Patreon has been an amazing tool for podcasters to give listeners and viewers a convenient and easy way to provide value back to the shows for the value they receive. As I’ve said many times, the best part about Patreon, in my opinion, is that you, the patron, are in charge of everything.
You get to choose how much money to spend a month or per show. You get to choose how many creators you want to support. You can change your patronage at any time to whatever you want.
On the creator side, it’s been a bit of a mystery how much money we get paid from those who contribute. I haven’t spent much time or energy trying to figure it out, but I understood the basic idea.
If I get a notice saying you’ve pledged $1, it doesn’t necessarily mean that I’ll be getting a dollar. There will be a processing fee, say from your credit card company or PayPal, and there’s a processing fee from Patreon. There’s also the matter of how many people to whom you’ve pledged, which changes my fee depending on how much content the other creators create. I know I do ok, but I couldn’t for the life of me predict the revenue.
See how confusing this is?
In my case, I don’t depend on this for my living. I don’t mind donating my time and energy, and in fact I thrive on it, but having it also cost me money isn’t ideal. I like the patronage model because I get to have my fun and yet it’s pretty close to cost-neutral.
This week the folks at Patreon decided to make the business model less confusing for the creators, (Link to the blog post from Patreon explaining all this.) but the model they chose is more confusing for patrons. It also drives up the cost to patrons, and the smaller the dollar amount pledged, the worse it is on a percentage basis. Let’s walk through some math.
In the new model, Patreon will pay creators exactly 95% of the pledges to their shows. That sounds great, right? But in order to accomplish this stabilization and predictability for the creators, they added cost and complexity to the patron side.
For every transaction, patrons will pay $0.35 plus 2.9% of their pledge. That sounds predictable, and in a way it is, but it means your cost changes dramatically based on how the creator has chosen to charge. I set up my Patreon to charge patrons for every show I produce. That means if you pledged $1 per show, your monthly cost was $4. But with the new model, you’ll pay $1.38 per show, or a monthly cost of $5.52 which is a 38% increase in your cost.
But if I change my plan to charge monthly, you’d pay $4 *1.029 + .35 = $4.50. That’s a lot better. It’s still $0.50 more but that’s 13% more, not 38% more.
One of the promises of Patreon was that you only paid if the creator actually produced shows, which made the per show charge so attractive. Of course with the NosillaCast you’re pretty much money in the bank that a show will come out every week, but there’s a lot of shows that are much more intermittent.
In the short term, it makes sense for me to change our Patreon model from per show to per month. The monthly plan means you’ll pay in advance for a month’s worth of shows and it renews on your own monthly anniversary signup date.
If I change the plan to monthly, I hope your per show pledge will turn into a per month charge. The bad news for me is that my revenue will drop by 75% instantly. But that’s BETTER than any other scenario because it puts YOU in the driver’s seat to push it back up. Your trust is much more important to me than this money.
I have written to Patreon explaining that I don’t think they understand that the patrons are their customer, not the creators. You are the ones paying, not us. I’m also contributing to an open letter with the Diamond Club/Frogpants network people including Tom Merritt explaining that this model doesn’t work for us.
The CEO of Patreon, Jack Conte, has gotten blasted for the last few days over this. People are not happy. People are leaving Patreon in droves for some podcasters. @jackconte tweeted this on Friday:
Hi creators and patrons — I’m hearing and seeing all the feedback. I spent the day on phone calls with creators. I’m reading the tweets and emails. I’m collecting my thoughts and will share more next week.
I think I’ll leave the accounts alone for now and wait to see what comes out next week. But please be assured that I will do everything in my power to ensure that you are treated fairly and that you are the one in charge of your own costs.
If you have comments, feedback or suggestions, please bring it on.