We’re sorry, and we’re not rolling out the fees change
blog.patreon.com
blog.patreon.com
If not for their initial response to the first round of feedback, namely to put a "we're still doing it" at the bottom of their original blog post (with completely unreasonable and unjustified explanations for why), I'd give them full credit for responding appropriately. As it is, though, at least they fixed this. They're still going to need to deal with the giant pile of patrons they drove off; many people lost a significant fraction of their support because of this change, and that won't necessarily come back.
Between 1 and 2 years ago, I talked to some folks at Patreon about an unrelated topic (namely, trying to use Patreon for registered charities). They mentioned at that time that they had a change in the works to shift processing fees from creators to patrons, which they said at the time would be "better for creators" for various reasons, but that didn't want to talk about the details yet. (Since the issue is now public, I don't see any issue with saying that now.) That discussion naturally didn't include any information about fee structure or un-aggregation of charges with associated additional fees, e.g. the "$1 costs $1.37" problem, since that wasn't the topic; the impression they gave at the time was that the only change was to pass on the (presumably still aggregated) fees to the patrons, which wouldn't have been as serious a problem, and wouldn't have killed Patreon's suitability as a wildly successful microtransaction platform the way this change did. So, they've been thinking about this for a long time, and yet they sprung it on people without warning and without running the full details by anyone.
Update: there's now a survey from Patreon asking for feedback: https://twitter.com/Patreon/status/941010263385374720
Why did they decide that?? (sorry did not read all blogpost in case it is there)
If Patreon came out and said hey, we've built a platform for years, this is incredibly expensive, we need to show a profit or shut this entire thing down. We're going to start charging a bit more, AND give you this thing you've been asking for in return.
Then everyone would be happy. They need to follow the shit sandwich strategy of good, shit news, some more good stuff for you guys.
Instead they dropped the shit on the community, arrogantly hoping they'll simply eat it.
I am a creator and my immediate response was to think about the math for a few seconds and go OH HELL NO.
Once per month.
I recommend the talk[1] Joe Peacock of fark.com gave about the time they deployed a redesign unannounced and made their infamous "You'll get over it." post in the thread full of confused and angry members.
But the size of the change matters. No matter how much warning they gave there's no way I would tolerate a flat $0.35 fee plus a percentage on a dollar donation.
Are we supposed to believe they didn't game the numbers out on this? That attrition wouldn't hold sway? I don't believe it, and any attempt by them to "I'm just a simple caveman, unfamiliar with your society" an excuse lies in high tension with "$100MM in funding."
I think the simplest explanation is that moving to focus on bigger-ticket patrons destroyed their brand.
It's astonishing how a company with one product could misunderstand its own market so badly, but given the troubles of Twitter and to a lesser extent Etsy perhaps it's less surprising.
I suppose that can be construed as a warm fuzzy feeling.
I read you want to put weight on how the very fact of giving or retracting donations messages an expectation to the creator and creates a kind of defacto commercial relationship.
But honestly I see it the other way round, where creators on patreons have already put something out in the world, and donations come after the fact.
There is an expectation that they go on creating, but if they said “fuck it I can’t do it anymore” I won’t be running after them to ask for my money back; I already got my warm and fuzzy feelings, the deal is closed on my side.
Yes. In the same way that you purchase something from a charity when you make a donation.
There's also a fair bit of patron-only content from many people - bonus comics, behind the scenes stuff, exclusive videos, requested artwork, whatever.
So yes, you are purchasing arts and entertainment. Just in an unusual model.
Just because there's no defined benefit or exclusivity doesn't mean all you're paying for is "fuzzy feelings".
"Voting with your wallet." Or to paraphrase the way Polonius put it in Hamlet, one of the key differences between sane and insane is what people do with their money.
If they were out to solve a problem, they’d just do this for transactions say $10 and above.
Nay, Patreon knew very well what they’re trying to do, and seeing it fail, decided to use the “play dumb” card.
On the other hand, it's possible that most of thevø revenue does come from 1$ donations, and they didn't understand how much creators desired having many pateons vs. few high paying patreons.
Wonder if he's still leaving.
But, I believe, there is a way: they can introduce wallets for $1-2 patrons: put $10 in a single transaction, then charge the wallet once it is a time to pay to creator. This should aggregate small transactions into larger ones and significantly cut the costs.
And then VC dogs biting them to make fatter profits so they find ticket master like shoddy processing fee scams.
Even for very large businesses, actually processing cards directly is pretty difficult and generally not worth doing. Instead you can just get a processor like Stripe or Adyen to give you good rates on an interchange-plus model.
The problem was that was per pledge. So if, like me, you support a couple dozen creators at $1-$3 each, you would expect to pay 24 x $.35. But all those payments are charged in one transaction. So they are only paying $.30. It isn't 5c per transaction they were planning to skim, but $8.
Which honestly makes it even more baffling an idea.
It's like designing a fancy new electric car but leaving off the wheels.
However, they talk about that problem in the article. What if a Patreon supporter pledges/makes a subscription on Day 1, then another on Day 2, and a third on Day 3, and so on?
In their original blog post [1], they spoke about how, ideally, they'd issue each of those charges to the supporter immediately; and then begin recurring billing 30 days later after that date. However, if those charges are made on different days, and the anniversaries occur on different days going forward, then they don't have the opportunity to condense them into a single transaction.
Patreon are looking for a solution where someone can create a subscription, be billed for it immediately (i.e. not wait for beginning of next month), and then continue from there with recurring monthly payments. With a naive system each subscription would have its own cadence, preventing transaction consolidation. They also talk about how, if they have a standard monthly billing period, then there are issues with waiting until the next period to make the first charge.
Perhaps they didn't explain this as well as they could have, but it made sense to me. It seems like a "Patreon Wallet" could indeed be a solution to a lot of these problems. Refill your wallet with a single large transaction, then draw funds from it when pledging to support creators.
[1] https://blog.patreon.com/updating-patreons-fee-structure/
WRT Patreon, I'm 99% sure that this is the reason they didn't propose something like a "balance card" where patrons just give them $X and both pledges and fees get deducted from that -- since that money's being held and then paid to someone else, it could end up being too close to a "money transmission service." (I'd thought there was a non-zero chance that this was a motivating factor in this change to start with, actually; coming so soon after a huge investment round sure makes it seem like there was a condition to that investment that spurred this change. Christie Koehler wrote a good post about that on her blog, although I don't have the link handy.)
How is that different from putting money into a Patreon account, which can later be allocated to content creators, at which point the funds are disbursed, minus Patreon's rake?
Patreon could certainly do that, but either they haven't considered it or--probably more likely--they don't like the idea. There could be practical reasons for not wanting to do that; a lot of people have talked about Patreon's problems with chargebacks, for instance, when people want to cancel pledges but they're bundled together with pledges they want to keep going all in one credit card transaction. In this balance card scenario, it'd be easy to have someone say, "Hey, I wanna cancel the monthly pledges I'm giving and get my balance back," and they could lose a lot of goodwill if they say, "Yeah, you can't do that." (While many of us would rather receive cash than gift cards, we generally understand that an iTunes gift card is something we can only use by spending at iTunes.)
(Edited to add: of course, this means that Patreon could have done a balance card thing if they were willing to say "but you can't get your balance back if you cancel," but I doubt that would have won much more love than the per-transaction fee idea did...)
They could delay payments to creators by a month to combat this but then they're holding the funds for a month, which brings you back to the original problem of seeming like a bank.
This seems like something Stripe could address, maybe.
EDIT: Just saw the other reply that explained this is how it currently works. I'll leave my original comment up though
(and no, bitcoin doesn't fix that at all)
I think if we were in an alternate universe where the government managed a free utility for digital payments no one would find it strange for a second.
Cash costs money too--you have to count it, handle it, deposit it, protect it from theft, verify it's authenticity, make sure you have enough change, spend time counting change, etc. As a consumer, if a merchant fucks you over you have little recourse besides suing. Cash takes no time to clear so you can spend it right after getting it, it is anonymous, it is hard to trace so you can skip on taxes, etc.
Checks can bounce, you have to deposit them, they take time to clear, they take forever to write, they can be fake, etc. However, it is hard for your cashiers to skim off the top, it uses exact amounts so no change to keep, it is a single slip of paper to carry around instead of a pocket of paper currency, as a consumer you can stop payment on a check if the merchant fucks you over, etc...
Credit cards are super quick to use at the register. They don't require any change (unless handing cash back). As a consumer, if a merchant fucks you over you can issue a chargeback. It is easy to track your spending as a consumer because all transactions are recorded electronically. As a merchant you don't have to handle change or cash, your cashiers can't easily skim off the top, etc...
It's all trade offs and I'll bet if you did an NPV on all the different methods taking into consideration all their pros and cons, they'd all wind up "costing" similar amounts.
At least they used to be. Chips ruined that. Now I have to stand there staring at the screen for half a minute waiting to respond to prompts and to pull the card out at the end. For most transactions, cash is probably faster than using a chip.
