I think people are just getting hung up on the number without thinking deeper on what it costs to make things sustainable.
5% of the 500 million Patreon claims to be able to process is 25 million. According to their team picture on their website (https://www.patreon.com/about), they have 74 employees. That amounts to $330000/employee. Halving that to account for benefits (chair, table, wifi, insurance, etc) leads to $165000/employee for salary which seems reasonable average for a senior employee in the Bay Area. Notice this doesn't account for infrastructure, taxes, outside counsel/contractors, etc. It's crazy that after working for 6 years and creating half a billion of value, a company can barely afford to keep the lights on, let alone make a profit. I agree 30% just makes sense for a platform - you need enough to hire properly, pay all expenses and make enough of a profit for this to make sense. The alternative is half a billion of value disappears to save on a few million which I think is incredibly myopic.
An high quality chair is, say, $500 amortized over 5 years. A table, $100 amortized over 5 years. Open office space (at 65 square feet per employee and $100 per square foot per year) is about $6,500. Insurance is about $7,000 a year per employee - total.
So, under 10% of that extra per-employeee revenue is what the actual costs for those "bonuses".
Patreon is not that. At its heart, it's primarily a service for collecting donations. There is some content hosting, but that's kind of a secondary feature.
The 30% is a tithing to Apple for creating iPhone in the first place.
Patreon could sort of justify the same thing. Their real product is just the idea that anyone could be a monthly patron at all. That’s worth a LOT to creators. People didn’t think that way before Patreon.
Not a "gamer", so I don't really know what "Steam" is/does, but I suspect they must have some kind of moat.
I'm not sure that people are comfortable with Patreon taking a 10% cut.
I'm not happy about eBay taking a 10% cut, but they have a monopoly. Jack Ma, please bring Taobao to USA!
Yup. Competition is good for the market in general, and for consumers in a more indirect way, but balkanization of content space and having to deal with the crappy apps of me-too competitors is a real pain.
(There's probably some economical theory around this that I don't know, but my gut-feel classification is this: competition is good for consumer when competitors are providing the same, or at least directly substitutable, goods and services. Individual video games - and music, movies, books - are not substitutable goods, so the competition is useful only to the extent you can get the same game/movie from any of the competitors. Exclusive publishing deals make competition harmful to the consumer.)
Yes, there is a pretty standard economic proof that much of capitalism is based on. It says that an economy is most "efficient" (you can take a class on that word), when three pre-requisites are met:
1. Perfect information: Everyone knows the value of everything.
2. Commodities: Products created by competitors are equivalent. This works well for oil and bananas, but not so well for much else.
3. Access to Capital: This means new competitors can start competitors and enter markets easily. This isn't so easy when there is regulation, monopolies, or network effects.
In short, there is a set of circumstances when things work really well. However, in the real world, those circumstances rarely arise.
I don't really want a monopoly, though, having more than one store is better in the long run, even if it sucks having to register for multiple services. At least it's not like streaming where your costs go up the more services you register for.
The ideal would be if Steam could let other publishers plug in their platform for a much smaller cut of the profits and handle sales, forums, friends, wikis, with the other publisher handling distribution, marketing, etc. Or at least if it could function as OAuth and I could use my Steam profile on other publishers' services, carry over my friends list, maybe achievements, etc. Of course that still leaves Valve in a monopoly position, but I think it's an ok compromise.
The problem with "competing platforms" is that they're mostly not competing platforms. Recently Metro: Exodus was pulled from Steam store to be sold as an exclusive on the epic store. This is not competition, this is a monopoly on distribution of a title.
When different platforms emerge where most platforms have most titles (or offer DRM free like GoG or Humble Bundle), then we will have actual competition.
The game developers who were around before Steam, know how much that costs (promotion wise), and know they get a lot for that 30% cut. The same is true for those other platforms.
You seem to be a person that expects all internet platforms offer their stuff for free.
And another thing: all of those platforms mentioned have competitors, so calling them monopolies is quite strange. It's not because they are market leaders that there is no alternative (which monopolies don't offer)
In the same way you can put a store in a rural place, or you could put in in New York 5th Avenue with warrantied traffic.
And of course that 100% does not take into account your cost of hosting, creating or adapting the necessary infrastructure and maintenance.
