• About & Contact Us
  • SEO Community

Ulancer.com

    • Latest Stories

      What is new?

    • Square acquires corporate catering startup Zesty

      April 19, 2018

    • PlayVS wants every high school to have an esports team

      April 19, 2018

  • News
  • How to’s
  • Writing
  • Startups
  • Jobs
  • More
    • CMS Tools
    • APPS
    • Web Resources
      • Advertising
      • Firefox
      • Scripts
      • Tools

Why content crowdfunder Patreon is halting its hated fee change

  • by Ulancer Contributor
  • In Startups
  • — 13 Dec, 2017


Overhauling the creative economy turns out to be quite tricky. Following massive backlash, Patreon is at least temporarily pausing its plan to change its payment processing fee structure on December 18th from charging creators 2%-10% on the first of the next month to charging patrons 2.9% plus $0.35 per transaction up front and on the monthly anniversary of their first pledge beyond the 5% Patreon takes. “We messed up. We’re sorry, and we’re not rolling out the fees change” CEO Jack Conte writes. He tells me “We got in the way of the creators and their fans.”

The subscription content crowdfunding company’s goal was to prevent patrons from being able to sign up and get access to exclusive content and then cancel their subscription before paying on the first of the next month, and to avoid users being charged immediately and then again on the first of the next month so they’d essentially be doubled billed if they pledged near the end of the month. Pro-rating wouldn’t work either since patrons could sign up for a big $100 a month subscription, experience super-premium access to content, then cancel a day later having only paid $3.

Patreon CEO Jack Conte

But the problem with the fee change was that it prevented batching payments so patrons would pay just one processing fee for all their different pledges, and instead charged patrons the fee on every different campaign they support. This significantly boosted fees for patrons who only pledge a dollar or two per campaign, and ones that pledge to multiple campaigns and therefore get charged multiple fees. Patreon also admits it didn’t get enough direct feedback from creators and rushed a mere two week timeline for implementing the change.

So after a painful week of calls with creators who said patrons had cancelled their subscriptions to avoid the higher fees, Patreon is halting the change until it can receive more feedback and find a better path forward. The retreat shows a level of maturity at the company, even if also some lack of foresight.

Patreon raised $60 million earlier this year at a $450 million valuation to build out more monetization tools for content creators from video makers and comedians to illustrators and models. With $107 million in funding, many assumed Patreon was on stable enough financial footing to avoid having to change from its existing fee structure where it takes a mere 5% rake — compared to typical 30% charged by platforms like Apple and Google’s App Stores and 45% charged by Facebook and YouTube for ad revenue shares.

But “the system that my co-founder came up with 4 years ago in 25 days” needs to be updated. Patreon has to abide by credit card processing rules while keeping enough revenue to stay alive. Conte tells me Patreon still has a bunch of new premium tools in the works for creators, a storefront for selling merchandise for example, that will be unveiled in the coming year and will help it earn more money to keep the platform sustainable. But many creators surely construed the payment structure change as a way for Patreon to jack up fees.

The episode demonstrates just how tenuous it can be to alter the foundations of monetization systems that independent creators rely on. YouTube has had its own problems with creator backlash after pulling ads and demonetizing more videos and creators in order to appeal to family-friendly advertisers. Conte tells me the plan going forward is to “Work more with creators one-on-one, show them the problems that we’re trying to address, get more feedback earlier, give creators more lead time, do more qualitative research . . . and honor the idea of letting creators own their relationships and run their businesses the way they want to run them.”

After speaking at length with Conte, though, Patreon seems stuck between a rock and a hard place. Keeping the fee structure sustainable for the startup, preventing creators from having their content accessed without fair payment, and avoiding overcharging patrons for processing fees or fractions of a month of access seems somewhat intractible, otherwise the company would have come in with a better solution than its first attempt. We’ll see if it can create something that works for everyone.


News source

You might also like...

  • Uber confirms SoftBank has agreed to invest 13 Nov, 2017
  • Join me for an evening of crypto with writers Paul Vigna and Michael Casey 19 Feb, 2018
  • With $70M from Alphabet, United Masters replaces record labels 15 Nov, 2017
  • As 99designs turns 10, CEO Patrick Llewellyn plans for an Australian IPO 14 Feb, 2018
  • Previous story INSIKT raises $50 million to lend to low-income communities
  • Next story Comcast reiterates a shifting promise of ‘no paid prioritization’
  • RSS
    Receive Freebies & Latest Posts Directly To Your Email - it's Free!

    • Recent Posts
    • Most Popular
    • Comments
    • IQ-pZI_YrIcSquare acquires corporate catering startup ZestyApril 19, 2018
    • CwWjOVt7b0IPlayVS wants every high school to have an esports teamApril 19, 2018
    • item-page-cryptokitty.pngCrypto-collectibles and Kitties marketplace Rare Bits raises $6MApril 19, 2018
    • freelance-dream-590x354.jpg7 Resources to Help You Start Freelancing From ScratchApril 19, 2018
    • slider_wp_03Best collection of WordPress Slider PluginsJuly 5, 2010
    • Joomla template builderTop 8 Free Joomla Template GeneratorsJuly 19, 2011
    • 40+ Best WordPress Plugins for Comments40+ Best WordPress Plugins for CommentsJune 18, 2011
    • wptheme2A Collection of Free WordPress ThemesJuly 11, 2010
    • Troy on:Useful List of Best Magento SEO Extensions For E-commerce Store
    • Роман Оныщук on:  15 Most Popular Cloud Applications and SaaS Services for Business
    • Yemli Lala on:How to Outsource Your Freelance Blogging Work with Integrity
    • Sammy May on:Chip, the chatbot savings app, raises over £1M in crowdfunding with plans to apply for a banking license
  • Staff Picks

    • slider_wp_03Best collection of WordPress Slider PluginsJuly 5, 2010
    • Joomla template builderTop 8 Free Joomla Template GeneratorsJuly 19, 2011
    • 40+ Best WordPress Plugins for Comments40+ Best WordPress Plugins for CommentsJune 18, 2011
  • Recent Posts

    • Square acquires corporate catering startup Zesty
    • PlayVS wants every high school to have an esports team
  • Search Our Blog

  • Ulancer is an insightful freelance blog and resource site. We provide intuitive articles that cover Photoshop tutorials, time-saving management tips covering a broad range of topics. We also have an active freelance community forum, there you can meet other freelancers that share your common interest, socialize and chat about freelance trending news as the occurred.

© Copyright 2013 Ulancer.