What many people don't realize is that the operational and customer service costs of payments don't scale with payment amount. Customers will cost almost just as frequently dispute, have questions, have problems, ask for help, attempt to defraud etc with a $1 transaction as they will a $100 or $1000 transaction. This is the real killer with micro payment schemes. Customer service costs scale more with number of payments than payment volume. And these real costs are born by Patreon, by the networks and by the banks which is why min txn costs exist. The crypto bros totally miss the point in understanding this too.<p>Source: 25yrs experience building payment networks
What I think is something people easily overlook with Patreon and similar platforms is that it's quite hard to make a decent profit on $1 or $5 transactions that most of Patreon's income seems to come from.<p>They're definitely overcharging for more profit, but your margins won't be much lower if you handle payment yourself. Your 3% bank cut to receive money doesn't always work because often there's a minimum fee per transaction.<p>I know most iDeal (Dutch payment provider) transaction costs are 25 cents. It's a flat fee, so buying a €2000 TV will still leave you with 25 cents of fees, which is great for big stores, but when you use them do donate a single euro, the transaction fees are a whole quarter of the donation.<p>Tons of tiny transactions is a pretty terrible way to receive money. It's not "give up >15%" terrible, especially if your patrons tend to donate more, but Patreon needs to spread costs over all creators to make small content creators worth the effort.<p>Having a look at Donorbox, the same issue becomes clear: the cost for receiving payment in .NL is only 1.4%… and a €0,25 payment processor fee. These low processing fees are also only applicable to registered non profits in the NL which the author most definitely isn't. Even with the extra cheap rates and a non profit the fees to the lowest tier (±€3) add up to nearly 10% on a platform that's built around minimising costs for non profit organisations. There is the ability to use bank transfers for real cheap, but that's always a possibility anyway. One thing this site does seem to offer is the ability to offload all the site's cost onto the person who donates rather than subtract it afterwards, but that's just raising the donation price to compensate, not really a decrease in cost.
Patreon is a business and I don't begrudge them the ability to charge customers for their service (though I think it's pretty buggy). Before Patreon, I did not subscribe to a single podcast. After Patreon, I subscribe to 3-5 at various times. I subscribe to a couple other standalone products but the bar is certainly higher as the value they must provide is greater to get over having another subscription on another platform.<p>So I think Patreon likely does help individuals get business, even if they aren't out advertising on your behalf. That said, I agree the fee does seem high, given it is largely payment processing (and a simple media player) and we know what Stripe charges for that. I think they will probably be at risk from higher quality entrants like Substack who is moving into podcasting as well.
Patreon shouldn't even exist. They're here because government(s) have failed so badly that they haven't put any effort into the infrastructure to trivialize the transfer of its paper between the people holding it. It's as useful a function as highways and the internet, but government failures (that lobbyists pay individuals in government to continue failing at) create room for deeply entrenched trusts <i>paypal</i> to be established.<p>There's no moral amount they should charge imo; it's completely arbitrary. If you think it should be less, vote for better people, advocate for better things, make crypto that works and isn't exclusively an attraction for criminals and rent-seekers, or pour money into marketing a competitor. You can switch to another service, but I might not want to give your other service my card info. Well if your other service takes paypal I'll use it, so they'll <i>start</i> 5% behind.
The thing about Patreon is that it sucks for users too (as in, the consumers). Both the website and the app really suck. They look horrible, have few features, and often work poorly. It essentially serves as a notification platform that I then try to bounce out of into YouTube or wherever as soon as possible. It's kind of mind boggling that they seem to leave so much engagement on the table when even a mediocre website would probably keep me on there longer and thus potentially get me introduced to other creators, vs. that being solely through YouTube or something else. Then again, maybe it's a better investment to figure out way to take 17% from creators than to figure out ways to get people to find more creators.
“~14-17%. This is too high for a platform essentially only acting as a middle manager for supporting recurring payments.”<p>Patreon is not just asking this fee, because it’s middle men for recurring payments. If that was the case, you could use Stripe for your payment. You could easily cut these fees by providing donors a stripe link.<p>I guess the writer wouldn’t do that, because there is value in the donation platform.<p>Argumentation is not grounded.<p>If we compare the case with Between Epic games and Apple, where Apple was forcing high % for literally payments which could be done much cheaper at any other payment provider.
Maybe it is true, but I think it is somewhat ok. Patreon has enabled business that simply were not there before.<p>Some of these telemarketing companies that raise money for charity takes in the hundreds of percent more of the donations than this in fees btw. That something to be outraged about.
These articles seem to pop up from time to time, and the persons numbers seem roughly accurate in my experience.<p>In my experience Patreon has been around 11% cut scenario, split very roughly between Payment Fees and Platform fees. But I am on the Founders plan, which is the same 5% platform fees as Patreon Lite, but with the extra features of the 8% Pro plans.<p>I do think it is probably best for creators to diversify their platforms, but I still think that Patreon is worth it just because of it being a very well known platform outside of just tech circles.
15% is not a deep cut.<p>That’s a totally a reasonable cost for smoothly running the infrastructure necessary to support a creator with a monthly subscription model.
I never understood Patreon taking a % of money earned from creators. Seems unreasonable to me. I use Ko-Fi which has an optional “gold tier” with a fixed monthly price for more features. It also has an option for you to contribute a % of proceeds to Ko-Fi if you want. I happily paid for gold.<p><a href="https://ko-fi.com/" rel="nofollow">https://ko-fi.com/</a>
Apple take 30%. You have to understand that you're not paying just for the service, but the reach. You can DIY your donation platform and the tech side isn't rocket science, the issue that platforms like Patreon and Apple have access to orders of magnitude more users than you can ever generate on your own.
