This is a remarkably direct and appropriate apology, along with an appropriate response, a rare thing indeed.
If not for their initial response to the first round of feedback, namely to put a "we're still doing it" at the bottom of their original blog post (with completely unreasonable and unjustified explanations for why), I'd give them full credit for responding appropriately. As it is, though, at least they fixed this. They're still going to need to deal with the giant pile of patrons they drove off; many people lost a significant fraction of their support because of this change, and that won't necessarily come back.
Between 1 and 2 years ago, I talked to some folks at Patreon about an unrelated topic (namely, trying to use Patreon for registered charities). They mentioned at that time that they had a change in the works to shift processing fees from creators to patrons, which they said at the time would be "better for creators" for various reasons, but that didn't want to talk about the details yet. (Since the issue is now public, I don't see any issue with saying that now.) That discussion naturally didn't include any information about fee structure or un-aggregation of charges with associated additional fees, e.g. the "$1 costs $1.37" problem, since that wasn't the topic; the impression they gave at the time was that the only change was to pass on the (presumably still aggregated) fees to the patrons, which wouldn't have been as serious a problem, and wouldn't have killed Patreon's suitability as a wildly successful microtransaction platform the way this change did. So, they've been thinking about this for a long time, and yet they sprung it on people without warning and without running the full details by anyone.
Twitter was filled with screenshots of people removing their $1 pledges. It wouldn’t surprise me if the rollback of the new model was motivated more by economics than PR, where the forecasted revenue under the new model (accounting for loss rate of subscribers) was lower than the forecasted revenue under the old model.
Well, those things are inseperable in this day and age, especially for a company that depends on internet communities.
It's astonishing how a company with one product could misunderstand its own market so badly, but given the troubles of Twitter and to a lesser extent Etsy perhaps it's less surprising.
Especially Patreon. Patreon more or less takes people's money in exchange for warm fuzzy feelings. If they piss off their users, the users get less warm fuzzy feelings, and they'll stop buying.
It's more than that though, you're paying for that artist to be able to create. In most cases, if people stopped paying, the artist would have to stop creating, or at least reduce the time they spend creating, so they could find alternative income sources.
Just because there's no defined benefit or exclusivity doesn't mean all you're paying for is "fuzzy feelings".
You're not purchasing anything, Patreon is about patronage, as in donating/supporting with no expectation. Whether you get something is completely up to the creator to do.
Not necessarily. Patreon has two payment models - either pay per month, in which case you hope the creator sticks to what they say they'll be doing (and you withdraw your support if they don't and you're not happy about that); or the other option is where you pay when they publish a new piece of content (with a monthly cap). I support a couple on that model. So in that case it is more directly a purchase of some content, even if nothing stops creators from posting it outside of Patreon for anybody to enjoy.
There's also a fair bit of patron-only content from many people - bonus comics, behind the scenes stuff, exclusive videos, requested artwork, whatever.
So yes, you are purchasing arts and entertainment. Just in an unusual model.
If there is no obligation to deliver then there is no purchase. It's patronage, an already well defined concept and the basis for their name. Why must it be made more complicated as "purchasing...in an unusual model"?
I read you want to put weight on how the very fact of giving or retracting donations messages an expectation to the creator and creates a kind of defacto commercial relationship.
But honestly I see it the other way round, where creators on patreons have already put something out in the world, and donations come after the fact.
There is an expectation that they go on creating, but if they said “fuck it I can’t do it anymore” I won’t be running after them to ask for my money back; I already got my warm and fuzzy feelings, the deal is closed on my side.
If you think you are purchasing something you are badly mistaken.
The creator is not obligated to do anything. And your only recourse is to stop donating to him. There are no refunds.
What would that be? Either way, purchase implies a guarantee to receive something in return but the creator has no obligation to do this, so it's a donation.
There's many which aren't free content or which have content locked off for higher tier patrons. There's many which are "exclusive for patrons for [X time]" too.
They certainly can't say they didn't have time to think this over.. so yeah..
On the other hand, it's possible that most of thevø revenue does come from 1$ donations, and they didn't understand how much creators desired having many pateons vs. few high paying patreons.
Not so astonishing, when you understand the business of venture capital. When you raise too much venture capital and try to grow faster than the market dictates, this sort poor decision making tends to happen.
This is what I told them in the survey. I'm a newbie to the platform, and I understand the value proposition better than the owner?! That's really screwed up, and it will take quite a while before I trust them. I still kind of think creators should take their accounts elsewhere. How can a group of people just not understand their own product so thoroughly? Baffling. Is there any precedent for people so badly confused able to learn which end is up? It really makes me suspect the company and its users just have irreconcilably different ideas about what is going on.
Is there an elsewhere for creators to take their accounts? I give via patreon because it is the only platform I'm aware of that exists that anyone really uses in this way. I give to some creators via their own systems - but as far as a generally accepted mass market solution - I'm interested in hearing about others but don't know them yet.
Well, those things are inseperable in this day and age, especially for a company that depends on internet communities.
"Voting with your wallet." Or to paraphrase the way Polonius put it in Hamlet, one of the key differences between sane and insane is what people do with their money.
I wonder how many creators they lost, too. At least one guy I follow, who makes rpg scenarios, said “screw it” - all future scenarios would go to drivethrurpg, and patreon backers would get discount codes appropriate to their backing level. He kept patreon as a notification platform, and drove —all- his revenue to an alternate channel.
Same with a webcomic creator I know. He basically stated "I do this as a side-job and have a steady income, please move your pledges for me to the creators you support that depend on Patreon for their income."
I understand why they do it: they trying to bring down transaction costs with payment processors. These fees on small amounts is death by thousand cuts.
But, I believe, there is a way: they can introduce wallets for $1-2 patrons: put $10 in a single transaction, then charge the wallet once it is a time to pay to creator. This should aggregate small transactions into larger ones and significantly cut the costs.
They did aggregate up until this point, at least for most patrons and creators. If you did a regular pledge with a monthly charge, you only made one transaction a month. Similarly, each creator got paid once a month with one transaction. The exception was per-post patronages, which do indeed have more fees and are less suited to the micro-payment model. That is NOT what this was about, though.
The real motivation was to support gated content.
They want to bring creators into their subscription system, where you pay a fee to access content. They had a problem, though, in that people could pledge, access content, and then simply cancel their pledge before getting charged. To avoid this, they needed to do Charge Up Front (CUF) to ensure that any access to gated content was paid for. But that creates some confusion about when people get charged (do you pro-rate the first charge, with or without the next month, etc.) because people would pledge a certain amount and see a different amount charged. The alternative is to have people on their own billing cycles, which is much less confusing for customers, but eliminates the possibility of aggregation.
Basically, they want to abandon the goodwill/patronage model and become a subscription service, likely because the latter model is far more lucrative.
You're ignoring the fact that increasing the number of distinct fees charged to Patrons translates directly to more money for Patreon (because Patreon was charging a much higher fee to Patrons than they themselves are actually paying on the transaction). Their public explanation was that a traditional subscription model is simpler, but it's obviously worse for users and the only reason to do that instead of the alternatives (such as the wallet approach) is so Patreon can get their cut of those extra fees.
As Wikipedia would say, "[citation needed]". The transaction fees to patrons that Patreon proposed of 35¢ plus 2.9% are real familiar to anyone who's worked on a payment processor. Patreon was essentially passing the transaction fees they would have paid onto patrons, and they would not have been making a material amount of extra money for themselves if they'd stuck with the new system.
That’s a rate that a brand new company just starting out might get. For that to be the actual rate Patreon is paying they’d have to be extremely incompetent.
For comparison, both Square (which is not known to provide the best rates) and Stripe advertise better than 2.9% + 35¢, and that’s the rate you’d get without any negotiation at all.
35¢ plus 2.9% is for average e-commerce and small business clients. A company like Patreon that does large volume of transactions will almost always be able to negotiate a much lower transaction fees with payment processors.
I don't see how a 'wallet' doesn't handle the CUF... Patreon should already have the money in what is basically a pre-paid account. You just have a minimum amount that can be paid into the wallet. There should also be pay in/out schedules so things are aggregated/automated on both sides. They could even make interest off of the floating money and work a bit like a bank. This should be their bread and butter, optimizing transaction cost. Plenty of other sites do this sort of thing for real businesses, I don't see why it is so complex...
It really does seem incredibly straightforward. A patron adds $20 to a wallet and pays a low transaction fee. Can even configure their account to automatically add $20 whenever funds are low. Money stays in Patreon's bank account. Patron can't get their money back once it's in the wallet. Every month Patreon charges a percentage to disburse all money to the creator's bank account.
It's simple to explain in the context of this discussion. But probably doesn't seem as simple to the average user, who wants to donate $1 to a creator, and will feel like some kind of scam is going on if they are asked to add $10 to their Patreon balance first.
Thinking about it some more, Patreon may end up eating the additional fees for the first payment (for CUF posts), increasing their cut a bit on other posts to make up for that, then aggregating the recurring charges.
I am guessing they can make more off of an increased number of credit card transactions with some sort of deal with Stripe or whomever. It also allows them to obscure when and how much they are getting paid when it really doesn't need to be that complicated.
If I want to donate $1 per month to somebody, cashing out $20 in advance is quite a bit -- it'd probably discourage a lot of people, since the initial investment is too much.
It was just an example. It could be whatever the user wants to pay; since they're paying the fees for each transaction, it makes sense to keep some money in a wallet.
> A patron adds $20 to a wallet and pays a low transaction fee.
I wonder if they have problems with anti money laundering regulations? Financial transactions are supposed to clearly indicate the beneficiary. If you're paying into a wallet that gets divvied up later, that's not possible so showing the paper trail of who benefits gets difficult.
How do those look now? I imagine the beneficiary of the transaction is clearly Patreon. The fact that they happen to have another transaction that pays money to someone else is fine. I mean, we don't expect to have to write several checks to various patients and families when we give money to St Jude. Or, more interestingly, look at how escrow works in a real estate deal, where the buyer and seller transactions go to the escrow company, which is then responsible for distributing it to the various parties.
Now, since it's basically acting as an escrow payment, Patreon might have some laws restricting what it can do with that money while it's holding it. For instance, they likely cannot legally earn interest on that money. Similar to how the security deposit held for a rental cannot yield interest unless that interest is paid to the renter.
