I have no idea about the financials of Patreon but their site leaves so much room for improvement. It's actually pretty awful.
There are lots of independent artists running Pateron accounts with 200-5000 patrons. Fans sign up to support them but also to get access to their library of content.
Patreon provides a piss-poor UX for getting to this content. There is no list of content. There just "here's the stream of posts by the artist". The stream is JavaScript driven so if you want to go 100 posts back you have to page through multiple pages of posts. If you want to do it again tomorrow, or if the site crashes which it does, you have to start over at post 1 and page through again.
It's telling that so many artists use google drive, dropbox, mediafire, or mega to distribute their works. This seems like money Pateron is leaving on the table if they'd provide for a similar service at similar prices. They do provide a way to upload media but the UX is awful compared to Mega which has arguably the superior UX of those 5 options.
Worse, because these artists are using these separate services there is no way to limit who accesses them. In other words a bad user can share the links with others where as if they did this through patreon you'd have to log in to access the media. Of course bad users can still share the media they downloaded in other ways.
Further, and I don't know if this has been fixed, but I know what one time they only billed once month so bad users would sign up in the middle of the month, download everything, then cancel their patronage and avoid having to pay at all.
I can certainly imagine a service that's significantly better Patreon for this use case.
Let me also add discoverabilty is horrible. Maybe this is mostly on the artists but the #1 way I find one is off of patreon. Compare to say youtube where the #1 way I find anyone is on youtube itself.
> In March, Patreon wrote in a blog post, “Not only are patrons not leaving the platform, we’ve even seen many of them upgrade their tiers to support their favorite creators during this challenging time.” Additionally, the average income for creators was 60% higher in March than in previous months, according to the company.
> Around that same time, however, Patreon said it saw patrons exiting the platform more than usual due to financial hardships. Still, Patreon said churn rates were stable.
These two paragraphs are one right after the other. How do you reconcile the two? How is it not at least a question posed to their spokesperson of which is the case?
The key to reconciling is seeing that "due to financial hardships" is a dependent clause. When patrons leave, they are asked to give a reason why. The % of those leaving who give "financial hardships" as a reason, is increasing. However, as also noted, the total churn rate (people leaving for any reason) is stable.
They're not saying that more people are leaving than usual. They are saying that of the people leaving, more are offering financial hardship as a reason for leaving, than usual.
A corollary would be that the % of people leaving for reasons other than financial hardship has decreased.
Business analysts pulled these metrics from a data warehouse and the semantics don't line up.
I've worked on growth and data science teams, and there ought to be a book "How to lie with data science" as a successor to "How to lie with statistics".
There's been situations where I've seen the same metric queried in two different ways with contradictory results. The slight of hand here is that the query is query, and unless the metric is defined as the query, the metric is not the query.
I remember Nassim Taleb proposing that books are fractals and can't be summarized / compressed.
"In March alone, we onboarded 50,000 new creators to the platform of which the average income was 60% higher than previous months."
It seems like the "60% higher than previous months" figure applies to the new creators rather than all creators. I could easily imagine that income for new creators is very low on average and a 60% bump wouldn't mean much.
I'm totally guessing but I think there's simply a missing "most" in the first sentence:
> Not only are most patrons not leaving the platform, we’ve even seen many of them upgrade their tiers to support their favorite creators during this challenging time.”
Because as the second paragraph reminds us, there's always some churn. I think what they mean is, the churn rate went up a bit, but it's not increasing (though how they can tell from only one month is intersting).
And btw, it wouldn't surprise me if churn goes up, a lot of $1 tier supporrtes withdraw support to save money, but a bunch of higher level supporters increase their donation by a higher amount. E.g. if you're well off enough to support a creator at $10, you're less likely to need to leave given the current situation, and if you do incresae your pledge, then you won't increase it by $1 - you'll probably increase by $5-$10 at a minimum. So the average income could still go up even as churns are going up.
Guesses: Patreon loses money (ie, they're a startup). This may be due to solely due to international, the use of the round D, or not.
Either way, they -- much like the startup I run -- are immediately planning how to go 24-36 months without any additional investor cash. Because your investors will still expect you to meet growth targets to get that next round regardless of covid.
