do that.

I currently give $38 a month to 19 creators ($2 each, I don't really have much to give). So that is like what $13 in fees for me. I think not.


Patreon would only need to bill you once, not sure why they need to add processing fees to each pledge?

I agree. Without an efficient micropayment system available, I can understand a charge per transaction. But adding a transaction fee to each pledge, when the patron is making one monthly payment, is a bad idea. Maybe they want to get rid of patrons supporting lots of people at low levels for some reason.

They could argue they're potentially paying a transaction fee when they're paying the creator if you're the only patreon. That's a silly argument though. I'd be happy to pay a single 2.9% of my total pledges + a single 35c fee.

This just kills $1 donations (and in my mind: anything up to $10)


Because it lets them extract a lot more cash from their users under the cover of processing fees.

It seems that they might also be de-aggregating pledges - which means not only will you be paying the 2.9% + 35c on each pledge, you'll also get N charges on your card rather than one. There was also some other hint that pledges would continue to be charged on the day you signed up rather than the 1st - just to make a triple whammy of idiocy.

>So that is like what $13 in fees for me.

No, 19 * .35 + 38 * .029 = 7.752. Still quite a lot of course. This change really disincentivizes making multiple small donations (no shit). If instead you'd pick 4 creators to give 9.5 to, the fees would drop to under a third.


I asked this elsewhere and got no answer so far:

> how will this earn Patreon more profits? Am I doing the math wrong?


EDIT: Due to a blog post I was unaware of, the rest of this post is incorrect. Patreon will still make a bit more money than before, but with the new structure of billing each pledge on its own schedule, not nearly as much as I had outlined.

https://blog.patreon.com/updating-patreons-fee-structure/

ORIGINAL:

Most patrons provide many small donation amounts. Patreon will, as called out in the article, get a lot more money from those patrons.

If you assume a 2.9% + $0.30 CC charge fee (i.e. Stripe), and a patron giving $1 to 100 artists:

Before: Patreon gets $5 from their cut from the artists; the patron is charged $100, the artists each get $0.67.

After: Patreon gets $5 from their cut from the artists, and $34.70 from the additional fees; the patron is charged $137.50, the artists each get $0.95.


The structure to avoid increased fees is dumb. Charge once, wallet the money, distribute as needed. Steam can handle this. Bitcoin can handle this. Why can't Patreon handle this?

Drip? Is it this: https://d.rip/

Currently invite-only:

Drip is currently in an invite-only period for creators. We plan to open up more early next year, and you can drop your email in at the bottom of the homepage to be notified when we do.



Forgive me, how will this earn Patreon more profits? Am I doing the math wrong?

Imagine you have a user who supports five different creators, each with a $10 donation, and the money they are charged comes out on the same day every month.

From the end user perspective, as a result of this latest change they will be charged five transaction fees. However, from Patreon's perspective, that's not an efficient way to process the payments. What Patreon can do is bundle up the five $10 payments into a single $50 payment. What this means is Patreon will only pay for one transaction fee, but they'll charge this user for five transaction fees. The four extra transaction fees that Patreon have charged for are then used to boost Patreon's profits.


Actually, from Patreon's update, it sounds like Patreon will, in fact, run five different transactions:

https://blog.patreon.com/updating-patreons-fee-structure/

Which is frankly insane, but does explain the change.


Yikes. That is an insane way to do things. Silly inefficient to boot.

The only real winner in this will be Stripe and its ilk.

Thanks for finding and posting that.


It is insane, but they are doing it because they thought it made sense with their business model, namely Patreon is not a donation platform, it's a paywall service.

https://wiki.snowdrift.coop/market-research/other-crowdfundi...


Are they doing that? It sounds like they explicitly are NOT doing that.

They are proposing multiple charges each month, super wasteful. It's because they are first and foremost a paywall service.

Also, I'm going to reply to my own comment to point out a quote from that patreonhq.com post (by Jack Conte, a co-founder):

I want Patreon to be different. I want creators to feel understood by Patreon.

The only way creators will feel understood is to include them in the decision-making process. If I were a creator making money on Patreon, I'd be organizing a new site, co-owned by other creators, where everyone is involved in the decisions made by the company.


That would be really great, an organization, owned by its members, that would manage the site.

It just takes someone to launch this, and very hard work



That's huge! Thanks

You mean like a cooperative or an union?

Filthy communist ! /s


It was the Co-Operative Society in the UK that joint funded the Manchester Ship Canal, first national UK distribution service, first to promote Fairtrade goods. They were the UKs largest grocery retailer by far.

Today they are still 6th but with 4million members.


Coop in Norway is owned by the members and is one of Norways 3 large chains together with Reitangruppen and NorgesGruppen.

BTW: They recently been running a hilarious advertising campaign on tv, based on a story about a pivoting SV company that decides to do just this with a pilot in Norway.


Is this not just a marketing pitch, though? Where is your cut from Coop Norge Eiendom AS? [Coop Norway Real Estate]

Not sure. I'm not too much into it I just find the ads hilarious.

For what I know it might be a similar agreement as the one Mozilla uses but I don’t know.


Back of the envelope calculations:

Investors clearly want them to be profitable; maybe not now but eventually.

They have a $450m valuation and $150m in sales, for which they get 5% ($7.5m) [1]. According to Crunchbase, they have 50-100 employees. Assuming only 50 employees, they are spending at least $15m in wages (plus health insurance, etc.), plus fixed expenses (SF building, AWS, etc.) and advertisement.

So there is no way they would be making ends meet with their 5%. Even assuming they become 5x bigger while keeping the same expenses, they might still be losing money. The only way for them is to raise fees.

Sure, another option is to keep costs down, everything streamlined, don't spend on advertisement, etc. but as others pointed, you can't pick that route if you have investors.

[1] https://techcrunch.com/2017/09/14/patreon-series-c/

[2] https://www.crunchbase.com/organization/patreon


Why do they have so many employees? Seems excessive and totally unnecessary.

Can't be a Real Silicon Valley Start-Up™ if you aren't wildly over-capitalized and constantly adding unnecessary headcount.

More importantly, why is a company that's not doing anything super cutting edge in SF? That's like a textbook case of a company that should be somewhere boring and CHEAP.

Exactly. It's also not clear why it's taken VC- seems like it should be bootstrapped somewhere in the Midwest.

A bootstrapped company somewhere in the Midwest takes about 3-5 years of bootstrapping to be heard about on the east coast. A capitalized startup can hit the PR drum immediately. As put earler at https://news.ycombinator.com/item?id=15658756

> In consumer (markets), even a great product will often get blown out of the water if a competitor with a worse but good enough product has a deep, deep marketing war chest. If you space has a VC backed competitor, you have no choice but to also raise money and fight a war of attrition


“We will invest to help you growing if and only if you stop acting like a VC bonfire charity and start operating like a business"

I could well imagine investors to occasionally say that. The fees may have been a condition for getting the capital.

The backwardness of the timing is well within the range of weirdness that can be expected from a compromise that was a difficult struggle to get.


Unfortunately raising money isn’t a proxy for profitability. In many cases it’s the opposite. It could be seen as a proxy for potential, but potential alone doesn’t pay the bills.

This fee feels a lot like the fee a merchant would be charged for a credit card transaction, so in essence Patreon is passing on their fees.