Everyone hates the chip.
At least in Spain
In the US it's chip and signature, and you can't sign until after the chip verification (either signing a paper receipt, or with a stylus on the terminal screen).
In addition chips are new and some terminals are painfully slow (30 seconds) to verify. I'm not sure I've ever seen one finish in under 5 seconds, though a few merchants have terminals that come close to that.
We now have contactless payments for under £30 in the UK, similar to Apple pay but you just place your card on the reader.
When you use a PIN you get a nice two factor signature from the card chip: it signs the current timestamp and the PIN you knew, and can do both as quickly as chip's processing capability and the bandwidth between the chip and terminal allows.
US banks came up with a dumb compromise just like most of their websites use Wish-It-Were-Two-Factor auth and secondary "Security Question" passwords, the chip cards in the US are doing their own Wish-It-Were-Two-Factor: sign a timestamp, wait some amount of wall clock time, sign a different timestamp.
Most of the wait in a chip purchase in the US is artificial just to make sure that two timestamps are "sufficiently" different. US banks should just give people PINs and stop this silliness.
Is this conjecture, or do you have actual citations to back this up? Those same banks have been issuing debit cards with PINs for a couple decades.
Every chip card I've received to date from several different major US banks has included some variation of "Great news! You don't need to learn or use a PIN to use this card."
My personal reaction every time has been, "But what if I want to use a PIN?" and this far I've never seen a satisfactory answer in those same letters or on those banks' own websites.
Admittedly that is purely anecdotal, as far as citations go, but in my mind it seems pretty clear what these banks think about PINs for credit cards.
Though I’m in the US. I hear chip transactions are way faster in other countries where they’ve been using that system for a while.
When I was visiting Sweden the terminals did not support NFC or I was just doing something wrong.
I had high hopes for bitcoin like currency having a flat fee in cents and an optional percentage few for insurance if you do want a charge back and other nice credit card like features.
But bitcoin is riddled with its own charge mania nowadays.
You may not care about security, but all I said was it's worse, and not good enough for me which you have not denied.
In that case cash can save ~5 minutes.
Near field is also limited by transaction size so it's far from sipe for anything.
Waiters used to take cars and swipe them ASAP presumably to get better tips by being prompt. Now, put this off until they finish a full round and/or put cards in and start doing something else because it's going to take a while.
Granted, this is far from a complete switch, but it was still noticeable.
Major US banks made $171B _profit_ last year. Lets not pretend that they're already bending over backwards to lower costs on transaction processing.
It's a free market and you as a merchant are free to pick your vendor. In addition, you don't even have to accept credit cards if you want--you can just take cash or check, or even just cash. Of course people entering your store might not buy anything from you because who the hell carries around cash or checks anymore, but no jackbooted thugs will force you at gunpoint to accept credit cards.
The credit card industry is a huge, highly competitive industry with little barriers to entry. Massive market forces are at work squeezing the margins for transaction processing fees to as little as possible.
My bet is that transaction fees are priced at what they are because:
- its cheaper than handling cash or checks
- it results in more revenue, even with the "cash back" discount given to CC users.
- it is more traceable and easier for your bookkeepers to manage
And to be honest, I believe many small business who take cash only do so because they aren't reporting all their income. When it is off the books cash-only, you can pocket the sales tax, underreport income tax, pay your vendors cash under the table, etc. I also believe that if their margins are so thin they can't afford a 2% transaction fee they probably have no business staying in business anyway. Whatever they are doing is more likely than not a value-destroying NPV-negative project to begin with. (see also: just about every business shown on those "save my bar / save my restaurant / save my hotel" TV shows)
Holy God. I might as well say it's all equally free, since when the heat death of the universe is done with, there will be no difference between something having existed or taken place or not.
What makes you think we could do it digitally?
I would 100% opposes to a government run digital payment system, the government is too closing integrated to todays electronic systems as it is, I in no way want them to own and directly control it
Though, the Federal Reserve is quasi-public/quasi-private. But for any systemically important transactional system you can be sure that the government is plugged in one way or another. The Clearing House company is the main alternative to the Federal Reserve electronic systems for interbank transfers (they're the "private" ACH operator), and they're heavily regulated, with the Federal Reserve given substantial oversight authorities.
Just because the current system sucks and needs to be replace, does not mean that replacement should be another Government Run System.
As I stated in my original comment the government is too closly integrated to today's electronic systems as it is
I want the government out, not more ingrained
Note that nearly all fees are flat fees.
Even they have a $15 fee and sometimes a $15 receiving fee as well.
Ideally you'd have zero fees for transactions under $5. $5-$X0000 would have a percentage based fee and thereafter a flat fee for large transactions.
In general, real time payments for large amounts can be made for <1$ (both fedwire system for its participants and various EUR systems do that), and consumer payments that can be (a) batched and sent in bulk and (b) get delivered e.g. at the end of day, not in real time, those have a cost of ~$0.01 (perhaps 0.02 in case of small volumes) to the bank.
So, in EU, everyone has access to something that's pretty much equivalent to USA "wire transfer", and it might cost e.g. some 40 cents or can be offered to consumers either "for free" as part of a common services bundle/maintenance fee.
I have really hopes for the Euro
If I understand it right, merchants often aren't allowed to pass on the fees or (much the same thing) give discounts if you chose a cheaper payment option. No wonder there's little competition on the fees, and Visa[1], Mastercard[2] and PayPal[3] are all having record profits.
[1] https://www.cnbc.com/2017/10/25/visa-quarterly-profit-rises-...
[2] https://www.reuters.com/article/us-mastercard-results/master...
[3] https://www.reuters.com/article/us-paypal-hldg-results/paypa...
Anecdotally, I worked at a company store years ago where we would charge customers paying with cards a 2.75% fee, which is what we were paying. And that store was operated by a Fortune 500 company.
Also, virtually every small private business I go to in Los Angeles charges some fee, or has stipulations, for credit card transactions.
The big change came in January 2013 after a big court judgment. Adding fees, though, is still illegal in some states: https://www.creditcards.com/credit-card-news/business-surcha...
Made me wonder about the stores/restaurants I frequent here that do charge, apparently they're still ok to do so after 2015(link from the comments in your linked post): https://oag.ca.gov/consumers/general/credit-card-surcharges
There are more stores not accepting credit cards than charging extra.
Credit card "processing fees" however are high because of the stupid rewards programs that Americans are so addicted to because it makes them feel like they are "sticking it to the man" and getting money back, to the point of having dozens of plastic cards in their wallet. Of course with processing fees at >1% of gross value no cashback or airline miles program is ever going to make you come out ahead.
In the EU there are no silly rewards games and fixed processing fees of at most 0.3%.
Then they should have never strayed from the original model, where they charge you once per month for all your pledges, causing only one fee paid to the payment processor.
(If they needed to accommodate people pledging small amounts to very few creators, they could have introduced some sort of quarterly, biannual, or even annual payment option instead of just monthly. I'm curious if they evaluated this option and what they concluded.)
And you’re right, in that perhaps they should send $3 every three months or. $6 every six if you’re only giving to one person.
Payment cards are not a legal tender, so you can do whatever you want, provided you didn't sign a contract not to do.
You can impose a minimum purchase amount for accepting it though.
Certain professions (i.e., taxis) are even forced to accept credit cards.
Are you sure, that it is by law, though? In most countries, it is a contractual obligation: when you make a contract with your bank or payment processor, one of those terms & conditions is not to discriminate against the card payers. The purpose is to force the processing fees on the merchant, otherwise the cards would be at a disadvantage and would not get popular. For a case study, see Southeast Asia (1. cash rules there; 2. you can pay with a card, but you will have to cover the fees too; 3. as a consequence, everyone uses cash, see also point 1).
In the case of taxis, I would understand if they voluntarily had terminals for their own protection (so they would not get mugged for few banknotes), but forcing them... that sounds wrong.
> Are you sure, that it is by law?
It is: Article L112-12 from the Code monétaire et financier. "Le bénéficiaire ne peut appliquer de frais pour l'utilisation d'un instrument de paiement donné." (The seller shouldn't charge any fee for the use of a given payment instrument).
https://www.legifrance.gouv.fr/affichCodeArticle.do;jsession...
More generally, the law requires that the total to pay is to be presented to the client before he choses how to pay.
"Semantics" is about the meaning you're trying to express.
"Syntax" is the way you've chosen to express that meaning in this particular case.
e.g.:
def blah
"a"
end
function blah() {
return 'a';
}
The difference between "card surcharge" and "cash discount" is treated as 'semantic' in the merchant contract context, but is it a distinction without a difference from the customer's perspective?