Speaking for myself only, we've taken to heart the cut once, cut fast mantra that every company that came through 2008 says is the right thing to do. And we've figured out how the company will go for more than two years without additional cash, or be able to tolerate 20q2 being a sales disaster. Those both require immediately cutting burn.
The people leaving due to financial hardships weren't making much money so they pulled the average income down. After they were gone, average income of the remaining creators was 60% higher.
Maybe the point is that they are not reconcilable and the writer wants you to think what Patreon wrote in the blog post was a lie, hence the however in between "Around that same time" and the patrons exiting the platform.
Patreon's problem, I think, is that they've taken enough VC money to be at a kind of "half-unicorn" status -- and there's no possible way for them to return on that investment unless they start wooing megastars to their platform. The majority of creators are always going to be way back in the long tail, but the folks at the top of the curve need to be bringing in a lot. Like, a lot. A million a month or more.
And I can't help but suspect that this realization necessitates changing, if not the business model, the business strategy. Patreon in 2017 is fine with Chapo Trap House and Amanda Palmer as the top moneymakers; Patreon in 2020 needs the next Taylor Swift and Lady Gaga. (Better yet, the current Taylor Swift and Lady Gaga.) That doesn't mean they have to actively drive out the podcasters and comics nerds and furries, but it probably means they have to put all their resources into going after whales.
A middleware that can be described as Wordpress with access control and Stripe integration, but worse in terms of performance and UX; somehow takes on $165 million in funding [1] and describes their business model as "not sustainable" [2].
Patreon is a low touch SaaS platform that charges up to 12% PLUS payment processing fees. They do not provide any meaningful level of discoverability: you must build your audience yourself.
I wonder how the business would be doing if it disregarded that "raise money and spend money at all costs" model, that Softbank exaggerated? What if it had a WhatsApp-size of team: ~20 employees using sensible and well-architected tech stacks (not chasing the latest shiny thing just cuz its hip or cool)? I'm sure they'd be outrageously profitable.
I've never been in the position of taking VC funding, and I don't expect to be in my life, but if I were, I don't think I would. It seems to be a recipe for destroying your company ~5 years down the line. Perhaps the early founders get out with a bunch of money, and maybe that's the point, but I just don't think I'd want to do that to my employees and the people who came to depend on my company. If you don't have a sustainable business model from day 1, you've already lost, haven't you?
I've always wondered if Patreon's core business can ever be big enough to justify the VC and company size.
A generic 'patronage' business will always be expensive to develop and run compared with more targeted discovery and patronage platforms - music, video, podcast, porn. If I can see the 'patron early' videos in my normal youtube feed, or pay podcasters from my podcast app I'd use that.
It takes a huge amount of effort to support 'long tail' artists - those that I'm not a mega fan of - on a different site.
This is interesting given that, like the article suggests, patron contributions were still growing last month. Seems like they either wanted an excuse to "right-size" and this is a great opportunity, or they're expecting a significant hit to patron contributions on the back of mass unemployment, which would make the rest of the year rather painful.
Friends and I were discussing this last night on jitsi. We think that instead of throwing employees to the wolves at a time when getting a job is going to be difficult, many employees would accept equivalent pay cuts to help weather the storm.
In fact I know one company that did just this, with 100 employees. The staff chose a 10% indefinite pay cut over 10% reduction in head count.
Sacking people at this time is awful, and any company who has cash in the bank has options other than bankrupting some of their employees.
I don’t care if Patreon had planned this before Covid-19. There are alternatives. These are dark times and companies who sack their employees as a first resort are part of the problem.
I don't really understand why Patreon needs so many employees. We're talking about almost 300 people to just supervise a fully automated process. The tech has already been built almost a decade ago and hasn't changed much, so it can't require that much engineering work. It's also an easy problem (take X amount of money, divide it between Y people, pay them out) and they ironed out any potential issues over the years.
For what it's worth I've stopped using Patreon when they included some Facebook tracking (among others) on the membership management page that when blocked will crash the entire front-end and make the entire page unusable.
I feel like this sort of comment can only come from somebody who's never had to deal with operations.
When you have a lot of users (especially when they rely on you to get money from you!) even 0.1% of them asking questions and having difficulties is a huge work generator!