Automated road tolling systems have the exact same economic problems as Patreon. And the pre-charged wallet with $xx minimum fillups is exactly the model they chose. Judging by the longevity of their systems, it seems to work fine.
as was mentioned below, you don't really have a choice with road tolling systems. i don't like having to pre-load $xx, but it's better then the only alternative. people can stop interacting with Patreon, but you can't really avoid toll roads very easily.
At least in the Illinois Tollway you do: pay more by stopping at each toll.
That's sort of the same thing here, right? Prefill a wallet and you don't have to pay extra for processing fees (equating to convenience going back to tollways).
> To avoid this, they needed to do Charge Up Front (CUF) to ensure that any access to gated content was paid for. But that creates some confusion
But if you actually ask people whether they want the first couple charges to have weird timing, or whether they want to pay significantly more in credit card fees that don't go to the creator...
I really don't get the motivation of the change, aside from basic greed.
I mean, it seems like a dream business model, you basically channel donations to content creators taking a cut, collecting goodwill along the way.
Their service cannot be more than a (refined and well designed as you want) CRUD app with payment processing, it's hard to imagine having such high costs that is not profitable.
> I understand why they do it: they trying to bring down transaction costs with payment processors. These fees on small amounts is death by thousand cuts.
Then they should have never strayed from the original model, where they charge you once per month for all your pledges, causing only one fee paid to the payment processor.
(If they needed to accommodate people pledging small amounts to very few creators, they could have introduced some sort of quarterly, biannual, or even annual payment option instead of just monthly. I'm curious if they evaluated this option and what they concluded.)
My coffee shop has a sign: $0.50 fee for card transactions under $5. I’ve seen that sign over the years at a dozen places. The idea isn’t entirely novel.
And you’re right, in that perhaps they should send $3 every three months or. $6 every six if you’re only giving to one person.
The reason you don’t see that everywhere is it’s specifically against the merchant agreement to charge cc customers extra. The only places I’ve ever seen getting away with it are very small shops and government agencies (like the auto tag office) that legally cannot pay those costs out of ordinary revenue.
Not between 2013-2016; there was a federal settlement that included the provision that merchants can add a surcharge for credit payments, overriding any merchant agreement.
Which was recently thrown out on appeal, so that’s fun for any place that was relying on it.
It's semantics: I believe the wording or the typical agreement states that you may not charge a customer more for using a card. It does not, however, prohibit providing a 'cash discount'.
Which is why this whole debate seems a little silly from a practical perspective. It doesn't matter whether a fee is paid by the seller or the buyer or if a difference in price is a discount or a surcharge, it all washes out in the end. How Patreon or gas stations frame the difference is simply marketing. Patreon's mistake was just poor marketing.
OT, but why don't programmers say or write "It's syntax". Different semantics, in the programming language sense, isn't what that phrase usually means.
That's exactly what this whole discussion is about though.
The difference between "card surcharge" and "cash discount" is treated as 'semantic' in the merchant contract context, but is it a distinction without a difference from the customer's perspective?
Google gives two definitions for "semantics". The first one, "the branch of linguistics and logic concerned with meaning", clearly matches the common usage of "It's semantics": it's primarily about words and definitions, and how they relate to the concepts they refer to. The second is "the meaning of a word, phrase, sentence, or text". I guess that makes sense as a microcosm of the whole field of study, in the same sense that people talk about "the physics of a situation" (say, involving two hard balls bouncing off each other) as how the general study of physics applies to that situation.
It happens that, with programming, explaining precisely how each part of a program corresponds to "meaning" (and there are different levels and dimensions of precision, e.g. "xs.append(x) means it'll add object x onto the list xs" vs "xs.append(x) means it'll look up the value of the symbol 'xs' in the lexical environment and then the global if necessary, and do the same for x, and then look for xs's attribute hash table for a key named 'append'..." vs "xs.append(x) means it'll check if the array backing the list has room for one more element, and, if not, look for a free block of the right size in its freelist, and, if not, use 'mmap' to grab more memory from the OS, and barf if that fails, and then copy the array data into a new array of twice the size, and free the old array...") also gives a precise description of the behavior of the program (assuming hardware perfectly obeys the abstractions it's meant to obey), which is all the programmer is interested in.
This is a field where machines reliably turn symbols into actions; hence, the meanings of symbols are the central object of study. Semantics are extremely important and are almost all we need to think about. This is not the case in most fields. (I guess one other profession that comes to mind where semantics is important is law.)
To bring it back to your original question... yes, semantics is important to us. If we want to call something unimportant in that way... "It's a matter of definition" or "We're arguing over definitions" strikes me as the best fit.
(One other distinction: Programming language terms have semantics for machines. They also have semantics for humans. Whether the computer recognizes something as a closure, or complains about a syntax error or executes something completely different, is very important. Whether human programmers call it a "closure", a "function", a "procedure", or some other term, is generally unimportant. Thus, the maximally correct dismissive comment might be something like, "It's human semantics".)
I think that's not corporate policy and is something individual franchisees do, hoping no credit card company compliance officer will refuel at their store and notice (or possibly not even knowing it's prohibited).
> In France for instance if you accept credit cards, it is illegal to add a fee for accepting it.
Are you sure, that it is by law, though? In most countries, it is a contractual obligation: when you make a contract with your bank or payment processor, one of those terms & conditions is not to discriminate against the card payers. The purpose is to force the processing fees on the merchant, otherwise the cards would be at a disadvantage and would not get popular. For a case study, see Southeast Asia (1. cash rules there; 2. you can pay with a card, but you will have to cover the fees too; 3. as a consequence, everyone uses cash, see also point 1).
In the case of taxis, I would understand if they voluntarily had terminals for their own protection (so they would not get mugged for few banknotes), but forcing them... that sounds wrong.
>> In France for instance if you accept credit cards, it is illegal to add a fee for accepting it.
> Are you sure, that it is by law?
It is: Article L112-12 from the Code monétaire et financier.
"Le bénéficiaire ne peut appliquer de frais pour l'utilisation d'un instrument de paiement donné." (The seller shouldn't charge any fee for the use of a given payment instrument).
Maybe it's just me, but, I think it's so fucking stupid that it costs money (which goes to private businesses) to spend money in the modern world.
(and no, bitcoin doesn't fix that at all)
I think if we were in an alternate universe where the government managed a free utility for digital payments no one would find it strange for a second.
It has always costed money to to spend money and there are pros and cons to each method. All that stuff isn't free even if it isn't directly measurable most of the time.
Cash costs money too--you have to count it, handle it, deposit it, protect it from theft, verify it's authenticity, make sure you have enough change, spend time counting change, etc. As a consumer, if a merchant fucks you over you have little recourse besides suing. Cash takes no time to clear so you can spend it right after getting it, it is anonymous, it is hard to trace so you can skip on taxes, etc.
Checks can bounce, you have to deposit them, they take time to clear, they take forever to write, they can be fake, etc. However, it is hard for your cashiers to skim off the top, it uses exact amounts so no change to keep, it is a single slip of paper to carry around instead of a pocket of paper currency, as a consumer you can stop payment on a check if the merchant fucks you over, etc...
Credit cards are super quick to use at the register. They don't require any change (unless handing cash back). As a consumer, if a merchant fucks you over you can issue a chargeback. It is easy to track your spending as a consumer because all transactions are recorded electronically. As a merchant you don't have to handle change or cash, your cashiers can't easily skim off the top, etc...
It's all trade offs and I'll bet if you did an NPV on all the different methods taking into consideration all their pros and cons, they'd all wind up "costing" similar amounts.
> Lets not pretend that they're already bending over backwards to lower costs on transaction processing.
It's a free market and you as a merchant are free to pick your vendor. In addition, you don't even have to accept credit cards if you want--you can just take cash or check, or even just cash. Of course people entering your store might not buy anything from you because who the hell carries around cash or checks anymore, but no jackbooted thugs will force you at gunpoint to accept credit cards.
The credit card industry is a huge, highly competitive industry with little barriers to entry. Massive market forces are at work squeezing the margins for transaction processing fees to as little as possible.
My bet is that transaction fees are priced at what they are because:
- its cheaper than handling cash or checks
- it results in more revenue, even with the "cash back" discount given to CC users.
- it is more traceable and easier for your bookkeepers to manage
And to be honest, I believe many small business who take cash only do so because they aren't reporting all their income. When it is off the books cash-only, you can pocket the sales tax, underreport income tax, pay your vendors cash under the table, etc. I also believe that if their margins are so thin they can't afford a 2% transaction fee they probably have no business staying in business anyway. Whatever they are doing is more likely than not a value-destroying NPV-negative project to begin with. (see also: just about every business shown on those "save my bar / save my restaurant / save my hotel" TV shows)
>Credit cards are super quick to use at the register.
At least they used to be. Chips ruined that. Now I have to stand there staring at the screen for half a minute waiting to respond to prompts and to pull the card out at the end. For most transactions, cash is probably faster than using a chip.
This used to be the case for me until very recently. I've noticed that the two grocery stores I frequent most are suddenly significantly faster. Like almost instant (less than 2 secs). This is in Seattle. So, it'll probably be that way everywhere eventually.
In Sweden, in most stores, you insert the chip and enter the PIN just after the transaction starts, and then once everything is scanned you just confirm the total price (which is very quick).
This is why I’m a big fan of NFC payments when available. I find it to be pretty much instant, instead of having to wait what feels like 30 seconds for the chip transaction to process.
Though I’m in the US. I hear chip transactions are way faster in other countries where they’ve been using that system for a while.
It's even worse when your chip starts to fail, as one of my has started to do very recently. You have to put the card in three times(and wait for it to fail 3 times) before you're allowed to use the swipe function. Took longer than cash.
Recently I tried the chip and it failed, then I tried the swipe and it said to use the chip, then I used the chip and it said I had to use the swipe, and finally the swipe worked. First time I ever had a chip fail, and it's a pretty much brand new card, so it was most likely the machine's fault.
I don't see the problem. If waiting a little is such a big deal then you are in too much of a hurry already and/or too stressed out. Relax. Take it easy.