I wonder why they don’t have a structure akin to micro transactions, where there is no fixed fee but a slightly higher variable fee. I’d guess most of their transactions are probably small enough.


Originally half of the entire value proposition of Patreon was "backers pledge small amounts to multiple artists, Patreon bundles these up under one monthly charge, thereby spreading transaction fees fees around". Or in fewer, longer words: Patreon is a micropayments aggregator.

And it worked pretty well! A lot of creators got paid, myself included.

And now here's Patreon with a new fee structure that appends a percentage plus a minimum fee to every single transaction. So much for micropayments.


Do you know where Patreon said that? I had a hunch that what was what Pareon was doing but I could never find a source for it.

I think it's way more likely that Visa/MC came knocking on Patreon's door and told them to stop doing that, forcing them to either eat the fees, or pass it on to someone else, and now Patreon has to eat the bad PR.


Why would Visa/MC do that? It doesn't seem any different than metering any other service (eg Mailchimp invoicing monthly vs per email).

I'm not saying you're wrong- I just don't understand what leverage the CCs would have.


I don't even understand what they're using all that money for. The recent site and app redesigns have been a huge downgrade in overall UX (to the point I uninstalled the app as nearly unusable), and the site is just as slow and buggy as it's ever been (except now it's hard to navigate to boot).

If they simply need more money, they can simply raise the price directly and proportionally - this doesn't justify a major change to the pricing system that makes a previous use case (many $1 pledges) unviable.

They took money now are in debt and now need to make their investors happy. The same way every good idea died.

But the fee change won't make them much money, it just throws away patron money and gives it to Paypal/Stripe.

They're doing it because of demand for instant-charge because their main business is being a paywall service.


It helps the funds that gave $60M to patreon. Pretty simply imho. You know, follow the money.

> they just raised a bunch of money

Capital != revenue

> The obvious answer is that Patreon needs more money for some reason.

Probably because like pretty much all other businesses, they'd like to see a profit some day.


It's cash flow vs cash on hand. If they are doing this as a part of getting positive cash flow, then good for them.

I think the clearest explanation of the change is in this tweet: https://twitter.com/TPRJones/status/938646263800705024

"The extra cost isn't tiny if you pledge small amounts to many creators. Pledging $100 to 1 creator will now cost $103.25 which is reasonable. Pledging $1 each to 100 creators will now cost $138 which is not reasonable"


$138 is unreasonable to me for one simple reason: When I pledge to 20 creators, Patreon batches my pledges based on arbitrary server-side criteria, such that they cannot guarantee how many charges will be made to cover my pledges.

So typically I see two charges per month. They can't charge me $0.35 per charge because the # of charges varies without any ability for the customer to predict and cannot be defended reasonably to customers.

Instead of revamping their billing groupings to ensure that each patron is charged once per month, they are charging $0.35 per creator, which is the absolute worst case scenario here.

So to me, the ripoff is that they charge me for two credit card transactions, but instead of $0.35 per transaction, they charge $0.35 per creator within a single credit transaction - when that $0.35 is not charged to them by their merchant processor for those individual creators.

I would have been fine if they'd simply tell me "X creators = Y transactions @ $0.35 each + 2.9% of amount", where Y is virtually always some tiny fraction of X, but that they instead say "X creators = X transactions @ $0.35 each + 2.9% of amount" to avoid regrouping their billing is a misuse of the word 'transaction' as they implement it.

EDIT: If Patreon has been charging $0.35 per patreon to their creators, then this is not new profit for them, but is instead the same profit now collected from patreons instead of creators. It's still unacceptable to me, because they're charging the worst-case scenario (one transaction, per patreon, per creator) and then optimizing for less than that and not crediting the excess (Y-X) x $0.35 back somehow. If their 5% take isn't enough to cover transaction costs, hiding a profit in (Y-X) x $0.35 is not the correct way to solve that.

EDIT: It's possible that Patreon was censured by Stripe somehow and is going to stop batching charges period full stop come January, and so then Y=X for all cases, at which point this all starts to make a lot more sense.


This is a pretty terrible excuse. It amounts to: we're overcharging you because we're too lazy to change our billing system.

A reasonable change is to make one charge per month for the total you've pledged. The CC charges for $100 would be $3.25.

No one would object to $3.25 per $100.


I would not call it "lazy" because that's a direct insult to the human beings, but I have not yet seen a reasonable defense of why they appear to be charging more than Stripe charges them, and encourage folks to seek that when asking Patreon questions about this issue.

EDIT: "why they're" -> "why they appear to be"


Ok, yes that's fair. I shouldn't say lazy.. they could have an actual reason. but in 15 years of handling cc charges for my business, I can't think of a single one.

There's a rumor floating around that Stripe has taken issue with their batching model and that they're being forced to stop batching, which would absolutely justify this change since then Y=X, but I've not been able to find any solid evidence one way or the other about that.

EDIT: I filed a support ticket asking if my 2018-Jan charges will be batched or not. We'll see.


I mean, why wouldn't they say that in the messages they've distributed to creators and patrons, then? If that's the case, they have needlessly caused themselves a tremendous amount of public headache by being disingenuous about the reason behind the change.

Could be due to the coming EU regulations (PSD2) which places much stricter regulations around accepting money on behalf of someone else. See more in https://stripe.com/connect/eu-guide

Maybe they risk being labeled a money transmitter?

For those following up days later, this is what I think as well. Someone else wrote it up:

https://subfictional.com/my-theory-patreon-doesnt-want-to-be...


Do you know why they batch the pledges into several payments and not just one big payment?

Like Apple, they break up charges into arbitrary batches on their side, but I did not ask them to provide guidance on what their batch limits are. Apple sometimes waits days to charge me, and often distributes charges randomly across multiple transactions, so clearly there's some kind of optimization limit that's reached at scale.

Money laundering rules

Can you go into some more depth?

Hadn't thought of this reason, but that might make sense - in essence, the standard AML rules have always required specifying the final beneficiary of a payment if you pay money to someone who'll hand it over to them.

If Patreon is being treated as or claiming to be a payment service provider (i.e. it passes money through to authors without owning it in between, the only revenue on their balance sheet is the fee they take) then it'd be wrong to state that Patreon is the beneficiary of a particular payment, since it's not; and they'd be required to list all the actual beneficiaries on every payment, which can't really be done for reasons, so they need to charge many small separate payments.

On the other hand, if Patreon is being treated as or claiming to be selling a service (i.e. it takes all your money, and pays it out to authors as a business expense) then that has major tax implications, namely, all the amount (as opposed to just their fees) is their revenue and thus subject to various sales taxes and VAT worldwide. This seems to be the current option, since they're charging VAT on the full amount for EU patrons.

It might be plausible that they're currently switching from option 2 to option 1 for financial reasons, and this precludes them from batching in the future.


> they'd be required to list all the actual beneficiaries on every payment, which can't really be done for reasons

How so? If they can list the beneficiaries on the individual payments, why can't they lump them into my single-payment?


They can list a beneficiary on the payment, not an arbitrary number of beneficiaries. They can list a beneficiary tax residence on the payment, and that'll apply for the whole payment. Two beneficiaries means two amounts (you have to specify how much goes to person A, anyway), and thus two payments.


