Patreon isnt making enough money - When 5% of a billion for being a middle man won't do

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https://www.cnbc.com/amp/2019/01/23...lion-dollars-to-content-creators-in-2019.html

Patreon CEO says the company's generous business model is not sustainable as it sees rapid growth
Brandon Gomez | @bgomezreports
Published 3:41 PM ET Wed, 23 Jan 2019 Updated 2 Hours AgoCNBC.com
  • “Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business,” said Patreon CEO Jack Conte.
  • Patreon will send content creators more than half a billion dollars to fund their membership businesses in 2019.
  • More than $1 billion will be paid out to creators since the company's inception in 2013.
  • There are more than 3 million patrons supporting more than 100,000 creators on Patreon.
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Vasily Pindyurin | Getty Images


Crowd-funding service Patreon announced its latest benchmark Wednesday, with more than 3 million patrons supporting content creators each month through the company's platform.

Patreon allows illustrators, authors, podcasters, musicians and other independent creators to receive crowd funding directly from their audience.

The number of active patrons supporting artists on the platform in 2019 has seen significant growth, up 1 million over the last year, the company said. The company is also on track to pay out $500 million to content creators in 2019, pushing the company to surpass $1 billion in payouts since its inception in 2013.
Under the company's current business model, 90 percent of funds are paid directly to content creators. Patreon takes 5 percent, and the remaining 5 percent covers transaction fees.

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Patreon
Jack Conte, founder of Patreon
Patreon CEO Jack Conte said in an interview with CNBC that the platform will soon be facing the challenge of maintaining a profitable model as the company continues its growth.

"The reality is Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business," Conte said.

The company does not currently provide contracts, which allows users to retain 100 percent ownership of their work and full control of their brand.

The company plans to provide creators with new "value services," like options for merchandising, to generate new revenue. Creators will be given the opportunity to participate in these services, and it could ultimately reduce Patreon's generous 90 percent pay-out model.

"We will have to re-examine how we charge for new services as we put them out," Conte said.

Conte said with added revenue streams the company will continue to redefine the space of creative content creation and aggregation – currently dominated by YouTube, Spotify and other various subscription services.

He said the "feeling of support and connection with artists" along with the "transactional benefit of membership" encourages users to pay for content that they can otherwise receive for free.

Patreon is no stranger to the editorial controversies that plagued other big tech companies in 2018.

Top Patreon creator, author and podcaster Sam Harris deleted his Patreon account in December, and accused the company of political bias after several conservative accounts were removed for being associated with hate groups.

"We don't allow hate speech, which other platforms say they don't as well and Patreon really means it," Conte said. "You can't just say anything you want in the world and we don't want to build that platform."

The company also revised its content policy in 2017 to eliminate the site's use for the exchange of adult-themed photos, videos and content.

Conte said as the company grows it plans to build more enhancements, features and integrations to help every creator easily activate their membership business and focus on creating.


© 2019 CNBC LLC. All Rights Reserved. A Division of NBCUniversal
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moocow said:
Maybe it counts as fraud against the investors or something, but I doubt it's anything approaching fraud towards John Q. Public. Everybody (hopefully) knows the trick by now that you should put a couple bucks into the tip jar before you set it on the counter since people are more likely to donate if there's already a bit of cash in it.

If just inflating the apparent use of a platform was a crime, Facebook, Twitter, Google, Reddit and lots of others would be long gone by now.
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Yeah, the fraud would be against the investors, not the users. It's different from inflating user counts in facebook, twitter, google, etc because the money patreon makes is directly connected to those donation numbers. So my point is, if they are allowing money to be passed back and forth and back again, and then they count that money 3 times even though they make 0 money off it, the investors would think the company was worth much more than it really was.

If they provide some more honest account that only shows the actual transactions they make money off of to those people, then they're fine.
 
Corbin Dallas Multipass said:
If they provide some more honest account that only shows the actual transactions they make money off of to those people, then they're fine.
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That might be part of why they haven't had an IPO yet. If they had to publicly disclose their real numbers, it might be pretty embarrassing how small they really are.
 
Lol at everyone who didn't read the article.

Patreon isn't losing money yet. Patreon allegedly isn't making enough money to 'be sustainable'

They want more because they're greedy. Not because they're dying next week.
 
gobbogobb said:
Lol at everyone who didn't read the article.

Patreon isn't losing money yet. Patreon allegedly isn't making enough money to 'be sustainable'

They want more because they're greedy. Not because they're dying next week.
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To be fair the article goes off on a whole tangent about needing to curb hate speech, which at this point is basically code for “We have a lot of useless deadweight “creators” who eat into our profits, but instead of biting the bullet and facing the short term backlash for trimming the fat, we gotta make it sound more palatable with a convenient scape goat”
 
I took it more to mean that they need more revenue streams in case the current one dies. They're trying to diversify the company; which isn't a terrible idea.

It sounds like they're looking at being more of a "one stop shop" for content creators, like branching out into merchandising. I don't there is really much there for them, though, as the top-tier of creators will already have their merchandise handled by a different company and most other creators wouldn't sell enough to make it viable for Patreon to invest in, but having a "sell what you can model" might be attractive to a mid-tier creator.

I can see Patreon trying to muscle in on other creator payment processing such as tips (which is done through Youtube, twitch, paypal or streamlabs) and one-off commissions. The main problem though is that they're coming in too late to the party and unless they make something amazing I don't see people jumping off of their current platforms.
 
1Tonka_Truck said:
It probably would have been alright if they hadn't tried a regressive fee structure. They wanted to take a something like 20% of the $1-5 donations.
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Right, and was put on the patrons instead of the creators at that. I remember the newsletter because it was the same one where they wanted to try to encourage quality content to come out since a few higher backers for good content is better than a lot of little backers for no content due to processing fees on everyone's end and making Patreon look more like GoFundMe. However, I get a feeling what they really wanted to do was resolve the ponzi web, but they're so damn handwringy to call it out for what it is.

Tanner Glass said:
It sounds like they're looking at being more of a "one stop shop" for content creators, like branching out into merchandising. I don't there is really much there for them, though, as the top-tier of creators will already have their merchandise handled by a different company and most other creators wouldn't sell enough to make it viable for Patreon to invest in, but having a "sell what you can model" might be attractive to a mid-tier creator.
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I'm really curious to see how their merch system will work beyond just the default ability to collect addresses from backers. I actually think it could be what they were aiming for before: trying to get more quality content creators on the site. Yeah, it won't be of any use for a high-tier creator, but it could be a stepping stone for a mid-tier. They would have to offer something that a place like Kickstarter, IndieGogo, or even Etsy doesn't, however.
 
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