I lived in Spain for a year, and everyone had chips there. My US card always drew eyerolls as they had to find the /old/ machine and dust it off and find someone who remembered how to use it. I was excited that we were getting chips here in the US, but of course they fucked it up and for whatever reason it takes ages for your chip to be read, and there are frequent chip read errors.
In the US, it depends entirely on the point-of-sale system. Some are just as fast; some are a lot slower. My guess is that the slow ones are using the same old CPUs that the previous "stripe-only" ones did, which just aren't powerful enough to handle the added cryptography requirements in a reasonable amount of time.
Chip cards work super-slow in the US. I often pay in cash because it's so much faster. I take the same chip card to the Netherlands and it works in a few seconds.
I have been used cards with chips for years and now contactless payments and they are a lot quicker than swipping the card. In less than 5 seconds is done
In the US it's chip and signature, and you can't sign until after the chip verification (either signing a paper receipt, or with a stylus on the terminal screen).
In addition chips are new and some terminals are painfully slow (30 seconds) to verify. I'm not sure I've ever seen one finish in under 5 seconds, though a few merchants have terminals that come close to that.
The sad fact is the terminals are painfully slow because US banks don't think US customers want or are capable of using PINs.
When you use a PIN you get a nice two factor signature from the card chip: it signs the current timestamp and the PIN you knew, and can do both as quickly as chip's processing capability and the bandwidth between the chip and terminal allows.
US banks came up with a dumb compromise just like most of their websites use Wish-It-Were-Two-Factor auth and secondary "Security Question" passwords, the chip cards in the US are doing their own Wish-It-Were-Two-Factor: sign a timestamp, wait some amount of wall clock time, sign a different timestamp.
Most of the wait in a chip purchase in the US is artificial just to make sure that two timestamps are "sufficiently" different. US banks should just give people PINs and stop this silliness.
It's a bit intentional hyperbole, but not by much.
Every chip card I've received to date from several different major US banks has included some variation of "Great news! You don't need to learn or use a PIN to use this card."
My personal reaction every time has been, "But what if I want to use a PIN?" and this far I've never seen a satisfactory answer in those same letters or on those banks' own websites.
Admittedly that is purely anecdotal, as far as citations go, but in my mind it seems pretty clear what these banks think about PINs for credit cards.
Why can't you though? I feel that is an implementation detail that is leaking out. The machine can do two things at once and only use the signature if the transaction is successful.
Yeah but a >1% fee is ridiculous. We all know visa, Mastercard, PayPal are drowning in cash.
I had high hopes for bitcoin like currency having a flat fee in cents and an optional percentage few for insurance if you do want a charge back and other nice credit card like features.
But bitcoin is riddled with its own charge mania nowadays.
> Cash costs money too--you have to count it, handle it, deposit it, protect it from theft, verify it's authenticity, make sure you have enough change, spend time counting change, etc.
Holy God. I might as well say it's all equally free, since when the heat death of the universe is done with, there will be no difference between something having existed or taken place or not.
What's insecure about it? Heard of a lot of cases where money were stolen from people banks accounts/cards using scamming, viruses etc (and witnessed one right when it was happening), never heard of problems because of card being contactless. It also lets you not to flash your pin in front of the whole store for many of the payments. I think on the convenience/security scale it's very high.
They limit it to low value transactions specifically because it's not as secure. Feel free to dig into it if you don't trust the industry's assessment.
They limit it to make it secure and make it pointless for the thieves to try exploit it, at the same time covering many quick payment needs - convinience/security balance I mentioned and you ignored. And feel free to think about industry's assessment - they make more and more cards with contactless payment capabilities and it's used very extensively in some countries of the world already.
to make it secure Security is not binary. It's trusted less than physical contact readers for large value transactions for very good reasons. They care less about low value transactions, but that's not a security question.
You may not care about security, but all I said was it's worse, and not good enough for me which you have not denied.
That was true before the introduction of chip cards, though. The waiter's having to carry the card to the staff area of the restaurant, complete the transaction (by swiping), then return the card to you, probably interweaving some of their other duties along the way, took up most of the time. Their having to wait an extra few seconds for the chip reader seems a drop in the bucket.
I noticed this process has gotten noticeably longer after chip cards where required.
Waiters used to take cars and swipe them ASAP presumably to get better tips by being prompt. Now, put this off until they finish a full round and/or put cards in and start doing something else because it's going to take a while.
Granted, this is far from a complete switch, but it was still noticeable.
You don't have to hand anything over with near field stuff. You put it near it, ding, done. Saving you 5 minutes + time it takes for you to exchange cash. If you're dealing with a waiter for lunch, you're already wasting a ton of time.
I don't think it's stupid that it costs money, but I am surprised fees are still as high as they are. I suspect it's got something to do with how opaque the processing fee is for the customer.
If I understand it right, merchants often aren't allowed to pass on the fees or (much the same thing) give discounts if you chose a cheaper payment option. No wonder there's little competition on the fees, and Visa[1], Mastercard[2] and PayPal[3] are all having record profits.
Merchants absolutely can pass on the fees or give "discounts" for cash, at least in the USA. Gas stations are one of the major businesses that practice this.
Anecdotally, I worked at a company store years ago where we would charge customers paying with cards a 2.75% fee, which is what we were paying. And that store was operated by a Fortune 500 company.
Also, virtually every small private business I go to in Los Angeles charges some fee, or has stipulations, for credit card transactions.
This wasn't originally the case. Passing on the fee was for a long time against most merchant agreements. Which makes sense from the credit card company's point of view: they don't want shoppers to have any reason not to whip out the card.
Maybe I should've mentioned "Los Angeles" higher in my comment, but looking at the sibling comment to yours, apparently there are plenty other states where it is legal to pass on the fees as a surcharge as well. Obviously your situation may vary.
PayPal fees are high because 1) people pay it and 2) fraud.
Credit card "processing fees" however are high because of the stupid rewards programs that Americans are so addicted to because it makes them feel like they are "sticking it to the man" and getting money back, to the point of having dozens of plastic cards in their wallet. Of course with processing fees at >1% of gross value no cashback or airline miles program is ever going to make you come out ahead.
In the EU there are no silly rewards games and fixed processing fees of at most 0.3%.
I would, I in no way want to give that kind of power to government.
I would 100% opposes to a government run digital payment system, the government is too closing integrated to todays electronic systems as it is, I in no way want them to own and directly control it
If you receive your paycheck electronically, the transfer likely occurs over the ACH system, the primary operator of which is the Federal Reserve. The Fed also runs FedWire. The Federal Reserve has actually been at the forefront of electronic payment and settlement systems since their advent.
Though, the Federal Reserve is quasi-public/quasi-private. But for any systemically important transactional system you can be sure that the government is plugged in one way or another. The Clearing House company is the main alternative to the Federal Reserve electronic systems for interbank transfers (they're the "private" ACH operator), and they're heavily regulated, with the Federal Reserve given substantial oversight authorities.
I'm still optimistic that we'll have a digital currency solving this problem well in the future. Distributed, auditable, scalable, international transactions at ridiculously low fees.
It costs money because there are significant fixed and incremental costs to handle it: Fixed because of the labor and value of the technology, and incremental because of fraud. Much of the incremental cost is fraud insurance.
There are many ways banks could reduce the fraud, but US banks don't need to since nobody is protesting the fees. In Europe however, where interchange fees are regulated to low levels, they have been quick to adopt/mandate features like chip-and-PIN and 3DSecure that lower fraud.
Some places have systems you'd like. For instance Denmark has the "dankort" debit payment network where small merchants only play a flat annual fee and no per-transaction costs whatsoever.
They couldn't even do it with physical mail. You're paying the government every time you send a letter for the cost of that postage stamp. And the postal service in the US is pretty much constantly under-funded.
You pay to have some handle the transaction details for you. It's a service. You are free to mail dollar bills, though you'll use a service you need to pay for there, too.
USA wire transfers have so high fees because banks don't want to offer such payment methods, so they charge extreme markup (their cost is less than 1$, so 15$ is 1400% markup) on that.
In general, real time payments for large amounts can be made for <1$ (both fedwire system for its participants and various EUR systems do that), and consumer payments that can be (a) batched and sent in bulk and (b) get delivered e.g. at the end of day, not in real time, those have a cost of ~$0.01 (perhaps 0.02 in case of small volumes) to the bank.
So, in EU, everyone has access to something that's pretty much equivalent to USA "wire transfer", and it might cost e.g. some 40 cents or can be offered to consumers either "for free" as part of a common services bundle/maintenance fee.
It seems very likely that the change was motivated by payment processor fees. Patreon uses Stripe to process payments, which charges a flat rate of 2.9% + $0.30 per successful charge. Compare that to the proposed fee patron fee structure of 2.9% + $0.35 — where presumably the extra $0.05 per transaction is the cut Patreon takes off the top for themselves.
> the proposed fee patron fee structure of 2.9% + $0.35
The problem was that was per pledge. So if, like me, you support a couple dozen creators at $1-$3 each, you would expect to pay 24 x $.35. But all those payments are charged in one transaction. So they are only paying $.30. It isn't 5c per transaction they were planning to skim, but $8.
...which is still baffling! The core value of Patreon is microtransaction aggregation. This isn't just "product management screwed up a feature", it's product management doesn't understand their own product at all. Crazy.
It's like designing a fancy new electric car but leaving off the wheels.
You're assuming that Patreon will issue all of those charges at once.
However, they talk about that problem in the article. What if a Patreon supporter pledges/makes a subscription on Day 1, then another on Day 2, and a third on Day 3, and so on?
In their original blog post [1], they spoke about how, ideally, they'd issue each of those charges to the supporter immediately; and then begin recurring billing 30 days later after that date. However, if those charges are made on different days, and the anniversaries occur on different days going forward, then they don't have the opportunity to condense them into a single transaction.
Patreon are looking for a solution where someone can create a subscription, be billed for it immediately (i.e. not wait for beginning of next month), and then continue from there with recurring monthly payments. With a naive system each subscription would have its own cadence, preventing transaction consolidation. They also talk about how, if they have a standard monthly billing period, then there are issues with waiting until the next period to make the first charge.
Perhaps they didn't explain this as well as they could have, but it made sense to me. It seems like a "Patreon Wallet" could indeed be a solution to a lot of these problems. Refill your wallet with a single large transaction, then draw funds from it when pledging to support creators.
