I have faith in their ability to screw up a good thing for no reason.

A couple years ago, they tried to change their whole payment system so each subscription was billed individually, racking up more fees for patrons. They kept defending it and finally backed down at the last minute after a ton of their biggest creators yelled at them.

Why on earth would they do that? That kills micro-subscriptions on their platform.

yeah, they were trying to shake off the $1/mo subscribers, they thought they were surplus.

no, I don't understand either.

Patreon has raised hundreds of millions (https://www.crunchbase.com/organization/patreon/company_fina... - according to this $414M in 10 rounds) in venture capital.

Meanwhile in January they said they had taken in a total of $3.5 billion in creator lifetime funding. At lets say 8% average cut that means they've made a total of $280M in their whole history, although earlier accounts got grandfathered at the original 5% rate I think. We'll go with 8% to be generous. Even at 12% that means total lifetime income for patreon is $420M, around the same as their VC funding.

Then they have to pay all the processing fees, their own development and operational staff (~300 employees in 4 offices), etc. Then they have to actually make money as profit to satisfy investors.

VC funding killed patreon.

> VC funding killed patreon.

A company is worth it’s future cash flows. You are making an incorrect argument about the sunken costs (sunken costs do admittedly have relevance to individual funds, but not to your argument).

You don’t get 10 rounds of investment without a convincing argument (or believable story) for future profitability at each round (even if some rounds turn out to be duds later).

>You don’t get 10 rounds of investment without a convincing argument (or believable story) for future profitability at each round (even if some rounds turn out to be duds later).

Patreon has had multiple rounds of layoffs since 2020. Their finances aren't public but no matter what they're selling investors, what they're doing shows they're bleeding money all over, and VCs make many mistakes betting on the wrong horses.

> VCs make many mistakes betting on the wrong horses

A poor analogy. VC is more like putting 20 horses in a race, hoping that 1 horse will win billions of dollars. The other 19 horses usually make approximately $0 in comparison to the winner.

VC is not zero-sum. Most sports are zero-sum and most sports betting is worse than zero-sum due to house take and taxes. Using sports for analogies with business often gives invalid intuitions because of this.

I think you are also making a fat tail error, the opposite of survivorship/selection bias[1]: you see heaps of failures so you are not properly offsetting correctly for the small percentage of big wins which is the theoretical modus operandi of VC[2]. A majority of VC funds fail to return enough for their risk, but that alone doesn’t tell you whether investing in VC funds gives a poor return: perhaps one VC fund returns 100x, perhaps an investor is willing to pay for investment diversity, perhaps other reasons to invest in what superficially appears to be a poor performing sector.

[1] https://en.m.wikipedia.org/wiki/Survivorship_bias

[2] https://techcrunch.com/2017/06/01/the-meeting-that-showed-me...

I think you're reading too much into an analogy I used saying 'sometimes VCs invest money and fail'. I'm not looking at other companies, I'm looking at Patreon, and they're not making enough money to justify their valuation, as far as I can tell. And they don't act like they're profitable either.

To flog a dead horse, I just think saying “VC killed Patreon” is senseless.

Profitability might not matter to the VC investors if they can IPO like Uber.

Patreon has been amazing for small and large content creators, providing a big win for society IMHO, and Patreon seems likely to continue in some form even if they don’t meet the VC growth targets. In a perfect world, things would be different, but there there is little surprising here (which is part of the crux of your point?).

Profitability is almost meaningless for a growing company (see Amazon). Perhaps Patreon turns out to be a loser for the investors, or perhaps a loser for society. But we have to wait and see, and meanwhile take the wins we get.

They have sacked some employees, but employees take that risk on when they join a startup, and those risks are obvious to anyone that is paying any attention.

Sure, VCs make mistakes, often big hurtful ones. That’s part of the game. You are calling the game over, and it isn’t half-time (to stretch some sporting analogies badly), and most importantly: you are a spectator and you are not the ref. As far as I can tell, you don’t understand the rules of the game.

That guy from Pomplamoose taking Patreon to VCs is what killed it.

you don't have pay back your vc's you raised from(unless you raised debt). another story is that their investors might have forced them to cut costs and make everything needed to become profitable as soon as possible.

edited my post. We don't know the terms of the funding so that was just a guess. Even still I don't think they're rolling in money. They're ~10 years old but until 2019 they were only taking 5%. I'd guess they've always lost money.

Good point. I also can’t help but notice their CEO monetizes almost entirely on YouTube with scary pockets and other videos.

Furthermore, if Patreon goes then a lot of indie people are royally screwed. So many demonetized Youtubers or people at risk of being booted depend on Patreon.

There are still Ko-Fi, SubscribeStar, as well as YouTube memberships. To say nothing about OnlyFans and Fansly, which have been trying to become less… porn-dependent.

YouTube memberships? Demonetization on YouTube is one of the main things that drives people to use Patreon.

Demonetization on YouTube means YouTube won't show ads on your videos so you don't get money from them, and YouTube recommends them less.

Having members on YouTube doesn't impact that at all. The members will pay and discover, same as if they were on Patreon. Non-members might have a harder time discovering, but it's not like it's easy to discover content through Patreon either.

If there’s a need in the market someone will step in and fill the void. Probably it’s for the best if they don’t get greedy and keep it simple, shave a bit as a fee and that’s all.

> If there’s a need in the market someone will step in and fill the void.

Only if the Visa/Mastercard duopoly approves. It's not a real market.

