Artist funding platform Patreon is making some changes to the way it deals with patron pledges and it's already costing both creators and their supporters more than they'd like. The change to Patreon's transaction fees will guarantee creators receive 95 per cent of the amount committed by patrons to their creative work. Unfortunately, that also means patrons will be charged more for their pledges -- and as a result, some patrons are reducing or cancelling their pledges.
How Patreon Pledges Worked Before
In the past, Patreon processed payments on the first of every month (with the exception of "charge up front" creators, who initially charged new patrons when they sign up, and on the first of the month thereafter). Some artists also charge per creation, the total costs of which are paid on the first of the month.
Crowdfunding site Kickstarter announced a reboot of the patronage service Drip, putting similar services such as Patreon and Flattr in its crosshairs. The subscription-based Drip could provide artists, side-hustlers, and anyone with a creative bent yet another way to bring in some dough.
If you support, for example, three creators with three $US5 ($7) pledges every month, that means you're spending $US15 ($20) per month. Patreon then deducts a 5 per cent service fee, in addition to requisite processing fees, from the pledge. That left creators with fluctuating amounts of monthly revenue, taking anywhere from 85-93 per cent of what they were originally owed.
How Your Payments Toward Creators Will Change
Now, to combat the change in fees that would modify the net income of creators, Patreon is shifting the burden of processing fees on patrons themselves. Creators will be guaranteed 95 per cent of their expected pledge, while patrons pay more to cover the processing fee.
In addition to the service fee, patrons will now be charged monthly on the day they pledged money to a creator (the same way your Netflix subscription you purchased on July 4 renews the fourth of every month instead of the first of every month). If creators charge per creation, patrons will be charged when those creations are made available.
So now, your support of three creators with three $US5 ($7) pledges every month will cost you $US16.49 ($22) per month. Not a lot, but enough for some to consider dropping a creator or two from their list of pledges.
Image credit: Patreon
Supporting your favourite podcaster with a $US10 ($13) monthly subscription? You'll be shelling out an additional 2.9 per cent of your designated subscription (in this case, $US0.29) as well as a fixed fee of $US0.35. It might not be much if you're already donating more than $US5 ($7) per month to a creator, but patrons supporting multiple creators with donations closer to $US1 per month (like me) will be disproportionately affected by the processing fee change.
We reached out to Patreon to figure out why the changes were being made and how they would affect both patrons and creators. "We think endlessly about the creator and patron impact for every decision we make," said a Patreon spokesperson. "After running tests with both creators and patrons, we settled on a fee that would impact creators and patrons in the smallest way possible, considering both the amount that patrons pledge and the likelihood that they will keep supporting their creators on Patreon."
The decision to disproportionately impact patrons donating smaller amounts seems counterintuitive to Patreon's goal of using crowdfunding to support creators. Patrons willing to donate smaller amounts to multiple creators are being discouraged to do so with the addition of these fees -- fees that only serve to further confuse both patrons who preferred the simpler monthly charge and patrons supporting multiple creators at once.
As a supporter of five Patreon creators, I can't say I'm pleased with the change myself. While Patreon claims it can't eat the cost of the processing fees with its current 5 per cent cut of pledges, I would imagine that both creators and patrons would understand if the company needed to take a larger cut of each pledge to keep patrons donating at the same price.