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Patreon Hits Donors With New Fees, Angering Creators (venturebeat.com)
Patreon's changing their fee structure to make donors cover payment-processing fees (standardized to 2.9%) -- plus an additional 35 cents for every pledge. Long-time Slashdot reader NewtonsLaw reports that Patreon's users are furious:
Despite Patreon's hype that this is a good thing for creators, few of these actually seem to agree and there's already a growing backlash on social media... many fear that their net return will be lower because the extra fees levied on patreons are causing them to either reduce the amount they pledge or withdraw completely... For those patrons supporting only a few creators the effect won't be large, but for those who make small donations to many creators this could amount to a hike of almost 40% in the amount charged to their credit cards. Without exception, all the content creators I have spoken to would have:
a) liked to have been consulted first
b) wanted the option to retain the old system where they bear the cost of the fees.
As a content creator, I've already seen quite a few of my patreons reducing their pledge and others canceling their pledges completely -- and I understand why they are doing that.
"Everyone hates Patreon's new fee," writes VentureBeat, adding "Many creators are saying it's unfair for patrons to have to pay transaction fees. In addition to that, most people support multiple creators and not just one, and they'll have to pay the extra fee for each pledge they make."
Tech journalist Bryan Lunduke is already soliciting suggestions on Twitter for an open source or Free Software solution that accepts donations from multiple payment systems, and while the change doesn't go into effect until December 18th, NewtonsLaw writes that "it's starting to look as if many content creators will be getting a slightly larger percentage of a much smaller amount as a result of this lunacy by Patreon -- something that will see them far worse off than the were before."
a) liked to have been consulted first
b) wanted the option to retain the old system where they bear the cost of the fees.
As a content creator, I've already seen quite a few of my patreons reducing their pledge and others canceling their pledges completely -- and I understand why they are doing that.
"Everyone hates Patreon's new fee," writes VentureBeat, adding "Many creators are saying it's unfair for patrons to have to pay transaction fees. In addition to that, most people support multiple creators and not just one, and they'll have to pay the extra fee for each pledge they make."
Tech journalist Bryan Lunduke is already soliciting suggestions on Twitter for an open source or Free Software solution that accepts donations from multiple payment systems, and while the change doesn't go into effect until December 18th, NewtonsLaw writes that "it's starting to look as if many content creators will be getting a slightly larger percentage of a much smaller amount as a result of this lunacy by Patreon -- something that will see them far worse off than the were before."
I had been pledging $1/month to several different creators. With the new fee structure, it's better to only fund one creator each month and rotate that creator every month. That's ridiculous.
I canceled all my pledges this morning in protest.
As a creator with several hundred patrons and about $1500/month in pledges, I had agreed to the terms where I paid the fees. Nobody asked if I wanted to change the deal I had made. I had no problem paying the fees because it kept things simple for my patrons. It almost feels like "I have altered the deal. Pray I do not alter it further."
If if the only way we can get away from these life sucking vampires is to quit using their currency, then so be it. They aren't providing value commensurate to the fee. It has to stop.
This just seems like a cash grab on the part of Patreon. There's no reason that they couldn't combine all of the pledges into a single transaction with respect to billing the customer and then split the fee equally across all transactions. So if someone is pledging $1 to 10 different individuals,
Yeah, quit using currency with a %2 transaction fee and switch to Bitcoin with a flat $20 transaction fee.
On the contrary, the patrons were already paying the transaction fees before. They'd send donations to the creator, and the creator would use some of those donations to pay the transaction fees.
The only thing that's changed is that the patrons now know how much of their donation is going to transaction fees. This knowledge can be used to eliminate inefficient donations in favor of more efficient donations which incur smaller fees. e.g. the other commenter who paid $1/mo to a bunch of creators.
I suppose some creators might be upset at donations becoming less uniform, coming in large bursts instead of small steady amounts. But at the end of the year they'll have gotten to keep more money. Unless this change somehow alters donors behavior and they end up donating less overall.
I'm not a patron or creator on Patreon, but here's what I've been able to piece together from recent news:
The credit card processors charge a swipe fee on the order of 30 cents per transaction in addition to a rake of 2 to 3 percent of the value. For debit cards processed through card-present EFTPOS, only the swipe fee applies, which is part of why stores default to "debit" instead of "credit". But in either case, the swipe fee is why many convenience stores have a minimum charge for small purchases, and Amazon charges sellers a minimum commission of $1 per item.
The use of "de-aggregate" in this Tweet implies that Patreon used to aggregate pledges from multiple donors when charging patrons' credit cards. But there were reportedly a couple abuses of this. One involved people who would pledge to a particular creator, view the creator's patron-only posts, and cancel the pledge the user's before billing date. Another is that a chargeback by a cardmember who doesn't remember his pledges would affect all pledges. So instead, Patreon switched to separately on behalf of each creator.
I can think of a few ways that Patreon could reduce the impact of a swipe fee on $1 and $2 pledges.