Patreon confirmed that this change is to permit them to stop batching charges period full stop on Twitter, and updated their blog post.

https://twitter.com/jackconte/status/938926147085242368


They are being honest. They just aren't admitting why they would stop batching charges. And a large part of the answer is that they are a paywall service more than a donation platform, and everything follows from that.

I previously pledged between $2 and $5 to almost a dozen content creators. This change would have added quite a bit to my costs so I have withdrawn my pledges. I am billed by Patreon once a month - not sure why I need to pay fixed & percentage fees on individual pledges...

I'm at 11 now, 10*$1 and a $1.50. I forget what I was at when they were going to do this in April of this year, but when I emailed their support about the change and how it would make me decrease the number of creators I backed the individual I was working with suggested that most backers back a small number of creators. Individuals like ourselves aren't really accounted for.

If you haven't, I would suggest emailing support and noting your case. I think the more people that remind them about backers who back many creators.


That's a great idea. I'll go do that now.

I just cancelled most of my lower monthly pledges, but I suppose it doesn't hurt to speak in action _and_ words.


Since we have ~10 days, I haven't gone through and cancelled any pledges, even the ones that I no longer want to support since I'm not getting anything from them.

I was watching the train wreck on Twiiter last night and I've seen what Lazy Game Reviews, and others, have witnessed since Patreon announced this change. They back peddled in April, so I'm hoping they'll do so again this time.


I'm in exactly the same boat and I've done the same.

Debit card(Durbin covered banks) interchange is 0.22 fixed fee + the variable amount. Add on processing fees and its easily 0.30.

Visa has a microtransaction(sub $10) framework where you can roll up 3 auths into one interchange but most processors don't support it.


Patreon always has been bundling many small transactions into one large, that has been the major point from a fee perspective to use them. Their fees already included the processing fees for that.

$0.30 or so per credit card transaction (+ a percentage) is totally expected and what they did until now.


> Patreon always has been bundling many small transactions into one large

Yeah, from what I understand they are planning to stop that.

So that's the end of patreon as a micro payment platform.


It was always (and remains) a paywall service first and foremost. It wasn't meant to be a micro payment platform.


Patreon uses Stripe and Paypal. Both of their fees are 30¢ + 2.9% regardless of interchange fee for a specific card. Not sure where they got the extra 5¢, but it seems reasonable to charge what their paying.

The difference is that Patreon withdraws money from me once a month -- that is a single transaction. Yes, I'm OK with them covering the actual cost of the Stripe/Paypal fee. But for them to charge me $3.50 because there are theoretically 10 charges (when there is actually one aggregate charge) is in no way fair.

I wonder if the answer is to have levels within the pledging system? If you pledge only one backer we take x% or cents. If you back 2-10, we charge this x-t% or cents. If 100, no charges at all. This will provide incentive to people to back more creators too.

The solution is Patreonpoints. Sell vouchers and let supporters allocate those vouchers, lock the exchange rate to the currency used to purchase the vouchers and build the service fee into that exchange rate.

This is a much smarter idea, because it also locks their money into Patreon once they've stocked up on points to spend. Not sure why they didn't go this route, to be honest.

The points make it easy to build in the service fee. Public transit here maintains an “account balance” in USD, you set the max and when your account dips below what is required for fare it refills to that max.

Steam does some something similar with an account balance but I don't think it refills. I believe a lot of businesses have a similar concept. I think you can maintain an account balance at Amazon (and probably other retailers) too.


That is what Twitch does with "bits", it should definitely work here as well.

Patreon has just updated their blog with the rationale for the change: https://blog.patreon.com/updating-patreons-fee-structure/

Unfortunately, changing the payment structure to what they're proposing - while easier to understand - removes any payment-processing value that Patreon was providing. Putting the friction back into these kinds of micro-donations.

Seems like a bad business move to me. The hard problem here was making micro-donations cost-effective, not creating a website where creators could host links to content.

Edit: The relevant paragraph.

> To do that, we need to move our payments system to treat your pledges like any other subscription service. In other words, we need a system that charges patrons at the time of their initial pledge, and on the anniversary of their pledge each month thereafter.

So every individual monthly pledge will result in a CC transaction now. I'm guessing in cases where two pledges fall on the same day Patreon will still do one CC transaction and pocket the $0.35 they saved?


Ok, that link makes things clearer, and I can understand their position a bit more.

But they missed the BIG OBVIOUS solution: charge a pro-rated "first month" pledge, then combine all subsequent pledges like they do now.

For example, if I become a patron at the $10/month level, on the 15th of the month, they can charge me $5 immediately. Then the $10 gets added to my regular charge on the first of the month, and everyone saves in processing fees.

As a patron, I would much rather get one charge per month on the first. The current schedule works great.


I'd swap that. Charge the $10 immediately, then bundle the pro-rated refund of the half of the month you missed into the first month's subscription charge.

Yeah exactly. This is the extremely simple solution which closes all loopholes and avoids a horrific mess of new fees.

I'd like to take Patreon in good faith here and assume they've just blundered into a huge mistake which benefits nobody except for the payment processors. If so, they should be correcting course in the next few days. But until that happens, I remain skeptical.


I totally agree that pro-rating seems to be by far the best and most obvious solution. So much so that it almost feels like lying by omission when they don't discuss it as a possible solution in their blog post.

I stopped using Patreon a while back when they got hacked and leaked my personal information, but before that I was donating $1 a month to a handful of creators. I feel like that isn't an atypical use case at all - maybe even the most common pledge amount for a lot of creators. And there is absolutely no way I would have been willing to pay a $0.38 fee to pledge $1.


There are often privileges and perks associated with being a patron of a certain creator. These perks aren't pro-rated, thus subscribing late in the month for a day or two might be a viable way to cheat this system. Personally, I don't think this is a huge deal, and, if this is their reasoning, it's a mistake.

You could even do it where you pay the full cost immediately, but the difference between that and the prorated cost counts as a credit to the next start-of-month payment. eg. If there's a $100 reward tier and I sign up 60% of the way through the month, I immediately pay $100, then at the start of next month my $100 pledge is discounted by the $60 I overpaid for the previous month, so I only pay $40.

Effectively, it flips the first two months so you pay the full amount immediately but if you stay on for at least two months it all balances out in the end.

EDIT: Ninja'd by sibling comment


Charge the pro-rated amount on the first of the first month and the full month's amount on the initial subscription date.

> But they missed the BIG OBVIOUS solution: charge a pro-rated "first month" pledge

The problem there is for creators who post high-value content - Jimmy McThief can sign up on the 29th, pay a fraction of the subscription tier, snarf all the content on the 30th, then unsubscribe.

Patreon could offer a "only allow patrons access to [certain content] after a full monthly payment has been taken" option but that would be the simple solution...


There are a number of obvious and simple fixes to that problem, but honestly it would be fine to just ignore it. People who are going to "scam" like that are such a teeny tiny fraction of the user base, they're barely worth considering.

Patreon has been doing great; even the porn stars who charge large fees apparently have overwhelmingly honest patrons. It's much more of a theoretical problem than an actual one.


No no no, you just don't understand! Solving the issue of "how do we handle mid-month sign-ups for a service that bills monthly" is a nigh impossible problem that requires at least 40 to 50 Stanford- or MIT-trained engineers.

>Seems like a bad business move to me. The hard problem here was making micro-donations cost-effective, not creating a website where creators could host links to content.

Exactly - this undermines the entire point of Patreon's existence in the first place.

