'They need to earn back our trust': Facebook's subscriptions play for creators meets resistance
February 28, 2019 by Kerry Flynn
Facebook wants creators to use its platform to drive subscriptions, but some creators aren't biting.
Facebook offers a product called "fan subscriptions," which allows creators to make money directly from their followers in exchange for Facebook taking a cut of all subscriptions. Launched last March, the product has 1,000 creators and is still in a beta test, a Facebook spokesperson said. Currently, creators get to keep 100 percent of the revenue. But that could change soon with Facebook taking a 30 percent cut of subscription revenue, as outlined in Facebook's terms of service for creators and obtained by Digiday.
That revenue cut that is the main point of the contention around the fan subscriptions product. Matt Saincome, the founder of the satirical website The Hard Times, shared his frustrations with the terms in a Twitter thread on Feb. 25. Facebook reached out to Saincome to offer early access to the product, but he said wasn't interested.
"These are the people who tanked our traffic by 70 percent overnight when they decided to focus on 'friends and family' and then asked for money to 'boost' our posts to people who already signed up to see it. The whole team was just laughing at the notion of ever building anything creative on Facebook ever again. They'd need to do something to earn back our trust first, not try to lure us in with 'keep 100 percent of your revenue' and then say 'we may jack it up to 30 percent.' It's a joke," Saincome said in an email.
Saincome told Digiday he didn't know why exactly Facebook had reached out with the offer but guessed it had to do with the page's ties to gaming.
"It isn't our biggest page. We have Hard Times page as well and that has more than 250,000 likes. I think they probably targeted [Hard Drive] because it's a gaming page that has previously had a streaming integration, aka we synced up our stream to it. They seem to be focusing on gaming stuff," he emailed.
A Facebook spokesperson said a good portion of creators in the program are related to gaming. A creator who has spoken to Facebook about the program also said the big focus, for now, is on gaming.
Image courtesy of Matt Saincome
Saincome said his team makes the majority of its revenue from ads on its owned and operated properties.
"When Facebook decided to not let our content spread organically as it had in the past, we lost a ton and had to work our asses off to replace the lost revenue. We are a tiny DIY organization, and they are one of the largest companies in the world, and they constantly try to eat our lunch. Why the fuck would I let them control my connection to my audience again? Especially if there is money or subscriptions involved," he said.
Fan subscriptions is Facebook's latest attempt to lure video creators to its platform as it competes with YouTube, Amazon's Twitch, Snapchat and TikTok.
With fan subscriptions, Facebook is also competing with Patreon, which isn't tied to a specific distribution platform but rather helps creators manage a membership program and takes a 5 percent cut. The Hard Times uses Patreon to help fund its new podcast network, Saincome said. Patrons to the Patreon account receive their names and faces in articles on Hard Times' site as well as ad-free episodes of the podcast.
Despite creators like Saincome comparing Patreon to Facebook's program, Patreon's svp of product, Wyatt Jenkins, said his company doesn't see Facebook as its main competition.
"We're in a very different business model. Facebook has three constituents: advertisers, end users, and, lastly, they have creators. We have one master when we build: creators. No matter how many features Facebook or YouTube build, their priority will be ad revenue, No. 1," Jenkins said.
Facebook has touted the success of some creators in its beta program. For example, Facebook wrote a case study on the UK creator LadBaby. Earlier this month, Facebook expanded it to Europe, the Middle East and Africa during its first "Creator Day" in those regions. The company has not yet announced when it will be released out of beta. The spokesperson said it will most likely be some time this year.
The Facebook spokesperson said the company hasn't yet determined what the final ad revenue split will be when the product is released but said it will be in line with the rest of the industry and that creators will retain the majority of earnings. For context, Twitch's split is 50 percent for its subscriptions. YouTube takes 45 percent of ad revenue. YouTube also shares revenue from subscriptions with creators in YouTube Premium, but that program is being changed in favor of ad-supported content.
Facebook has told creators in the beta program that recurring revenue they receive from subscribers will not be subject to revenue sharing — just the revenue from new subscribers, a spokesperson said. Though that isn't explicitly written in the contract, as reviewed by Digiday.
Meanwhile, Patreon doesn't currently have plans to change its existing rates.
"Changing existing creators rates is not something in our future roadmap. We have new products. We bought that merch company Kit to provide new services people can use," Jenkins said.