It happens that, with programming, explaining precisely how each part of a program corresponds to "meaning" (and there are different levels and dimensions of precision, e.g. "xs.append(x) means it'll add object x onto the list xs" vs "xs.append(x) means it'll look up the value of the symbol 'xs' in the lexical environment and then the global if necessary, and do the same for x, and then look for xs's attribute hash table for a key named 'append'..." vs "xs.append(x) means it'll check if the array backing the list has room for one more element, and, if not, look for a free block of the right size in its freelist, and, if not, use 'mmap' to grab more memory from the OS, and barf if that fails, and then copy the array data into a new array of twice the size, and free the old array...") also gives a precise description of the behavior of the program (assuming hardware perfectly obeys the abstractions it's meant to obey), which is all the programmer is interested in.
This is a field where machines reliably turn symbols into actions; hence, the meanings of symbols are the central object of study. Semantics are extremely important and are almost all we need to think about. This is not the case in most fields. (I guess one other profession that comes to mind where semantics is important is law.)
To bring it back to your original question... yes, semantics is important to us. If we want to call something unimportant in that way... "It's a matter of definition" or "We're arguing over definitions" strikes me as the best fit.
(One other distinction: Programming language terms have semantics for machines. They also have semantics for humans. Whether the computer recognizes something as a closure, or complains about a syntax error or executes something completely different, is very important. Whether human programmers call it a "closure", a "function", a "procedure", or some other term, is generally unimportant. Thus, the maximally correct dismissive comment might be something like, "It's human semantics".)
Q. Why are there different prices for paying with cash vs. with my Visa card?
A. A merchant is permitted to offer discounts for paying in cash, however, the discount must be given as a reduction from the standard price.
Which was recently thrown out on appeal, so that’s fun for any place that was relying on it.
Places can simply work out a monthly total the cost of CC fees and increase their prices overall (or on specific products) to recover that cost.
They already group the transaction on the 1st of the month for me. I use PayPal, is it different for other payment types?
At least in Europe that's not true. If I buy milk (6% VAT) and beer (19% VAT) in the supermarket here (The Netherlands), I don't have to split that in two transactions.
They did aggregate up until this point, at least for most patrons and creators. If you did a regular pledge with a monthly charge, you only made one transaction a month. Similarly, each creator got paid once a month with one transaction. The exception was per-post patronages, which do indeed have more fees and are less suited to the micro-payment model. That is NOT what this was about, though.
The real motivation was to support gated content.
They want to bring creators into their subscription system, where you pay a fee to access content. They had a problem, though, in that people could pledge, access content, and then simply cancel their pledge before getting charged. To avoid this, they needed to do Charge Up Front (CUF) to ensure that any access to gated content was paid for. But that creates some confusion about when people get charged (do you pro-rate the first charge, with or without the next month, etc.) because people would pledge a certain amount and see a different amount charged. The alternative is to have people on their own billing cycles, which is much less confusing for customers, but eliminates the possibility of aggregation.
Basically, they want to abandon the goodwill/patronage model and become a subscription service, likely because the latter model is far more lucrative.
Still an issue if most people support 1-2 creators with $1-2 pledges.
For comparison, both Square (which is not known to provide the best rates) and Stripe advertise better than 2.9% + 35¢, and that’s the rate you’d get without any negotiation at all.
What am I missing?
I wonder if they have problems with anti money laundering regulations? Financial transactions are supposed to clearly indicate the beneficiary. If you're paying into a wallet that gets divvied up later, that's not possible so showing the paper trail of who benefits gets difficult.
Now, since it's basically acting as an escrow payment, Patreon might have some laws restricting what it can do with that money while it's holding it. For instance, they likely cannot legally earn interest on that money. Similar to how the security deposit held for a rental cannot yield interest unless that interest is paid to the renter.
That's sort of the same thing here, right? Prefill a wallet and you don't have to pay extra for processing fees (equating to convenience going back to tollways).
But if you actually ask people whether they want the first couple charges to have weird timing, or whether they want to pay significantly more in credit card fees that don't go to the creator...
I mean, it seems like a dream business model, you basically channel donations to content creators taking a cut, collecting goodwill along the way.
Their service cannot be more than a (refined and well designed as you want) CRUD app with payment processing, it's hard to imagine having such high costs that is not profitable.
At the end of the day, it was obvious that we fucked up from the immediate feedback, but internally there was already a strong camp who felt this change was wrong, which greatly helped our ability to move quickly and plan out how we'd call this off (all the code was already in production behind feature flags).
On the data side, our churn ticked up, but was actually lower than we predicted and quickly returned to normal levels https://imgur.com/a/inFOE -- so the reversal was largely driven by the complaints of creators and patrons alike, and our own realization of how tone-deaf the decision was to begin with.
Speaking of which -- in my mind there are some obvious solutions to alleviating fees that didn't require moving the entire burden onto the goodwill of supporters. We're going to tackle a more comprehensive roadmap in the coming days and weeks (and talk to creators much more during this process), but if anyone is curious or wants to offer feedback, here are my thoughts:
* A big problem (that we arguably created ourselves) is a patron could pledge to a creator on the 25th of a month (granting a patron 5-6 days of access), get charged, and then get charged again on the 1st of the next month (granting the patron 30-31 days of patron-access). Pro-rating didn't seem like a right solution for the first charge since becoming a patron unlocked all the content immediately. So imo we should just (like a Netflix or any other subscription) have your first pledge grant you 30 days of access, whenever it was created -- and have this forever be your "anniversary date" of charge -- if you pledge Jan 25th, you'd be charged again Feb 25th.
* The question is around how we aggregate pledges if this patron pledges to another creator. If we say the patron pledged $5 to the 1st creator on the 25th of Jan, then pledged $5 to the second creator on the 10th of February, I'd want to charge the patron $10 on Feb 25, and in the receipt call out that you're paying for the 1st creator for the period of Feb 25-March 25, and for the 2nd creator from March 10-April 10 (because you'd have already paid for Feb 10-March 10 when you pledged to the 2nd creator on Feb 10). This way you're ALWAYS getting 30 days of access for every pledge you pay.
* Now that we can aggregate payments across multiple creators, I'd want to allow for the purchasing of multiple months/year at a time for a creator or creators, which further reduces fees -- additionally it allows creators to setup rewards (we're building this system out now) for when patrons have pledged a total of X amount or pledged for some time period.
* Finally, once we can pledge across multiple time periods, I'd love for cryptocurrency to be able to pay for patronage. Currently it's trivial for us to accept bitcoin via our Stripe integration, but we wouldn't be able to do recurring payments, and the ultimate thing that kills it for me is that creators wouldn't actually get bitcoin, but rather we'd have to convert it to fiat immediately. I'd rather patrons be able to purchase multiple months of patronage and creators have the option to convert to fiat immediately or hold actual bitcoin and participate in the wild ride that is cryptocurrency speculation :)
Ok that's all -- ideas are rough above, but that's what's on my mind lately -- happy holidays.
A simple solution to the "patron pledges near the end of the month" problem would be to have two batching dates, one at the end of the month and the other at the middle, and chose the one farthest from the current date, so the initial charge of a pledge would always be for at least a couple of weeks. Though personally, I would find that solution a bit annoying; having everything aggregate into a single charge per month is very convenient for patrons.
TLDR: Aggregate on a single day, but pro-rate the second month, not the first, so there isn't a "runt" payment up-front.
I start a monthly $20/mo pledge on Feb 15th. I'm billed $20 on the Feb 15th, same day. This covers one month, Feb 15th - March 15th. Let's say the first of the month is aggregation day. Come March 1st I'm already paid up through the 15th, so I get billed for the pro-rated $10 for the second half of March. Come April 1st and all aggregation days thereafter I can now be billed on aggregation day for the full monthly charge.
That was my immediate thought reading this text. Of course it'll confuse some users, but since it's the fairest way, it should be the way to go. Also, just don't charge for the prorated period if the feed is going to be as big as the contribution (e.g. for a couple days for someone contributing $2 a month)
You could keep your charge date on the 1st of the month, and just not charge for that first month if they are charged up front. Let creators choose the length of their grace period: 3 days, 10 days, two weeks. Creators get paid, don't feel pressured to provide refunds, and patrons get a little sign-on discount.
And as a patron, I appreciate receiving my December rewards near the end of December rather than mid-January.
The reason this is important is because a one-size-fits-all solution may not be possible. For the case of physical rewards in return for pledges, charge-up-front is completely unnecessary. The creator can just say that the rewards will go out after they receive payment on the first of the month, so someone subscribing in the middle of the month receives nothing until the month ticks over. For the donation case, charge-up-front is useful, but not for the reason you might think. The main point is to prevent freeloaders who pledge, view the exclusive content, and then cancel without paying a cent. In this case, creators would probably be fine with pro-rating the first monthly payment after charge-up-front, or even just skipping it entirely. It's all donations anyway, so the point is not to extract maximum value from each patron, it's to make sure each patron is paying an amount that they are comfortable with, so that they will continue to pledge long-term.
My overall point is that the platform that is Patreon is abstract and flexible enough to support a number of different business models, which may have different needs with regard to charge-up-front and other features. And to get an idea of the full breadth of those possibilities, I think you just need to interview a lot of creators, and I think you'll find that the usage patterns are more varied than you expect. At the same time, I'm sure there's value for patrons in having things like charge-up-front work the same way across different creators' Patreon accounts, so that they know what to expect when pledging.