I've already removed most of my low dollar pledges, and will be watching the people I follow to see if they move to alternate platforms or have a direct donation link I can use.


Is Patreon "agile"? Why would they change something like this?

$0.35 fee on a $1 donation is a lot of friction.

The $0.35 / donation fee doesn't make sense to me. It sounds like a credit card transaction fee. But Patreon charges my CC once a month. So why not charge me the $0.35 once a month? Why once per donation?

The 2.9% part seems fine to me. So does shifting the costs to the donators. But why charge me per donation instead of per credit card transaction?

Edit this article has a nice analysis: https://www.pretty-terrible.com/funny-money-patreon-style/


Exactly. If you support 10 creators they get to keep 90% of the 10x$0.35. The argument that it's for payment processors is utter bollocks.

Why do you think it's bollocks? It makes perfect sense. A transaction fee + % is common with payment processors. Couple that with new rules coming down the pipeline (as well as common sense when it comes to processing transactions for other people), nothing about the pricing is unreasonable. Quite the opposite, in fact.

The entire point of Patreon is to spread the transaction fee across the people you are backing at $1/month or $1/post.

If they had this 2.9%+$0.35 fee get charged when they charge my card, I would be fine with it. Its the per creator charging of it that is ridiculous. Most of the people I back is at the $1 level, which would be not viable with the new fee.

There is no good reason for this, as even paying to the creator should be lump sum via ACH, rather than hundreds of $1 transactions. ACH (a electronic check system in the us) charges a very minimal amount for a connection to the network to cover admin costs. Current fees[0] are $264/yr+$0.000185/transaction. Even with paying ACH fees for both ends (creator and the patreon) and refusing to aggregate, ACH fees are still a rounding error.

What they should be doing is offering you to pay via ACH to reduce fees so the creators can actually get a bigger share of the $1 you spend.

[0]: https://www.nacha.org/ach-network/administration-fees


> The entire point of Patreon is to spread the transaction fee across the people you are backing at $1/month or $1/post.

That's decidedly false. The entire point of Patreon is to support creators, and to make it easy for creators to get that support.

> There is no good reason for this,

There are. Legal reasons. Banking reason. Simply put, lumping together transactions is dangerous. Dangerous for creators, dangerous for patreons, and dangerous for customers. I'm surprised they did it this long.

> as even paying to the creator should be lump sum via ACH,

What does this have to do with the majority of people paying via CC?


> There are. Legal reasons. Banking reason. Simply put, lumping together transactions is dangerous. Dangerous for creators, dangerous for patreons, and dangerous for customers.

You still keep records of who paid who (eg: This dollar in creator X's account came from backer Y), they are "lumped" as far as the CC processor is concerned so you don't have to pay that per-transaction fee for each creator backed. Basically, as long as the transactions are internal to Patreon, the transaction fees should be inline with the cost of a few rows in a database.

> What does this have to do with the majority of people paying via CC?

If they really were interested in reducing fees, they would let people pay via ACH, which it currently does not look like they do.


They're charging 0.35 for moving some balance from one big transaction they charged me into accounts of the people I support. It's basically charging for an atomic move.

You seem to assume that each pledge is a separate transaction. But the entire advantage of patreon over doing pledges directly is that all my pledges are one transaction with them, and all pledges someone receives are one transaction. Sure, charge me 0.35+small % once a month as transaction fee.


> You seem to assume that each pledge is a separate transaction.

Incorrect. I know how Patreon used to work before this announcement. My understanding is they are splitting it up into separate transactions, which makes sense if you understand how credit card processing, monetary transactions, and all the legal ramifications around them operate.

What I do hear is a lot of people who haven't worked in the CC industry making baseless assumptions about how all this works.


PayPay, Google Wallet, and many other systems allows you to move money within the system for free. Only paying a fee when money comes in or out of the system.

What most of us are unhappy with this that they plan to split the pledges into one transaction per pledge.

Which will make micro payments unfeasible.


The updated FAQ explains the fee-per-donation: they're going to start billing donors' cards separately for each donation.

What it doesn't give is a plausible explanation for switching over to that.

Reduced complexity does not plausibly explain such a huge overhead increase.


So patrons will now be responsible for covering the Stripe fees, and Patreon is still taking an additional 5% for their services.

The Stripe fees were previously taken out of the creators' portion, so it made a big difference to a creator whether they had one patron for $100/month or 100 patrons for $1/month. But that was hidden from patrons, who could easily and happily pledge $1 to a dozen creators.

Can I now pledge 63 cents, so that the cost to me is $1?

Also, I'd be shocked if me pledging $1 to a dozen creators resulted in a dozen Stripe charges. Clearly Patreon should run those charge once, so my $12 costs only 70 cents from Stripe.


Patreon wants us to think they're Stripe fees, but they're not.

When I pay $17 for my monthly pledges, that comes out of my card as one single transaction, with one single $0.30 Stripe per-transaction fee.

Stripe also offers high-volume clients a discount on the 2.9% rate, which Patreon must be big enough to get.


> Stripe also offers high-volume clients a discount on the 2.9% rate, which Patreon must be big enough to get.

Yep. They pay 1.9% (source: https://patreon.zendesk.com/hc/en-us/articles/204606125-How-...)

Also, Paypal offers a 5 cents + 5% micropayments rate that they take advantage of.

The 35 cents plus 2.9% is clearly designed to make you think that they are processing fees and I'd be very surprised if Patreon wasn't putting at least half of that into their pocket.


5 cents and 5% is ridiculous if it is cost-plus, but if it is indeed a flat rate, considering how small some of these microtransactions can be, and the overhead involved for a transaction of any size, it starts to make sense.

Why would it? Patreon can batch them, charge you $16.55, pay out $11.40 to creators, pay out $0.61 to stripe, and pocket ~$4.54. Of course Patreon wants to pocket that $4.54. That's patreon taking a 27% cut instead of a 5% cut. Follow the money.

I tried changing a pledge to $0.63 just now, and the web form said I'd have to make it at least $1.00. So I canceled my pledge.

I cancelled all my pledges over this, it's a huge breach of trust IMO. I set things up to authorize Patreon to charge me $X per month. They unilaterally decided to use that authorization to charge me $X + service fees per month going forward. They announced this by sending me an email that takes several minutes and multiple paragraphs for me to understand that the cost to continue my Patreon subscription would go up next month.

I don't give authorization for recurring charges to companies that unilaterally decide to foist price increases on me.


Agreed, I've similarly cancelled all my pledges and I am very disappointed that Patreon has done so without a clear email and explanation of why to boot.

Since the graphs is Patreon's own blog post are so grossly misleading, I made my own: https://mneme.dedyn.io/shiny_users/ryan/patreon-fees/

Not surprisingly, the look nothing like Patreon's graphs. For any pledge of $4 or less (and probably a lot more than that), Patreon is now taking more of the pledge for themselves. Since this likely represents the vast majority of pledges, Patreon is effectively raising their prices without admitting that that's what they're doing.


probably because your `Patreon_Old_Max_Fee` and `Patreon_Old_Min_Fee` are wrong. The portion taken has never been as low as 2% on a $1 pledge. From their old FAQ: "Stripe charges 1.9% + $0.30 per transaction. PayPal charges 5% + $0.05 per transaction."