Annual billing Let the user pay 12 months of a pledge in advance with one transaction. Print magazines, for instance, have used this for decades. "Reset my billing date" button Reintroduce aggregation as an opt-in choice, where patron-only posts remain locked until a patron submits a form that charges a pro-rated fraction of the existing pledges. Gift cards Let a patron top-up Patreon credit. Prepaid mobile phone providers use this.Tech journalist Bryan Lunduke is already soliciting suggestions on Twitter for an open source or Free Software solution that accepts donations from multiple payment systems.
This sounds like a job for GNU Taler.
https://taler.net/en/index.html
"You should never doubt what nobody is sure about." -- Willy Wonka
This might be a good time to mention dwolla dot com. A couple years ago they were offering an easy way to do small transactions with no fees at all. They might still be doing it, although they are not now advertising it as obviously as they were back then. So for anyone interested, it could be worth looking into.
But that requires work and stuff. Complaining on social media is far easier.
If someone was supporting 10 patrons for $1/month each, then Patreon would bill them ONCE for $10 each month and the single transaction fee was split between the 10 creators. The result being each creator would get around 90 cents. This is what made the ecosystem of small donations actually work.
Now that person is billed 10 times with 10 transaction fees totaling $14 and each creator receives 95 cents.
Before the creators were getting 90% of the donation. Now they are getting 68%. People are upset because it breaks the system that only existed because of the way the fees were originally structured.
Give these guys a try.
This seems like Patreon is read to IPO. A few months ago they went after game developers (who use the system and provide monthly updates to patreons) and started objecting to sexual content in the games. Now they are changing the system to start charging more to the patreons, instead of charging more to the people who benefit from the donations. There was a time (I am showing my age) where Paypal did the same thing before it IPOed, by changing the payment method just before it became public so that they could have predictable revenue methods to describe to investors.
I don't know if it is for the best or now, I just know that people don't like being screwed out of money. In the US, we are conditioned to not know what prices are as everything we buy is the price of an item but tax is figured by the computer at the register. Yes sometimes in some states it is simple math but when you live in a province with tax rates like 9.417% you have no freaking clue what you are going to pay until the cashier tells you. That is exactly what people are pissed off about with this new policy change at Patreon. They knew it was a dollar (or ten) that was spent, now it is some formula that they have to figure out and it is not easy to figure out what is going on. Patreon is not mentioning if you get charged fees multiple times, single transactions, etc.
My Patreon account usually gets $350-450 per month with like 80 supporters-ish and I've seen zero drop off. People have to learn how payment processing systems work. If you give 3 people $1, it costs a static amount plus a percentage to run your credit card. That's just how it works. Why should Patreon be responsible for eating all the profit and potentially losing money for exceptionally low payment amounts? That doesn't make any sense. You ever try to buy $0.50 collectible cards on ebay for MTG, Yugioh, Pokemon, etc? If you don't buy the whole deck at a time, just like 4 cards for $0.50, they charge you the cost of postage and the envelope and it costs you more! What a concept!
The money they spend on their operations and covering fraud has to come from some where, therefore what is your proposal?
The cost of operation is small. The majority of their cost is in the big expensive office buildings, overpaid executives and hundreds of employees who do nothing of value.
That is what happens when you outsource a basic business function like collecting revenue. Similarly, content creators complaining about Googleâ(TM)s YouTube or Facebook policies should rethink their decision on where they host content.
Slashdot isn't 'social media'. It's more like 'antisocial media'.
echo -e 'global _start\n _start:\n mov eax, 2\n int 80h\n jmp _start' > a.asm; nasm a.asm -f elf; ld a.o -o a;
Monopoly money also has very low transaction costs of zero monopoly dollars. Additionally one monopoly dollar is worth zero actual dollars.
echo -e 'global _start\n _start:\n mov eax, 2\n int 80h\n jmp _start' > a.asm; nasm a.asm -f elf; ld a.o -o a;
It's not the 2% (actually 2.9 iirc, call it 3), it's the 35 cents per. If it was just 3% and nothing else, I doubt anyone would be stressed.
We trusted them with our wallets and they have told us that OUR wallets are THEIR property. It follows from that that Patreon cannot be trusted. I've canceled my smaller donations and am going to contact them about alternatives, since I do want to support their work. I'm also going to be contacting my bigger beneficiaries about alternatives.
Patreon is toast as far as I'm concerned. There is NO way they can apologize their way out of the attitude they have demonstrated.
According to Patreon's blog entry, previously creators received anywhere from 85%-93% of donations. Now they receive exactly 95% of pledges, but only a part of the amount paid by the patron counts as "the pledge".
Let x be the total amount paid by a patron for a pledge, and p be the value of the pledge.
x = 1.029p + 0.35
Solving for the worst case, where the 95% of the pledge that the creator receives is at least 85% of all money donated, to match that under the new system the patron would need to pledge at least $3.95, which would cost the patron $4.42. That's what a patron will need to pay to avoid the creator receiving less than the worst case under the old system. Paying $5 is hardly better - let's look at the $1-$5 range, which is what most patrons are probably giving:
From now on, patrons who pledge $1 have to pay $1.38, and the creator receives less than 69% of that. Patrons who want to pay $1 to each of their recipients are out of luck, and must choose between increasing their monthly Patreon expense or give up donating. When patrons spend $5 the creator sees less that 86% of that, which is basically the same as the old system's worst case.