This seems like the key. Instead of making any decisions about payment scheduling options, design your system to allow for all of them within reason, and give the creators a menu.
If you don't offer your users enough options, you will eventually be out-competed by a patronage service that does. Hardwiring your system to a model that happens to work for you simply ensures that this will happen sooner rather than later.
Worst case: a patron could game the system and only pay half as much as other patrons for the same content. That would involve pledging and canceling repeatedly every other month. That is not a likely scenario, and still infinitely better than the previous worst case: patrons paying $0 for that premium content.
You have ONE solo transaction, the rest are able to be bundled as normal, and the $1 pledges that make up half of my Patreon income (and, I’m extrapolating, a similar fraction of everyone's Patreon income) aren’t eaten up by that 35¢ fee.
I'd really like to see a debit system: I could load up 6 months worth of pledges at once and incur only one fee (whether it's explicitly charged or done 'hidden', I don't care). Creators could choose how often to be paid, as well, so they control what kind of fees they incur as well.
Creators all run vastly different businesses so pro-rating is always a thought -- one thing it seems incompatible with is in the fulfillment of goods, where the creator takes on a burden of cost. It would be difficult to consider what the patron receives in return if they only pay out a pro-rated portion of a reward tier. Curious how that would play out in your scenario --
Anyone have examples of ones done right?
I think they had good intentions, but got greedy and lost sight of their overall goal
They could have restored all cancelled pledges and covered their costs for a few months. That would give creators money to pay the rent, and probably go a long way towards restoring relationship with patrons.
Clearly, they're not that sorry.
I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator. A lot of patrons feel like their payment is a donation instead of paying a subscription or water bill. Yes, some patrons+creators have a quid-pro-quo arrangement where payments unlocks content or extra services. However, many payments are just "appreciation" type of money. That is a fragile relationship and it was wrong to tamper with it by charging extra fees to the patron.
Jack was/is a creator himself so he should have known this dynamic and therefore predicted the bad outcome ahead of time.
Ideally, when you start a multi-sided platform, you want to get the economics correct from the very beginning so you can leave it unchanged. (E.g. Apple iTunes charges 30% since 2008 and it's stayed that way.) However, if you have to readjust the percentages, it's preferable to take it out on the sellers' side and not the buyers' side. When ebay started, the fees for sellers were ~3.25%. Over the last 10 years, it has crept up in increments to ~10%. All of those price increases were absorbed by the sellers.
If Patreon needs more than 5% to make the numbers work for a sustainable business, they need to take it from the creators and not the patrons. Patreon was riding on the "good will" of patrons making voluntary payments. It was a terrible miscalculation to destroy that good will and nickel & dime patrons with extra fees.
And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content (e.g. bonus/patron chapters), there's no exclusive/sale type arrangement.
Yes, when I typed out "quid-pro-quo", I was thinking back to the recent HN article about webcam women making money on Patreon. Patrons would pay $10 a month and for that, the women would do private chats, role play, etc. For that particular type of patron who needs to see a particular woman take her clothes off, the 2.9% fee plus 35 cents would be more of a "nuisance" fee and they'd just go ahead and pay it. Let's call this group, the SUBSCRIBERS.
However, a lot of Patreon relationships are not quid-pro-quo and it's a totally different psychology when patrons pay a $1 donation to "support an artist" with no direct benefit other than some good feelings or minor things like "early access to content" like you pointed out. In this scenario, Patreon is the online version of throwing money into a hat to show appreciation for the musician at a coffee shop. Inflicting extra fees on patrons damages this type of relationship. (E.g. "Twitter was filled with screenshots of people removing their $1 pledges.") Let's call this tip jar group, the DONATORS.
If SUBSCRIBERS are the majority and dominated the platform over the DONATORS, Patreon could have stayed the course to charge extra fees to patrons on December 18.
However, it's telling that Patreon aborted that plan which signals to me that the DONATORS are a very large and influential part of the Patreon membership. Jack said they did a bunch of spreadsheet models and surveys before announcing the fee changes but obviously, their assumptions about their members were way off somewhere.
(I'm oversimplifying with categories of SUBSCRIBERS vs DONATORS to illustrate a point. It's certainly possible for some patrons to be a blend of both psychologies based on how their pledges are split to various creators.)
I thank that might exactly be the reason why it happened. From what I recall as a fan of their artistic work, he (& his wife) never asked for straight up donations, but either offered something in direct exchange (via Bandcamp) or the money went towards a specific project (Kickstarter).
Isn't this a false dichotomy? It's just a matter of how you phrase it, no?
If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference.
That would be true but that didn't happen. Final ebay auction values for stable items (e.g. books) did not rise by +7%. The sellers really did end up paying most of the fee increases.
Yes, some sellers tried to claw back the extra fee commission by adding extra "handling charges" to the total. That had limited effect because it made prices higher than (1) other ebay sellers that didn't add handling fees and (2) competitive Amazon Marketplace prices.
Also, Ebay lets bidders sort search results by "total price including shipping & handling" so adding handling fees just pushes your items down to the bottom of the list.
Let's say the final price is 100$ and cut is 10%, so seller gets 90$ and buyer pays 100$. You could say the buyer is paying for it since the seller was willing to sell for 90$ and the buyer had to add 10$ to get the item. Or you could say the seller pays for it, since the buyer was willing to buy for 100$ and the seller has to give up on 10$ out of those 100$.
I really don't see the difference. It seems just marketing in terms of how you phrase it. I even saw companies saying things like: seller is paying 5% and buyer 5%, which seems just a way to make it look lower for both sides.
While you are correct that one way or another the buyer will be paying more it is how you present it (buyer raises price to counteract the increase vs seller being charged more directly by the service).
IMO, before Twitter/Facebook, this apology would've never happened. They would've continued to press on with their fee structure and it would've been yesterday's news.
The real question is - is this still a good move for them? Or should they have dealt with the blowback either way?
From their initial blog post announcing this change:
> In preparation for this change, we ran experiments and months and months of research to understand patrons’ potential reactions and we found that many patrons were happy knowing that this change will send more money to creators.
Looks like a somewhat interesting user-testing glitch to me. Perhaps their sample of patrons wasn't representive, or when you sit people down and discuss a new feature 1-1 you can be more convincing than when broadcasting it to the whole world in a blog post.
Or perhaps we're all just a raving mob waiting for the right inputs, and early sentiment by influential individuals actually shapes our thoughts and actions far more than we like to admit.
But that we are very noisy, because tech people on HN/twitter/etc. really want a micro payment solution for the web, to avoid ads.
As a patron, I'd be fine if Patreon just added transparency on fees, showing exactly how much reached the creator and how much went to fees, which is equivalent to "passing on" those fees. (They're effectively paid by the patrons either way, the only question is whether it's made clear what fraction of a pledge goes to the creator, what fraction to Patreon, and what fraction to processing fees.)
In my opinion, they made two critical mistakes here, and transparency on fees wasn't one of them. First, they un-aggregated charges, so that a $1 pledge costs $1.37, and ten $1 pledges costs $13.70. Second, they effectively increased all the pledges by individual patrons, rather than just being transparent about fees on the existing pledges. Effectively, they said "we're going to increase everyone's pledges by the amount of the fees (and hey, would you look at that, we get more money now)", rather than "we're going to show you exactly how much of your existing pledge goes where, without changing your existing pledge". Of course that led to a revolt.
According to what I’ve heard, this was requested by credit card processors, because people would revoke the patreon charge, not understand why they’d be charged such a random amount every month.
Instead, they were supposed to charge every patron for every creator separately, and make it clear on the bill for which creator that is.
I fully expect that they will have to keep this unbundling.
> Not only that, but if you’re a creator on the monthly plan without the benefit of charge up front, you are constantly worried that your patrons are going to delete their pledges before they’ve paid.
Patreon, to my knowledge, has never said this. The move would be understandable if it were true, but they've instead offered different rationales (like "creators want to be paid out faster on new pledges"). If this were the reason for the new model, I can't think of a reason Patreon wouldn't publicly say so - it would've won a lot more sympathy.
Do you have any evidence this is the case?
This is exactly the reason. The important follow-up question is: which creators?
Patreon supports two fundamentally different groups. One uses the platform for pure donations, where there are no exclusive perks to becoming a patron. This group doesn't care about faster payout because there's nothing riding on it.
The other group uses Patreon as a paywall platform. They care a lot about payout speed, to prevent people from joining quickly to gain access to the paywalled content, then canceling their payment before start of the next month.
The paywall group is where the money is, because Patreon's model doesn't provide the mutual assurance necessary to convince people to fund public (unrestricted, infinitely-reproducible) goods. And so, inevitably, the platform will cater to the paywall group.
I'm happy to foot a 50c or so service fee per month. I'm not up for paying 35% service fees! That's outrageous and I'm confident someone else will start the right service and creators will simply move there.