So, under the old fee system, for a $1 pledge, the service fee was either $0.32 for Stripe or $0.10 for PayPal. On a $10 pledge, it was $0.50 for Stripe and $0.55 for Paypal.


I just went based on the information given in their blog post, which said "an additional third party processing fee that ranged from 2% – 10%".

Edit: I'm not exactly sure how to calculate the fees based on the info in their FAQ. Taking Stripe as the example, they say the fees are 1.9% + $0.30 per transaction. So if I pledge $10, I guess that means that Patreon charges me an amount $X such that X * 1.019 + 0.3 = 10? And if so, do they take their own 5% cut out of $10 or out of $X?

Edit 2: I took my best stab at it and replaced the min/max with specific entries for Stripe and Paypal.


> I just went based on the information given in their blog post, which said "an additional third party processing fee that ranged from 2% – 10%".

that's probably because the average pledge size is probably much closer to $10 than $1

> I'm not exactly sure how to calculate the fees based on the info in their FAQ...

What you're guessing seems spot on. If you pledge $10 under the old system, then Patreon took a 5% cut of $10, and Stripe took 1.9%*$10 plus 30¢. So, the patron paid $10, Patreon got 50¢, Stripe got 49¢, and the creator got the remaining $9.01.


The average might be close to $10, but I'll bet the median pledge is much closer to $1.

This is really clean, how did you do this?

Not the author, but this is a R Shiny application. If you mean the plots, they are made with ggplot, a package in R.

https://shiny.rstudio.com/


Yes, that's right, Shiny for the web page and ggplot2 for the plots.

I'm a creator who uses Patreon. Most of my support is $1 pledges; I have a couple small pledges I make to other creators, as well.

I heard about this entirely through people talking about it on Mastodon. Didn't get any email from Patreon about this, not even lost in my spam folder; the only email I have from Patreon going back for a while is "hey you got paid", "someone made/changed a pledge", and "someone commented on one of your posts".

I'm not anyone huge, I make about $800 a month on a really productive month, and I don't make videos which is sometimes all Patreon seems to care about - I quit subscribing to their creator newsletter because it was nothing but chirpy articles on why and how you should be making video content!!11!! - but I kinda feel like, I dunno, maybe I should have had, like, some email in my inbox about this?

----

I really hope that everyone (including me) is misreading the detailed explanation of How This New Fee Structure Works, because it sure does sound like they're going to be imposing a 2.9%+35¢ transaction fee to every single pledge before they add up all of the pledges you've made to the dozen creators you might support on Patreon, instead of after. Which adds up really quickly.

If this is the case, I guess I get to see if being a Featured Project twice on Kickstarter is going to be of any help in getting into their new invite-only Patreon-alike d.rip...

edit: They updated the FAQ page on the new fees to address the concerns of the per-thing creators like me. https://patreon.zendesk.com/hc/en-us/articles/115005631963

>Q: How does this impact me as a per-post creator?

>A: As a per-post creator, your patrons will see the 2.9% + $0.35 service fee added to all paid posts. For example, if you are a per post creator making two paid posts per month, your patrons will be charged 2.9% + $0.35 for each paid post.

(Italics mine.)

are they, like, completely unbundling all of their charges from each other now? Why are we even using Patreon any more if that's the case?


Here's the email I got at 11:23AM this morning:

"Dear patron,

Your support is truly changing the lives of creators around the world. You give creators a reliable paycheck that enables them to do their best work. Thank you thank you thank you.

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.

Starting December 18th, we will apply a new service fee of 2.9% + $0.35 that patrons will pay for each individual pledge. This service fee helps keep Patreon up and running.

We want you to know that we approach every change with thoughtfulness for creators and patrons. By standardizing Patreon’s fees, we’re ensuring that creators get paid to continue creating high quality content. If you have questions or would like to learn more, please visit our FAQ here.

Sincerely, The Patreon team"


thank you <3

it's good to see how they're pitching this to the patrons, I've mostly just seen fellow creators running around with their hair on fire about this.


If you have pledges yourself, shouldn't you have gotten this email too?

Yeah, I do and I should. But I didn't. Which perturbs me.

Would you consider using Liberapay? Would be good to give those that want to support you a way to do so without having to put up with Patreon's latest antics:

https://liberapay.com/about/faq


I've been looking into it. The front page kinda gives me the impression that it's only for people doing open-source projects? I don't feel like sharing all the source files of my comics.

Liberapay is NOT only for people doing open-source projects. There is no requirement for you to release the source code of your comics.

However, from their FAQ: "Liberapay is only for donations, meaning that transactions must not be linked to a contract nor a promise of recompense." So you can't provide things specifically only to your patrons.


"but I kinda feel like, I dunno, maybe I should have had, like, some email in my inbox about this?"

I think this is what happens when you are a product not a customer...


I'm guessing they're NOT unbundling their charges. They're just pocketing a massive fee increase levied on all the patrons of multiple creators by making it per pledge.

I just cancelled all my pledges. This is absurd.

The whole point of Patreon was to bundle small charges to avoid these fees, and to hopefully make support more reliable/consistent for creators. If they're going to fail outright on the former pledge, then I want nothing to do with them.

I strongly urge others to cancel pledges, as this is the strongest feedback we can provide. There are many ways to support creators.


The really sad part is that they tricked people into potentially leaving their job and then ripped the carpet out from under them.

I'm really thinking of dropping pledges and simply mail them some cash but I'm afraid I'd skip the last step and hurt the creators I love in the end.


I dropped my pledges off the back of this news. I was only supporting one creator, so it wasn't that dramatic. Also, I left a comment before I cancelled indicating I was only leaving because of Patreon's business practices, and suggested I'd like to support the creator again if they open up an account with a competitor. Liberapay would be my preferred choice but as long as Patreon get the message and the creators don't have to suffer, some good can come out of it.

I canceled all my pledges too! Sure they were only $1/month each, but there were quite a few of them!

This is pretty crazy of Patreon. I mean - they can easily bundle pledges on charge. I don't understand why they'd drop a separate charge for each one, except for "fuck it, they won't care, right?".

They can bundle the charges to the patrons to reduce cost to themselves, while still charging fees as if they were making individual transactions.

I’m inclined to believe they’re already doing this.


> I’m inclined to believe they’re already doing this.

AFAICT (from my charges) they have indeed been bundling charges. Charging the %+constant fee for each patron given that there is no individual payment-processor action for each patron on the debit side is absolutely nasty.

I'm not asking them to eat payment-processing fees, I'm not asking them not to make a profit, I'm simply asking them to not charge for fees for transactions that never happened.

I hope Hatreon (or any other patreon clone) steals half of their userbase because they absolutely deserve to be punished and chastised for this manipulative nonsense (along with their banning legal-but-NSFW content producers); because nothing else but people exiting from Patreon will make them feel anything.


Hatreon's a platform designed explicitly and specifically for white supremacists, so maybe not them.

Yeah it's marketed explicitly to righties, but if the hard-right set can make their own patreon clone (with sensical fee structure); other people can certainly do as well.

I mentioned it not as an endorsement, but as a proof of concept. Since it exists there's no excuse for other people being unable to replicate it (without its political marketing, of course).


I didn't know that so I checked them out and when I saw their featured creators my skin started to crawl.

I think Hatreon was just designed to not censor things. At the moment that happens to be appealing to white supremacists and right leaning content creators, but I wouldn't be too shocked to see NSFW creators moving there soon.