If I back a new creator, it charges me immediately (I think,
at least it seems that way from my billing history), but going forward I'm billed with the rest of my support in one transaction (definitely). I really don't see the problem.
Stripe isn't really a middleman. In fact, as they also handle the acquiring process with efficient high-volume rates, generally fewer parties are involved than normal.
Even for very large businesses, actually processing cards directly is pretty difficult and generally not worth doing. Instead you can just get a processor like Stripe or Adyen to give you good rates on an interchange-plus model.
That's what they did before the announced fee changes. After the fee changes were supposed to go into effect they we're no longer aggregating pledges. Madness.
Would that put any extra requirements on them? They're not just a middleman in that situation, they actually hold the funds. That sounds close to the PayPal for a long time: we've got accounts and transactions and deal with real money but we really really are not a bank, promise, please don't regulate us as one!
Alternately they could have patrons pay in arrears: You give your donations and then you pay at the end of the month. One transaction on the card and then it gets divvied up.
That is how it currently works... I get one patreon transaction a month even though I have weekly pledges. That's part of what made this change so frustrating and greedy
Maybe they felt the cost of fighting fraud there would be too high? Scammer signs up as a patron to his own account with stolen credit card, gets paid, Patreon can't charge the (now-cancelled) card at the end of the month?
They could delay payments to creators by a month to combat this but then they're holding the funds for a month, which brings you back to the original problem of seeming like a bank.
This seems like something Stripe could address, maybe.
EDIT: Just saw the other reply that explained this is how it currently works. I'll leave my original comment up though
If you keep people's money and move it around for them, you start looking like a bank, and you get regulated like a bank. I think this is why online games let you buy tokens with real money, and the tokens sit in your account. (It's probably of critical importance that there exist no way for the tokens to be converted back into currency - which is why regulators were and are far more concerned about online gold farming than the game devs themselves. It's good to be the bank.)
Having worked many years ago at There, a now defunct-in-all-but-name Second Life competitor: you're absolutely right. We could let people buy "Therebucks," but it would have been illegal for us to let them convert Therebucks back to cash.
WRT Patreon, I'm 99% sure that this is the reason they didn't propose something like a "balance card" where patrons just give them $X and both pledges and fees get deducted from that -- since that money's being held and then paid to someone else, it could end up being too close to a "money transmission service." (I'd thought there was a non-zero chance that this was a motivating factor in this change to start with, actually; coming so soon after a huge investment round sure makes it seem like there was a condition to that investment that spurred this change. Christie Koehler wrote a good post about that on her blog, although I don't have the link handy.)
How do this work for services like Playstation or Steam, which have wallets like you're describing? Is it just the fact that you can't take money back out or what? (I have no idea about laws regarding banking/finance/etc)
I'm pretty sure it's the "can't take money back out" that's the deciding factor, yep. While I'm not positive, I think this is even true for (non-banking) government agencies -- I can load value on a transit card, but I can't take it back off as cash.
(Edited to add: of course, this means that Patreon could have done a balance card thing if they were willing to say "but you can't get your balance back if you cancel," but I doubt that would have won much more love than the per-transaction fee idea did...)
Those aren't the same, though. You can pay for a subscription with the App Store, and you can buy in-app "tokens" for games. But the subscriptions are being charged when they turn over each month (Apple will bundle charges together that occur on the same day, but that's it, AFAIK), and you can't exchange tokens back for cash. So Apple is never "holding" your money.
I was thinking more along the lines of buying iTunes cards to load money onto your "account", which you can then later use to purchase digital goods, at which point the funds are disbursed to the content creators, minus Apple's rake.
How is that different from putting money into a Patreon account, which can later be allocated to content creators, at which point the funds are disbursed, minus Patreon's rake?
Ah, I see. But I think that's still the same "one-way conversion" thing that avoids the issue, right? If you buy a $50 iTunes card, you can't spend $25 of it on iTunes and get the other $25 back as cash.
Patreon could certainly do that, but either they haven't considered it or--probably more likely--they don't like the idea. There could be practical reasons for not wanting to do that; a lot of people have talked about Patreon's problems with chargebacks, for instance, when people want to cancel pledges but they're bundled together with pledges they want to keep going all in one credit card transaction. In this balance card scenario, it'd be easy to have someone say, "Hey, I wanna cancel the monthly pledges I'm giving and get my balance back," and they could lose a lot of goodwill if they say, "Yeah, you can't do that." (While many of us would rather receive cash than gift cards, we generally understand that an iTunes gift card is something we can only use by spending at iTunes.)
You can go creative (though, I'm not lawyer, nor accountant):
have a minimum payment limit: 5$, for instance; if pledge is $1, then ask to pre-pay 5 units in advance (and be transparent why this has to be this way).
The problem if I understood correctly their previous strife is when you finance patrons across taxation boundaries. If they have to collect vat, they need separate transactions, even if that drived up transaction costd
> If they have to collect vat, they need separate transactions
At least in Europe that's not true. If I buy milk (6% VAT) and beer (19% VAT) in the supermarket here (The Netherlands), I don't have to split that in two transactions.
sure it's true for goods and services if sold to a single state, but if you sell across state boundaries you're required to register and pay your vat to each state where the sale happened and track those transactions along with the source
Yeah, they could have avoided this altogether by checking with their user base but this is a good response, although radio silence for five days is a bit crazy.
Shocking you community's members with a sudden change - no matter the size - is almost always seen as hostile and drives members away.
I recommend the talk[1] Joe Peacock of fark.com gave about the time they deployed a redesign unannounced and made their infamous "You'll get over it." post in the thread full of confused and angry members.
>Shocking you community's members with a sudden change - no matter the size - is almost always seen as hostile and drives members away.
But the size of the change matters. No matter how much warning they gave there's no way I would tolerate a flat $0.35 fee plus a percentage on a dollar donation.
What VC board of directors is going to support that?
Are we supposed to believe they didn't game the numbers out on this? That attrition wouldn't hold sway? I don't believe it, and any attempt by them to "I'm just a simple caveman, unfamiliar with your society" an excuse lies in high tension with "$100MM in funding."
I think the simplest explanation is that moving to focus on bigger-ticket patrons destroyed their brand.
Their user base includes both patrons and creators. Obviously patrons would say they don't want a price increase, all other things being equal, but they might be okay with it knowing that increase goes to creators. And asking a handful of high earning creators could have given them good feedback on why it's a bad idea.
It didn’t really seem like Patreon was making significantly more money from the new model, fees were higher because they chose to no longer batch charges. The fact that this belief is so widespread is a major testament to Patreon’s failed messaging.
I feel like Patreon is trying to please everyone, which in the end pleases no one.
If Patreon came out and said hey, we've built a platform for years, this is incredibly expensive, we need to show a profit or shut this entire thing down. We're going to start charging a bit more, AND give you this thing you've been asking for in return.
Then everyone would be happy. They need to follow the shit sandwich strategy of good, shit news, some more good stuff for you guys.
Instead they dropped the shit on the community, arrogantly hoping they'll simply eat it.
I give them leeway on the 5 days. I guess they could have said something general like "We understand the new payment policies are not what our user base has expected of us. We are formulating an in-depth response and will have it out in the next few days. We appreciate your response and patience."
It'd have been dangerous to say even that if they didn't know they could fix the problem in a satisfactory way, or they'd get blasted even more. But yes, they should have handled this far, far better.
I'm just sharing in here b/c I've always appreciated when others "peel back the curtain" to show the thinking behind decisions.
At the end of the day, it was obvious that we fucked up from the immediate feedback, but internally there was already a strong camp who felt this change was wrong, which greatly helped our ability to move quickly and plan out how we'd call this off (all the code was already in production behind feature flags).
On the data side, our churn ticked up, but was actually lower than we predicted and quickly returned to normal levels https://imgur.com/a/inFOE -- so the reversal was largely driven by the complaints of creators and patrons alike, and our own realization of how tone-deaf the decision was to begin with.
Speaking of which -- in my mind there are some obvious solutions to alleviating fees that didn't require moving the entire burden onto the goodwill of supporters. We're going to tackle a more comprehensive roadmap in the coming days and weeks (and talk to creators much more during this process), but if anyone is curious or wants to offer feedback, here are my thoughts:
* A big problem (that we arguably created ourselves) is a patron could pledge to a creator on the 25th of a month (granting a patron 5-6 days of access), get charged, and then get charged again on the 1st of the next month (granting the patron 30-31 days of patron-access). Pro-rating didn't seem like a right solution for the first charge since becoming a patron unlocked all the content immediately. So imo we should just (like a Netflix or any other subscription) have your first pledge grant you 30 days of access, whenever it was created -- and have this forever be your "anniversary date" of charge -- if you pledge Jan 25th, you'd be charged again Feb 25th.
* The question is around how we aggregate pledges if this patron pledges to another creator. If we say the patron pledged $5 to the 1st creator on the 25th of Jan, then pledged $5 to the second creator on the 10th of February, I'd want to charge the patron $10 on Feb 25, and in the receipt call out that you're paying for the 1st creator for the period of Feb 25-March 25, and for the 2nd creator from March 10-April 10 (because you'd have already paid for Feb 10-March 10 when you pledged to the 2nd creator on Feb 10). This way you're ALWAYS getting 30 days of access for every pledge you pay.
* Now that we can aggregate payments across multiple creators, I'd want to allow for the purchasing of multiple months/year at a time for a creator or creators, which further reduces fees -- additionally it allows creators to setup rewards (we're building this system out now) for when patrons have pledged a total of X amount or pledged for some time period.
* Finally, once we can pledge across multiple time periods, I'd love for cryptocurrency to be able to pay for patronage. Currently it's trivial for us to accept bitcoin via our Stripe integration, but we wouldn't be able to do recurring payments, and the ultimate thing that kills it for me is that creators wouldn't actually get bitcoin, but rather we'd have to convert it to fiat immediately. I'd rather patrons be able to purchase multiple months of patronage and creators have the option to convert to fiat immediately or hold actual bitcoin and participate in the wild ride that is cryptocurrency speculation :)
Ok that's all -- ideas are rough above, but that's what's on my mind lately -- happy holidays.
As you say, pro-rating first charge has the content unlock problem and "anniversary date" of charge defeats aggregation.