It's not "oh it's easy to write a for loop". It's "my for loop now has 20 non-orthogonal options, and a user is saying we emptied their bank account and now we gotta make sure if we did". Also a content host, a CMS, and reporting software for taxes and the like.
I mean I bet you could get away with 100 people or something for this but there's _so much_ that can go wrong and would require lots of intervention.
This statement can be made about almost any company in the US right now. There is some serious systemic risk in the surreal number of people working whose jobs do not matter at all.
Even for productive software engineers, think back on how many projects in your career really shipped, how many of those then made any money, and then how many of those companies are still thriving. For me nearly all of the work in my career has amounted to surprisingly little and I have always been on the front lines of creating products in my roles.
So why are there so many people at every company that don't really create value? What does it mean when an economy depends on those people being employeed, well paid and consuming goods?
* Hire lots of people because that's what successful companies do
* Product development slows way down, because you hired too fast (Mythical Man Month stuff kicks in, where adding more people to a team can slow development down, if not done carefully and thoughtfully)
* Notice that development is slow, so you hire even more people to try and speed it up
At least that's been my experience at 3 different companies.
This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it.
Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.
FWIW I’m pretty sure OnlyFans is run by one guy out of London. Maybe has a handful of contracted employees for engineering and support. Basically the same business. Not sure what the payment volume comparison is but must be hundreds of millions a year, at least.
Patreon became successful mostly because of the girls charging money for their nudes. Then they've started to ban these girls because they wanted a clean platform. Guess what, these girls have now moved to onlyfans and they won't come back. Patreon has lost the money bringing members thinking that failed musicians/youtubers would bring them the big bucks.
seeing news like this really brings me down, no matter what i hate when employees take the hit and i sure hope they can find another job sooner rather than later.
I think there should be a music service that works exactly like Spotify / Apple Music / Google Music but with these differences:
1. No free tier
2. Your views determine which artists get your money.
AFAIK all of the above mentioned services pool views and give your money to the artists with the most overall views. If I listen exclusively to Scatman John's Scatman's World then I would have expected his estate to get all my money minus maybe 5% admin fees.
I thought similar. Four developers/full-stack, but then a customer support function that'd roughly 0.X scale with users, then marketing - could double-hat that, then certainly a legal/compliance team after some scale, also finance which probably doesn't need to scale linearly but should be a couple of people at least and no double-hatting on these at their size. So, thinking a bit, perhaps more than four.
I'm slightly surprised by Patreon's pricing, given they're not a discovery platform - it's really just subscription payments and some simple CRM stuff...
It's pretty easy to make a simple facility for accepting subscription payments.
You can do this with any website, plus a tool like Trolley [1] - of which I'm the creator, btw - with no technical knowledge.
The fee structure (2% for Trolley, plus your Stripe fee of ~2%) comes out less than Patreon, and you're not inside a walled garden.
Use the webhooks to link to it a CRM of your choice - probably on a free plan - and you're golden (yeah ok, maybe this bit isn't entirely non technical)
I should probably write a blog post about this, tbh :)
Given the purging of creators for arbitrary and political reasons, I can't say I feel sympathy for this company's collapse. Ideally it'd go out of business entirely. Creators should be cutting out the middleman anyway.
I have had “donate” buttons on my work and I have had Patreon and I have gotten several orders of magnitude more money out of Patreon than any other method. Patreon has more than earned their 5% cut of what my fans are willing to give me for drawing weird comics that make no attempt to fit into what corporations are interested in marketing.
I'm with you on the political thing, but the middleman is great for reducing friction. I personally do not like to think about X number of expenses, which means X receipts in the email, X credit card numbers to update, etc. Patreon was one expense. What I would give to have one organization handles every charity I might donate to (and then have them hide my mailing address from them).
At very least it would be nice to have a piece of local software that acts as a "middleman" by integrating with (let's say) Stripe or Bitcoin, and I set up subscriptions that way.
Yes, I will simply not donate if my only option is Patreon. I want a dumb pipe between myself and the person or organization who receives the money. I do not want the pipe making any decisions about who gets to use it.
The idea that I am going to have to navigate the ever-changing political sensibilities of different organizations is starting to bother me, and I am seeing in it more and more places.