The name is literally Hate-reon, my dude. Its audience is well-defined.

I can definitely see a Patreon alternative that might do better by folks getting some traction--Kickstarter as a PBC is interesting, I actually didn't realize Patreon wasn't. But I know a decent few NSFW creators and I can't imagine any of them going to where the Daily Stormer and Richard Spencer gets their funding.

Conflating self-declared Nazis with pornography is exactly what those Nazis would like people to do.


Conflating Nazis with pornography wasn't really my intention - I just meant that a site founded due to Patreon no-platforming people might also be a destination of NSFW creators when Patreon starts cracking down on them.

As for the audience of Hatreon, I guess I was just taking their about page [0] and community guidelines [1] at face value.

"Hate speech is protected speech. Hatreon exists in reaction to politically motivated no-platforming at sites like Patreon. Always consider your local, state, and national laws, but the site stands for free speech absolutism and will protect creators’ interests against sovereign and corporate threats. Do not abuse this protection."

In other words, "I disapprove of what you say, but I will defend to the death your right to say it." - which is a sentiment I can get behind.

[0] https://hatreon.net/about/ [1] https://hatreon.net/guidelines/


That's one way to look at it, and that's the only remotely defensible way one can wash their hands of aiding Nazis.

But it's dishonest. Taking money for Nazis is not the same as ensuring their right to speak. It means you're doing business with them. You are providing them aid and assistance, not even merely a place to speak (which no private citizen is obligated to provide and no private citizen should be removed from judgment for so doing). That's money that doesn't go merely to "speech" at all.

In no place and at no time in history has enthusiastic, freely undertaken business with Nazis made you freedom-loving or high-minded; it has only and ever made you, in the best light of history possible, a sucker and a sap (if not a collaborator). But it might make you money, so...


> In no place and at no time in history has enthusiastic, freely undertaken business with Nazis made you freedom-loving or high-minded; it has only and ever made you, in the best light of history possible, a sucker and a sap (if not a collaborator). But it might make you money, so...

Read more history. The tangent you're rambling on about both muddies the discussion and falls short of factual accuracy.

A man named Oskar Schindler enthusiastically and freely undertook business with actual Nazis and even became a member of the Nazi Party. His actions saved the lives of well over a thousand Jews and cost him all the money he had amassed prior to the war. Hatreon has nothing to do with this history and Patreon's poor terms even less so.


Psst. Schindler was not merely a collaborator, he was a Nazi. You know the whole story there, yeah? That he campaigned for Jewish labor because it was free slave labor? That he had an attack of conscience and reached minimally-decent-human-being status is certainly a thing--but all that enthusiastically-and-freely-undertaken business was Nazi-ass Naz business until his conscience, a notable omission in heildudes like Richard Spencer, made him confront that Jews are, y'know, people.

It is, perhaps, not exactly the hill you want to die on to go "b-b-b-but Oskar Schindler!". Stormfront wants heads on sticks and burning crosses on black folks' lawns. They don't care about Oskar Schindler and they don't care about the plausible deniability that Hatreon really wants suckers and saps to buy into. They know. They know it's there for them and only for them.

Don't use Patreon if you don't like their terms. Don't use Hatreon because they're for Nazis.


Given both the presence of "Hate" in the name of the site and the fact that it's one of Richard Spencer's revenue streams, I don't agree with your assessment that it's temporary and it's oriented towards "not safe for work" content.

Sexual content can be considered NSFW and should not be conflated with a "safe haven" for hate speech.


Plausible. Shitty, but plausible. If you're right, I'll be pulling every pledge I have immediately and telling every campaign that I'll happily return once they leave.

I guess I'll find out next time they run and I can count number of charges.


I can confirm my Patreon pledges to multiple people were charged to PayPal as a single transaction.

Under their new model? I wasn't sure if it's already gone through.

Existing charges. But it's hard to imagine Patreon would intentionally triple their service fee costs to themselves by charging pledges individually instead of in aggregate. The only thing that's changing is the service fees they're charging users.

It's not hard to imagine if you've ever looked at running a marketplace. ;) The one reason I'm not throwing stones yet is that the laws around money transmission are state-level and very weird and there's the possibility that they're trying to avoid getting slammed by then. Also, Stripe might have a beef with their bundling, too.

When I contacted them back in April when they were doing this, they mentioned changing over to billing monthly based upon when you first started backing a creator.

So instead of being charged once at the beginning/end of the month, you would instead be charged on the monthly anniversary of when you started backing someone.

I'm not sure they're (thinking about) switching over to this (yet), but I've seen mention of this in comments online, so, could be.

EDIT: They are:

> To do that, we need to move our payments system to treat your pledges like any other subscription service. In other words, we need a system that charges patrons at the time of their initial pledge, and on the anniversary of their pledge each month thereafter.


They appear to bundle pledges by the creator's numeric ID, so if you pledge $1 to 15 creators who signed up today, you'll get charged one transaction - but if you pledge $1 to 15 creators who signed up at various times over 3 years, you'll get charged up to 15 transactions. It's incredibly confusing as a customer to see this occurring, since I ended up at one point where one transaction contained a single pledge and the second contained ten of them.

They already do. I only get one charge on my account for like half a dozen patreon pledges.

It seems that will depend on their payment processor and the bargaining power of Patreon. If no processor wants to lower their charges there is not much Patreon can do. Similarly, if Patreon are not a big ticket fees generating customer they don't have much leverage.

How to do a profitable micro transaction is still a mystery.


It shouldn't depend on the payment processor; if the credit card payment is going to Patreon, they can batch up the charges however they way (e.g. they could batch up all of one customer's donations for a week to 50 different artists, and process a single transaction with their payment processor for the whole amount. They would then only be charged for a single transaction)

This is assuming that everyone is paying $1 across 50 different artists.

The question here really is - What is the distribution of backers and payment amount on Patreon?

If majority of their customers are, 1:1 ie one patron to one artist for $1. Then it is an issue which payment processor needs to look into.

But, if it is 1:50 ie one patron to 50 artists for $1 then I am sure Patreon will be creating a batch transaction.

Patreon's problem surely stems from the fact that 1:1 is more likely true.


Even if it was 1:1, actually charging the payment processing fee for the payment processed would be fine. The person with one pledge for $1 to one creator would be charged $1.38. The person with one pledge for $100 to one creator would be charged $103.80. The person with 100 pledges for $1 to 100 creators would be charged $103.80. Fine. With the rules they're putting into place, the person with 100 pledges for $1 to 100 creators will be charged $138.00 - with the other $37 going to Patreon. Not cool.

They should really let me charge up my account by $10 and then take it out of that until it gets below $1 and do it again etc.

No one has mentioned https://liberapay.com/ ?

They seem to deal with this problem by letting you fund a donation account and then disburse funds on a periodic basis. This is also similar to donor advised funds so I'm not sure why Patreon is doing this when other alternatives are available.


I just cancelled my two pledges on Patreon, and migrated them to Liberapay.

The process was surprisingly smooth and easy. We'll see how it works on the long run, but for now Liberapay looks like an excellent alternative. (Also they don't take automatic fees for their own finances; tip is on a voluntary basis).


