Patreon's fee change punishes supporters who make small pledges

Patreon's fee change punishes supporters who make small pledges
From Engadget - December 8, 2017

If you are unfamiliar with Patreon, it's a service that allows individual people to financially support creators, such as webcomics authors, writers, podcasters and YouTube stars. Rather than a service like PayPal or Venmo, which offers one-time payments, Patreon operates on a per-month basis. Supporters pledge a certain amount per month -- $1 is the minimum -- and their cards are automatically charged at the beginning of the month for the amount they have committed across the platform. And obviously Patreon takes a cut, which is how it makes money.

Until now, it's been a pretty simple, no-frills system that many people in creative fields have taken advantage of. Musician Amanda Palmer, podcaster Sam Harris, YouTube star Jackson Bird and comics creator Jon Rosenberg are just a few of the big names that use the service.

In the interest of full disclosure, I personally use Patreon to cover the expenses of a podcast I am the cohost of, called Desi Geek Girls. We make a reasonable amount per month, but we certainly are not dependent on it. That's not the case for many creators, who rely on the service to support themselves on a day-to-day basis, using the service to pay rent, purchase groceries and buy equipment and supplies for their creative endeavors.

This week, though, Patreon introduced new changes that turns all of this upside down. On Wednesday, the service sent an email to creators outlining changes to the fee structure of pledges. Rather than extracting a processing fee from the creator side, Patreon is going to start charging supporters extra. The new service fee is 2.9 percent plus 35 cents per pledge. It's effective on December 18th for new pledges and as of January 1st for existing ones. Additionally, patrons will now be charged individually on the date of their pledge anniversary, rather than in bulk at the beginning of the month.

Now, this may not seem like a lot, but from anecdotal and personal experience, $1 pledges make up the backbone of Patreon. Generally speaking, people have a limited amount they are able to pledge, and rather than send $10 to one thing, they will often send $1 to 10 different projects they want to support. This new fee structure will wreak havoc on that system. Every $1 pledge will cost patrons $1.38 under this new model. Small donors are, in essence, going to pay 38 percent more under this new system. This change incentivizes bigger individual pledges. One $10 pledge will now cost a supporter $10.64 per month, while ten $1 pledges will be $13.80. This change will gut the $1, and perhaps the $5, economy on Patreon.

After the backlash, Patreon updated its announcement post to address some of its users' concerns and explain the fee change further. The team claims that creators and patrons both found the old payments system incredibly confusing, which resulted in thousands of support tickets from confused customers. The fee structure was also unclear -- a 5 percent fee from Patreon, plus a processing fee that ranged from 2 percent to 10 percent from a third party. It's true that this updated model simplifies things. The issue is who is bearing the burden of these fees.

Kate Leth(@kateleth) December 7, 2017
Mikey Neumann (@mikeyface) December 8, 2017


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