Patreon is changing the way pledges to creators are handled, with many in the creative community concerned this will lead to smaller incomes and fewer subscribers.
Launched in 2013, Patreon is a crowd-supported service that allows people — patrons — to financially support artists, writers, podcasters, musicians, journalists, game developers, models and other entrepreneurs. Patrons are encouraged to pledge either a monthly or per-post subscription that allows them access to new, often times exclusive pieces from the creator they’re supporting.
The shift in the way Patreon’s servicing fees are processed can get complicated, but here’s the gist of the updated model. As it stands right now, before the changes happen, creators cover Patreon’s five percent fee and all of the service processing fees. Simply put, if a patron wanted to pledge $1 to a creator, they would pay exactly $1 and not have to worry about an additional processing cost. According to the company, this resulted in creators losing anywhere from seven to 15 percent of their income covering fees.
On Dec. 18, a new model will standardize that fee. Creators will only pay five percent of the processing fee, instead of the seven to 15 percent, because those who pledge will have to pay an additional 2.9 percent and $0.35 fee each pledge to help cover those remaining costs.
That may not sound like a lot for patrons who support one creator a month at $10. But for patrons who back a larger number of creators at smaller amounts, it could have a bigger impact.
Let’s break it down a little further: Under the new rules, patrons who pledge $1 to a creator will see their payments go up to $1.38. Those who pledge $5 to a creator will pay $5.50. This means for people who back 10 creators on Patreon at $1 per post, it will cost them $13.80, vs. $10.64 if they donated that to one creator.
In a statement to Polygon, a Patreon representative said the decision to implement the service change came after nearly a year of experimentation. The representative said the standard service fee the company decided upon was designed to impact creators and patrons as little as possible.
We think endlessly about the creator and patron impact for every decision we make. This is a change we spent a lot of time thinking about (almost a year!). After running tests with both creators and patrons, we settled on a fee that would impact creators and patrons in the smallest way possible, considering both the amount that patrons pledge and the likelihood that they’ll keep supporting their creators on Patreon.
The creator community, however, disagrees. Backlash from those who use Patreon as a way of keeping their work going have spoken out on Twitter about the change, asking the company to reevaluate its decision. Their biggest concern is geared toward the thousands of patrons who pledge $1 or $5 amounts to a number of creators or channels.
Greg McMahon, a professional animator who built his business up on YouTube but has recently joined Patreon as a way to sustaining costs associated with time spent on projects, told Polygon it’s the $1 and $5 tiers that represent the backbone of Patreon’s pledging community.
“The vast majority of my patrons are only pledging a dollar or two, which is something I encouraged when I launched my Patreon in the first place,” McMahon said. “With this new fee structure in place, the idea of pledging a small amount is going to look a lot less attractive to many potential patrons, and could even convince current patrons to leave. Patreon is a fantastic way for fans to support the creators they enjoy, so I really hope the folks in charge will see the potential negative impact this change could have and decide not to go through with it.”
McMahon, who has over 200 patrons pledging just under $450 a month, said although he only joined Patreon in recent months, he’s concerned about what the future of the company looks like if the decision to implement the new fee policy goes through. McMahon added that if the “change really has a bad effect on Patreon then I might have to look elsewhere for ways to make money with my work.”
McMahon’s voice joins the number of creators who are asking Patreon to leave the current fee system alone. Many creators on Twitter pointed out they don’t mind paying the varying process fee if that means patrons won’t be forced to pay an additional cost for supporting work on the site.
Phoebe Seiders, a writer for a podcast called “Under Pressure,” which makes just $40 a month on Patreon to help cover production costs, said it’s a matter of looking at the bigger picture. Many people on Patreon pledge to more than one creator; Seiders currently supports 16 creators on the platform, which is mostly done through $1 pledges. If someone has a hard limit of $10 that they can allocate to supporting talent on Patreon, that may drop to six or seven creators when the new processing fee scheme goes into effect.
“You’re going from $1 to $1.38 or from $5 to $5.50,” Seiders said. “You’re forced to have to do the math and figure out how to make that $1 stretch.”
Patreon views it differently. In the company’s blog post about the upcoming system, the payments team noted that they “approach every change with a creator-first mindset, aiming to help creators grow their businesses.” The team added that while they’re aware this may result in patrons canceling their subscriptions at first, “we know this will help creators earn more money in the long term.”
To brace for the change, Patreon told creators it was giving “advanced notice so that you and all patrons have an opportunity to cancel your pledge if you no longer wish to continue your membership with the updated service fee.”
The creators-first mentality that Patreon’s team is reportedly addressing the situation with is being questioned by the very community the company has sworn to protect. A Patreon representative told Polygon that despite accusations from the community that changes were being made to profit the company, that wasn’t the case.
“Patreon's fee — then and now — is 5 percent,” the representative said. “That's all we keep. So this isn't about Patreon making more money because of this change.”
Not everyone is convinced. Seiders told Polygon that she “can’t help but believe that Patreon needs to make more money on the process,” and that’s why the community is seeing the shift in how service fees are being handled. Seiders said this moves some of the weight off of the company and drops it on those who are pledging.
“It’s a business and everyone has to make money to live,” Seiders said. “They’ve tried to build a different structure of fees that looks like understandable for creators on the surface, but it really comes down to Patreon getting more money.”
As McMahon noted, “this is the first time a fee is placed directly on the patrons,” and it’s difficult to imagine what the company is going to look like if people who pledge $1 and $5 donations suddenly stop. McMahon said he’s enjoying being on Patreon and hopes to continue it, but questions what that future looks like.
He’s not alone in that, either. Seiders told Polygon that if she were able to talk to the payment team and executive committee at Patreon today, she would appeal to the company’s concern about the future, and ask them to take time to examine how this may hurt Patreon’s growth in the future.
“This is really where it’s going to hurt the most,” Seiders said. “Of the projects I’ve seen people back over the years, as they grow from $100 or less to over $1,000, they have absolutely been built on the backs of these $1 to $5 pledges. To penalize people who want to pledge at that basic level ... you are gambling on enough high rollers coming in and then growing and sustaining on that pledge base.
“You’re basing this decision on a gamble that may not pay off.”
As it stands, Patreon’s new service fee will go into effect on Dec. 18. A company blog post confirms that creators will see the “new rates will apply to your monthly pledges starting Dec. 18 so you'll see your first payment with the fee included Jan. 1, 2018.” More information on how this will affect both patrons and creators can be read about on the company’s Q&A page.
Update: Patreon’s payments team updated its original blog post after the community retaliated against the service fee changes. The blog goes further in-depth to explain why these changes are happening, noting the way patrons pay creators will be treated like “any other subscription service.” The update added that “we need a system that charges patrons at the time of their initial pledge, and on the anniversary of their pledge each month thereafter.”
The blog further states:
Historically, Patreon set a flat 5% fee for our service, with an additional third party processing fee that ranged from 2% – 10%. Some creators were hit by these fees much more than others, and it wasn’t predictable month to month. Right now, we keep those fees as low as we can by charging patrons once every month across multiple pledges — that’s why all charges come on the first day of the month. But if we move to an anniversary-based subscription model without a revised system, the fees would shoot up for creators.
Patreon’s update ends with the company reiterating this “was never (and still isn’t) about making more money for Patreon as a company,” contrary to remarks from creators and patrons online.
Creators began posting screenshots on Twitter last night of their patrons unsubscribing following news of the service fee change. Polygon has reached out to Patreon for more comment on the situation.