Let's run the numbers: https://blog.patreon.com/updating-patreons-fee-structure/

For a $1 pledge: previously creators took home 85c at least, so Patreon was maxed out at 15c. Now they will charge the patron 37.9 cents and the creator an additional 5c. So now they are maxed out at 42.9c. If 15c was enough to break even this means 27.9c of pure profit. That's a _very_ nice profit rate! (The rent seeking is too damn high.)

Let's presume patrons decrease their patronage so they pay the same as before, so if they paid x before now they pay 1.029y+0.35=x ==> .97x-0.34. The patron takes home 95% of this, .92x-0.32 Previously they took home at least .85x. So we are looking at 0.07x=0.32 ===> 4.57

So if you were pledging below 4.5USD (let's be realistic: 5 USD, noone pledges cents, not sure the platform lets you) and drop your pledge such that Patreon charges you the same, then this hurts your creator. And many won't react rationally and do the .97x-0.34 calculation, just cancel because hot damn, did a company I authorized to charge me X amounts just unilaterally decided to charge me more without proper clear notice (I just checked my home page and I do not see a big read warning this month I will be paying more either on the home page or the pledges page.)

Oh and many creators have various perks at 5USD which now they need to drop to 4.52 USD (again, does the platform allow for cents?) and encourage their patrons to drop to that level. Patrons in this case pay 5 USD still and the creator takes home 4.29. Previously, the creator took home 4.25-4.65.


This should be at the top of HN. A tech company just cut the livelihoods of artists and many other important groups of people all over an artificial fee. This is disgusting and I hope a competitor beats them out ASAP.

It is both outrageous and unsurprising. This is how these companies ("tech" startups) are incentivized to operate. It is awful to watch this cycle happen over and over and over.

It also smells like another example of how taking VC money is going to ruin a startup that could otherwise have grown organically.

I can't really make sense of that article:

>That changes on December 18, when patrons will start paying 2.9% plus 35 cents for each individual pledge

Then:

>With this update, creators will now take home exactly 95% of each pledge with no additional fees

Suppose you're donating $1, the .35 fixed "service fee" alone is 35% of the pledge, not even counting the 2.9% variable amount. I don't understand how they end up with the 95% figure.


Did they really just try to define "amount pledged" as different from "amount the end user actually pays" so they can say "well now you always get 95% of amount pledged" but, of course, not 95% of what the user paid. Seems like a bad experience for the user that wants to pledge X and gets charged X+fees. At least the people who are getting paid are used to Patreon taking a cut.

Yeah, 10 pledges of 1 USD will cost 13.79 USD and end with 31% overhead.

Previously: patron pledges $1, patron pays $1, creator ends up with some amount significantly less than $1, depending on all the fees.

Soon: patron pledges $1, patron pays $1.38, creator ends up with $0.95.


> patron pledges $1, patron pays $1, creator ends up with some amount significantly less than $1, depending on all the fees.

from [1], the "previous" (current) situation the creator would receive 85-93% of the amount. So $0.85 from $1, vs .95 from 1.38? Unless I'm completely flobbing the maths, that's ~69% in the new system?

[1] https://blog.patreon.com/updating-patreons-fee-structure/


The pledge is $1, what the patron pays is different from the pledge, that's the point. (It's not a good system but I'm not sure what you're getting hung up on.)

They used to bundle CC transactions, when they stop doing that micro payments become infeasible.

So transaction cost for a lot of 1$ pledges goes from 5-10% to 31%.


Is it a common scheme? It seems super misleading to do it that way, why have a percentage fee on both sides? "I pledge $x, I end up paying more and the creator ends up receiving less".

It's uncommon in this context, common in other contexts. There are lots of things you can buy in retail stores that might involve fees. You might pay extra for using a credit card (versus cash) than the stated price to cover the processing fees. And it's possible that if you're using some service or intermediary for selling something then they might take an additional cut as well.

i'm not defending patreon here, but it is pretty normal.

Even the state takes both income tax and sales tax.


Not including taxes in the prices is a US thing only.

Most other countries have sane regulation that foster competition and transparency.


I know, I'm German after all and pay mehrwertsteuer on everything.

But wherever it is listed directly up front or not doesn't change the fact that the state takes money on both sides. When you're earning it and when you're using it.

The actual tax in Germany is about 50 %, it's just hidden in several smaller percentages


Let me add a bit of info for you that is the missing piece of the puzzle:

Previously: Patreon made 0.05.

Soon: Patreon makes 0.104


If someone pledges $1, the pledger gets charged $1.40 (edit: sorry, $1.38), and the pledgee gets paid $0.95.

Mmh, could you "show me your work"? Because I don't see how you end up with these numbers.

2.9% of $1 is $0.029

$1 + $0.029 + $0.35 ~= $1.38

95% of $1.38 is $1.311

Clearly that doesn't make sense.

Or does it mean that Patreon gets 5% from the creator's share and then 2.9% + .35 cents on your side? So if I want to pledge $1 then I have to pay $1.38 and the creator really only receives $.95? If so that seems misleading. Also in this case it would mean that in that case Patreon ends up taking 31% of the actual money spent by the pledger.


The pledge is $1.

The pledgee receives 95% of the pledge, $0.95.

The pledger is charged $1 PLUS the "processing fees", which are an ADDITIONAL 2.9% of the pledge (2.9 cents) and 35 cents fixed.

> Also in this case it would mean that in that case Patreon ends up taking 31% of the actual money spent by the pledger.

Yep, and batching charges means much of that 31% isn't actually going to real processing fees, but into Patreon's pocket.

Their recent (September) taking of $60M in VC money may provide a motive for this approach.


I believe that Patreon's claim is that the bulk of that money is going to the payment processor, although that argument falls apart if they are batching your payments (which is what they currently do).

And if they stop batching they aren't they just generating money for payment processor?

I for one don't want more than one email from patreon per month. Nor do I want more than one CC entry.


For those considering an alternative to Patreon, I have a self-hosted, open source payment platform that takes one-time and recurring donations via Stripe:

https://github.com/sircmpwn/fosspay

I offer this to my supporters in addition to my Patreon page.

https://drewdevault.com/donate

https://patreon.com/sircmpwn


That doesn't provide the benefit of batching, though. (Of course, now neither does Patreon.)

Have you considered putting up a hosted version that batches Stripe charges?


I hadn't, no. That sounds like a good idea.

If you accept money on behalf of creators, you probably need some kind of financial service provider license.

Handling chargebacks+fees might be a bit annoying as well.


Please do, and please announce that far and wide. There are likely many projects that'd like to use it but don't want to have to host it themselves, and you might want to catch the pile of current dissatisfied Patreon users.

And I wonder what if Stripe just offered this kind of service?

Patreon is just an additional middleman.



Lots of people unsubscribing apparently, screencap: https://twitter.com/lazygamereviews/status/93884540533643673...

I just did. I hope others do as well.

This sucks because I'm tempted to do it as well, but this means that I can't support the content creators that I like.

I really hope that a better alternative comes soon. I've seen a lot of people using https://ko-fi.com/ (and I've used it to donate to them a few times), but it's not exactly the same.


Creators won't bother to find alternative platforms until the users leave the harmful dominant one.

That sucks. LGR is great.

It is definitely a money grab. They're even making it so that you can't use your patreon balance to pay other creators, ensuring you'll need to pay their "service fee"

https://twitter.com/zandravandra/status/938897708286390272


Wow. I only have a pile of $1 pledges right now, and this will significantly increase my bill for almost no gain for the people I'm supporting.