They care about payout guarantees. That's not the same thing.
The point isn't whether they'd benefit, it's whether they're in favor of it when (possibly) polled.
For me it was enough to put "just pay an annual lump sum to my favorite creators and drop the rest" on my TODO list; I'm glad Patreon came to their senses.
I'm not saying that this makes the change a good idea, or that it was communicated well, or that there aren't some really interesting business dynamics that are likely to come up one way or the other that will piss off creators. (There are only six creators on Patreon who have more than 10,000 patrons as of now; to earn that $450M valuation, Patreon may need creators who have hundreds of thousands of patrons.) I'm just not convinced this would have been the Patreoncalypse.
Patreon really tried to make this "point". It is not actually valid; "amount of pledges" before the change is not comparable to "amount of pledges" after the change. Measured as a percentage of "money paid by patrons", revenues to creators fell -- they rose when measured as a percentage of "pledges" because the new fees weren't part of "pledges" while the old fees were.
That could depend on how they asked patrons.
If I was asked if I were in favor of more money going to creators, I would say yes.
If I was asked if I were in favor of paying more to make this happen, I would say no. If I want to send more money to creators, I would opt for a higher patron tier.
On my first read I thought the fee was per transaction and that they would keep aggreting pledges...
It would have take the degenerate example to show that... And only a super honest business would show the edge cases.
To me, at least, this is the core issue. Patreon is supposed to be the way to support creators in the internet age.
If they're going to make a strong many-to-many funding model impractical, then why should anyone put money into them as opposed to conventional charities? An NPR pledge drive will sign me up for a credit card monthly auto-payment, but that just doesn't really get me excited. Sure, it's a good cause, but good causes have always been around.
This is critical because of the fact that so many of the creators are actually doing bleeding-edge things. The tiny sub-categories of creators I fund didn't exist 3 years ago. A $1 donation isn't just a signal from the supporter to the creator. It's a signal to the media, it's a signal for potential book deals, all kinds of things. Those numbers have value. By making those contributions radically financially inefficient, they are risking a tipping point that undermines their core value proposition. Even worse, it hurts the frontiers of creation that we cared about in the first place.
WRT dumping Patreon and the like, I'd rather see community-efforts and enterprise compete. That has lead to some very high quality products from both (e.g. clang vs. gcc, chrome vs. firefox).
Their rank improved 8,324,736 positions vs Liberapay's 824,569 positions. MS is now rank 578,982 and Liberapay is 586,177 vs Patreon's 461
Data from alexa.com:
I’m willing to bet that this rollback is because Patreon leadership and Sr. Managers woke up Monday morning, took a look at their metrics and KPIs and nearly had a heart attack. It probably looks like a nice upward trend for a long time then a massive spike down after the announcement.
Always follow the money.
This is certainly a business decision, but image is part of their business, and part of their image is, ostensibly, listening to creators.
https://www.patreon.com/posts/15819420
It turns out the whales remember when they were minnows.
I only lost a few, but it already has me poking around at different options for the future.
That's probably not a bad thing overall. I'm sure people that stopped pledging money during this period will get an email, and have a chance to undo the action. That said, there's quite a few people getting a couple bucks a month from me that I don't really have any reason to support anymore, but haven't taken the time to clean out. That's not an efficient market. If I had stopped pledging to some of them because of this (I didn't as I didn't see a problem with this move), I wouldn't feel compelled to pledge again, and that's a good thing, as right now they are only getting money from me because of my laziness.
I'm not talking about people that I still want to support on principle or because I think they do cool stuff even if I'm not consuming it. Those people by definition are worth my money, so I would likely sign back up.
Same here. Nobody is going to trust Patreon not to do something equally damaging again. It's nice they've reversed this, but I really can't think of anything that will bring back the trust they just trashed.
Creators would get more money of course, but purely because all patreons would start paying more money. They didn't mention that either.
I hope that in the future content creators won't have to depend on a single company which takes decisions purely based on their own profit. The marketing team can spin this anyway they want, but ultimately as a company that is their goal.
For lack of a better term, microtransactions and some form of digital currency should solve this problem.
I'm not a fan of the Brave browser, but they introduced a micropayment system last year[0]. It seems to have been launched with Bitcoin support, but maybe this has expanded (as it should) towards other currencies.
Can someone share their experience with Brave Payments, or with similar systems?
This seems like the only logical way to go, from a technology standpoint, and we're not that far off from reaching it.
Creators have their digital wallets, payments are made in the background (with very limited user interaction, or none whatsoever) after a certain smart contract is fulfilled between creator and consumer, and the funds are transferred with very little latency.
The content creation service that launches with this will be huge in the near future. Bonus points for open sourcing it and making an open system that all content creation sites can reuse.
I just want something where I can put in a few dollars and it goes to sites I visit. (Previous services have resembled this but with notable issues.)
It's way too early to judge the approach based on current implementations, because of flaws in those implementations.
But consider a system where the user is always in control of how much resources the web miner is consuming, via say, specific quotas based on domain, content creator, etc., and that there could be little risk for the miner to hijack those resources.
This is a technical problem that can be easily solved in future revisions.
That said, I'm not sure if mining is the right approach, simply because the proof of work is completely arbitrary for some currencies (e.g. Bitcoin) and has no real value.
With content creators it's clear: they provide the value, the content consumers want, and set the cost accordingly, and the consumer simply decides to pay for it. It's simple, and no client side mining would be required.
Mining is only necessary to lower the barrier of entry for the consumer, since they wouldn't need to have a digital wallet with existing funds. But in the near future owning a digital wallet will be just as common, if not more, as having a social media account, so this wouldn't be necessary for the long term.
Exactly.
> Mining is only necessary to lower the barrier of entry for the consumer,
Even now there is a barrier of entry, which is the processing costs. The goal is to lower them, not to force burning the more hydrocarbons for every transaction.
Coinhive has already been successfully deployed to mine $XMR in browsers. I haven't used it yet, but they claim to get pretty close to native CPU performance also which is pretty incredible.
And what about abuse via advertisers, injection, cross-site, etc?
I feel like the potential for abuse would still be a better tradeoff than the current situation of ads that try to download malware or redirect you to phishing sites.
Ads generate sales that does translate to real world value.
Mining generates distributed consensus on transactions. But why should all computers in the world participate in that? (Obviously, this is best done by specialized hardware)
Also, do you the imagine a future where people make content for the internet inorder to be miners??? Why not just invest in hardware, rather than content for the web.
Also power requirements would be crazy, most devices are battery powered today.. mining is crazy.
Value for the webmaster: the value of the mined coins, obviously.
Is there a certain definition of value you're using that these don't fall under? Why should all people in the world participate in the distributed process of counting out the correct amount of cash in person to each other?
Why doesn't every company just invest directly in finance instead of doing what they do? I don't really have an answer to that, but if user-end mining generated more revenue than ads then website hosts would just switch over to it. Imagining a future where people make content in order to be miners, or indirectly they make content to make money, seems fine, I already support some creators on patreon.
I think the power/cpu requirements for lower end devices could be worked out in time.
Because you have to invest in something that generates value.
Otherwise, it's all just a zero sum game and we might as well go to the casinos..
Where I live we're actually regressing. Went from 30% nuclear to 0%, and now since natural gas is so expensive they're building coal plants.
"We took a calculated risk, announcing the set of changes, and seeing what the fallout would be. The fallout exceeded the threshold we set, so we're now going to issue the apology we had prepared in case that situation was reached."
If they had been upfront about it from the beginning, it would still be a business decision, only less cynic.
Another secret while we're at it: adults run businesses, and have strategies that they hope are rational. Again, incredible, I know; I though companies were run by impulsive 14 yo with black and white minds.
No decision can or will please every stakeholder. You always need to make compromises.
It's still a rounding error compared to Patreon's size, but I'm happy to see open-source non-profit grow.
$patron_charge = $pledges_to_creators + $cc_fee + ($patreon_fee?)
$creator_payout = $pledges_from_patrons - ($patreon_fee?)
My beef is with aboloshing payment batching, which is the only wholesome value proposition of patreon (i.e. strictly creates or spreads wealth). Without that it's just another locked-down social graph.
The goal for this change seemed to be at-cost fee payments with no loss or profit, and to prevent chargebacks from customers who didn't remember/expect a payment total or payment date.
The first goal is acomplished with the patron-pays-cc-fee model, and the second one might be solveable enough with UX tweaks.
Showing how the total is calculated in a big, ledgible table, perhaps after every new pledge, seems like a useful start. Maybe even showing a calendar, granting the ablility to change the monthly charge date, and sending/offering reminders or adding an export-to-calendar button.
Of course those may be overwhelming to users, so maybe KISS and find out what can be improved later.
I'm not fine paying seventeen of them for my swarm of little $1-3 pledges that get billed as one monthly transaction.
Not a good model imo, but at least it wasn’t totally insane.