TLDR: Aggregate on a single day, but pro-rate the second month, not the first, so there isn't a "runt" payment up-front.
I start a monthly $20/mo pledge on Feb 15th. I'm billed $20 on the Feb 15th, same day. This covers one month, Feb 15th - March 15th. Let's say the first of the month is aggregation day. Come March 1st I'm already paid up through the 15th, so I get billed for the pro-rated $10 for the second half of March. Come April 1st and all aggregation days thereafter I can now be billed on aggregation day for the full monthly charge.
> TLDR: Aggregate on a single day, but pro-rate the second month, not the first, so there isn't a "runt" payment up-front.
That was my immediate thought reading this text. Of course it'll confuse some users, but since it's the fairest way, it should be the way to go. Also, just don't charge for the prorated period if the feed is going to be as big as the contribution (e.g. for a couple days for someone contributing $2 a month)
This is essentially the same feedback I left in the form: pro-rate the 2nd payment, and waive it entirely if it's too small to justify the fee. The payment processing confirmation email that Patreon sends out could put an asterisk next to a pro-rated pledge and explain what's going on down below for people who are paying close attention.
Pro-rating is fine, just make it a month+. So you support with one week left in the billing cycle, they get charged for 5 weeks. You could make it an option that creators set.
I'd really like to see a debit system: I could load up 6 months worth of pledges at once and incur only one fee (whether it's explicitly charged or done 'hidden', I don't care). Creators could choose how often to be paid, as well, so they control what kind of fees they incur as well.
Ah, if that wasn't clear from my post, I think debit/credit is absolutely interesting. Analogous to how Twitch effectively gives you more "bits" to send to streamers as you buy more in bulk.
Creators all run vastly different businesses so pro-rating is always a thought -- one thing it seems incompatible with is in the fulfillment of goods, where the creator takes on a burden of cost. It would be difficult to consider what the patron receives in return if they only pay out a pro-rated portion of a reward tier. Curious how that would play out in your scenario --
You could make your own cryptocurrency. Just a PatronCoin or something that people just buy a bunch of and plop in an account and they get sent to creators who can exchange them for USD if they so choose or sell them to someone for more just like any other coin. This could be an option that provides maybe a fee-less transaction or something. Since the patrons will be buying them from you you could mark them up slightly or something along those lines then you make your money up front instead of waiting for fees to roll in?
> A big problem (that we arguably created ourselves) is a patron could pledge to a creator on the 25th of a month (granting a patron 5-6 days of access), get charged, and then get charged again on the 1st of the next month (granting the patron 30-31 days of patron-access). Pro-rating didn't seem like a right solution for the first charge since becoming a patron unlocked all the content immediately. So imo we should just (like a Netflix or any other subscription) have your first pledge grant you 30 days of access, whenever it was created -- and have this forever be your "anniversary date" of charge -- if you pledge Jan 25th, you'd be charged again Feb 25th.
You could keep your charge date on the 1st of the month, and just not charge for that first month if they are charged up front. Let creators choose the length of their grace period: 3 days, 10 days, two weeks. Creators get paid, don't feel pressured to provide refunds, and patrons get a little sign-on discount.
Creators get paid, don't feel pressured to provide refunds, and patrons get a little sign-on discount.
This seems like the key. Instead of making any decisions about payment scheduling options, design your system to allow for all of them within reason, and give the creators a menu.
If you don't offer your users enough options, you will eventually be out-competed by a patronage service that does. Hardwiring your system to a model that happens to work for you simply ensures that this will happen sooner rather than later.
This is an interesting thought -- one of the other things we see creators do is physical rewards, which means there is a cost to them in fulfilling their pledges. Although I could see compatibility to your suggestion still b/c you just wouldn't get the physical good twice, one good would cover the period of the next month + the original grace period.
I think one essential consideration that's been lost in the discussion is that Patreon can be used in many different ways. For some creators, it may be a periodic direct exchange of money for goods and services. Each month a patron pays $X and receives $X worth of either physical goods or some kind of service. For other creators, Patreon is a tip jar, where the primary product is released elsewhere for free, and fans can use Patreon to give recurring tips/donations, and through Patreon they at most receive some bonus rewards that are generally not themselves worth the $X they paid, since they are mainly paying in order to donate to a project that is external to Patreon. This latter mode of use is the one I, as a patron, am most involved with, since I donate to multiple web comics. I'm sure there are other modes of use as well that I haven't thought of or seen.
The reason this is important is because a one-size-fits-all solution may not be possible. For the case of physical rewards in return for pledges, charge-up-front is completely unnecessary. The creator can just say that the rewards will go out after they receive payment on the first of the month, so someone subscribing in the middle of the month receives nothing until the month ticks over. For the donation case, charge-up-front is useful, but not for the reason you might think. The main point is to prevent freeloaders who pledge, view the exclusive content, and then cancel without paying a cent. In this case, creators would probably be fine with pro-rating the first monthly payment after charge-up-front, or even just skipping it entirely. It's all donations anyway, so the point is not to extract maximum value from each patron, it's to make sure each patron is paying an amount that they are comfortable with, so that they will continue to pledge long-term.
My overall point is that the platform that is Patreon is abstract and flexible enough to support a number of different business models, which may have different needs with regard to charge-up-front and other features. And to get an idea of the full breadth of those possibilities, I think you just need to interview a lot of creators, and I think you'll find that the usage patterns are more varied than you expect. At the same time, I'm sure there's value for patrons in having things like charge-up-front work the same way across different creators' Patreon accounts, so that they know what to expect when pledging.
I think there is a real benefit for creators of physical rewards when they aren't obligated to fulfill or refund pledges that come in at the very end of the month. They can begin and end shipping earlier, and apply late pledges to next month's rewards.
And as a patron, I appreciate receiving my December rewards near the end of December rather than mid-January.
This doesn't seem like a great idea. What if I just joined for the first month, grabbed all of the content, then dropped out? I mean, I love this idea for the Creators that offer premium content that I want but don't want to pay for but it seems like they'd get ripped off a lot.
The problem that charging up-front was created to address was people pledging money, reaping rewards, then dropping out before paying any money at all. With this system, if someone signs up for one month, then drops, the creator still gets paid for that month.
Worst case: a patron could game the system and only pay half as much as other patrons for the same content. That would involve pledging and canceling repeatedly every other month. That is not a likely scenario, and still infinitely better than the previous worst case: patrons paying $0 for that premium content.
One solution I’ve seen suggested: Pro-rate the SECOND transaction. The one on the first of the next month. Full charge for the first one.
You have ONE solo transaction, the rest are able to be bundled as normal, and the $1 pledges that make up half of my Patreon income (and, I’m extrapolating, a similar fraction of everyone's Patreon income) aren’t eaten up by that 35¢ fee.
> A big problem (that we arguably created ourselves) is a patron could pledge to a creator on the 25th of a month (granting a patron 5-6 days of access), get charged, and then get charged again on the 1st of the next month (granting the patron 30-31 days of patron-access).
A simple solution to the "patron pledges near the end of the month" problem would be to have two batching dates, one at the end of the month and the other at the middle, and chose the one farthest from the current date, so the initial charge of a pledge would always be for at least a couple of weeks. Though personally, I would find that solution a bit annoying; having everything aggregate into a single charge per month is very convenient for patrons.
> This is a remarkably direct and appropriate apology [...] many people lost a significant fraction of their support because of this change, and that won't necessarily come back
They could have restored all cancelled pledges and covered their costs for a few months. That would give creators money to pay the rent, and probably go a long way towards restoring relationship with patrons.
I don't understand why this .37 applies to every transaction. Wouldn't it make sense to charge the overhead once a month, with the actual dollar(s) being distributed as the user wishes? They should use the power of their platform (obviously nearing or having passed critical mass) to make it easier for prolific supporters while also maximising their paetron's income.
I think they had good intentions, but got greedy and lost sight of their overall goal
I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator. A lot of patrons feel like their payment is a donation instead of paying a subscription or water bill. Yes, some patrons+creators have a quid-pro-quo arrangement where payments unlocks content or extra services. However, many payments are just "appreciation" type of money. That is a fragile relationship and it was wrong to tamper with it by charging extra fees to the patron.
Jack was/is a creator himself so he should have known this dynamic and therefore predicted the bad outcome ahead of time.
Ideally, when you start a multi-sided platform, you want to get the economics correct from the very beginning so you can leave it unchanged. (E.g. Apple iTunes charges 30% since 2008 and it's stayed that way.) However, if you have to readjust the percentages, it's preferable to take it out on the sellers' side and not the buyers' side. When ebay started, the fees for sellers were ~3.25%. Over the last 10 years, it has crept up in increments to ~10%. All of those price increases were absorbed by the sellers.
If Patreon needs more than 5% to make the numbers work for a sustainable business, they need to take it from the creators and not the patrons. Patreon was riding on the "good will" of patrons making voluntary payments. It was a terrible miscalculation to destroy that good will and nickel & dime patrons with extra fees.
> Jack was/is a creator himself so he should have known this dynamic and therefore predicted the bad outcome ahead of time.
I thank that might exactly be the reason why it happened. From what I recall as a fan of their artistic work, he (& his wife) never asked for straight up donations, but either offered something in direct exchange (via Bandcamp) or the money went towards a specific project (Kickstarter).
> I think Jack at Patreon fundamentally misunderstood the nature of the relationship between patron and creator. A lot of patrons feel like their payment is a donation instead of a subscription or water bill. Yes, some patrons+creators have a quid-pro-quo arrangement where payments unlocks content or extra services. However, many payments are just "appreciation" type of money.
And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content (e.g. bonus/patron chapters), there's no exclusive/sale type arrangement.
>And at least for serials the "quid-pro-quo" arrangement is usually earlier access to content
Yes, when I typed out "quid-pro-quo", I was thinking back to the recent HN article about webcam women making money on Patreon. Patrons would pay $10 a month and for that, the women would do private chats, role play, etc. For that particular type of patron who needs to see a particular woman take her clothes off, the 2.9% fee plus 35 cents would be more of a "nuisance" fee and they'd just go ahead and pay it. Let's call this group, the SUBSCRIBERS.
