As of two days ago, I have withdrawn all my pledges from Patreon. I’d like to talk about why I did that.
I am a strong believer in supporting good-quality content. I believe creators deserve to be supported for the good content they make so that they can continue doing so. As a result, I had turned to a service called “Patreon” where I could donate a certain amount of money either each month, or per video a creator released on Youtube. It had all the functionality I needed. For example, I could set a maximum cap on the total amount of a pledge so I could have an upper bound on how much I’d pay at the end of the month. This cap set a maximum amount I’d have to pay each month, making it easier to budget and monitor my finances accordingly.
As of last week, Patreon has announced a change to their fee structure, in a true corporate scumbag fashion. You can read their justification (read “excuse”) on their blog post here. In essence, what they aim to do is to ensure that creators always get 95% of the total pledge amount, which is not the case in the old fee structure because they also footed the transaction fees.
What Patreon has done now is offloaded the overhead to Patrons instead. So, not only do you now pay the total amount of the pledge (which Patreon takes a 5% cut of), you also pay a percentage plus $0.35 which also goes to Patreon. This offloaded expense can’t make me stop thinking about tipping in the US, which is ridiculous in itself. Essentially, a waiter or waiter is paid below minimum wage by the company, and customers foot the cost of the wage difference in the form of tips. Essentially, the company stands to profit out of this behavior. This is exactly what Patreon is doing right now.
What’s even more scummy about Patreon is how they’re implementing this system. This system applies to every single pledge, individually. That is, if you are supporting 10 creators, each with a dollar’s pledge, you pay that percentage plus $0.35 on each of those 10 pledges. The system would be a bit better if this fee only applied once. If Patreon calculated the total value of all the pledges and added that transaction fee, it wouldn’t be too bad. But that’s not how this new structure works.
The new fee structure severely punishes people with low-value pledges. This is because they’ll end up paying 35% more on those pledges, strictly due to the $0.35 “transaction fee”. This will definitely put people off, and creators have already noticed the pinch.
What’s makes this new structure even less appealing is how unpredictable your monthly costs due to pledges can be. Earlier, the calculation was really simple. You set a cap for each pledge, and that total was how much you could stand to spend at the end of the month. Now, there’s a convoluted fee structure with percentages, making this calculation a lot more complicated. It’s money-making 101. If you want people to spend money, you have to make it easy for them. No one is going to do mental gymnastics just to give someone else money.
This new fee structure is good for creators. They take home a little bit more money, and their income due to pledges is now easier to calculate because they are no longer paying the fees. But again, making money through internet videos has never been a guaranteed source of income Ask any Twitch streamer or Youtube content creator. Ad revenue changes every single time. They never take the same paycheque home each month. So why should Patreon be different?
I was not much of a fan of the new system when I heard it. However, the straw the broke the camel’s back was when I heard that Patreon had received complaints from other people – both, Patrons and creators. People complained that they did not approve of the new system. Some even asked if they could choose to foot the transaction fees themselves. Instead of listening to the people that support this site and provide such an option, Patreon outright said “no”.
Instead, they edited their blog post to further justify their greed. Pure corporate scumbag behaviour, indeed. And that’s why I withdrew all my pledges. I want to hit Patreon where it hurts: their wallet. I’ve been using Patreon for years now, with hundreds, if not thousands of dollars given to creators. And sure, I might just be a drop in the ocean, but if enough people do it, they might reconsider.
But here’s the thing: I won’t ever be coming back to Patreon. Patreon was supposed to be the big guy that looked out for the little guy. The big guy that supported the little guys. It’s clear that this is not their main concern. They’re more concerned about their bottom line. And that’s fine, they’re a business. However, I refuse to support a business without morals or ethics. What they have done is an extremely underhanded money-grab. I will not support them ever again, even if they reverse their decision.
What is unfortunate, though, is that the creators of the channels I supported now suffer. There are a few small channels that I support (for example, 3Blue1Brown and Science Asylum) that are struggling financially. They put out great content and they deserve to be supported. I personally sent those creators a message, asking them to provide an alternative method of support. Hopefully they pull through and find a way around this.
I absolutely hate it when big companies make money-grabs like this. They had a model that worked, and it worked well. Instead of building up and improving the model, they make the greediest move they can. I really hope they take a big financial hit after this decision. I wouldn’t even shed a tear if they closed down altogether (although I highly doubt it). Companies like these do not deserve to exist. They basically exploit hard-working individuals for their own benefit. They’re not better than any of the other “giants” in play.
Edit: It looks like as of 13/12/2017, Patreon has decided to scrap their plans for the new fee structure and will maintain the current structure as it is right now. Nevertheless, I still do not trust them (as I mentioned in my post) and will continue to not use their service.