All at once is good. Their credit card fees have a percentage component (1.9% for Stripe) and a fixed, per-transaction component ($0.30 for Stripe).
All at once means that fixed component gets charged once per month. Moving to a one-transaction-per-pledge model means that fixed component is multiplied by the number of pledges, which dramatically increased costs for users like me with a bunch of small ones.
But... semantics. Charge once and apply one service fee would make a lot more sense.
Also, for online transactions, Stripe's percentage is 2.9%. Of course, there's a lot of caveats to Stripe's pricing, so I'm sure the actual charge amount changes.
Patreon's Zendesk until recently listed 1.9% as their Stripe rate.
What they said was: "We're changing our business model to make every subscription a separate credit card charge, instead of bundling all subscriptions into one monthly charge. The credit card processing fees will be radically higher, so we're passing them on to you, but we won't make any extra money from this ourselves"
Personally I found their decision pretty baffling, as in my book the monthly aggregation was the main thing differentiating their product from Paypal, Stripe and suchlike.
I understand that people want their money right away, but if they're allowing payments as low as $1, then they need to limit the number of transactions somehow.
Essentially they have a lot of complicated problems to solve, they just picked a solution that introduced a whole lot of new problems for the very people who provide the life blood for the service.
It makes anti-money-laundering practically impossible, because all the payments might contain some legitimate component together with some fraud component.
Also, from the user perspective, if a user is unhappy with any one of the things they are patrons of, they might ask the bank to do a chargeback. That would make their chargeback rate much higher, which is also bad for business.
Have deposits, and transaction fee-less transfers, since everything would happen within Paypal/some bank.
Essentially, some creators were having a problem where their donations dissapeared at the end of the month because the donator canceled before making the payment. To rectify this, Patreon introduced a pay up front system, where the first payment happens when you pledge, and all future payments happen at the beggining of the month.
This introduces a problem when you pledge at the end of the month. In this case you could pay on the 29th when you sign up, and again on the 1st when the monthly pledge ticks.
Charging seperatly would enable them to charge you when you first pledge, and monthly, starting with your pledge. So in the above example, they would charge you on the 29th of each month.
[0] https://blog.patreon.com/updating-patreons-fee-structure/
Unfortunately changing the payment model for EVERY creator site-wide completely breaks aggregating multiple payments into one charge. Which, as a creator, is the entire reason I'm on Patreon in the first place - I could just set up a Paypal widget and try to get my fans to subscribe to that for about the same fees, minus the 5% to Patreon.
Or at least that was the argument they gave, there are multiple theories about why they were doing this (those new VC loans they were crowing about last month wanna see some profit, maybe aggregating micropayments is brushing perilously close to laws designed to fight money laundering, they're trying to look more profitable before selling themselves, they just want more money baths) that are rather less charitable than "they got obsessed with solving this one problem caused by people trying to use Patreon in ways it was never designed for and threw the baby out with the bathwater".
But even though most creators do this artificial-scarcity paywall thing, only a small minority of them probably have even the slightest worry about freeriders. Most focus on continuing to be productive and don't stress out about the horror of some freerider "stealing" by getting around the paywall and then not paying. It's a pathological worry to freak out about that. It's healthy to just focus on all those who are happy supporters and want to donate.
Patreon screwed up by focusing their attention on the noisy minority who were not only using paywalls but demanding that Patreon make the paywalls stronger.
And while they come up with a non-stupid way to deal with charges around stronger paywalls, they show no indication of stepping back from prioritizing strong paywalls.
Several of the people and projects I sponsor have moved to alternative services, and I followed them. In the future, if a competing service is offered I will favor it over Patreon.
There are actually a lot of different ways to setup this kind of funding stream, depending on what you're looking for. If you're looking for "Patreon, but not Patreon" then it gets a little more complicated.
Whilst it's a nicely worded apology, they F'd up being greedy, and are now trying to recover by maintaining that closeness with the users. I'm not buying it.
Even if you run the charges once a month, this is a fee for each Patron and another fee for each creator. If you're a patron and you're giving just $1 to just one creator, you're probably giving them like $0.10 and Patreon a big fat penny.
This is why so many stores have a minimum transaction amount for credit cards. If they don't do that, they can lose money on fees because the profit margin on what they're selling doesn't even cover the service charge.
One theory going around is that having individual payments reduces their chargeback rate because the number in the credit card bill matches the individual contributions instead of the lump sum. Another theory going around is that separate payments would allow payments to be immediately sent to the creator instead of waiting until the end of the month. But Patreon hasn't been clear if one of these is the reason or if it was something else.
From what I've read, the credit card companies are complaining about partial refunds, which apparently occur much more often with Patreon. If I've got 10 creators I'm supporting for $1 each, and I decide I need a refund for one of them, well, Patreon only ran one $10 transaction. Now it's kind of a pain in the ass for the credit card company because I'm telling my credit card company it should be 10 transactions @ $1 and I want to refund $1, but what they see is one $10 transaction.
I know Hanlon’s razor but lately I get the feeling that most of the companies try to push shitty stuff on their customers and in case of getting caught with the hand still in the cookie jar they apologize profusely and move on to another one.
I refuse to believe that it was innocent accident. As other commenter pointed out this was discussed for a long time and most likely WAS an educated decision. The only thing that was underestimated here is amount of outrage that followed.
While companies certainly do have a specific and sometimes even unique culture, do we really think that _they_ have "core beliefs"?
Unless they were trying to become a real commerce and subscription business, it seems rather disingenuous to claim that as a reason, and it looks like that was the core foundation because taking that away leaves little more than saying that the existing system was "confusing", which could've be solved differently. Also I'm not sure how individual payments with even more fees could be less confusing than a single payment and fee per month but this is a rather unfortunate incident for all the patrons who have to suffer from the loss.
Well. Either way. This looks like a good thing. Until the VCs start again to pressure for more revenue. Let's see what happens then. Probably higher fees for the creators.
According to Patreon's blog posts the unbundling was entirely related to the "date of first subscription" problem.
The first 100 understood EVERYTHING about our customers and the product. Something got lost in translation when we grew to 1500 in a few years.
I wonder if they have scaled out to the point where they are hiring people who don't quite understand the product but are just a butt in a seat?
This is an unprofitable startup here, so I don't think they can start giving out money to everyone who lost support.
Businesses make mistakes, and I'd think it would be a positive when they listen to their users.
Pulling back addresses the fee concerns directly and gives some feeling that the users can have some influence, although they'll stay wary.
None of this changes what drove the fee issue in the first place: Patreon tries to present itself as a donation platform but is primarily a paywall service. Since most "creators" use it to easily manage restricted access to shareable perks (i.e. perks that are non-rivalrous in nature and could be shared with the world), they will continue to have to serve that freemium business model.
Nothing actually eliminates piracy issues; it's easy to discreetly mirror an RSS feed, for example. You're ultimately relying on the honesty of the vast majority of your patrons, a strategy which has worked out for Patreon creators very well thus far.
The stupidity was clear when they wrote “if you’re a creator on the monthly plan without the benefit of charge up front, you are constantly worried that your patrons are going to delete their pledges before they’ve paid”. From that, we can see how they were just hearing irrational paywall worries from people and responding irrationally around just trying to please those requests / address those worries.
Those worries should have been recognized as irrational. Patreon ought to be saying that this is about honesty and people who want to support you and that they aren't in the business to try to stop all possible freeriding, they are working to help everyone who actually wants to support the creators etc.
They paywall some stuff, but not nearly enough to justify the price.
This might just be selection bias though, as I mostly come to them through youtube; which means that the ones I see tend to release their work publically anyway.
I happen to think that paywalls are fundamentally bad and that we should reject them on principle even when they are used modestly. Certainly the worst of that approach is not the folks you support.
I encourage people to donate to the people who don't hold anything at ransom behind a paywall, the ones who release everything non-rivalrous. There's still other perks like thanks or custom stuff that's inherently scarce and can be limited to patrons without using paywalls.
If I donate to the local theatre, art-in-the-park, PBS, etc. then there is a non-profit organization accepting and then distributing the funds.
Some of the platforms are non-profit, though not necessarily 501(c)(3) (and some outside U.S.) see https://wiki.snowdrift.coop/market-research/other-crowdfundi...
Patreon decided that they were SICK of supplementing all the $1 pledges, and added a new fee schedule. The internet, was too short sighted to care about this economic reality, and so they were forced to burn with fees once more.
The creators ate the Paypal fee (usually 4-5%), and then Patreon collected an additional 5% for simply coordinating these exchanges with their service.
I doubt there were many people who only pledged $1 to one creator and that was it. But if that was truly a problem, then sure, one 35-cent charge per month would be reasonable.
When throwing in five bucks or more especially per creation I am like "you are one of my favorite musicians please give us more" (and then I put in Taylor Davis' Carol Of The Bells and just feel good).