Small-time niche creators largely can't cut out the middleman, because consumers are (quite understandably) reluctant to give payment information to some random person with no real reputation.
Discoverability is a huge deal. Looking for new, interesting projects? You know where to go.
It's the reason Etsy is very popular. Could sellers open their own Shopify stores in order to have more control over their storefronts? Of course, but they lose out on the search feature that Etsy provides, as well as the trust that buyers associate with these larger platforms.
They had some trouble with micro-payments, resulting in a big drop. It's solved now. (Basically: don't do micro payments, pay e.g. 1 year in advance, directly to each receiver.)
[+] [-] asiachick|5 years ago|reply
There are lots of independent artists running Pateron accounts with 200-5000 patrons. Fans sign up to support them but also to get access to their library of content.
Patreon provides a piss-poor UX for getting to this content. There is no list of content. There just "here's the stream of posts by the artist". The stream is JavaScript driven so if you want to go 100 posts back you have to page through multiple pages of posts. If you want to do it again tomorrow, or if the site crashes which it does, you have to start over at post 1 and page through again.
It's telling that so many artists use google drive, dropbox, mediafire, or mega to distribute their works. This seems like money Pateron is leaving on the table if they'd provide for a similar service at similar prices. They do provide a way to upload media but the UX is awful compared to Mega which has arguably the superior UX of those 5 options.
Worse, because these artists are using these separate services there is no way to limit who accesses them. In other words a bad user can share the links with others where as if they did this through patreon you'd have to log in to access the media. Of course bad users can still share the media they downloaded in other ways.
Further, and I don't know if this has been fixed, but I know what one time they only billed once month so bad users would sign up in the middle of the month, download everything, then cancel their patronage and avoid having to pay at all.
I can certainly imagine a service that's significantly better Patreon for this use case.
Let me also add discoverabilty is horrible. Maybe this is mostly on the artists but the #1 way I find one is off of patreon. Compare to say youtube where the #1 way I find anyone is on youtube itself.
[+] [-] patrickyeon|5 years ago|reply
> Around that same time, however, Patreon said it saw patrons exiting the platform more than usual due to financial hardships. Still, Patreon said churn rates were stable.
These two paragraphs are one right after the other. How do you reconcile the two? How is it not at least a question posed to their spokesperson of which is the case?
[+] [-] quickthrower2|5 years ago|reply
[+] [-] hammock|5 years ago|reply
They're not saying that more people are leaving than usual. They are saying that of the people leaving, more are offering financial hardship as a reason for leaving, than usual.
A corollary would be that the % of people leaving for reasons other than financial hardship has decreased.
[+] [-] alephnan|5 years ago|reply
This sounds like a riddle / koan.
Business analysts pulled these metrics from a data warehouse and the semantics don't line up.
I've worked on growth and data science teams, and there ought to be a book "How to lie with data science" as a successor to "How to lie with statistics".
There's been situations where I've seen the same metric queried in two different ways with contradictory results. The slight of hand here is that the query is query, and unless the metric is defined as the query, the metric is not the query.
I remember Nassim Taleb proposing that books are fractals and can't be summarized / compressed.
[+] [-] ALittleLight|5 years ago|reply
It seems like the "60% higher than previous months" figure applies to the new creators rather than all creators. I could easily imagine that income for new creators is very low on average and a 60% bump wouldn't mean much.
[+] [-] edanm|5 years ago|reply
> Not only are most patrons not leaving the platform, we’ve even seen many of them upgrade their tiers to support their favorite creators during this challenging time.”
Because as the second paragraph reminds us, there's always some churn. I think what they mean is, the churn rate went up a bit, but it's not increasing (though how they can tell from only one month is intersting).
And btw, it wouldn't surprise me if churn goes up, a lot of $1 tier supporrtes withdraw support to save money, but a bunch of higher level supporters increase their donation by a higher amount. E.g. if you're well off enough to support a creator at $10, you're less likely to need to leave given the current situation, and if you do incresae your pledge, then you won't increase it by $1 - you'll probably increase by $5-$10 at a minimum. So the average income could still go up even as churns are going up.
[+] [-] x0x0|5 years ago|reply
Facts: They raised a $60m D in July 2019.
