Patreon’s new service fee spurs concern that creators will lose patrons [updated]

Update: After the negative reaction from Patreon creators, the company updated its blog post about the fee change with a more detailed explanation of how it will supposedly ease confusion over payments. Judging from the response on Twitter, however, many creators feel Patreon hasn’t adequately addressed how the changes will affect their patrons, who are, after all, the people pledging money.

Patreon announced a new service fee policy that it says will help creators keep more money, but many are worried because they believe it will instead discourage their patrons from pledging.

The crowdfunding platform for artists currently takes a fee of 5% (creators also pay fees charged by payment processors like Stripe or PayPal) from each pledge. That changes on December 18, when patrons will start paying 2.9% plus 35 cents for each individual pledge, according to Patreon’s product update page.

For patrons who back per-post creators, the 2.9% plus 35 cents service fee will be added to all paid posts. Creators don’t have the option to cover or remove service fees from their pledges.

Patreon says the reasoning behind its new policy is to let creators keep a larger cut of each pledge. “With this update, creators will now take home exactly 95% of each pledge with no additional fees,” the company explained on its update page. “In the past, a creator’s income on Patreon varied because of processing fees every month. They could lose anywhere from 7-15% of their earnings to these fees. This means creators actually took home a lower percentage of pledges than their patrons may have realized.”

It added that “Creators often take home a lower percentage of their Patreon income than patrons may realize. Standardizing our fees across the board provides consistent expectations and more money for creators on Patreon.”

Many Patreon creators, however, quickly criticized the change, arguing that it will turn away patrons, particularly people who prefer to pledge small amounts to multiple creators.

For example, comic artist Gibson Twist said on Twitter that he expects to lose many backers because the new fees will increase most of their current pledges by more than a third. Twist added that as a patron himself, his own charges will also climb significantly if he needs to add 35 cents every time he makes a pledge.

Some pretty troubling news from @Patreon about changes in how they charge Patrons. I’m going to lose a lot of my backers over this. Still looking into it, but I’m very unhappy about this.

— Gibson Twist (@GibsonTwist) December 6, 2017

 

Still a little bewildered that it’s real, but they’re now going to add an additional 35 to the cost of every pledge, plus another 2.9%, which will increase most of my Patrons’ pledges by more than a third. I wouldn’t pay that, I wouldn’t expect anyone else to either.

— Gibson Twist (@GibsonTwist) December 6, 2017

 

They’re trying to sell it to us as “You get a bigger % of the money!” but a bigger percentage of less money isn’t a selling point. Also, are we not supposed to notice the huge spike in how much Patreon takes of my supporters’ coin? Is this right?

— Gibson Twist (@GibsonTwist) December 6, 2017

 

They’re trying to sell it to us as “You get a bigger % of the money!” but a bigger percentage of less money isn’t a selling point. Also, are we not supposed to notice the huge spike in how much Patreon takes of my supporters’ coin? Is this right?

— Gibson Twist (@GibsonTwist) December 6, 2017

 

This is not to mention the extra that will be charged to Patrons supporting many artists, getting dinged 35+ cents each time. Someone supporting 20 people at a buck, that $20 jumps to over $27.50. As a Patron myself, I’ll see my charges increase by nearly 40%. That’s significant.

— Gibson Twist (@GibsonTwist) December 6, 2017

 

Patreon’s FAQ on this change reads very “Isn’t it great? No down side here!” but this change is almost certainly going to lead to me shutting down my Patreon account. I’m not interested in gouging my audience in something I don’t believe benefits me or them at all.

— Gibson Twist (@GibsonTwist) December 6, 2017

 

Meanwhile, just yesterday, they sent me an email talking about what a “mindblowing year” 2017 has been, so I’m not convinced they’re hurting for cash.

Please, @Patreon, don’t do this. This will hurt a lot of artists, and I am one.

— Gibson Twist (@GibsonTwist) December 6, 2017

 

Some quick math and the numbers are jarring. Right now, artists pocket 80-85ish% of what our Patrons pay. Under the new system, we’ll get roughly 70% of what most Patrons pay. They’re selling to us as “You get a higher % of the money!” but in truth, we’re getting a lot less.

— Gibson Twist (@GibsonTwist) December 6, 2017

 

Some patrons also said that the new service fee will incentivize people to make a large pledge to one creator instead of supporting several with smaller amounts because they don’t want their fees to add up, which hurts artists who depend on getting many $1 pledges.

The extra cost isn’t tiny if you pledge small amounts to many creators. Pledging $100 to 1 creator will now cost $103.25 which is reasonable. Pledging $1 each to 100 creators will now cost $138 which is not reasonable.

— James a.k.a TPRJones (@TPRJones) December 7, 2017

 

it has little to do with the actual fee and more to do with passing it on to the patron, because while creators “”make more”” this change doesn’t even consider the mentality behind pledging small amounts and why people do that at all

— radruler @ midwestern furry festival (@Radruler) December 7, 2017

 

Small shows like ours get support from listeners paying a few bucks a month from fans. Many creators believe this will shrink the number of shows people will be willing to support.

— Todd Faulkner (@ToddFaulkner) December 7, 2017

 

Patreon, which was founded in 2013 and has raised about $107 million in funding so far, says it has more than one million subscribers who pay an average of $12 per month to more than 50,000 creators. Its success prompted Kickstarter to retool Drip, its subscription service for independent musicians, to compete more directly with Patreon. Other rival crowdfunding platforms for creators include Flattr and Steady.

While creators can ask supporters for pledges on their own using PayPal, Stripe and other payment services, Patreon’s ease of use, thanks to tools like its API, and popularity helps many make an income (or at least not lose money) from their art. This is especially important for creators who rely on YouTube, but saw their revenue plunge this year as a result of changes to its advertising policies—(an event known as the “adpocalypse“). For them, Patreon’s new service fees represent a potential double whammy and are yet another reminder that the online platforms that help them make a livelihood can also very quickly take it away.

TechCrunch has contacted Patreon for comment. A Patreon spokesperson said “We think endlessly about the creator and patron impact for every decision we make. 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.”