A $1 pledge, to me, is a way to say "I enjoy your content. I want you to keep doing it, instead of needing to quit and get a 'real job'. And I use adblock so you aren't otherwise getting any benefit from my enjoyment.". When 1000s of other people make the same $1/mo decision as me, the creator has a stable income, and they create more and better content, which is good for me.
Background: https://news.ycombinator.com/item?id=11626864
Neither of which are immutable laws of physics. I feel for those employees, but between giving money to them or to the creators - I'm giving to the creators.
I don't like this mindset
I keep getting this vision of Jack Conte just being a really nice guy who's giving sinecure positions to his friends...
Given that - why has there been such a push back against this?
Because lost income is as bad as increased revenues are good, and people lost income. Patreon aren't in a field where they get to experiment like that without affecting people's income, and that's always going to lead to pushback.
Previously, Patreaon worked fine for this use-case. You support 10 creators at $1 each. Patreon charges you $10 each month, and credits $1 to each of your pledgies accounts. Patreon then eats $FEES from the pledgie's account and gives them the remaining money. Patreon would aggragate transfers so they only pay transaction fees on the single $10 charge to me, and on the final payment to the creator. As a result of this (and maybe other things), the fees were unpredictable to the creators, because they did not know how many other creators were splitting the transaction fees. In this example, a single creator would only see a ~$0.03 fee on my $1 donation; however, if I only had a single creator, he would see the full $0.30 on my dontation. (There are other fees at play, but this is the important one).
Under the new system, every donation pays the $0.35 transaction fee. This means that even if I support 10 creators, they all pay the full $0.35 on my $1 donation.
In contrast, if I instead had a single creator at $10, he would only see $0.38 in fees, or about $0.04 per dollar.
This means that the new system disproportional effects people making small donations.
It is also not clear that this was a pure money grab. This change coincided with a change to their payment system where they would stop aggregating charges. If they do not aggragate charges, it makes sense that they would charge smaller donations more, because those now have more overhead. The problem is that this breaks the service for small donation use cases.
One of my pledges is to a favorite author. $1/month means $12/year. She puts out about a book a year, at about $12 in Kindle format, so my pledge means I'm at least doubling the amount of revenue she gets from me annually (and I'd suspect significant portions of that $12 go to Amazon, agents, publishers, etc.).
I can do this casually, for a bunch of creators I like - comic artists, activists, authors, indie game devs - and it's not just me doing it, either.
For me, there are creators I like, but aren't very active, aren't that valuable to me, or are supported by me in other ways that I pledge $1 to.
I post most of the stuff I make online for free, with no ads. All those $1s add together to make a sustainable wage for me.
It's the Long Tail in action. It's pretty nice.
Participating in attempts to block NGO (affiliated with Doctors without Borders) ships performing maritime search and rescue missions for migrants is particularly heinous. If it must be spelled out, this is acting to prevent the rescue of drowning refugees.
Are you really supporting freedom of expression by allowing your platform to support people who don't support others right to exist?
While that argument is not super solid it is a political one and to Ban her based on her intention to report on this seems political to me.
You're claiming the motivations here are to protect the lives of migrants by limiting "incentived human trafficking", but the motive is white nationalism.
http://www.dw.com/en/defend-europe-identitarians-charter-a-s...
I hear far too often that people on the right are white nationalist, yet I see no one presenting evidence they are. There are some white nationalist on the right but I don't think it's fair to tar everyone on the right with the same brush.
I'd still be looking for alternatives, the original decision was a gross breach of trust and revealed that Patreon's business 1decisions are not coming from the authentic place we may once have hoped for.
edit: to clarify, the content I'm looking for in a real apology is a plan of action so that this isn't repeated. Patreon needs to restore trust. Apology language doesn't do that. Rolling back the act of searing incompetence was step one. Making sure it doesn't happen again is the real apology.
More seriously. My takeaway is not "I wish Patreon hadn't issued an apology", but to beware promises without binding contracts or strong signals of fidelity.
- cancel this change
- consult with the community about how to solve the perceived problem
Both of which they appear to be doing. I get that the proof of sincerity is in what solution they eventually move forward with, but I think what people are pushing back at you on is your apparent argument that what they've done so far to fix this isn't good enough. I think what they've done so far to fix this is literally all they can do at this moment.
> It's made worse by people thinking that anything about the content of the apology matters. It was literally crafted by an expert actor.
Yes they are a money making organization...that's why they were able to build such a useful service in the first place and yes they paid people to write this letter... who happen to be people that are good at communicating. Does that mean we should question every action they make as insincere because they are self-interested?
Most free/open-source projects are so over-burdened with work/bug reports that they neglect PR pieces like this as they simply don't have the time. It's a good thing it was written by an expert writer IMO, even if it does contain a bit of spin people typically have enough common-sense to know the difference where it matters.
The whole reason they rolled back this change is because they were ultimately self-interested... the customers were very unhappy about it and protested, which may hurt their business, so they rolled it back. It's win-win for everyone. They aren't forcing anyone to use the service, people use it because it's useful and the company gets rewarded for not pissing them off.
Not to mention there is a real action/behaviour behind this letter... it's not just PR-speak sidestepping an issue, as we've seen in the past. It's an announcement that they made a mistake and listened to consumer feedback and are reversing a bad decision.
I find many of these types of complaints (see: every FB group made after changes made to FB) are just people looking for something to whine about, or to feel superior to a company, and they typically aren't representing the average consumer. Most messaging like this is considering the interests of the average/majority customer. Not the cynical/high iq minority who is touchy about copywriting in press releases.
Yes! As customers in a cold, realist world, we're doomed to have an adversarial relationship with the organizations trying to profit from us. The question is who wins: Joe Six-pack like you and me, or the suits with the lawyers and PR teams?
... who wins what? The most value which the company provides?
Apologies if I missed some sarcasm here, it’s hard to tell these days.
I’m curious what customers are potentially losing or being ‘manipulated’ here ... because a company wrote a human personal-style press release.
We’re not talking about the special advantages large companies or wealthy individuals get as a result of government policy or in the court room... where politicians and law makers can be bought off or influenced in in their favour, over competitors or consumer interests.
And if customers occasionally reacting negatively, in regards to a service they clearly care about enough to protect and protest to making a change, is ‘adversarial’ then you’re engaging in your own spin. This seems like a healthy give and take. The fundamental basis on which our society is built.
Trust is immensely valuable. They lost a trust fortune over night. No amount of posturing or PR babble can fix that, and accepting PR babble as trust currency is deeply misguided when dealing with a corporation. A good-faith plan of action is something we can put some stock in.
It seems to me like they did? The plan of action is articulated here:
"we’re going to fix them in a different way, and we’re going to work with you to come up with the specifics, as we should have done the first time around."
And it is implemented here:
"If you haven’t sent us a note yet, or if you don’t see your concerns listed above, please leave us your feedback here[LINK]."
(And of course part of the implementation is actually listening to the feedback in the future.)
I understand that you don't find this satisfactory. However, I don't know what you would find satisfactory. What would a response that legitimately addressed #2 look like, concretely? Could someone give an example response?
EDIT: Ah, you say elsewhere that the people involved in the decision should be "replaced, retrained, or otherwise required to alter their behavior". Do you want Patreon's press release to say, e.g., that people were fired/demoted/retrained as a result of the decision? If so, you should have said so!
Instead, only pay attention to the actions that follow, because those cannot be faked.
Individuals lie, just like companies do. The rate of lying might be different, but that doesn't really change much.
But well, yes. It might be an exaggeration. To look at it positively, marketing people are just good at communicating ... only the borders to missleading and plain lying are very blurry ...
The fact that this was a dramatic mea culpa does not matter. I have every reason to not pay attention to how contrite they sound.
It's like being apologized to by a drug addict, for stealing. The apology has no content.
Is it inaccurate to think that they will not be enacting the fee structure change they had announced before? What are you even talking about? They said "sorry", and "we won't do the thing that made us have to apologize", what more are they supposed to do?
If they are acting in a clear manner they would explain how they undo the damage. This is a business after all and they can be sued for things they "mess up"
Only if the things they mess up are illegal. Are you implying they could be sued for making a stupid business decision? The overwhelming majority of business screw-ups aren't illegal, just bad decisions.
The overwhelming majority of business lawsuits aren't due to crimes, just torts.
...wait, that isn't quite the whole picture is it? It's almost like a group of entities, considered as a whole, has different properties than the individuals that comprise it.
This sort of thing should have been preceded by trying to get creators and patreons on board long before actually implementing it.
My trust in Patreon has expired, and I look forward to creators shifting to another platform.
Aren't most advertisements also creepy and manipulative? Do you expect companies to start having informative ads? Maybe when people stop rewarding bad behavior. If you don't do it, people will say you are tone deaf!
So giving ten euros to 1 creator actually costs 10.35 to the patron. Giving 1 euros to 10 creators costs 13.50
Wait, what happened?
I wish we could all do the same with our taxes to make a point to GOP.
..." for the rich and the corporations and on the costs of the public services."
ftfy
But that's just for me, and it's the simplest look at the rules. I may get screwed on some other tax, others might as well.