However, a lot of Patreon relationships are not quid-pro-quo and it's a totally different psychology when patrons pay a $1 donation to "support an artist" with no direct benefit other than some good feelings or minor things like "early access to content" like you pointed out. In this scenario, Patreon is the online version of throwing money into a hat to show appreciation for the musician at a coffee shop. Inflicting extra fees on patrons damages this type of relationship. (E.g. "Twitter was filled with screenshots of people removing their $1 pledges.") Let's call this tip jar group, the DONATORS.
If SUBSCRIBERS are the majority and dominated the platform over the DONATORS, Patreon could have stayed the course to charge extra fees to patrons on December 18.
However, it's telling that Patreon aborted that plan which signals to me that the DONATORS are a very large and influential part of the Patreon membership. Jack said they did a bunch of spreadsheet models and surveys before announcing the fee changes but obviously, their assumptions about their members were way off somewhere.
(I'm oversimplifying with categories of SUBSCRIBERS vs DONATORS to illustrate a point. It's certainly possible for some patrons to be a blend of both psychologies based on how their pledges are split to various creators.)
This episode is a good demonstration of how the structure of production works: prices begin with what the consumer is willing to pay and work backward to higher-order goods or factors of production.
It makes intuitive sense that if there are costs generated by the arrangement, you go to the ones benefiting from the arrangement (creators) before you go to the ones already providing the funding (patrons). Maybe Jack's being a creator himself is what blinded him to this.
Exactly - I'm thrilled to donate $30-50/mo to the YouTuber FlightChops because he does some amazing, high production value work and I want him to be able to keep doing it. Even still, I only watch 1/3-1/2 of his videos simply because it's rare that I have 25-30 minutes to sit down and watch one. I'm happy to donate the money to him because he's doing good work and I spend a lot more money on much more pointless things. I don't view myself as buying anything from him. I wouldn't be upset if he went 2 months without putting anything out just like I wouldn't be upset if he put out 10 videos in a month (I have a cap on my donation to him as I think most Patrons do).
> ebay started, the fees for sellers were ~3.25%. Over the last 10 years, it has crept up in increments to ~10%. All of those price increases were absorbed by the sellers.
Isn't this a false dichotomy? It's just a matter of how you phrase it, no?
If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference.
>If the increase in seller fees is reflected in real pricepoints on eBay's market, it could work out as it really being the buyers paying the difference.
That would be true but that didn't happen. Final ebay auction values for stable items (e.g. books) did not rise by +7%. The sellers really did end up paying most of the fee increases.
Yes, some sellers tried to claw back the extra fee commission by adding extra "handling charges" to the total. That had limited effect because it made prices higher than (1) other ebay sellers that didn't add handling fees and (2) competitive Amazon Marketplace prices.
Also, Ebay lets bidders sort search results by "total price including shipping & handling" so adding handling fees just pushes your items down to the bottom of the list.
I don't get this. Eventually, it is just taking a cut from a transaction. What does even mean the seller is paying for it or the buyer?
Let's say the final price is 100$ and cut is 10%, so seller gets 90$ and buyer pays 100$. You could say the buyer is paying for it since the seller was willing to sell for 90$ and the buyer had to add 10$ to get the item. Or you could say the seller pays for it, since the buyer was willing to buy for 100$ and the seller has to give up on 10$ out of those 100$.
I really don't see the difference. It seems just marketing in terms of how you phrase it. I even saw companies saying things like: seller is paying 5% and buyer 5%, which seems just a way to make it look lower for both sides.
The distinct difference is that if the increase is absorbed by the sellers, they either leave their prices the same or raise them, but the buyer is always paying the amount listed. If the increase is absorbed by the buyer, they can see the cost and buy it, and then be changed the extra amount at the end.
While you are correct that one way or another the buyer will be paying more it is how you present it (buyer raises price to counteract the increase vs seller being charged more directly by the service).
It's hard to believe that Patreon didn't ask for feedback on this model initially. I'm sure they did, but my guess is that they didn't expect the blowback from people that depended on $1-2 patrons to have such a large impact on their image.
IMO, before Twitter/Facebook, this apology would've never happened. They would've continued to press on with their fee structure and it would've been yesterday's news.
The real question is - is this still a good move for them? Or should they have dealt with the blowback either way?
> It's hard to believe that Patreon didn't ask for feedback on this model initially.
From their initial blog post announcing this change:
> In preparation for this change, we ran experiments and months and months of research to understand patrons’ potential reactions and we found that many patrons were happy knowing that this change will send more money to creators.
Looks like a somewhat interesting user-testing glitch to me. Perhaps their sample of patrons wasn't representive, or when you sit people down and discuss a new feature 1-1 you can be more convincing than when broadcasting it to the whole world in a blog post.
I could also imagine that they didn't actually show the fee details, and just pitched it at a high-level.
As a patron, I'd be fine if Patreon just added transparency on fees, showing exactly how much reached the creator and how much went to fees, which is equivalent to "passing on" those fees. (They're effectively paid by the patrons either way, the only question is whether it's made clear what fraction of a pledge goes to the creator, what fraction to Patreon, and what fraction to processing fees.)
In my opinion, they made two critical mistakes here, and transparency on fees wasn't one of them. First, they un-aggregated charges, so that a $1 pledge costs $1.37, and ten $1 pledges costs $13.70. Second, they effectively increased all the pledges by individual patrons, rather than just being transparent about fees on the existing pledges. Effectively, they said "we're going to increase everyone's pledges by the amount of the fees (and hey, would you look at that, we get more money now)", rather than "we're going to show you exactly how much of your existing pledge goes where, without changing your existing pledge". Of course that led to a revolt.
> First, they un-aggregated charges, so that a $1 pledge costs $1.37, and ten $1 pledges costs $13.70
According to what I’ve heard, this was requested by credit card processors, because people would revoke the patreon charge, not understand why they’d be charged such a random amount every month.
Instead, they were supposed to charge every patron for every creator separately, and make it clear on the bill for which creator that is.
I fully expect that they will have to keep this unbundling.
Patreon, to my knowledge, has never said this. The move would be understandable if it were true, but they've instead offered different rationales (like "creators want to be paid out faster on new pledges"). If this were the reason for the new model, I can't think of a reason Patreon wouldn't publicly say so - it would've won a lot more sympathy.
> "creators want to be paid out faster on new pledges"
This is exactly the reason. The important follow-up question is: which creators?
Patreon supports two fundamentally different groups. One uses the platform for pure donations, where there are no exclusive perks to becoming a patron. This group doesn't care about faster payout because there's nothing riding on it.
The other group uses Patreon as a paywall platform. They care a lot about payout speed, to prevent people from joining quickly to gain access to the paywalled content, then canceling their payment before start of the next month.
The paywall group is where the money is, because Patreon's model doesn't provide the mutual assurance necessary to convince people to fund public (unrestricted, infinitely-reproducible) goods. And so, inevitably, the platform will cater to the paywall group.
Patreon should use a prepaid wallet for this group. It should continue aggregating for the first.
I'm happy to foot a 50c or so service fee per month. I'm not up for paying 35% service fees! That's outrageous and I'm confident someone else will start the right service and creators will simply move there.
I've seen no evidence or mentions of that particular rationale. They claimed they un-aggregated to support their "pay up front" model and start charging pledges on the anniversary of the pledge date.
They mention it below the original announcement, though they don't give any numbers.
> Not only that, but if you’re a creator on the monthly plan without the benefit of charge up front, you are constantly worried that your patrons are going to delete their pledges before they’ve paid.
That doesn't say it was requested by credit card processors. As I understand it, the concern there is that they don't want people to pledge, get access to patron-only content, and then revoke their pledge.
> Looks like a somewhat interesting user-testing glitch to me. Perhaps their sample of patrons wasn't representive, or when you sit people down and discuss a new feature 1-1 you can be more convincing than when broadcasting it to the whole world in a blog post.
Or perhaps we're all just a raving mob waiting for the right inputs, and early sentiment by influential individuals actually shapes our thoughts and actions far more than we like to admit.
Chapo Trap House has exactly one pledge level at $5+, which means this change would have probably benefited them financially. They'd be unlikely to lose many patrons upset about having to pay $5.50 a month instead of $5, and they'd be getting 3-5% more from each pledge due to no longer having to pay transaction fees on their side.
You'd be surprised how many people would be upset at $5.50. Especially since that $0.50 is going to be multiplied by the number of creators a single patron supports.
For me it was enough to put "just pay an annual lump sum to my favorite creators and drop the rest" on my TODO list; I'm glad Patreon came to their senses.
> patrons were happy knowing that this change will send more money to creators.
That could depend on how they asked patrons.
If I was asked if I were in favor of more money going to creators, I would say yes.
If I was asked if I were in favor of paying more to make this happen, I would say no. If I want to send more money to creators, I would opt for a higher patron tier.
Well, something that's gotten elided in a lot of the outrage is that moving the transaction fees from the creators to the patrons would have given creators 3-5% more money on the same amount of pledges. And while it seems "no duh" to point out that a $5 pledge is literally worth five times what a $1 pledge is, in terms of revenue, that means that many creators could have lost a surprising number of $1 pledges and still come out even (or even slightly ahead). I ran the numbers for several Patreons, big and small, based on what I could scour from Graphtreon, and the amount of money most creators lost over the last few days would have been largely offset by the money they'd get back.
I'm not saying that this makes the change a good idea, or that it was communicated well, or that there aren't some really interesting business dynamics that are likely to come up one way or the other that will piss off creators. (There are only six creators on Patreon who have more than 10,000 patrons as of now; to earn that $450M valuation, Patreon may need creators who have hundreds of thousands of patrons.) I'm just not convinced this would have been the Patreoncalypse.
If patrons on average adjusted their pledges under the new fee structure such that they were paying about as much money as they were before, creators would end up with less money on average, because the new de-aggregated fee structure results in higher fees as a percentage of the total amount paid in almost all cases.
> something that's gotten elided in a lot of the outrage is that moving the transaction fees from the creators to the patrons would have given creators 3-5% more money on the same amount of pledges
Patreon really tried to make this "point". It is not actually valid; "amount of pledges" before the change is not comparable to "amount of pledges" after the change. Measured as a percentage of "money paid by patrons", revenues to creators fell -- they rose when measured as a percentage of "pledges" because the new fees weren't part of "pledges" while the old fees were.