I'm thinking about Craigslist, Snapchat, Vimeo, Mixer, etc. Don't confuse market leader with monopoly.
Before Steam, you had several casual portals (all competing with each other). Do you know which cut they took? 70%.
Do you know why platforms nowadays take 30%? Because it's well worth the 30%, that's why. And if you think a platform can live off a 3% cut, please show me the successful on that does that.
That is not the way things work.
Why does Apple take 30% of sales? Because Apple prices at the profit-maximizing percentage and because Apple figures that the profit-maximizing percentage is 30%.
Lower, and they leave money on the table. Higher, and sales volume goes down.
Ever hear of something called "consumer surplus"? A gallon of gasoline would well be worth $10 to me, but I pay a lot less then that! Why? Because of competition.
In the white darn city here, the prices are within 1 cent of each other and everyone somehow raises them whenever there is any excuse.
Differences between cities are up to 20 percent. Sometimes (not considering externalities) it would be worth driving much farther to buy petrol. Few people do it.
Local monopoly or collusion is as good as global one. For Google Pay, the local is whole main Android store.
Where they do compete with cheaper alternatives (e.g. in South Korea), the premium is lower. But only there.
Facebook essentially guesses a price on their advertisement monopoly on their platform. The price is not set by competition nor by demand, but by belief in value added (which is only partially responsive to supply and demand), just like in most stocks.
I recommend reading on the concept of elasticity and substitute good, as well as idiosyncracies of human economical decisions.
30% is the price, set on the non-monopoly market. I don't get what you are complaining about.
No indie game developer that has been around for a while would say this. A 30% cut is way less than anything else that came before it.
Steam also allows you to sell Steam keys from wherever, and you get to keep 100% of that. This is how Humble Bundle works.
When you release on Steam, you also get free exposure at first, which is basically free ads. You would otherwise pay several thousands of dollars for that.
So in any sense, Steam worked to get that 30%, and there is no serious indie game developer that is arguing with that.
Which is not exactly happily handing over 30% of your earnings to Steam/Apple.
Also, as mentioned in other replies, Apple explicitly blocks any other licencing path unless you're one of the big boys and can afford lawyers etc...
Steam's bigger marketplace and that it removes the uncertainty and risks around payment provider management (chargebacks etc.) easily make up for the bigger cut. Do less work, make more money. It's not unreasonable.
I'm not saying Apple don't provide a service, of course they do, though at times it sucks. My main point is about is about the price, not the principle. I pay Apple a yearly subscription just to develop for their platform. On top of that every sale I make they get 30%.
Would 95% be ok?
Another extreme element of this is that I cannot sell a licence outside of the App Store to my customers. I cannot ask them to buy from my website (which many have asked about and would be happy to do) and provide them with a code they can use to unlock or upgrade. This is explicitly banned. Unless you're a big player like Spotify or Netflix your app will not be allowed to do this. I've tried and been denied and stonewalled.
In this case I am willing to build and manage my own payment/licencing setup to gain 30%. I'm just not allowed to do that.
And I don't, tbh, have an opinion about the rest of your post; I'm talking about Steam, not Apple.
But, having gone down this road myself (and why I cite the Jeff Vogel talk): you would almost certainly spend more than 30% on customer support and payment processing and fraud protection and accounting. Or you would do it incorrectly, which is worse. And, regardless, you'd expose yourself to a way smaller audience. It seems to me to be a good way to shoot yourself in the foot for no gain (and as an app developer myself I certainly wouldn't bother).
I explicitly cannot do this for iOS apps. There is just no way for me to get my app in front of people's eyes without paying the Apple tax.
If I was prevented from distributing my movie somehow by Disney, you might have a point.
Disney's not going to put it in their online store, though.
In the case of an iOS app, you can sell the source and let people build it on their own Xcode installs, if you like.
Then we'd all have a half dozen completely incompatible physical media players and so on.
Which might be for the best, Steam is in dire need of a serious competitor (I know GOG and co exist but sadly they have not been able to make a real dent in Steam's marketshare).
Steam has dropped so many balls and the main thing going for them is inertia.
Also, just because paying a large cut to various middlemen is common does not mean it is ok.
> Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam, the revenue share for that application will adjust to 75%/25% on earnings beyond $10M. At $50 million, the revenue share will adjust to 80%/20% on earnings beyond $50M.
