Dear Sugar Daddies, Patreon, and the Creative Community,
As many of you are now aware, Patreon is shifting the onus of the transaction fees to the patrons, instead of leaving them where they should be, the creators. To be clear, I am both a creator and a patron.
When I decided to create a page for Stereo-Typed, I did so knowing that I would be absorbing the transaction fees for the pledges I received. There was an additional 5% that was paid to Patreon (which creators will continue to pay) which I chalked up to the convenience of having them deal with all of the collection and distribution of funds. Additionally, I pay a transaction fee when I withdraw my funds from my Patreon account (so in reality, I was paying fees on both ends of the transaction, but I was okay with that).
Patreon has decided to change their fee model so that my Sugar Daddies are responsible for the fees (I still pay 5% and the withdrawal fees). This is unacceptable, especially since they gave no notice and are giving us no option. Personally, I would like to continue to absorb these fees instead of passing it on to the people who have already shown such generosity. As for the lack of notice? Hell, my coffee shop gives me ample notice that they will be raising the cost of my morning cuppa joe. Patreon, by comparison, has given what amounts to 10 days notice for those who support a per-release model (which Stereo-Typed isn’t).
More predictable revenue for Creators
Patreon contends that this will provide Creators a more predictable revenue. We will receive 95% of our pledge amount, period. However, as I said before, when I registered with Patreon, I agreed to pay these fees.
What their statement doesn’t make clear is that this shift in fees is being coupled with an unbundling of pledges.
Under the old system, patrons could support an unlimited number of creators with a single monthly payment. Since there was only one large transaction, each of the creators that you sponsored would share in the transaction costs for your pledge. Patreon collected 5% from each of us for what I assumed was the use of their platform and the internal accounting that they did to get those larger sums applied to the individual accounts.
Under the new system, it appears that patrons will have a separate charge for each pledge on various days throughout the month (the anniversary of when you pledge). This means that the banking fees will be applied fully and separately to every pledge you make. What this means in real dollars depends on the amounts you pledge.
Effectively ending the $1 pledge
One of the greatest advantages to Patreon was the “even a dollar helps” idea. For many creators, that is their bread and butter. Patrons also benefitted from being able to support many creators with a small “tip” each month. However, under the new system, that $1 is closer to $1.40 (plus whatever VAT is applicable). This means a reduction of 40% of the available funds to make contributions … or, in real terms, some creators will be receiving $0 instead of the potential $1 less fees they were previously earning.
The single collection of multiple pledges was a major advantage to the Patreon system. They bundled the transactions to reduce fees. Those lower fees were passed on to all of the creators an individual patron supported.
Why the unbundling?
The rationale behind unbundling the pledges and doing several transactions monthly is so they can switch to up-front billing. Under the old system, a new patron would gain access to the additional content before they are charged anything. Apparently, some creators were concerned that patrons would enjoy the access then cancel prior to the first payment. That never worried me. I didn’t send out any tangible rewards until after the first payment was received.
However, the idea that they need to unbundle pledges in order to achieve up-front billing is false. In the day and age of computers, charges do not need to go through on the anniversary of the pledge. The initial pledge can be easily pro-rated with the future payments going through on the first of the month (as they do now). Granted, on a smaller pledge, such as $1, this means very little will go to the creator after fees, but they could easily charge the pro-rated amount plus the first monthly payment. For example, someone joins with $1 pledge with 5 days remaining in the month. Their initial charge would be for one month + 5 days. Subsequent months will be the charged at the monthly amount.
Creators supporting each other
In the past, I could support other creators out of what was pledged to me. There were no transaction fees attached to this. However, this is a thing of the past. Apparently, they will be levying the transaction fees against me for my pledges (even though the money is already in the Patreon system–where are these fees going?) and have said that they are looking at removing the ability for us to use our Patreon funds to support other creators. So, they will be charging my credit card for these transactions in the future. Keep in mind, the creators I am supporting are paying 5% already on the funds I am pledging to their work (and I paid 5% plus the transaction fees when it came into my account).
The changes to the fee structure make it costly for a creator to support their peers.
What am I going to do about it?
Well, there isn’t much I can do. We will have to see what Patreon’s position is in light of the backlash they have received. There are creators that are already reporting a reduction in the level of sponsorship due to these changes. The whole “Creators will have a more predictable income” is turning into “Creators will no longer have an income” if their main source was lower level pledges (such as the “every dollar helps” variety).
I cannot do anything to offset the cost of the $1 level pledge (which isn’t my bread and butter anyway), but I will be giving my patrons the choice of whether they wish to pay the fees or not. Over the next few days, I will be creating new support levels that are reduced so that the amount my patrons pay is as close to what they have been paying as possible. The rewards will mirror those of the old level. For those of you who have no problem paying the fees, you can continue at your current level. If you wish to have me absorb the fees (as I have done in the past), you can move your pledge to the new level. I will start with those levels where I already have pledges, but will eventually have one for each category. As I said, I can’t do anything about the $1 pledge.
For the time being, I will continue to use Patreon, however, since their fee changes erode the greatest advantages of using their platform (single monthly charge for all of your pledges and the ability for creators to support each other), I am exploring the idea of bringing it in-house and modifying the website to allow for a similar system. I will not be creating an account for TPOK Educational Network since the new model isn’t conducive to that account being a single collection point for support of all the shows.
Patreon: Thank you for complicating and adding stress to the process of getting paid. Oh, and incidentally, I have not received your notification as a Creator or a Patron.