Yea, could have been a botched user study. I've also seen situations where user studies were carefully crafted (and the questions worded) with a desired conclusion in mind, often in order to justify an executive's already-made decision. Not at all saying this was the case here, but that happens too.
In addition to what others have said, this is almost surely a messaging issue. How you frame the survey and outcome is critical to getting honest feedback. I bet the surveys didn't detail exactly how things would be implemented and how it would be presented to the patrons. Instead, if you frame it as potential solutions that get your favorite creators more money, the response would certainly be positive.
They ran a poor test and / or the internal politics were always going to prove out a certain result. There is value to qualitative research and I doubt the answer was to do a better job of A/B testing.
> Aggregation is highly-valued, and we underestimated that.
To me, at least, this is the core issue. Patreon is supposed to be the way to support creators in the internet age.
If they're going to make a strong many-to-many funding model impractical, then why should anyone put money into them as opposed to conventional charities? An NPR pledge drive will sign me up for a credit card monthly auto-payment, but that just doesn't really get me excited. Sure, it's a good cause, but good causes have always been around.
This is critical because of the fact that so many of the creators are actually doing bleeding-edge things. The tiny sub-categories of creators I fund didn't exist 3 years ago. A $1 donation isn't just a signal from the supporter to the creator. It's a signal to the media, it's a signal for potential book deals, all kinds of things. Those numbers have value. By making those contributions radically financially inefficient, they are risking a tipping point that undermines their core value proposition. Even worse, it hurts the frontiers of creation that we cared about in the first place.
Hopefully folks continue to migrate to them. It's pretty clear Patreon is only looking out for themselves at this point, and the "sudden" change in direction is because their bank account started to bleed.
Every enterprise has to earn a decent amount of money to survive, let alone succeed in a financial way. They'd just start out as a NGO otherwise.
WRT dumping Patreon and the like, I'd rather see community-efforts and enterprise compete. That has lead to some very high quality products from both (e.g. clang vs. gcc, chrome vs. firefox).
I doubt it was the feedback that they heard. I think it was the money.
I’m willing to bet that this rollback is because Patreon leadership and Sr. Managers woke up Monday morning, took a look at their metrics and KPIs and nearly had a heart attack. It probably looks like a nice upward trend for a long time then a massive spike down after the announcement.
Not sure it was graphs. I think #4 creator Amanda Palmer posting in open revolt asking her patrons to sign up for email so they could follow her somewhere else might have helped:
This isn't the Enterprise. Did you take a look at the people who run Patreon? I'm sure they are more shattered that people lost patrons than the fact that Patreon themselves lost money. They had good intentions - to get the creators paid 95% but they executed it poorly.
Maybe, but if you poke around Graphtreon for a while and just look at the dropoffs in terms of patron counts and revenue from the time of the announcement until today, they're noticeable but they're not "OMG our world is on fire." (It's useful to click "Start on Zero" when that option is there, so you have a better visual representation of the actual drop.) Patreon could certainly have afforded to wait and see what happened after the change rolled out.
This is certainly a business decision, but image is part of their business, and part of their image is, ostensibly, listening to creators.
> I have a feeling that people who lost a lot of supporters won't see a 100% recovery.
That's probably not a bad thing overall. I'm sure people that stopped pledging money during this period will get an email, and have a chance to undo the action. That said, there's quite a few people getting a couple bucks a month from me that I don't really have any reason to support anymore, but haven't taken the time to clean out. That's not an efficient market. If I had stopped pledging to some of them because of this (I didn't as I didn't see a problem with this move), I wouldn't feel compelled to pledge again, and that's a good thing, as right now they are only getting money from me because of my laziness.
I'm not talking about people that I still want to support on principle or because I think they do cool stuff even if I'm not consuming it. Those people by definition are worth my money, so I would likely sign back up.
> I only lost a few, but it already has me poking around at different options for the future.
Same here. Nobody is going to trust Patreon not to do something equally damaging again. It's nice they've reversed this, but I really can't think of anything that will bring back the trust they just trashed.
From the contributor end, I no longer trust Patreon. Their announcement email was way too much obfuscation and didn't include the bottom line up front: that my $X/mo pledges would cost me an additional service fee starting January 1, and that I would automatically be levied these fees.
That is entirely my issue with it too. They said that creators would start getting almost all of the pledged money instead of just a share of it; what they "forgot" to mention is that this is purely because they redefined what a pledge means. They silently redefined it from "the amount of money I pay per month" to "the amount of money I pay per month minus fees".
Creators would get more money of course, but purely because all patreons would start paying more money. They didn't mention that either.
This is an admirable response, but I feel like Patreon is just one of the first approaches towards getting rid of the advertising revenue models so prevalent on the internet today, which should definitely be our goal. We can't allow greedy advertisers to hijack online services, as is the current case for YouTube.
I hope that in the future content creators won't have to depend on a single company which takes decisions purely based on their own profit. The marketing team can spin this anyway they want, but ultimately as a company that is their goal.
For lack of a better term, microtransactions and some form of digital currency should solve this problem.
I'm not a fan of the Brave browser, but they introduced a micropayment system last year[0]. It seems to have been launched with Bitcoin support, but maybe this has expanded (as it should) towards other currencies.
Can someone share their experience with Brave Payments, or with similar systems?
This seems like the only logical way to go, from a technology standpoint, and we're not that far off from reaching it.
Creators have their digital wallets, payments are made in the background (with very limited user interaction, or none whatsoever) after a certain smart contract is fulfilled between creator and consumer, and the funds are transferred with very little latency.
The content creation service that launches with this will be huge in the near future. Bonus points for open sourcing it and making an open system that all content creation sites can reuse.
I really liked the idea of websites mining some cpu-mineable cryptocurrency in place of having ads there. I suspect that might be a more widespread solution in the future. Maybe even in the long term, the mining will be done through webGL or some other API so that the browser can take advantage of the host's GPU/GPU equivalent.
So instead of paying cash, I'm paying through my electricity bill and my children's future (since all power where I live is fossil)? No thanks. I'd rather just give them money
Your children's future? Besides that we're continually moving towards cleaner methods of producing electricity, that's blowing it out of proportion. I highly doubt the additional energy consumption would be much more or even more at all than the difference between using a brand new or 5-year-old device that was less energy efficient.
Ads generate sales that does translate to real world value.
Mining generates distributed consensus on transactions. But why should all computers in the world participate in that?
(Obviously, this is best done by specialized hardware)
Also, do you the imagine a future where people make content for the internet inorder to be miners???
Why not just invest in hardware, rather than content for the web.
Also power requirements would be crazy, most devices are battery powered today.. mining is crazy.
Value for the user: no ads and the site gets supported for "free" (the user is very unlikely to care about or even be aware of the electric use and device wear)
Value for the webmaster: the value of the mined coins, obviously.
Is there a certain definition of value you're using that these don't fall under? Why should all people in the world participate in the distributed process of counting out the correct amount of cash in person to each other?
Why doesn't every company just invest directly in finance instead of doing what they do? I don't really have an answer to that, but if user-end mining generated more revenue than ads then website hosts would just switch over to it. Imagining a future where people make content in order to be miners, or indirectly they make content to make money, seems fine, I already support some creators on patreon.
I think the power/cpu requirements for lower end devices could be worked out in time.
I'm a believer in this approach as well. in-browser proofs of work can serve as anti-bot/scraper/spam filters as well
Coinhive has already been successfully deployed to mine $XMR in browsers. I haven't used it yet, but they claim to get pretty close to native CPU performance also which is pretty incredible.
Slower clients can likely just be subsidized by faster clients since I imagine the return would be higher and more consistent than traditional ads. It's already been done on a few sites, so you could look into what they did, but I forget where.
I feel like the potential for abuse would still be a better tradeoff than the current situation of ads that try to download malware or redirect you to phishing sites.
All current consequences are simply because the system hasn't been fleshed out and perfected enough.
It's way too early to judge the approach based on current implementations, because of flaws in those implementations.
But consider a system where the user is always in control of how much resources the web miner is consuming, via say, specific quotas based on domain, content creator, etc., and that there could be little risk for the miner to hijack those resources.
This is a technical problem that can be easily solved in future revisions.
That said, I'm not sure if mining is the right approach, simply because the proof of work is completely arbitrary for some currencies (e.g. Bitcoin) and has no real value.
With content creators it's clear: they provide the value, the content consumers want, and set the cost accordingly, and the consumer simply decides to pay for it. It's simple, and no client side mining would be required.
Mining is only necessary to lower the barrier of entry for the consumer, since they wouldn't need to have a digital wallet with existing funds. But in the near future owning a digital wallet will be just as common, if not more, as having a social media account, so this wouldn't be necessary for the long term.
> That said, I'm not sure if mining is the right approach, simply because the proof of work is completely arbitrary for some currencies (e.g. Bitcoin) and has no real value.
Exactly.
> Mining is only necessary to lower the barrier of entry for the consumer,
Even now there is a barrier of entry, which is the processing costs. The goal is to lower them, not to force burning the more hydrocarbons for every transaction.
If you see major issues then you should say what they are. I think trading some battery/mains power and a bit of wear on the device for using an otherwise ad-based service sounds fine.
First consider how much is "some battery." E.g. do you really want that more computing work allows higher payments? Bad luck paying anything not cents when you don't have your computer or a mobile plugged in the wall. Who's "richer"? Who has a bigger computer. Etc. Also see my other comment here.
Not having to put in money directly is one of the advantages of the approach. Aside from just convenience, hiding the true cost in this way will make it a lot more palatable for most people - if the device loses a bit of battery faster or gets warmer, it's not a big deal, but being forced to think about it in terms of direct payment will elicit more reactions of opting to just not go to as many websites.
If you just want for user to make it "palatable" you can produce the solution that doesn't involve mining and be "palatable." We are already having our batteries too drained by ads, that's a primary reason why I install add-block on the mobile.
This brave payments system seems like an awesome idea! Though I'd really like to have it as an extension for Firefox than have to use a whole new browser.
"We took a calculated risk, announcing the set of changes, and seeing what the fallout would be. The fallout exceeded the threshold we set, so we're now going to issue the apology we had prepared in case that situation was reached."
