Patreon CEO: fee restructuring “is just to keep the lights on”
Syndicated Comics

        The creative community is still waiting on Patreon to officially address the new policy of passing transaction fees on to the patrons (backers), but it appears that co-founder and figurehead Jack Conte has been calling some of creators to discuss the situation with them.  Jeph Jacques, the cartoonist behind Questionable Content (over 5,300 patrons as of this typing. though the number of patrons as been… fluid… for many Patreon creators in the last few days) tweeted about his conversation with Conte:


Just got off the phone with Jack at Patreon. Productive conversation. Will debrief in detail later but the quotable line from him was
“We absolutely fucked up that rollout”
— Inceltic Frost (@jephjacques) December 9, 2017


Okay, back on wifi. There’s a fair bit that jack asked me not to talk about publicly but I’ll say what I can:
1) they know they fucked up
2) they know why everyone is so angry
3) they still think the service fee changes are necessary- I don’t think it’s going to go anywhere
— Inceltic Frost (@jephjacques) December 9, 2017


4) they are discussing plans to mitigate the problems with Patreon and make the fee change worthwhile in the long run
5) there was no mention of “raising capital” or “investors,” I was told the money is just to keep the lights on
— Inceltic Frost (@jephjacques) December 9, 2017


6) they know small donors and small creators are getting boned the worst by all this. Their attitude is that this fee change will allow them to do things to HELP small creators (and donors) in the long run.
— Inceltic Frost (@jephjacques) December 9, 2017


7) I have no idea if 6 is true. Just reporting what I was told.
8) I opened the conversation by telling Jack how much money he had lost me and my friends
9) I’m sure I’ll remember more later
— Inceltic Frost (@jephjacques) December 9, 2017


My feelings about the situation haven’t really changed: the new fees suck and if you have to cancel pledges bc of them I understand. I hope you won’t but I get it.
— Inceltic Frost (@jephjacques) December 9, 2017


I think the ethical thing for me to do now is stop talking about it bc I have privileged info and I don’t want my biases to affect the conversation from here on out.
— Inceltic Frost (@jephjacques) December 9, 2017


One last thought: jack was talking about how maybe their #1 complaint from creators was not being able to predict how much money Patreon will give them from month to month.
I said “yes, that uncertainty is real and it sucks. But it’s…also part of being a business?”
— Inceltic Frost (@jephjacques) December 9, 2017


I feel like Patreon is trying to solve a problem there that is A) not solvable and B) not their job to solve
— Inceltic Frost (@jephjacques) December 9, 2017


I’m sorry I can’t talk specifics but there is an array of options they are considering to mitigate the pain of the extra charge. https://t.co/5UmN9VqWbA
— Inceltic Frost (@jephjacques) December 9, 2017


My *understanding* is that the fee change is still happening as scheduled. https://t.co/5bq7lE8hlb
— Inceltic Frost (@jephjacques) December 9, 2017

Patreon is going to have a tough time selling both their base of creators AND their patrons on keeping those new fees.  And let’s be clear, there is no Patreon without backers.  The tone of their rollout wasn’t exactly reverential to their patrons.  One might almost say somebody on one of their product teams thought patrons should be obligated to pay those fees.  Not a good look.
Speaking of “not a good look,” one of Patreon’s Growth PMs wrote a piece about the thinking behind their efforts to recruit new creators.  The link has been circulating and the phrase “pouring gasoline on a fire” doesn’t begin to do it justice.
In a sense, the piece is written from the perspective of an engineering culture that’s looking to maximize returns.  The trouble is, maximizing returns might not be consistent with Patreon’s stated mission of getting artists paid and a lot of people are reading some scorn into some of the passages.  Nothing there is necessarily incorrect from a business process standpoint, but… well, let’s hit the highlights and you’ll see for yourself.
We have very clear, rigorous internal criteria for what we consider financially successful — there is a specific threshold that we’ve found to be “life-changing” for our Creators.
It’s a number where we believe the platform has meaningfully changed a creator’s life and ability to create more, focus more on their craft, and in many cases go full time.”
———
2. A meaningful life change for a financially successful Creator –> more Creators
The second reason why active FSCs works as a north star metric is because the designation indicates that Patreon has effected a meaningful life change for a Creator.
Raviv explains, “We’d rather have our GMV be made up of fewer, but truly life-changed creators rather than a lot of creators making a few dollars.”
This is because while active FSCs do bring on significantly more Patrons (the fans who support them), they also bring on more Creators. The bigger their success, the greater the aspirational value it carries.
For the company, Patron growth is a linear lever, while Creator growth is an exponential lever. Patron growth is a given as long as there is Creator growth. At Patreon, Creator growth is key not because it triggers more Patrons (it does that as well), but because it seeds more Creator growth.
——
This posed a conundrum for the growth team. For example, an 80% drop-off at a given onboarding step would typically be alarming to any other growth team working on user activation.
But at Patreon, a big drop-off could actually mean something good is happening — unqualified leads are getting weeded out.
By the same token, a high-converting step could actually result in turning away the right Creators, because suddenly there would be lots of live Patreon pages with uninspiring revenue results (Creator earnings are publicly visible on each Patreon page).
Now… let’s be clear.  What the *ahem* extremely sensitive fellow writing this is talking about is his concern that Patreon doesn’t scare off any high rollers as they’re attempting to set up their account.  It’s not bad if they loose some potential tiny players as long as they keep the big ones coming.  Again, from a pure business standpoint, that makes perfect sense.
On the other hand, the whole passage lets you inside of some of the things Patreon users — and the folks who’ve shied away from Patreon — have been complaining about.  It talks about how “a financially successful Creator is not only more likely to have a pre-existing audience that they — and Patreon — can monetize,” which is hitting the discovery nail on the head.  Patreon has always appeared to be reliant on pre-existing audience.  Discovery is a huge problem there and it’s questionable how much effort has been put into addressing that problem.

Now… it should be emphasized, this is all coming from the user acquisition standpoint.  Not the head of the company.  Growth will have their own specific needs and yes, there’s going to be an emphasis on landing Creators with large following who can effectively blunt force hammer that pre-existing audience with emails and tweets about their Patreon page.  But it sure doesn’t sound very good to anyone looking to grow an artistic career from an earlier stage.  In fact, you can see where people are taking these comments as hostile, especially when the smaller players appear to be getting hit worse by the new fees.
Let’s just say Patreon didn’t make any friends in the creative community discussing all that so publicly.  The Patreon community on Twitter sure is taking it as an educational document, though.  We’ll see if that’s addressed along with the new fees when Patreon breaks their silence on the matter.  It does sound like we should expect some new announcements on Monday.  It isn’t clear how much anyone is going to like them, though.
If these new fees really are “just to keep the lights on” so soon after an investment round, that’s a pretty interesting topic all by itself.
Want to learn more about how comics publishing and digital comics work?  Try Todd’s book, Economics of Digital Comics
    