Okay, but at what point does the new system work out better for the creator than the old system's best case? The answer is: never. Even if a donor pledges a million dollars a month the creator gets barely over 92% of it.
---
To sum it all up, Patreon is raising its fees dramatically, so instead of creators receiving 85%-93% of money given by patrons, they will now receive 69%-86% in practice.
In addition, they will also have fewer patrons because new hidden fees on the payer's side will turn many potential and existing patrons off.
And on top of that, the minimum pledge of $1 now costs 38% extra, all the patrons who used to sponsor multiple creators at $1 each but aren't willing to pay 38% extra per month on Patreon will now have to choose between dropping more than a third of their sponsored creators or dropping out of Patreon entirely. Either way, creators lose many of their patrons.
If Patreon simply hiked their fees honestly instead of instead of adding the extra "35c plus 2.9% of your pledge that that count as part of your pledge" hidden service fee for patrons to disguise the fee hike then it would creators would grumble about losing roughly an eighth of their net revenue but at least wouldn't be losing patrons too. Keeping all the fees on the receiver's is better for everybody.
It's not the 2% (actually 2.9 iirc, call it 3), it's the 35 cents per. If it was just 3% and nothing else, I doubt anyone would be stressed.
Or even if each patron was only charged $0.35 on top of the 102.9% of the total of their pledges each month.
More like "pyschopathic media."
Watch better stuff. The channels I donate to rarely tout patreon. They either have very few supporters and/or produce insanely high quality videos that I wish to continue seeing e.g; Science Asylum and Applied Science.
Were that I say, pancakes?
You also can't trade Apple shares or gold bars at McDonald's, doesn't mean they're worthless.
There's so many anti-crypto-currencies morons on Slashdot, it's hard to believe this used to be a place for nerds.
#DeleteFacebook
No, right wingers love taxes when it's taxes and fees from a government that calls itself a corporation. Plus, they love jerking off military contractors.
This is my signature. There are many like it, but this one is mine.
If you really believe Dogecoins are worthless, send five million of them to D9scjyKETYZesSmhjCR4vye4bc6iDqXPd6.
He was complaining that there is a low value for what they charge compared to the services they provide, so the proposal would be that they charge more reasonable rates for their services.
This is my signature. There are many like it, but this one is mine.
But that requires an enormous capital investment, and de facto involves bribing politicians enough to let you in on the racket. Either that, or effective antitrust law breaks up the financial industry sufficiently enough to have a competitive market, but let's be realistic.
This is my signature. There are many like it, but this one is mine.
Am looking around for alternatives, and wondering if anyone here use either Flattr or Liberapay, either as a creator or a supported ?
Well, people are too selfish and lazy to shop locally, with cash, so nothing is going to change.
I don't respond to AC's.
Fees are under 5 cents. Who knows about a system that lets me do scheduled payments (onchain, not via an exchange)?
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
Are they closing soon?
I have to admit, that's the bit that confuses the hell out of me.
That's such an obvious way to minimise transaction fees (which are to the detriment of creators, patrons and patreon themselves) that it just doesn't make sense not to do it.
Nonsense. Take VISA, their operational costs are over $6 billion a year.
Now look at page six of their annual report:
http://s1.q4cdn.com/050606653/...
They're just one of three different parties between consumer and merchant - and pages 6 and 8 detail the value that those three companies add to both parties.
Despite this, VISA have just 15000 employees to handle over 111 billion transactions a year. Every one of those transactions has to be secure, traceable, checked for fraud, compliant with AML (and other) regulations, carry assurances on funds availability and also actually be routed correctly. Ideally in a couple of seconds or less.
If they're as inefficient as you claim, then step up and undercut them. I know people that work there, they'd welcome the competition.
Reddit has horrifically censored conversations, I can't trust the discourse there. It's useful for (e.g.) looking up computer game hints (via a Google search) but just doesn't support the open discussions we get here.
What decade did you time travel from. even the smallest businesses can get rates of .99% to 1.99% with an $0.18 transaction fee. Patreon is obviously paying less so are at least charging double their cost to cover basically non-existent overhead. (web site, small office and a handful of staff)
Presumably the point of the 35 cent per pledge fee is to cover transaction costs. But Patreon can aggregate those for patrons that pledge money to more than one creator each month, and simply put through one charge transaction that covers all the pledges. (They're running their business badly if they're not already doing that.) Patreon would have gotten a lot less pushback if they had instituted a single monthly fee to patrons, and would still get enough revenue to cover their processing costs. Other than what they pay the payment processor, their per-pledge cost should be minimal because it's all automated.
As for the 2.9%, they could have continued to charge that to the creators as they do now. Putting transaction fees on the customer can be done - Brown Paper Tickets does, for example - but trying to change the model mid-stream just causes resentment.