I missed seeing this news the other day. This is worrisome—Patreon's already been saying that their current business isn't sustainable, and now they've just put themselves into even more VC debt....
I missed seeing this news the other day.
This is worrisome—Patreon's already been saying that their current business isn't sustainable, and now they've just put themselves into even more VC debt. This makes a total of $165M raised now, so they're going to be under even more pressure to find a way to monetize the site much more heavily than "facilitate payments to creators" is giving them.
What is their current business model, anyway? PayPal seems to be doing fine being essentially an online payment processor, taking a small commission off every transaction. Why can't Patreon...
What is their current business model, anyway? PayPal seems to be doing fine being essentially an online payment processor, taking a small commission off every transaction. Why can't Patreon function the same? I honestly thought that was their business model, just geared towards subscription-based support of online artists/creators.
I just hope they don't go under without a good alternative rising in their place immediately, because a lot of my favorite online creators make a living via their platform.
Patreon isn't actually a payment processor like Paypal and Stripe (who they actually use), even though they probably should be. They are essentially just a middle-man offering recurring donation...
Patreon isn't actually a payment processor like Paypal and Stripe (who they actually use), even though they probably should be. They are essentially just a middle-man offering recurring donation management and community features. And yeah, you would think they should be profitable, especially since they actually take more of a cut than their payment processors do (Paypal and Stripe both take the standard 3%+$0.30 per transaction, but Patreon takes anywhere from 5-12%). However despite that, and the massive number of users and monthly transactions flowing through them (>100,000 creators with 3 Million+ active patrons), they somehow aren't profitable.
Why? I would hazard a guess that is likely because they have fallen into the typical California based, Venture Capital funded, Startup trap: They have 175 employees (way more than they actually need to maintain and manage the site), their 42,000 ft² HQ is in downtown San Fran with another office in NYC (the two most expensive cities in the US) requiring them to offer competitive wages for those areas, and they use AWS (which gets incredibly expensive at scale).
p.s. Don't get me wrong, I love Patreon and use it to back multiple projects/creators (including Tildes), and I really admire Jack Conte and adore his music... but he dun goofed up big time if he can't make that business profitable, IMO.
I'm wondering if this is part of the new strategy: to get more established "mainstream" creators involved with Patreon and eventually hope to become a content distribution platform for them as...
Conte also revealed that a handful of artists, including musician Serj Tankian and comedian Hannibal Buress, invested in Patreon as part of this new round. He hopes that the Pro and Premium tiers will draw more creators who don’t already use Patreon and support existing customers who need a more advanced toolset given the size of their fan base.
I'm wondering if this is part of the new strategy: to get more established "mainstream" creators involved with Patreon and eventually hope to become a content distribution platform for them as well. The cuts from work by established artists would probably be considerably bigger.
I missed seeing this news the other day.
This is worrisome—Patreon's already been saying that their current business isn't sustainable, and now they've just put themselves into even more VC debt. This makes a total of $165M raised now, so they're going to be under even more pressure to find a way to monetize the site much more heavily than "facilitate payments to creators" is giving them.
What is their current business model, anyway? PayPal seems to be doing fine being essentially an online payment processor, taking a small commission off every transaction. Why can't Patreon function the same? I honestly thought that was their business model, just geared towards subscription-based support of online artists/creators.
I just hope they don't go under without a good alternative rising in their place immediately, because a lot of my favorite online creators make a living via their platform.
Patreon isn't actually a payment processor like Paypal and Stripe (who they actually use), even though they probably should be. They are essentially just a middle-man offering recurring donation management and community features. And yeah, you would think they should be profitable, especially since they actually take more of a cut than their payment processors do (Paypal and Stripe both take the standard 3%+$0.30 per transaction, but Patreon takes anywhere from 5-12%). However despite that, and the massive number of users and monthly transactions flowing through them (>100,000 creators with 3 Million+ active patrons), they somehow aren't profitable.
Why? I would hazard a guess that is likely because they have fallen into the typical California based, Venture Capital funded, Startup trap: They have 175 employees (way more than they actually need to maintain and manage the site), their 42,000 ft² HQ is in downtown San Fran with another office in NYC (the two most expensive cities in the US) requiring them to offer competitive wages for those areas, and they use AWS (which gets incredibly expensive at scale).
p.s. Don't get me wrong, I love Patreon and use it to back multiple projects/creators (including Tildes), and I really admire Jack Conte and adore his music... but he dun goofed up big time if he can't make that business profitable, IMO.
I'm wondering if this is part of the new strategy: to get more established "mainstream" creators involved with Patreon and eventually hope to become a content distribution platform for them as well. The cuts from work by established artists would probably be considerably bigger.