Patreon, Greg Miller and the real cost of going indie

"What are they going to do for health insurance?"

This was my depressingly adult reaction to the news that the Kinda Funny crew quit their jobs at IGN to go indie with a Patreon-supported business. "We had great jobs, great benefits," Nick Scarpino said during the introduction video. And that's gone now, they're on their own. It's a move many of us in the media are going to be watching with great interest.

To date the crew is pulling in $15,761 a month from one Patreon, and just over $19,000 a month from the other. That's over $408,000 a year! They're rich, right? The age of fan-supported content has arrived, and the publishing world will never be the same.

Hold up a bit

The conversation around these numbers has often been "they're doing amazing!" but as someone who has worked in online publishing for over a decade, I can tell you: They're in for a hard road and it's going to take much more work than most people would assume. They'd likely be the first to admit it.

The economics of this move are interesting, though. It took approximately 5,500 patrons to reach $34,000 a month, which is amazing. In the traditional ad-supported model, assuming around $5 per thousand readers — which could be wildly inaccurate depending on the ads being shown against IGN's content — those viewers would be worth $27.50. In total.

It takes an order of magnitude fewer fans to support yourself if those fans are willing to throw you a few dollars to support your business rather than selling those eyeballs to advertisers. The proverbial middle-man or woman has been cut out.

So by moving onto Patreon, Greg Miller and company were able to take a valuable and appreciated resource — their most dedicated fans — and change that value from $27.50 to $34,000. Each fan is now worth more than $6 ... and that's assuming no duplication between the two lists.

That is a powerful move to make, and it's even more refreshing to think of your audience not as a "click" that's worth fractions of a penny but as a person who is willing to give you a few dollars to do something they appreciate. The fact they now have two very successful Patreon accounts is kind of interesting, but it shows just how much pull they have with their fans.

The emotional fulfillment they receive from having that relationship with their fans can't be measured directly, but it matters in a very real way. Owning your own product is also worth a good amount of piece of mind. It's clear that Kinda Funny as a whole cares about the product, and having control of that content is worth something that can't be measured in dollars and cents. Many creative individuals are willing to work 12 hours a day to avoid a nine to five.

They were also kept from covering things like video games and comic books in their shows. That was IGN's world, and the idea that some of the site's biggest names were going after that audience in their spare time couldn't have been comfortable. Now that Kinda Funny can deal with the biggest games and movie news, it's likely the audience will expand rapidly. No topic is off-limits, and the lack of video game content had to have been a limiting factor in their growth before this move.

But keep in mind you're not paying money to these four individuals personally, you're funding their company, and that's where things get interesting.

Where does the money go?

So let's say Kinda Funny is pulling in $408,000 a year from Patreon. But even that is misleading, as Patreon takes eight percent in fees, which is how the company makes money. It's not a bad deal at all, but that removes $32,640 off the top, before anything else happens.

Patreon is also not tax free, it's money you're taking in with the promise of delivering a product. How it's taxed is an open question, and much has to do with how entities like Kinda Funny handle their books and incorporation. Remember, you're not funding four people directly, you're funding a company in which payroll is only one of many expenses.

To even find this out they're either going to have to hire an accountant, which costs money, or get good at books, which has a time cost. These are things that are handled by other people when you have a job at an outlet like IGN, but those jobs fall directly onto your shoulders when you go independent.

Ask an indie developer how much time they spend on payroll, taxes and paperwork versus game development. It's eye-opening.

And of course, they have to pay for things like health insurance. The shift from content creators to small business owners is huge, and includes much more work than people assume. The power of owning your content and interacting directly with your audience has to balanced with the idea that you're now going to be doing much more work to keep the ship running. If you're doing twice the work for even twice the profit, which would be a great outcome, you're still only breaking even.

Let's start with the $408,000 a year, which isn't as much as it sounds when you want to create the kind of video and podcast content Kinda Funny wishes to sell to its audience. You lose eight percent to Patreon, you lose another chunk to taxes, every time you have to cover a show you're paying a few thousand for plane tickets and hotels, not to mention video equipment and upkeep, none of which is cheap if you want to produce a good-looking and sounding product.

Once all those costs are removed, the four men involved with the company get to see what's left for salaries, which is how they'll do things like pay rent and, you know, eat food. Beer is optional. It's very possible that the money left over from business expenses, split four ways, matches their IGN salaries and benefits. I actually wouldn't be surprised if they took a slight pay cut when all is said and done.

Leaving IGN was a bold move, and they haven't yet "made it" in the sense many people watching the Patreon assume. They've begun the process of building a media company, which is a long and expensive proposition. What Patreon has done has likely allowed them to be in the black and pay themselves a very respectable salary for the first year, which is a huge achievement when it comes to selling content.

As they discuss in the video embedded above, the door is also now open for things like paid personal appearances and other kinds of promotional work. The money made for creating content as Kinda Funny is only part of the value of going independent; there are plenty of ways to make money in this space outside of Patreon and ads on the content.

They're also going to be working much harder due to the fact they have to either do everything themselves, or pay for the help. They own all their success, but with that comes the scary responsibility of owning every single bit of behind the scenes work that goes into building that success.

There is an idea that if you enjoy doing something you should be paid less, and it's hard to fight that perception when people have such a skewed perception about what it takes to launch an maintain a company like Kinda Funny. The upside is that they can now focus on that work exclusively, without first putting in a full day's work at IGN. The downside is that the Kinda Funny infrastructure consists of four people; every bit of work has to be either done by them, or paid for by them.

So what does this mean?

Leaving IGN was a huge leap, and the success of the Patreon has to be gratifying, but this is where the work begins, not where it ends. No one is laughing their way to the bank in this deal, they have just about the minimum amount of money needed to create their content, explore the space, and make a damned respectable living in payroll.

This isn't meant to make you feel bad for these individuals, they're in an amazing position to do great work. They're smart guys, who likely did their due diligence about what this was going to mean and the amount of work it would entail. If anything I respect them more having given some thought to what this approach takes, and the emotional cost it brings to your personal life. I also know enough to realize that they're not quite at the gold-plated Lambo phase of their lives yet.

They're also at the mercy of the fans who support them via Patreon. It's very easy for someone to get angry at something someone said and pull support, which may make criticism of pop culture a bit tricky. It's hard not to feel beholden to your audience when they're paying for your existence. Whether or not that's better, or worse, than the traditional ad-supported model remains to be seen.

Kinda Funny has taken the leap into independence, and from basically day one they have their expenses covered with enough money for four people to pull an above average salary in content development. That's a huge accomplishment in this business, and it likely wouldn't have been possible even a year ago.

What I want this story to do is to put into perspective how much money it costs to get to that point. There is no huge flood of cash here, this is four people working very hard to make a very decent livable wage in content. That $408,000 a year is a workable budget for a four-person media company, but it's far from obscene. It's a realistic budget for the work they're going to be doing.

It's also very possible that in terms of hours worked and money cleared on a per-person basis they're making less than they made at IGN. What they're earning is the possibility of greater success, and that success will be owned by them free and clear. That's an amazing feeling.