Patreon Rethinks New Fee Structure After Creators Balk

We messed up.’ That was Patreon CEO Jack Conte’s response to creators who balked after the company announced new changes to their fee structure

Patreon Rethinks New Fee Structure After Creators Balk

Source: Patreon

We messed up.’ That was Patreon CEO Jack Conte’s response to creators who balked after the company announced new changes to their fee structure last week which, creators said, would result in the loss of patrons who make small contributions. Under the new fee structure, Patreon planned to replace its existing 5 percent cut plus third-party payment processing fees with a 2.9 percent fee structure plus a $0.35 fee per pledge to be passed on to patrons, effective December 18.

Patreon said this creator-first approach to fees was being done to streamline fees for creators and patrons, so creators would take home more of their earnings and offer them some income consistency and stability. Here’s what Patreon envisioned that would look like for creators:

Patreon Rethinks New Fee Structure After Creators Balk

Source: Patreon

‘Every decision we make – including this one – is a part of our goal to help creators establish memberships, earn salaries, and build careers. Standardizing third-party fees in this way helps ensure that creators can continue to get paid making content their fans love,’ Conte explained in a blog post.

Tubefilter reports that some creators were upset with the change, because donors who pledge small monthly amounts (e.g., $1, $2, $4) to multiple creators will now be charged $0.35 to process each pledge. Here’s an example of what that might look like for a patron:

Membership #1               $1.00    monthly pledge

Membership #1               $0.35    per transaction processing fee

Membership #2               $2.00    monthly pledge

Membership #2               $0.35    per transaction processing fee

Membership #3               $3.00    monthly pledge

Membership #3               $0.35    per transaction processing fee

                                           $7.05    ($6 in pledges, $1.05 in processing fees, or 14.9 percent of total)

Tubefilter shared this tweet as one example of a disappointed creator:

Patreon Rethinks New Fee Structure After Creators Balk

Source: Tubefilter and Twitter

Yesterday Patreon back-pedaled, rethinking the fee structure after Conte spent hours on the phone with creators. He summarized creators’ concerns in these major points:

  • The new fee structure disproportionately impacted patrons who paid $1 to $2. There needs to be a better system for those patrons.
  • Aggregation is highly-valued, and Patreon admitted to underestimating that.
  • Creators should own the business decisions with their fans, and Patreon admitted to overstepping.

Here are excerpts from the announcement:

‘We’ve heard you loud and clear. We’re not going to rollout the changes to our payments system that we announced last week. We still have to fix the problems that those changes addressed, but 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. Many of you lost patrons, and you lost income. No apology will make up for that, but nevertheless, I’m sorry. It is our core belief that you should own the relationships with your fans. These are your businesses, and they are your fans,’ wrote Conte.

‘I know it will take a long time for us to earn back your trust. But we are utterly devoted to your success and to getting you sustainable, reliable income for being a creator. We will work harder than ever to build you tools, functionality, and income, and our team won’t rest until Patreon is making that happen,’ Conte added.

Conte didn’t say exactly how they would reframe the fees, but he vowed to get creators involved in the decision making. He also said Patreon needed to give creators a more flexible product and platform, so creators could drive how memberships are handled.

Insider Take:

Subscription and membership companies like Patreon have to make difficult decisions every day in what fees they charge and who will be responsible for these fees. What Patreon admits to getting wrong is not involving creators or patrons in that process. While Patreon may not have had an obligation to do so, it is a good business practice to get feedback from key stakeholders before announcing and implementing a big change like this.

Unfortunately, in this case, creators are saying they’ve lost patrons as a result of the change which was to go in effect on Monday, and some have lost trust in Patreon to fairly represent their interest as small businesses. To Patreon’s credit, however, they announced the fee changes ahead of time, and they listened to creators and made changes accordingly. They reacted quickly and transparently. The process in which they decide the new fee structure will be just as important as the payment and fee solutions they come up with. 

Up Next

Register Now For Email Subscription News Updates!

Search this site

You May Be Interested in: