Patreon slammed after pitching fee hike as boon for creators


#1

Originally published at: https://boingboing.net/2017/12/07/patreon-slammed-after-pitching.html


#2

Patreon only changes my card once per month, no matter how many projects i am supporting so why do I need to be charged multiple processing fees? Its a single charge.


#3

Gee wiz, looks like it’s time for a potential Patreon rival moment to shine. And if there isn’t one now is the time to get that going.

Edit: Checked and there’s loads of different kinds of alternatives. Some are more DIY and allows a creator to set everything up themselves on their own site, others offer an existing platform, others just offer the option to setup re-occurring payment type of subscription.


#4

Maybe the decision was made by someone about to leave for a job at Kickstarter’s newly relaunched Drip service?


#5

That’s going to be tough if net neutrality goes away.


#6

When you go to the grocery store and you pay with a credit card, there is a merchant’s fee. However, it is either illegal or a violation of the merchant’s agreement, for them to pass that fee onto the customer. That’s why you pay the same for the loaf of bread no matter what payment method you choose, even though the store may actually lose money if you use something like AMEX, which has a large fee.

How them is Patreon able to pass this fee onto either the patrons or the creators? Patreon itself should have to pay these fees and they should be invisible to all other parties. Merchant’s fees are the cost of doing business.

And as a previous poster pointed out, Patreon is aggregating these charges into one per patron per month, so the fees should actually be significantly reduced because the number of total transactions is reduced.

It’s understandable that Patreon needs to take a cut of each donation, because how else can they pay their costs including hosting, employee salaries, and even the transaction fees? If they initially set that cut too low, and need to raise it, then that’s a mistake they have to pay for. If the cut is too high, they can lower it to make people happy, or spend that extra money improving the service. The mistake was in actually making the situation too transparent, giving people enough ammo to complain.

Also, is this change really that much worse? Will people lose patrons? Maybe, maybe not. I don’t know. What I do know is that any time a major site or application changes something, people get mad, and then the anger goes away. There was a lot of anger when Patreon changed its logo. Where is that anger now? I bet if Patreon tried to get rid of the ugly logo a few years from now, people would get mad. If they tried to change the pricing back to the old way in a few years, I bet people will be mad about that as well.


#7

Well Patreon type sites aren’t exactly generating the kind of traffic/usage as sites like Youtube, Netflix, Pandora, etc. So i would presume they’d be ok regardless, however everyone will be affected if net neutrality goes away one way or another.


#8

This is not exactly true. The way these rules are applied are a little odd, as none of it is applied directly to the merchants, but the card networks (Visa, MasterCard, etc) enforce these rules on the clearing providers (effectively the the banks merchants work with), and they are supposed to then enforce rules similarly on the merchants. This means sometimes the rules for one merchant will be subtly different than another for the same card type because the next step up the chain has chosen to interpret the rules differently when they are passed down.

The rules as I last read them (about 3-4 years ago) for MasterCard said that a merchant could not charge a fee on MasterCard transactions higher than the fees charged on any other similar payment card or electronic payment method (my paraphrasing). A merchant can differentiate between a Cash or Check transaction and a payment card transaction. So you could have a price of $20, and a $5 ‘convince fee’ for payment card transactions, but you could not charge $20 for a Visa card and $25 for a MasterCard. I’m not as up to date on the other card labels rules but I would be surprised if the were much different in this area.

Things also get tricky, because Patreon may not be the ‘Merchant’ in the transaction, I have seen arrangements where the site is the ‘Product’ and a third party is the ‘Merchant’. If Patreon is doing something like this they can sell you ‘Patreon’ at any price they want and the ‘Merchant’ site just needs to process the payment as priced by Patreon.

Disclaimer: I do work in the payments industry, but I have no relationship with Patreon other than being a patron on the service. All of this is my personal opinion and does not represent my employer, blah blah blah.


#9

I’m cancelling my account with them. It was great while it lasted, and I understand the problems with credit card charges on $1. It’s terrible. CCs can take up to 49 cents on a credit card charge of a buck. that’s a big issue for a company with lots of $1 charges. That said, they should have handled this differently. Also, the Patreon UI is just not what it should be for what I’m doing, which is writing. Moving my work to Wattpad - which is free.