You don't need cards to make payments anymore. At least in the UK you can make direct payments from your bank through a standard e-commerce checkout.

Cardless Subscriptions are also here (disclaimer, that's my role at a large open banking company) although some more legislation needs to be done before they can be used for ecommerce

Exactly, plus PayPal/Venmo-- look at how they pulled the plug on Mintpress.

Tell that to Parler and the aftermath of their disastrous data leak. There needs to be more respect for the effort that goes into making well built online services. Turns out its much harder than a lot of people realize.

I don't think that'd be the case. When Russia started war against Ukraine, a lot creators left the platform by simply taking subscriber contacts and moved to a different platform. You pay for individual creators, so whether it's Patreon, YouTube,or Substack, people are likely to follow into a new platform.

OnlyFans is just waiting to be “legit”

SubscribeStar does basically the same thing, right? I imagine everyone would just move right over, business as usual.

It's not that straightforward.

For the Creator, even if you exclude the things that interact with Patreon to do the benefit-management bits, you have to also do any KYC/Identity verification bits, re-setup account transfers.

Then you need to reach out to all your supporters and convince them to move over. They're going to lose some percentage of those people -- how much is going to depend on the creator and the fanbase. Some people are just going to ignore it, every single one of them though are going to re-evaluate that math in their head as to whether they really want to continue supporting that person.

Patreon also has major brand-awareness. Someone telling you to move over to SubscribeStar, Liberapay, Buy Me a Coffee or whatever might get a "This seems like a scam" type reaction.

Moving over for a content creator is probably trivial. Having all their patrons move over with them is most certainly not.

A lot of those demonetized YouTubers are technical ones, not political. Electronics, chemistry, software, history, etc.

The queer lefty independent webcomics scene leans on Patreon a lot too, I’m one of them.

Normally you'd think its just right wingers and yeah a lot of their garbage ends up demonetized but its also people that are pro-Union, anti-establishment (right wing and left wing), people who are anti-empire/anti-war/anti-Israel/Pro-palestine (Abby Martin for example). Craziest example I heard of recently is people who post anti-Tesla videos are getting attacked and demonetized by their fanboys.

Patreon takes the lowest cut of any platform. Only something like 12% vs most others taking 20-30% or more.

E: see this video https://youtu.be/bGvfYv5nzs0?t=138

12 cents on every dollar seems like an absurd amount of money, for a relatively basic microblog.

Have you ever had to do your own accounts receivable, fraud detection, government compliance, and subscription management?

No, but I have paid Stripe 3 cents on the dollar for pretty much all of the above. To be fair our business was much smaller than Patreon

This is absolutely false, Buy Me A Coffee takes a 5% platform fee and ko-fi takes 0%, this doesn't include the usual CC processing fee which is relatively minimal (Stripe rate).

Generally, their users don't need a platform, they need a payment processor.

If they didn't need a platform they could use Stripe directly.

If stripe had a better UI and would batch payments then that would work pretty well, yeah. As-is that would probably not work out well.

So you're saying that platforms are useful...

We're talking about payment processing vs. platform, right?

"Good UI" doesn't make something a platform.

Doing payments in a fee-minimizing way definitely doesn't make something a platform.

I've been under the impression that patreon makes a bunch of their cash from people selling nudes (and perhaps owes their brand popularity to the groups of nude sellers that were using them) and that stripe refuses to deal with anyone that does nudes (?)

Maybe, but that's pure profit.

This isn't like a newspaper, finding neither ads nor paywalls will make ends meet. They're not phone app developers, finding users will barely pay $1. It isn't an ad-supported business that can only make a fraction of a penny per user. Their moderation needs are at a pretty small scale, with most user accounts tied to known bank accounts. They don't have to negotiate with rights holders for copyrighted content and get taken to the cleaners. They don't have to store and distribute gigabytes of video per second. They don't face big customer acquisition costs.

Youtube and Twitch are doing a lot more work for their cuts.

> Seems like a money printing machine to me.

Only if the creatives are making their money on their platform.

Since Patreon's entire business model is based on taking a cut of the revenue artists make on their platform, they don't make money if the artists make money elsewhere. Many creatives use Patreon only for fan outreach, and sell merchandise outside of Patreon.

If Patreon charged a fixed rate for their software, they could make more money, but they would lose the business of small creatives. That's the dilemma.

More people turning to things like Stable Diffusion instead of commissioning artists likely has an effect too.

I would seriously doubt if people are relying SD for commercial art so quickly.

I've been freelancing for a studio over the past month and I've personally seen them using Midjourney and SD for multiple projects. Surely ten million other people doing the same thing is going to have some sort of effect.

Your sample size is 1 (ie, anecdata). If they outcompete their adversaries maybe then others will uptake.

You could be correct, but I posit it'll take 2-3 years minimum before it's used widely.

They serve videos. That can be easily more costly than the cut they get.

They serve videos for what percent of pages? And they could make that an extra fee; plenty of creators seem to be happy with unlisted youtube videos.

They have zero reason to lose significant money over the video feature, especially since it's still in closed beta.

Don't they use Vimeo?

They do currently run a closed beta of their own video thing, so technically they do serve video, but the vast majority of videos on Patreon are indeed embeds from Vimeo (or other sites, but Vimeo has a direct integration)

It's not free either

They are rolling in cash. But they are on the "increasing growth every year" treadmill, which is why they're trying to gouge more and more out of the payments to creators.