Patreon fee structure

[boxofdelights]

You may have heard that Patreon is changing their fee structure to charge the service fees to patrons instead of creators.

If I understand correctly, Patreon is actually using that change as a smokescreen for the change of charging each patron one service fee per donation, instead of one service fee per month. So a patron who gives 20 creators $1 each will now be paying 20 $0.35 minimum service fees, plus the 2.9% service charge on the whole $20. Patreon gets to keep the difference between (the service fees patrons pay to Patreon) and (the service fees Patreon pays to its bank), and that difference just got a lot bigger.

This is on top of the 5% of the total that Patreon takes from creators, which is not changing.


I'll sponsor my creators in other ways, or go back to Patreon if Patreon reverses this change, but for now I am on strike.

There is also a petition asking Patreon to change back here: https://www.change.org/p/patreon-patreon-drop-the-external-service-charge

Comments

[bibliofile]

So each transaction costs them money, and they figure why not fix that and might as well turn it into a revenue stream?

Also sounds like a double-taxation sort of problem, if that makes any sense. Are they trying to discourage microfinancing? Hmm, I should probably go read about it instead of just asking you all these questions! Thanks for pointing it out, though.

[boxofdelights]

Each transaction costs them money, and they have been taking that money out of the patron's donation before passing it on to the creator.

If I understand their statement, they are making two changes. I think the first one is just fine. That is adding the processing fee to my pledge, so, if I pledge $1, Patreon takes ($1 + processing fee) from me and gives ($1 - Patreon's 5%) to the creator.

[The old way, if I pledged $1, Patreon took $1 from me and gave ($1 - processing fee - Patreon's 5%) to the creator.]

The other change, which I think they are trying to cover up by making the first change at the same time, is that they are adding their processing fee to every pledge. They only take money from me once a month, so they only pay one processing fee for that one transaction. But they will charge me one processing fee for each pledge, so if I give one creator $20 at one time, I pay Patreon $0.93 (2.9% times $20 plus $0.35), but if I give twenty creators $1 each, I pay Patreon $7.58 (2.9% times $20 plus 20 times $0.35).

Either way, the creator(s) also pay Patreon 5% of the money they receive.

[sovay]

I'll sponsor my creators in other ways, or go back to Patreon if Patreon reverses this change, but for now I am on strike.

I understand that. I know no one who is happy with this news.

[boxofdelights]

I love your writing, and I'd be glad to say that with Paypal if you PM me an email address. (I don't love Paypal, but I am not currently on strike against Paypal.)

[sovay]

I love your writing, and I'd be glad to say that with Paypal if you PM me an email address.

I'm honored. Thank you so much for the offer. I'll message you in a moment.

[pameladean]

This is a real nightmare. I utterly support anybody who has to delete pledges. I am hoping Patreon will rethink itself, but given how very much money they are going to get with this stupid scheme I'm not sure they will. I'm also not sure which creators and donors they really value, so I'm not sure how losing some will affect their attitude.

P.

[boxofdelights]

Yeah. As you know, I love your writing too, and I do want to continue to support it.

[elf]

It looks like there are two core issues behind the change:

1) The standard "subscribe; pay at the first of the month" system, in which people could sign up, download this month's Nifty New Content, and unsubscribe before payments hit - this was a problem for creators.

2) The optional "pay immediately" system, in which people subscribe, pay the month's charge, and then get charged again at the first of the month; if they subscribed on the 27th of a month, they felt cheated.

So Patreon found a "solution": Charge everyone immediately on subscribing, and then every month on the anniversary of that subscription.

Only that means, every subscription is a separate charge, so they want to pass their fees to someone. (Along with, of course, a reasonable markup for their handling costs, doncha know.) And they knew how much outrage they'd get by telling creators, "Instead of getting $.85 for every $1 subscriber, you'll now be getting $.62 for those subscriptions."

So they handed the charge off to the buyers, phrased it to sound like a bonus to the creators and minimize the nearly 40% markup on small amounts, and decided that also, they will no longer allow pledges under $1. Oh, and they're getting rid of the ability for creators to sponsor other creators without going through the standard bank route, because their new accounting system can't handle subscriptions without bank charges attached.

End result is going to be a whole lot of cancelled subscriptions, a whole lot of reduced subscriptions, and huge swarms of people looking for other scheduled micropay platforms.

[boxofdelights]

Wow.
Wooow.
If they aren't aggregating small payments to minimize transaction fees, I don't understand what value they think they are adding.

[elf]

I suspect they're going to claim, "we have a platform that's arranged to deliver content based on subscription tier! Lots of creators all in one place! Good financial data encryption!"

And various other services that individuals could arrange for themselves, on their own websites, without notable expense.

I expect they really are overestimating the value of their platform as compared to the micropayment features that they're killing.

ETA: Forgot to mention - it's widely suspected that the real reason for the change is that they collected a whole lot of VC funding, and need to start creating superprofits in a hurry.