Exactly no gain if I'm understanding it.

Well, the analyses that I'm seeing suggest they'll see about $0.05 more per pledge. So, not "no gain", but very little gain, and almost certainly some cost as patrons leave the service over the price increase.

Can you detail that math? I've seen math thrown around all over this thread, much of it contradicting. To me, this seems completely negative:

Before: 7-15% net fees - $100 = $93 or $85 dollars

Now: 8%+ net fees with near 30% fees for $1 and 10% fees for $10

That math is using net fees when considering the amount the patron pays vs the person gets. Patreon is pulling some shady math by pretending that the patron isn't paying the original fees as part of the total amount.

To me, it looks like for nearly all cases, fees are going to increase. I would revise my statement to "loss, not gain", even if all patrons stay on the service.


Sorry, I should have worded that more precisely. I was basing it on this: https://twitter.com/wombatoverlord/status/938849760198447104 and various pieces I've read by creators. It looks like creators were averaging around 89% in net fees previously, where they will now be averaging 95%. So, ~$0.05 more on a $1 pledge.

The problem is that that $1 pledge is no longer just $1. It's bait and switch math.

Another perfectly good startup killed by the dreams of grandeur of silicon valley investors.

Not everybody company is supposed to be the next Google, guys.


I was considering Patreon for some stuff I planned to publish in somewhat distant future, but now this makes me suspicious. On such a platform I'd rather want to have numerous people that give me $1 monthly rather that a bunch that pays some three-figure sum, should I want to live off those pledges. If a $1 pledger decided to not support me anymore, I wouldn't have lost a big part of my income, but if instead someone who paid $100 or $200 decided to stop paying, that'd be a big change. I'd actually prefer to not allow people pay me more than $10 or 20 to not allow that kind of thing happen, and to not allow myself to have the illusion thereof.

As far as I understand, this new scheme will punish the kind of pledger that I said above I'd prefer: who pledges a couple $ or so. If I want to pledge $10 monthly, I'd better give it to a single creator than to 5-10 creators. In this case as a potential creator I'd be happier with a bigger cut from what I receive in expense of free payments on the patron's side.


Don’t Visa/MC frown on pushing CC fees on to consumers? And why now? Is it simply a cash grab or did their payment processor ask Patreon to change their tune?

It looks like they are charging a flat fee to everyone regardless of how they pay. I think the CC companies tend to get mad if you charge a fee to people paying credit at stores where paying by check or cash is an option. IIRC you can also get around it by having a cash "discount".

I believe the general rule is that merchants can't charge customers more for CC payments than they do for cash payments. I assume Patreon doesn't take cash payments, so there's no issue there.

That used to be the case, but it certainly isn't anymore. 95% of gas stations in Los Angeles have a separate, lower, price per gallon for cash.

Providing discounts for cash, as gas stations do, was legal prior to 2013 (and remains legal to this day). In 2013, charging customers a clearly-notified fee for accepting credit cards was authorized for all merchants; most simply choose not to.

> In 2013, charging customers a clearly-notified fee for accepting credit cards was authorized for all merchants; most simply choose not to.

The federal ban on charging fees was lifted, but many states (including New York and California) also still outlaw this at the state level.

In addition, merchant agreements often prohibit it - for example, merchants that take American Express cannot charge fees for any transactions, even the ones that run on Visa or Mastercard.


In Australia I get charged separate CC fees when booking flight tickets, concert tickets, many filling stations, some food / hospitality businesses, etc. Surprised that's not normal in the US.

I believe they frown on advertising different prices for different methods of payment. If this fee is applied to all transactions regardless of the payment method used (which appears to be the case) then the card companies won't care.

In other words: They frown on competing. Who would have thought?

Flattr is making the most out of the situation :) https://blog.flattr.net/2017/12/patreon-fees/

So instead of losing 2.9% + 0.35 on donor and 5% on recipient, why not lose 16.5% instead? #winning

From the FAQ at https://flattr.com/faq#23 :

We take 7.5% of received revenues (to keep Flattr running, develop further and handle chargebacks and fraud). Our payment provider (MangoPay) charges 9% of received revenues (please see this blog post for more information). These fees are withdrawn on the 1st of the month for revenue received in the prior month.

Whenever money is withdrawn (currently the minimum amount that can be withdrawn is $10) a $3 fee is charged.


"We still think Patreon is a great solution for creators, but they now seem to be less about supporting creators plural, and more about supporting a creator singular (or perhaps one or two creators)"

Does anyone know what they're talking about with the "or perhaps one or two creators" part?


With the fee change, if you have a budget of, say, $15 to spend on creators on Patreon, it makes sense to split that into as few pledges as possible to minimize the number of times you pay the fees.

My guess is assuming this will change consumer behavior. Suppose bob sponsored 5 people at 1$ each before. Now if Bob gets charged a fee for each of the 5 contributions, he might change his election to 5$ to his single favorite creator, so that he is only charged 1 fee instead of 5.

This is doubly weird because Patreon only charges users once per month, so they are really only paying one transaction fee per user. They also charge VAT for european pledgers, already bringing up the pledge amount by 25%.

Wasn't there something recently about Patreon having problems (legal/regulatory) with the way they were bundling all the contributions for a user and only submitting a single card/processor transaction for the total?

If so, that might explain why they want to effectively unbundle everything again, even if it makes everything worse for everyone.

The marketing-weasel language of their "robust question and answer page"[1] is a little hard to take regardless of actual reason though.

[1] https://patreon.zendesk.com/hc/en-us/articles/115005631963-W...


It's perfectly acceptable from a legal and regulatory standpoint for a merchant (Patreon) to bundle together several small charges into a single transaction for efficiency; Apple and Amazon both do this for digital purchases.

The payments to creators are a separate series of transactions. If using ACH, there should be minimal fees.

On the one hand, Patreon probably needs to charge more to meet its costs. On the other hand, it's doing so in an incredibly poorly-conceived and messaged fashion.


Well if that's the case it'd be better for them to say "we do such and such because law requires us to do so", no?

Do you recall which rule/law required unbundling of charges?

This is most likely due to EU's new PSD2 regulations (see https://stripe.com/connect/eu-guide)

If you ride the guide in its entirety (or the text of the PSD2 at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX...), you would see that one-to-many transactions are fine under the PSD2 regulations.

The most likely reason for the change in fee structures is that Patreon simply needs to charge more money.


no, I'm just going from a fairly hazy memory of some article, so it may not be the case at all.

Could also have been something contractual with the payment processors relating to fraud detection or prohibited item/services, but it seemed like it might threaten their current payment setup.

I'll see if I can find anything, but something in the firefox 56-57->52 ESR downgrade appears to have eaten all of my profile's History, and I'm not sure I can be bothered rummaging through external backups :)



I think this is more psychologically jarring than financially jarring. It's like if Amazon turned around and said, we're making Prime free, but it's a flat 25 cents for your previously free delivery. Doesn't sound a lot, but that's a psychological barrier that'll pop up every time when you're about to order something.

Consumers really love knowing up front what they're committing to pay. Adding extra charges on is not going to help at all with adoption.


I'm fine with them taking 2.9% (although I'm sure their volume lets them get a discount below that), but $0.35 per PLEDGE is lunacy. They don't make individual charges for each pledge.
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