Guesses: Patreon loses money (ie, they're a startup). This may be due to solely due to international, the use of the round D, or not.
Either way, they -- much like the startup I run -- are immediately planning how to go 24-36 months without any additional investor cash. Because your investors will still expect you to meet growth targets to get that next round regardless of covid.
Speaking for myself only, we've taken to heart the cut once, cut fast mantra that every company that came through 2008 says is the right thing to do. And we've figured out how the company will go for more than two years without additional cash, or be able to tolerate 20q2 being a sales disaster. Those both require immediately cutting burn.
[+] [-] adrianN|5 years ago|reply
Or something like that perhaps.
[+] [-] bryanrasmussen|5 years ago|reply
[+] [-] dpcan|5 years ago|reply
[+] [-] gadders|5 years ago|reply
[+] [-] chipotle_coyote|5 years ago|reply
And I can't help but suspect that this realization necessitates changing, if not the business model, the business strategy. Patreon in 2017 is fine with Chapo Trap House and Amanda Palmer as the top moneymakers; Patreon in 2020 needs the next Taylor Swift and Lady Gaga. (Better yet, the current Taylor Swift and Lady Gaga.) That doesn't mean they have to actively drive out the podcasters and comics nerds and furries, but it probably means they have to put all their resources into going after whales.
[+] [-] dannyw|5 years ago|reply
Patreon is a low touch SaaS platform that charges up to 12% PLUS payment processing fees. They do not provide any meaningful level of discoverability: you must build your audience yourself.
I wonder how the business would be doing if it disregarded that "raise money and spend money at all costs" model, that Softbank exaggerated? What if it had a WhatsApp-size of team: ~20 employees using sensible and well-architected tech stacks (not chasing the latest shiny thing just cuz its hip or cool)? I'm sure they'd be outrageously profitable.
[1]: https://techcrunch.com/2019/07/16/patreon-raises-60m-series-...
[2]: https://www.cnbc.com/2019/01/23/crowd-funding-platform-patre...
[+] [-] davidgerard|5 years ago|reply
Because the whales remember when they were minnows, and the small timers is where the big timers come from.
Patreon has wanted to dispose of the pain-in-the-backside long tail for ages - this was an explicit business plan by mid-2017.
Because they took VC money and turned a sustainable small-time business into something that MUST GROW, whether it makes sense or not.
[+] [-] coldpie|5 years ago|reply
[+] [-] helsinkiandrew|5 years ago|reply
A generic 'patronage' business will always be expensive to develop and run compared with more targeted discovery and patronage platforms - music, video, podcast, porn. If I can see the 'patron early' videos in my normal youtube feed, or pay podcasters from my podcast app I'd use that. It takes a huge amount of effort to support 'long tail' artists - those that I'm not a mega fan of - on a different site.
[+] [-] mdorazio|5 years ago|reply
[+] [-] doctor_eval|5 years ago|reply
In fact I know one company that did just this, with 100 employees. The staff chose a 10% indefinite pay cut over 10% reduction in head count.
Sacking people at this time is awful, and any company who has cash in the bank has options other than bankrupting some of their employees.
I don’t care if Patreon had planned this before Covid-19. There are alternatives. These are dark times and companies who sack their employees as a first resort are part of the problem.
[+] [-] Nextgrid|5 years ago|reply
For what it's worth I've stopped using Patreon when they included some Facebook tracking (among others) on the membership management page that when blocked will crash the entire front-end and make the entire page unusable.
[+] [-] rtpg|5 years ago|reply
When you have a lot of users (especially when they rely on you to get money from you!) even 0.1% of them asking questions and having difficulties is a huge work generator!
It's not "oh it's easy to write a for loop". It's "my for loop now has 20 non-orthogonal options, and a user is saying we emptied their bank account and now we gotta make sure if we did". Also a content host, a CMS, and reporting software for taxes and the like.
I mean I bet you could get away with 100 people or something for this but there's _so much_ that can go wrong and would require lots of intervention.
[+] [-] baron_harkonnen|5 years ago|reply
This statement can be made about almost any company in the US right now. There is some serious systemic risk in the surreal number of people working whose jobs do not matter at all.
