There’s been a lot of uproar about Patreon’s recently announced changes to their fee structure, due to kick in in a week’s time and be applied to the December billing cycle (paid in January). While Patreon has framed these changes as benefiting creators, a lot of creators feel as though their patrons are being penalised for supporting them, whilst many patrons who pledge less than $5 per creation / month are nervously re-evaluating whom they can afford to pledge to.
In the midst of all the noise, it’s taken some time to work out just what’s going on, why it will work for some people, how it will hurt and what’s just plain aggravating. Read on for my take on the matter, and what it will mean for patrons and creators going forward.
Just what are the changes?
Previously on Patreon, a potential patron would make a pledge – a set dollar payment to a creator either on a monthly basis or per work the creator posted on Patreon as “payable”. I’ve tried both and have settled on per-episode pledges as I’ve eased off from my two episode per month schedule.
Creators could encourage patrons to chip more in by offering them rewards at specific dollar amounts, like: “Join my exclusive patrons-only livestream for $10.00 / month and get a shout-out in the next episode!”
When Patreon processed the payments, it would take 5% for itself, then a further deduction for payment processing; once the payment was sent to the creator’s financial institution, that company would also take a variable cut. It’s this last cut that sucked somewhat; in my best months, I’d seen patron payments of $108 (three great months in a row, April-June 2017) result in actual deposits to PayPal of between $92 and $88.
Patreon must have got a lot of complaints about this discrepancy (including some from be before they explained what was going on), as they’ve decided on a new structure that will result in a reliable, transparent and consistent fee structure by transferring some of the fees onto patrons’ pledges. Now, a patron must pay 35 cents plus 2.9% of their pledge on top of their nominated pledge as processing / payout fees; after that, Patreon takes its 5% cut and passes the rest of the pledge on to the creator with no further fees or deductions.
To try and make this all make sense, I ran some figures based on a real-world example – my own – of how the changes to Patreon’s fees can affect patrons and creators. I’ve attached a screen grab below; the pledges are at their current level and the 85% and 82% payout estimates are based on the aforementioned great months.
Every cloud has a silver lining, and these changes do work out for some.
- As Patreon has stated, introducing this fee structure means that creators have complete clarity on their final payout; the previous black-hole of “payout fees” is eliminated.
- Based on the variance in payout over April, May and June 2017, it appears that creators whose patrons pledge $5 or more will consistently see more of what their patrons are paying than under the prior scheme.
According to my figures, the change to Patreon’s fees would work out better for me by around 60 cents per month, in the main because 62.5% of my patrons pledge $5.00 or more. That said, I’ve not posted a new episode since before the changeover, so I’m not sure whether / how my patrons are planning to adjust their pledges.
Unfortunately, the naysayers do have grounds for complaint, particularly those who rely on or make smaller pledges.
- Creators who rely on $1 pledges – the minimum pledge on Patreon – will only see 69% of what their patrons actually pay Patreon. This percentage is far less than my worst month on Patreon due to payout fees.
- This also puts more pressure on potential patrons to pledge at higher levels; the more you pledge, the less impact the 35 cent flat fee has as it becomes a smaller portion of the total pledge fee.
- Patrons with limited budgets who spread their pledge money as lots of small payments to several creators will now have to make a Sophie’s Choice; where $10.00 used to cover ten $1.00 pledges, it can only now cover seven $1.38 payments, leaving three creators down a patron.
- Patreon claims that patrons were taking home at most 93% of patrons’ payments under the old structure; under the new one, a patron must pay $101.19 (i.e. pledge $98) per work/month before creators see 92% of it. Even on a $1,000,000 pledge, the maths top out at 92.32%.
Worse still, this new structure shifts not just the fee load but some of the uncertainty back toward the patrons.
- Under the old structure, while there was no guarantee of what creators would receive (though a cut higher than 20% seems very unlikely), the idea of a “pledge” was a real concept for patrons: If you pledged, $1.00, you paid $1.00. Now, however, the “pledge” is a false concept for both sides of the equation; if a patron pledges $1.00, they actually pay $1.38 (35 cents flat fee plus 2.9% of their pledge), whilst creators still only receive 95% of the pledge.
- As of this writing, Patreon’s backer rewards scheme is based on pledge level, not actual payment; this means potential patrons are being sold on a fee different from what they actually pay. While this isn’t unusual in other online sales, the additional fees typically cover postal rates for physical goods; I can imagine many patrons struggling with the idea that they have to pay 50 cents on top of a $5 pledge to “post” their electronic pledge to their creator (who still only gets $4.75 of it).
How it all shakes down
Overall, the changes seem set to benefit patrons with larger backers whilst penalising those who rely on small pledges. If Patreon was set up to help the little guy, it seems the line under which you’re too little to ride (which was always there before at $1.00) has just got higher.
Some may advocate that creators should increase the value of their higher pledge rewards to make them more of a win-win. To my mind, though, one of the beauties of the previous Patreon model was that, thanks to $1.00 pledges encouraging more people to pledge a little each month, creators didn’t have to be that sales-y. They could potentially just do their thing for free and let the broader crowd make mountains out of mole-hill payments. (Hell, as far as I know, most creators don’t offer more than a “Thank you!” as a backer reward for a $1.00 payment.)
Patreon now has a reputation for building a reputation for helping small artists, then shafting them in order to attract richer patrons. This is of concern to me, not just if I decide to do more episodes of Paid to Play. If I decide to seek patronage for Only In Death: The Secret Mission Logs of Kill-team Atromitos next year, the negative press around Patreon and the genuine badness and ugliness of their new fee structure means I’ll have to work harder to convince folks that giving me their money on Patreon is worth their while. If it didn’t before, the “Patreon” brand has now left a sour taste in a lot of folks’ mouths.
Time to start shopping around?