Originally published at: https://boingboing.net/2017/12/08/measuring-the-right-thing.html
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On both of these metrics, Patreon is performing beautifully. On these metrics, Patreon is a fucking godsend to artists.
Until it isn’t, because Patreon is literally being criticized for taking more money that should go to artists. Maybe these are the right metrics, but defending Patreon is completely out of place here, because they just massively gouged a hole in those metrics.
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Well, the good news is that the clientele of patreon is composed mostly of people who were smart enough to see it’s value; the better news here is that patreon is very much a digital company and it can be replaced quickly and efficiently.
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The replaceable commodity here is Patreon, not the content that I support. I use Patreon because it is a good way to support the people who I want to support. If they tell me that they have found another payment system, I will switch in a heartbeat and not look back.
If Patreon pisses off too many patrons and/or too many content providers, they will shrivel up and blow away.
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Exactly. I’ve let the patreon creators I support know that they need to let me know if they want to go and I will follow them anywhere (almost anywhere).
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Closed my account last night and told the creators I"d be watching them on Tumblr or twitter to see where/when they moved. Kickstarter just debuted a service called Drip, and Flattr and Ko-Fi look like good alternatives so far.
And I messaged Patreon and told them I was withdrawing my account and how much money was at stake. It was higher than I thought.
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I wouldn’t mind the 0.35$+2% processing fees if they bundled all the payments in one so, let’s say I invest about 18$ in 10 different creators, I don’t pay 3.5$ in processing fees. Right now is a bleeding because most of my supports were at the 1$ mark. Of course, I say were because I retired them all and contacted most of the creators to let them know I will be willing to pay them via alternative means.
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Drip hasn’t launched. It’s only available to some creators in beta.
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The reason they are charging a per creation fee is because they are un-bundling pledges. Right now they do roll them up in one charge at the beginning of the month, but starting in January they want the billing to reoccur on the day you pledged. They are doing this because apparently some morons don’t understand that with first of the month billing you are going to get charged “twice” if you pledge near the end of the month under the pledge and charge model. Patreon basically brought this problem on themselves by trying to fix something else.
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And yet, the effect is that they are no longer aggregating the transactions. I want ONE patreon charge on my CC, not a dozen every month, with charges added to each.
Aggregation of micro-transactions was their superpower, and they’ve squandered it.
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Bundling pledges for cost efficiency is primary reason Patreon existed IMO. Yes, they do have search/discovery and enable patron-only content, but really the only interesting thing they offer(ed) to me was to make it cost effective to pledge $1/month to many creators. With this model, that kind of patronage is extremely cost-ineffective and many (myself included) are going to walk.
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That’s some deep sh*t, especially with all the talk of creators.
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The problem seems to be the fact that it costs money to send money. But why does it?
The Swedish banks have implemented a system called Swish, with which you can send money to people without fees. Why can’t we build such a system on an international scale?
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Better yet, by deaggregating it eliminates the “discount” that meant more of your money went to creators if you did it all through Patreon. No more feeling of lock-in.
Oh, and yeah. Merry Christmas.
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There’s a (smallish) competitor: https://en.liberapay.com/ No idea how good or how viable they are though
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Because Patreon operates based on credit card/ merchant processing. Where in a credit company (and often third party companies that rent machines and bind multiple credit processors together) makes its nut processing those payments. In the credit card system those processing fees are paid by the merchant. Some of these fees are quite high (Amex). For a debit card/check/bank transfer system there is typically low to no transaction fee for the merchant. And no direct transaction fee for the customer. Because the costs incurred there are covered by the various interests and fees paid to the bank by its customers. And that is the baseline internationally. Basically there are people and things working to move that money from person to person, place to place. That costs money. So some one’s gonna pay something. Swedish banks make that money off their customers, and thus can make the transactions “free” to anyone that can get a direct connection to them. As can my bank. But any entity standing in the middle of the transaction, doing work to make it happen. That isn’t funded by mortgages, and account fees (or the government). Has to charge for that. Or in the case of credit companies can charge for it to make a bit of extra cash.
$.35 per transaction seems a bit high though. Merchant fees typically run on a percentage rate. Or small whole sum amount + percentage. Apparently ~2% on average. Although it ranges by processor/credit company with some working out to up to 10% all said and done (base rate might be 3%, but there’s additional charges incurred by cancellations, bill-backs, third party processing companies who handle it all, rewards programs, points, miles etc). Anyway, works out to a higher proportion of small purchases being eaten up. Which is why you often see minimum purchase sizes from small businesses. $.35 is an absurdly high rate for anything under the $15-$20 mark. And a ridiculously low rate for anything too much above that. With most Patreon commitments being in the $1-$5 range (supposedly), a $.35 charge per dollar is ridiculous. Especially given they used to charge all your $1 commitments as one transaction. Imagine you send $1 to 20 different artists via patreon. Well you’re paying a 35% transaction fee over all. Where as if you pay $20 to one artist its like 1.7%. Assuming the average rate you’d be paying $.40 cents in the first scenario and $.40 in the second.
Unless they’ve got a uniquely bad agreement with a third party merchant processor. Or something is deeply fucked in their banking I do not see how this is a sensible way to handle payment processing costs, even if those costs are internal to Patreon (IE Patreon charging the customer for their costs incurred on handling the funds). That just doesn’t look like passing outside processing costs onto customers. And it doesn’t look like a sensible scheme for covering internal costs.
ETA: Edited repeatedly for clarity. This shit confuses the hell out of me. And I purportedly know how it works.
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https://en.liberapay.com/ won’t work for people using Patreon as it’s anonymous donation platform. From their site:
“Payments come with no strings attached. You don’t know exactly who is giving to you, and donations are capped at €100.00 per week per donor to dampen undue influence.”
The solution for Patreon is to re-aggregate the pledges and allow patrons to fund their account in advance and have that debited.
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Maybe not all, but it would work for some. Especially for $1 or $2 dollar donations, which commonly have no perks or rewards, just a warm fuzzy feeling… And some Patreons have no rewards at all, and its all about funding free-as-in-beer content.
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Every market is an irrational market. Because people are.
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Patreon didn’t do all this for profit. They made this blunder trying to deal with being actually a promoter of freemium paywall business models rather than patronage-for-public-goods.
https://wiki.snowdrift.coop/market-research/other-crowdfunding#fn5