(https://steamcommunity.com/groups/steamworks/announcements/d...)
The Epic store really isn't much of a competitor at all yet, the only reason it's having any impact at all is because they've been paying developers to release exclusively on the Epic store.
Maybe someone in China could, but they don't directly compete.
GoG has a niche they're trying to expand, as does Humble. A few other small stores. Game company ones (EA, Blizzard, Ubisoft) are not even close. Funny enough, the small shops often resell Steam keys...
> You keep full ownership of all content that you post on Patreon, but to operate we need licenses from you.
> By posting content to Patreon you grant us a royalty-free, perpetual, irrevocable, non-exclusive, sublicensable, worldwide license to use, reproduce, distribute, perform, publicly display or prepare derivative works of your content. The purpose of this license is to allow us to operate Patreon, promote Patreon and promote your content on Patreon. We are not trying to steal your content or use it in an exploitative way.
Facebook, on the other hand, has numerous ways to benefit that don't proportionally benefit the creator, including from indirect revenue sources like advertising and data enrichment that don't flow back to the creator in any way. I suppose this is alright when you are just showing cat photos to your family, but it's quite different when you are basing your business on someone else's market-dominating platform with large negotiating leverage. And there are known cases where Facebook has been known to very liberally appropriate ideas from companies that are competitive with them (e.g., Snapchat).
So if your content would make a good ad for Patreon, you've given them permission to use it without compensating you.
Google has a guarantee on when your deleted data disappears from tapes in vaults, and it was something that every engineer at the company had to think about (not to mention a ton of work in actually implementing it). You may wish for Some New Startup with 2 engineers to do it for you, but it's hard, takes time, and nobody actually cares. Look at how many people use Patreon despite that policy. Why spend years of engineering work when your lawyer can get the problem fixed in 5 minutes? It's just economics.
The real problem is when Facebook uses that content to further their business interests. Likewise, the publisher shouldn't be sending that rejected manuscript around for others to mine for ideas.
(that said, to avoid the temptation that gives rise to this precise problem, it's common practice for publishers to return rejected manuscripts)
That argument makes no sense if you're talking about publishing, AKA making something available to the public.
But the real world of production computer systems is not always the happy path. Consider the case where you delete your account, then the service suffers a database problem, and your content doesn't actually get deleted (failover to a replica, restore from backup, etc.) Now they are violating that contract with you. That is why they make the terms of the contract "in perpetuity" so the engineers can fix the production system incrementally, rather than saying "welp, there's a risk of a lawsuit if we failover to the backup, so we're shutting off the website and paying back the shareholders, everyone go home, we're done here".
Like I said, some companies take a middle ground where they really do guarantee deletion even if unhappy events take place at exactly the wrong time. It is possible. It's just not very economical.
If this was just about liability, the terms could be much narrower. They're intentionally broad to guarantee the maximum benefit to the platform and allow them to come up with other uses for that data later on.
This is exploitative and only works because of the power imbalance between platforms and individual creators. Even if you follow the idea of the "free marketplace" you'll have to acknowledge that creators have no individual leverage when it comes to platforms with "take it or leave it" ToS.
The objectionable part is not the exclusive license. The objectionable part is the sublicense right, which lets Facebook sell creators works to third parties without paying the creators, and even after the underlying business relationship with the Creator has ended.
I know what some are thinking, these platforms are extremely successful. this is partially true, but they haven't thrived anywhere near I think they are capable of.
I feel like these two are much harder than the others. How does the app store help you with beta testing? Isn't discoverability basically a lottery?
By discovery I mean lots of users go on the app store and search for apps to download directly, no marketing or SEO needed. Adding the website, trials, SEO, etc helped a bit probably, but my app seems to just live on app store organic searches.
But at the end of the day what can I do? There's not really competition to drive the commissions down. If another app store came up and offered 10% commissions and the audience I'd go there instead.
Both Apple and Google drop subscriptions to 15% after the first year.
I could see that happening given that you'd have a huge base of people with accounts already and it's a platform for sharing content.
Patreon is the outlier, and they're dropping hints now that it probably isn't going to last: https://www.cnbc.com/2019/01/23/crowd-funding-platform-patre...