#10

I cancelled my Patreon account. Its ridiculous to even bring the fee subject up with donors. WE ARE NOT PATREONS CLIENTS!!


#11

I do. Most of my pledges are in the $1-$2 range, which means I’ll be paying almost double to support the same number of people this month, and I literally cannot afford to do that. Someone is going to have to get cut. Literally every person on Twitter who uses Patreon understands that this is what’s going to happen, because they themselves are going to have to cut back on which friends they can support out of their marginal discretionary spending budget for the same reason. This is going to be a disaster for people who make a living off of Patreon through a broad base of small-dollar donations.


#12

Here’s the thing, though: as a patron who supports a bunch of creators at low pledge levels, you don’t get billed (say) 10 times for ten $1 donations. You get billed once for $10, then the fees get taken out of that $10 charge and Patreon takes their cut, with the rest going to the creator. When Patreon says they have to apply the 2.9% + 35 cent fee to EVERY PLEDGE to cover costs, they’re lying. They’re going to be raking in tons of 35-cent bonus fees for themselves.

Edit: this gets even worse if you’re a charge-per-post creator, because the 2.9%+35cent fee gets applied to every post being paid for, not the sum total of the posts you make:


#13

Thanks, that is very interesting! I still think it is in the best interest of a merchant to hide these fees from everybody by just simply raising prices to cover them. That will make people less angry than telling them they have to pay a fee of any kind.


#14

This was my first thought. The technology is hardly anything new or particularly challenging. The Patreon brand may be worth something, but…not at the expense of all the other brands under its umbrella.!


#15

Looks like i might have to cancel my Patreon pledge, currently i only support Amanda Palmer at the $5 level and i would hate to withdraw but this kind of fuckery sours my willingness to jump into that enterprise if its propping up abuse of consumers and makers of content.


#16

Patreon, and platforms like it offer some kind of brand recognition that makes people feel better about giving their money away to a particular individual or enterprise. But honestly this can all be done guerilla style by one self, seems like it’d be a bit of a harder sell. I know i would struggle more giving my money away if it was outside Patreon but it might highly depend. Rasputina, my favorite musician, does not have a Patreon and i go way out of my way to buy her self published music directly from her site.


#17

It seems to me that a Co-operatively run version that was deliberately run at-cost, and managed like any other workers’ coop, would occupy a sweet spot of credibility… As long as enough artists could be found with egos that could be contained in such a finite space…


#18

Run as a co-op of artists and fans i think it’d be a great platform. I don’t know how expensive running such a platform would be but i can’t imagine it’d be prohibitively expensive though would be interesting to have insight from someone who has experience with websites and such.


#19

Because they’re not actually making it “you need to pay the CC costs yourself,” they’re simply changing the pricing so that it costs the patrons $1.38 to donate $0.95 to a creator (if I’ve understood their FAQ right).

So it’s totally legal, since they’re doing it across the board. It’s like a coffee shop raising their prices for coffee by 5% because they’re spending so much on CC fees.

The sneaky part – although perhaps it’s good for creators? – is that by divorcing the amount you’re pledging from the amount you’re spending, this seems to be a way to get patrons to spend more money, because they “feel” like they’re pledging $10, and then they’re hit with an additional fee at processing time, and Patreon just hopes they’ll shrug and say “ok.” Or they’re just hoping that the majority of their existing pledge subscriptions won’t change.

If Patreon is really just juggling things so that more ends up in their pockets, though, that’s shitty. They need to open their books: assuming existing pledges stay the same, how much more will individuals be paying per month, how much will the huge creators be getting, how much will the tiny creators be getting, and how much will Patreon be getting?

It seems unlikely that 2.7% + $0.35 will magically cover everyone’s different CC percentages exactly, so Patreon has to be either gaining or losing the difference. Clearly, they’d prefer the former.


#20

Agreed, about the only places I see extra fees charged now days is where there is a monopoly, like at my state DMV.

It used to be more common to see low margin businesses like gas stations offering cash discounts, but I can’t recall the last time I’ve seen that. Basically the same as charging a fee for using a payment card, but it makes people fell good instead.