I'm not sure it's that high. They probably have AML regulations in multiple countries on their backs, and they are dealing with tons of tiny payments not a few big ones. For each tiny payment there's some chance of a problem occurring which will require support time.
I know patreon only because of youtube. Are there many creators not connected to youtube on patreon? My impression is if youtube would allow donations to creators, patreon would be dead. Am I wrong?
So the article criticizes Patreon for having "additional charges for non-US PayPal payments as well as separate currency conversion fees that are mysteriously high at 2.5%", offering donorbox.org as a respite, yet no-where can I seem to find what donorbox charges for non-US PayPal payments and currency conversion?
Typical credit card fees might be 25 cents/transaction plus 3%. What transaction size would give you the 17% cut that the writer complains about Patreon taking?<p>.25 + .03x = .17x
.25 = .14x
x = .25/.14 = 1.79<p>So, for these numbers (exact rates vary but are in this ballpark), a transaction size of $1.79 will result in a cut of 17%.<p>There is a non-zero cost per transaction, with any credit card company, with paper checks (built into the cost of the check), with any payment scheme other than "give me the cash in person". The smaller the transaction size, the larger the cost will be as a percentage. The numbers described here seem pretty typical.
There's an awful lot of comments here from people who seem totally unaware that PayPal offers a micropayment account type, with a completely different fee structure from a standard account. For US$1 transactions, a micropayment account saves 23c in fees.<p>If you're talking about or doing many transactions below US$12 and paying the standard fee structure, you're doing it wrong.
A solution to this is for creators to make the same move as ecommerce businesses going from Etsy to Shopify. Getting closer to the money and having patrons pay them through their own domain. I believe in this idea so much that I built a solution for creators who want to do exactly that -> <a href="https://jetpeak.co" rel="nofollow">https://jetpeak.co</a>
What part of ~14%-17% is 'stark' is hard to understand. Other creator subscription platforms have 20%-30% cut even from the start. He is confusing a creator membership platform with payment processors. Which means that he also is not aware of the below:<p>Patreon handles all fraud, chargebacks, scams, and on top of that it also handles international tax schemes like EUVAT. Which is a GIGANTIC help for any creator because otherwise you will have to process and file the tax from all those sales one by one yourself or have an accountant do it for you. He seems to have missed that part of the cost. Donorbox seems to be for non-profits, which, I very much doubt the author's writing qualifies as. He may get away with it since he is from India and India may not be cracking on such things yet, but as the international VAT schemes proliferate and India jumps on board, it will be a different story.
I don't know your audience but calling $25/year or $3/month "Symbolic support" on your "Donorbox" seems a bit ungrateful.<p>I do support creators moving off the sluggish excuse for a website that Patreon is though - especially if they can't even provide the main advantage of a centralized patronage platform: to keep fees low by aggregating smaller amounts distributed to many creators in one credit card/bank transaction.
This article claims Patreon's true cut is not the advertised 8-10%, but *86-83%*?? Surely this can't be true? We would have heard more people complaining about it by now.
A "14-17%" cut seems very reasonable for the suite of services Patreon provides. Generous, if anything. I wouldn't fault them for taking 20%
Crypto presents a real solution to this problem despite HN’s hate for it. Users who want to achieve Patreon style donations and gated access to digital media can use stablecoin payments on a high-throughput layer two network. Cost per transaction would be minimal, allowing micropayments without cutting into artist profits. The protocol could be fully open source as well.
The alternative platform suggested in OP, Donorbox [0], seems to require a project to be governed by a non-profit organization. At least, all of their top-level landing pages only mention this type of org. Is this true? And if so, does Patreo require the same?<p>[0] <a href="https://donorbox.org/memberships" rel="nofollow">https://donorbox.org/memberships</a>
I think this article is missing the real network effect of Patreon.<p>Anyone who uses Patreon will be much more likely to support you because they already have a Patreon account. They don't have to setup an account on some other platform and add their CC details again.
I appreciate there may be some international issues with this, but at least for U.S. domestic, what's wrong with folks using services such as Zelle? At least for direct gifting, vs "ordering" where you want the payment tied to the transaction.
Hopefully we eventually get a platform that solves this, cutting out (enough) of the middlemen.<p>creator <> Patreon <> stripe/square <> visa/mastercard <> your money<p>Should be<p>creator <> one entity to rule them all (possibly decentralized) <>
your money
It's not exactly in the same niche, but I like <a href="https://www.podia.com/" rel="nofollow">https://www.podia.com/</a> in no small part because they charge a flat rate, not percentage.
Lets not be disingenuous.<p>CAPITALISM cuts deep inside creator's profits. Patreon is only one such that relies on the creative works of humans, and gatekeep while charging usurious rates for "access".<p>Patreon DOES cut deep, for little benefit. But so does every company that hires people. By definition, we do not get the full surplus of our labor. We get scraps, and the "job creators" (read: capitalist scam) get the lion's share of our work.<p>That's how capitalism works - it's a scheme where only a few at the top get the benefits of the rest of us, all the while they tell us that they deserve our benefits of work.
TFW when white collar professionals complain about the prices businesses charge in order to pay the white collar salaries necessary to make the products they use. And so many of these companies aren't even profitable, either.<p>It's like carnivores being judgmental of hunters.