Even for productive software engineers, think back on how many projects in your career really shipped, how many of those then made any money, and then how many of those companies are still thriving. For me nearly all of the work in my career has amounted to surprisingly little and I have always been on the front lines of creating products in my roles.
So why are there so many people at every company that don't really create value? What does it mean when an economy depends on those people being employeed, well paid and consuming goods?
[+] [-] Trasmatta|5 years ago|reply
* Hire lots of people because that's what successful companies do
* Product development slows way down, because you hired too fast (Mythical Man Month stuff kicks in, where adding more people to a team can slow development down, if not done carefully and thoughtfully)
* Notice that development is slow, so you hire even more people to try and speed it up
At least that's been my experience at 3 different companies.
[+] [-] tempsy|5 years ago|reply
Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.
[+] [-] tempsy|5 years ago|reply
[+] [-] zerm778|5 years ago|reply
[+] [-] imjustsaying|5 years ago|reply
>Still, it’s peculiar timing for Patreon, given the company touted an increase in new memberships during the first three weeks of March.
Peculiar indeed. So what is a factor not yet mentioned?
69 days ago, I was net downvoted after pointing out specifically what trouble was coming for Patreon.
https://news.ycombinator.com/item?id=22316071
>>I wonder if consumers could use forced arbitration in the same way.
>They can. Patreon is about to be hit really hard for playing thought policeman.
Now we are here.
[+] [-] draw_down|5 years ago|reply
[deleted]
[+] [-] gldev|5 years ago|reply
[+] [-] mikorym|5 years ago|reply
1. No free tier
2. Your views determine which artists get your money.
AFAIK all of the above mentioned services pool views and give your money to the artists with the most overall views. If I listen exclusively to Scatman John's Scatman's World then I would have expected his estate to get all my money minus maybe 5% admin fees.
[+] [-] flashman|5 years ago|reply
[+] [-] winslow|5 years ago|reply
[+] [-] tobyhinloopen|5 years ago|reply
[+] [-] zhte415|5 years ago|reply
[+] [-] rorygibson|5 years ago|reply
It's pretty easy to make a simple facility for accepting subscription payments.
You can do this with any website, plus a tool like Trolley [1] - of which I'm the creator, btw - with no technical knowledge. The fee structure (2% for Trolley, plus your Stripe fee of ~2%) comes out less than Patreon, and you're not inside a walled garden.
Use the webhooks to link to it a CRM of your choice - probably on a free plan - and you're golden (yeah ok, maybe this bit isn't entirely non technical)
I should probably write a blog post about this, tbh :)
[1] - https://trolley.link
[+] [-] 0xy|5 years ago|reply
[+] [-] egypturnash|5 years ago|reply
[+] [-] orblivion|5 years ago|reply
At very least it would be nice to have a piece of local software that acts as a "middleman" by integrating with (let's say) Stripe or Bitcoin, and I set up subscriptions that way.
[+] [-] at_a_remove|5 years ago|reply
The idea that I am going to have to navigate the ever-changing political sensibilities of different organizations is starting to bother me, and I am seeing in it more and more places.
[+] [-] SpicyLemonZest|5 years ago|reply
[+] [-] LargeWu|5 years ago|reply
It's the reason Etsy is very popular. Could sellers open their own Shopify stores in order to have more control over their storefronts? Of course, but they lose out on the search feature that Etsy provides, as well as the trust that buyers associate with these larger platforms.
[+] [-] hateMyIdeas|5 years ago|reply
Gamification?
[+] [-] panpanna|5 years ago|reply
What happened to those French guys patron alternative for open source projects? Libre-something was is name...
[+] [-] Matumio|5 years ago|reply
They had some trouble with micro-payments, resulting in a big drop. It's solved now. (Basically: don't do micro payments, pay e.g. 1 year in advance, directly to each receiver.)
[+] [-] sp332|5 years ago|reply
[+] [-] Ruthalas|5 years ago|reply
Suscribestar OnlyFans New Project 2 Liberapay
[+] [-] muyuu|5 years ago|reply
[+] [-] 0zwan|5 years ago|reply
How is it possible?
[+] [-] billpg|5 years ago|reply
If you sign up with Patreon to get perks, you're not really a patron any more. You're a customer.
[+] [-] dependenttypes|5 years ago|reply