I also live in a state with no income tax. (WA)
They're doubling the standard deduction, which will cut taxes for the majority of all middle-class tax payers. Most of the middle class pays no or little in the way of net income taxes as it is, with 85%-90% of all income taxes being paid by the top 20% income bracket. The tax cuts the middle class will receive, will drive their net income taxes that much closer to zero.
85% of all the value of the SALT / local income tax deduction goes to people making over $100,000 per year.
97% of all home owners own homes worth less than the new proposed cap on mortgage interest deduction.
Both of those tax increases will almost exclusively hit well-off people.
far too often high taxation states have lived with the idea that the rich won't complaint too much since they can deduct a large portion from their federal taxes. yet all those not rich enough to itemize got stuffed.
people need to understand that deductions of state, real estate, and similar taxes, only serves the wealthy. Yet oddly the very same people who complain about the wealthy and taxes instantly pivot when they learn how its all done and that they will be affected.
We are the rich, the vast majority posting here make far more than the average if not in multiples. people think it takes millions to be rich, but its not true when you look at the numbers.
It should be neutral to them, which is why State/local taxes should be deductible; non-deductibility creates an artificial incentive to avoid tax-funded programs that are a net economic benefit before considering the distortion produced by federal taxation.
A longer write-up and worked example of how this is a problem that I wrote in an earlier discussion of the tax plan is here: https://news.ycombinator.com/item?id=15855955
The underlying assumption to your question is that the money belonged to the government in the first place.
By that logic, you go to work, produce economic value, various levels of government take what they want, and you receive whatever is left at their pleasure. That's your income: whatever part they decide to let you have after they're done dividing up the money that your employer desired to pay to you.
Thus by not "allowing you to deduct" taxes paid, one level of government is literally trying to tax you for money that has been taken by another before you got any of it.
How does the proverb go again? If you owe the bank fifty thousand dollars you have a problem, if you owe the bank fifty million dollars the bank has a problem?
A tax strike is illegal and done openly in an effort to get other people to do the same illegal thing openly. Neither tax evasion nor tax avoidance.
Apple is not striking a deal with Ireland nor does it want to. The European Court of Justice has ruled that Ireland’s tax policy constitutes state aid and Apple should pay more tax. Ireland and Apple both disagree and are appealing the ruling. Until such time as the appeal is ruled on the money is being held in escrow.
The only deal being struck is between the EU and Ireland to make Apple pay additional tax that Ireland says Apple doesn’t owe, and it’s more of a threat from the EU than an actual deal.
Companies recognizing that good decisions make them money is the key. If they figure they're going to lose money no matter what they do, they're less likely to take our feedback into account.
Nah, it'll never work.
Just because mob mentality vote says X candidate wins means little. Especially if we were to hold to the initial representation in the constitution of 30k people per representative. But that number has ossified at 535 for how long now?
I'm never quite sure what people who make these kinds of arguments as you did are attempting or hoping to achieve. It's trivially impossible to represent every single viewpoint within a constituency with anything other than direct voting. So that's fine if you want to advocate for direct voting, but just come out and say it. Otherwise, any other system involves intermediate representation, which will then have this exact problem.
So how is this at all justifiable?
Further, even if Trump had won the popular vote, your floated premise would remain: the popular vote only represented a modest minority fraction of all adults in the US. So how can that possibly represent the actual full will of The People?
Regardless, history has proven on countless occasions that the will of the people is not always the ideal thing to follow. The Bill of Rights exists precisely to protect the minority from the all-too-often irrational will of the people. (you'll note that I specifically didn't justify the current state of affairs in US politics as being somehow good or positive, I'll pre-empt that conflation)
You can approximate it much better than FPTP does by any system which produces more proprotional results, which is just about any system of democratic representation you don't deliberately try to make worse; FPTP for legislative seats is pretty much the bubble sort of election methods.
I'm sitting with a -3 on my main post, and I still believe my points are still valid. I live in a liberal city in Indiana, and the republicans have gerrymandered us down the middle to split our votes to 2 different republican districts. Prior to 2010, we had better representation and would get more moderate republicans or democrats. No longer.
Perhaps a method for measuring this is needed. A way to evaluate a representative based on the merits they've shown.
It'd be amazing/nonsensical to believe that the entire system works on blind trust alone but it seems so, aside from journalists' reports.
That 30,000 number was decided before many advancements allowing for much higher population densities. London had a population of around one million in its first census in 1801. That's 33 representatives. New York City alone now has around 8.5 million people, or 285 representatives. The entire US would be 10820...
And with newer tech, like the Internet (which was an academic curiosity when the 535 rule was enacted) can now easily network 11k representatives. There's now very little reason to meet physically in a room. Especially if we value transparency.
I'd like to see that there is an effective communication going on between citizens and their representatives.
Right now, with the current system, I see a few ways to communicate.
Physical letter: form letter or nothing
Phone: automated system recording
Email: form letter or auto-subscribed to email list
Facebook: Ignored, form statement, or banned
Twitter: Ignored, form statement, or banned
With a contention ratio of 30k to 50k/rep, would make meeting your representative much more likely. It would also reduce money effects, since now elections are a local thing instead of a moneyball contest.
I've commented on this before; I'll just link those instead of repeating myself:
We detached this subthread from https://news.ycombinator.com/item?id=15916464 and marked it off-topic.
Of course, being a pseudo-monopoly allows you to test the limits of monetization.
That said, this could be an opportunity for them. Patreon should have some test audiences (from both types of Patreon users) for potential changes like this, to evaluate what they look like. Creating some kind of advisory council (and ensuring that it does not just include high-profile creators the way YouTube's equivalent does) would help address this.
Any good faith view is possible to express thoughtfully if you want to, so if you want to comment on HN, please do it that way.
http://imperium-europa.blogspot.com/2016/06/thomas-sowell-br...
Economics is one of the biggest factors deciding what people do. (I'd put it at #2 or #3) However, there are even mightier factors than money and livelihood. Otherwise, we'd be Ferengi, not humans, and the Ferengi characters in Star Trek which are written to be different would be the main characters. That economics reigns supreme is one of the false cornerstones of the original Marxian economics which experts in the field now know to be false, but which persists in zombie form in the popular consciousness.
Future high primary energy cost economies will almost certainly be based on slave labour, like they have in the past.
Then why not have slaves running your coal powered machinery? The truth is that the free labor of slaves was just a particular (and ultimately inefficient) pattern of organizing society, and the human capital of knowledge is the real driving force. If energy was the ruling force, then West Virginia wouldn't be so poor and rural, and Japan wouldn't be a world economic powerhouse.
Future high primary energy cost economies will almost certainly be based on slave labour, like they have in the past.
Even in the historical US, slaves that worked in agriculture and industries that required knowledge and attention to detail were paid. Otherwise, there is no motivation for energizing the human capital of skill and knowledge.
If the way you see the world were accurate, then totalitarian societies would be the wealthy ones. Instead, those with some degree of free trade and individual freedom are the wealthy ones.
My point is that it was cheap coal energy that freed slaves, the economic realities of coal joules vs human joules, not high justice, economics.
Then you are clearly demonstrating that you didn't carefully read the entirely what I wrote. The "free" labor of slavery was of little relative utility over other forms of social organization. In effect, it was just another (particularly egregious) form of social organization. All forms of human organization back then had about the same access to human joules. In all cases, the value of the human joules and coal joules was greatly increased through the addition of human capital in the form of skill and knowledge. Having the power of life and death obedience over people only goes so far. It gets you only a very crude application of those human joules. In order to get the maximum value out of your working population, you need forms of motivation beyond life and death obedience.
The key fact is that the productive capacity of human capital intelligently combined with energy far outstrips the output of poorly applied energy. The key is the human capital, not the energy. If it was just the energy, then you'd just have slaves running coal powered plants. You would not have had slaves running business as in the Roman Empire, or artisan slaves and paid specialist agricultural in the US.
High justice, as a form of human capital, enables economics.
We detached this subthread from https://news.ycombinator.com/item?id=15916381 and marked it off-topic.
Edit: oops, sorry, it's Patreon. That damn dog whistle again...
Patreon is just a place for your fans to support your work in a structured manner (rather than a free-form donate button).
If you are a content creator, it is up to you to market your patreon account and request your fans to support you there. Did you do that?
1. Make a thing and post it online for free with some degree of regularity.
2. Every post had a small link: "Pssst! Wanna help crowdfund a pagerate for me? Support my comics on Patreon."
3. Every time I made a thing, I'd post it to Patreon; at the end of the month, my backers would get charged based on how many things I made.
4. Over the course of a year, my Patreon went from "paying for my drink at the weekly cartoonist meetup sometimes" to "paying most of my rent on a productive month". And I am doing this by drawing a complicated graphic novel about a lesbian robot with Philip K Dick problems.
I make far more from Patreon than I ever did from ads, and I'm delighted to have been able to turn them off for good.