Subscriptions are a tried and true business model. Subscriptions have been around for a long time.
People used to pay for things they use. This backward world [a world based on advertising and paying with your attention] has only existed for 15 years.
What is infuriating to me is this weird love triangle we have set up. You have a person who makes a thing, a person who consumes a thing, and then an advertiser who gets in between. That is where the revenue is generated. Consumers end up paying with their privacy and their attention. I do not think that is a great business model. It has a lot of downsides.
Is the world you are trying to craft [people paying creators directly] working? Yes. It is working really well. This year we will send over $500 million to creators.
Patreon’s revenue is 5% of the payments. If Patreon pays out $500 million, they would receive $25 million in revenue.
It is not just individuals using Patreon. There are companies like Kinda Funny and Phil DeFranco that have entire teams working together.
For platforms [like Facebook] the customer is the advertisers. They build products for advertisers. The problem of not getting paid enough for your content is a problem for creators. Not advertisers. So it is not a priority to them.
This first version of the web is being funded by attention and privacy. I think the next version of the web is integrated consumer payments. This will drive the next wave of really beautiful production.
Connie Chan on When Advertising Isn’t Enough and Outgrowing Advertising: Multimodal Business Models as a Product Strategy.
There are over 100,000 creators making money on Patreon. There are 3 million patrons. The average monthly payment is $11 to $12. Half of the payments come from people who are subscribing to more than 1 creator.
I started Patreon because I have been a creator for 10 years. I am still creating. Last year I made 100 music videos. I built a following on YouTube. I would get a million views on a video and make a few hundred bucks in ad revenue. I thought there is something wrong here.
I built Patreon for myself. I asked my fans to become a member. Within two weeks of launching I was making $4000 to $5000 a month.
Other creators saw this and started signing up. We didn’t do any sales or marketing at first. It was all organic.
One thing I didn’t know before starting a company is the compounding complexity of scaling a global technology product. The number of systems that need to be maintained and need to scale: human, technical, operations etc is unfathomable.
The word “influencer” is weird to me. It rubs you the wrong way. It commoditizes creators. It strips away anything that is unique and special and different about them. It sells the fact that they can influence people. It sells that influence like a commodity in a marketplace. Almost like you are buying corn.
There are software developers that are using Patreon for subscription payments. Their benefits are new software updates. [The largest creator on Patreon is an example. Global ++ has 64,000 members]. There are physical stores using Patreon to give membership benefits in person.