A company having foresight of a potential explosion and a contingency rollback plan in place before embarking on a major product initiative? That wouldn't be the cynical case, it'd be a goddamn miracle.
I'm not sure why that requires cynacism. It is a business, after all. I would rather them do this than blunder along blindly with policies that might cause them to fail entirely, and adversely affect all those that rely on they far more than this did.
Middleman takes their users for fools two times in a row after bottom line threatening shocker. Is it time to cut back on the greed? Proceed to find out whether they sobered up after the outrage
That's not cynicism. let me tell you a secret. Businesses are there to make money. It's surprising, I know.
Another secret while we're at it: adults run businesses, and have strategies that they hope are rational. Again, incredible, I know; I though companies were run by impulsive 14 yo with black and white minds.
I'm scratching my head wondering why they didn't just take the obvious route of offering an optional 'also pay the processing fees' option like paypal does. Phrased in a way that lets the patron know that their supported creators are getting a larger cut as a result. They might have been pleasantly surprised by how many people will go for that as long as it's voluntary and the fees are reasonable.
And I really like their model. You sent a fixed amount of money to your account once and then distribute it over time as you like. For a 100€ load this is 60¢ in fees. Withdrawing euros to a SEPA bank account is free. Totally awesome!
I don't understand why they had to make the change global. Why didn't they just do this for e.g. patrons paying more than $10 (or whichever amount makes sense)? I support a lot of projects but only the minimum of $1-2 per month/project and suddenly they were all $2-3 (multiplied by 10 projects is a huge tax).
My beef is with aboloshing payment batching, which is the only wholesome value proposition of patreon (i.e. strictly creates or spreads wealth). Without that it's just another locked-down social graph.
The goal for this change seemed to be at-cost fee payments with no loss or profit, and to prevent chargebacks from customers who didn't remember/expect a payment total or payment date.
The first goal is acomplished with the patron-pays-cc-fee model, and the second one might be solveable enough with UX tweaks.
Showing how the total is calculated in a big, ledgible table, perhaps after every new pledge, seems like a useful start. Maybe even showing a calendar, granting the ablility to change the monthly charge date, and sending/offering reminders or adding an export-to-calendar button.
Of course those may be overwhelming to users, so maybe KISS and find out what can be improved later.
I mean, how many ways can you say "To make this viable, we need more money. That can come from you, or it can come indirectly via fees to your patrons. Which would you prefer?"
I don't think any of the blog posts Patreon made said that?
What they said was: "We're changing our business model to make every subscription a separate credit card charge, instead of bundling all subscriptions into one monthly charge. The credit card processing fees will be radically higher, so we're passing them on to you, but we won't make any extra money from this ourselves"
Personally I found their decision pretty baffling, as in my book the monthly aggregation was the main thing differentiating their product from Paypal, Stripe and suchlike.
Agreed. I can easily afford the fees they were adding, I'd be totally fine bumping my single monthly payment by 3% + $0.35, that's pocket change to me. What bugs me is the clutter/volume (mental, email confirmation, and credit card transaction) associated with splitting my convenient single monthly payment into more than a half-dozen separate charges throughout the month, depending on whether each creator's campaign is on a monthly or per creation basis on top of increasing each of those sub payments by that same fee.
Bundling things together is usually frowned upon by credit card companies. Especially when that money is going to end up in a bunch of different places.
It makes anti-money-laundering practically impossible, because all the payments might contain some legitimate component together with some fraud component.
Also, from the user perspective, if a user is unhappy with any one of the things they are patrons of, they might ask the bank to do a chargeback. That would make their chargeback rate much higher, which is also bad for business.
Yeah, the charges need to accumulate throughout the month and then fire off on the first of the following month. That will cover both monthly and per-creation payments, and it minimizes the number of transactions that Patreon has to pay to process and the number of transfers they have to make to creator accounts.
I understand that people want their money right away, but if they're allowing payments as low as $1, then they need to limit the number of transactions somehow.
Their big blog post actually explained (IMO) fairly well the logic behind their decision. Patreon works differently from many subscription models which have you on a monthly basis pinned to the date you started. If you start Netflix on the 15th, you'll be billed on the 15th each month. Meanwhile if you start a Patreon pledge on the 15th there's the issue of whether you're charged on the 15th for the first month or on the 1st of the next month. And if the latter, what about pledges that unlock additional rewards, can those people cancel before their first actual payment?
Essentially they have a lot of complicated problems to solve, they just picked a solution that introduced a whole lot of new problems for the very people who provide the life blood for the service.
So Patreon doesn't want to be in the money aggregation business where they have to front a little bit of money and do some time matching finance? Then what is their business that's possibly worth 5%? A marketing platform?
This is discussed in the original announcement [0]
Essentially, some creators were having a problem where their donations dissapeared at the end of the month because the donator canceled before making the payment. To rectify this, Patreon introduced a pay up front system, where the first payment happens when you pledge, and all future payments happen at the beggining of the month.
This introduces a problem when you pledge at the end of the month. In this case you could pay on the 29th when you sign up, and again on the 1st when the monthly pledge ticks.
Charging seperatly would enable them to charge you when you first pledge, and monthly, starting with your pledge. So in the above example, they would charge you on the 29th of each month.
There is a subset of creators who are trying to use Patreon as a paywall for their content. This change was entirely about trying to make sure that nobody could ever sign up to support a creator, get access, scrape all their paid content, then stop supporting that person without ever being charged.
Unfortunately changing the payment model for EVERY creator site-wide completely breaks aggregating multiple payments into one charge. Which, as a creator, is the entire reason I'm on Patreon in the first place - I could just set up a Paypal widget and try to get my fans to subscribe to that for about the same fees, minus the 5% to Patreon.
Or at least that was the argument they gave, there are multiple theories about why they were doing this (those new VC loans they were crowing about last month wanna see some profit, maybe aggregating micropayments is brushing perilously close to laws designed to fight money laundering, they're trying to look more profitable before selling themselves, they just want more money baths) that are rather less charitable than "they got obsessed with solving this one problem caused by people trying to use Patreon in ways it was never designed for and threw the baby out with the bathwater".
The subset of creators who DO use Patreon as a paywall service seems to be the majority! Patreon pushes perks as a key part of their model, and it's always easier (thought not as ethical arguably) to restrict otherwise shareable content than to offer something naturally scarce (dedicated time, physical goods) to patrons.
But even though most creators do this artificial-scarcity paywall thing, only a small minority of them probably have even the slightest worry about freeriders. Most focus on continuing to be productive and don't stress out about the horror of some freerider "stealing" by getting around the paywall and then not paying. It's a pathological worry to freak out about that. It's healthy to just focus on all those who are happy supporters and want to donate.
Patreon screwed up by focusing their attention on the noisy minority who were not only using paywalls but demanding that Patreon make the paywalls stronger.
And while they come up with a non-stupid way to deal with charges around stronger paywalls, they show no indication of stepping back from prioritizing strong paywalls.
According to the expanded initial blog post, it would not have been all at once, but over the course of a month, corresponding to when you created a pledge.
Not a good model imo, but at least it wasn’t totally insane.
No, that "not all at once" is precisely what made it insane.
All at once is good. Their credit card fees have a percentage component (1.9% for Stripe) and a fixed, per-transaction component ($0.30 for Stripe).
All at once means that fixed component gets charged once per month. Moving to a one-transaction-per-pledge model means that fixed component is multiplied by the number of pledges, which dramatically increased costs for users like me with a bunch of small ones.
Well, I would have considered "charge all at once" combined with "charge for every individual service charge" to be insane.
But... semantics. Charge once and apply one service fee would make a lot more sense.
Also, for online transactions, Stripe's percentage is 2.9%. Of course, there's a lot of caveats to Stripe's pricing, so I'm sure the actual charge amount changes.
I'm glad they're reversing these changes. But these developments scream loud and clear that no creator should ever rely too heavily on any single platform. If I was a creator I would certainly still be on the lookout for alternatives.
I would urge everyone to open up a Liberapay account on the side. In the long run Patreon only has one direction to go to, thanks to moral policing and other shenanigans.
This is probably too late for a lot of creators, so hopefully Patreon feels the pain of this boneheaded decision for a long time to come.
Several of the people and projects I sponsor have moved to alternative services, and I followed them. In the future, if a competing service is offered I will favor it over Patreon.
One went to LiberaPay, another set up something called SendOwl, and a third just put their product on itch.io.
There are actually a lot of different ways to setup this kind of funding stream, depending on what you're looking for. If you're looking for "Patreon, but not Patreon" then it gets a little more complicated.
One alternative is Podia. We've been getting a lot of signups from Patreon users over the past few days. We don't play games with fees (no transaction fees at all, actually, only what Stripe/Paypal charges). Here's more on the differences: https://www.podia.com/patreon-alternative If anyone wants to give it a shot, feel free to reach out to me (Spencer, the founder) directly in the live chat widget :)
You mean they didn't look at the stats and see how low the average pledge is, and the many, many users who pledge $1-2?
Whilst it's a nicely worded apology, they F'd up being greedy, and are now trying to recover by maintaining that closeness with the users. I'm not buying it.
I understand why they need to do something different. It's no mistake that the rule was $0.35 plus a percentage. All the credit card companies that people use to pay with Patreon charge the retailer per transaction regardless of the size, and it's usually $0.20 to $0.35 plus a percentage; debit cards can be as high as $0.50 plus a percentage. That has to be the motivation for this. So the first $1 you give is only like $0.65, and that's just the payment processing fee. It also costs money to transfer the funds to the creator's account , and then Patreon gets 5% of what's left (https://patreon.zendesk.com/hc/en-us/articles/204606125-How-...). Almost all the money has gone to fees.
Even if you run the charges once a month, this is a fee for each Patron and another fee for each creator. If you're a patron and you're giving just $1 to just one creator, you're probably giving them like $0.10 and Patreon a big fat penny.
This is why so many stores have a minimum transaction amount for credit cards. If they don't do that, they can lose money on fees because the profit margin on what they're selling doesn't even cover the service charge.
Patreon originally aggregated all payments into a monthly lump transaction to Patreon. The new fee structure is consistent with them desegregating the payments but it is not clear why they would do that.
One theory going around is that having individual payments reduces their chargeback rate because the number in the credit card bill matches the individual contributions instead of the lump sum. Another theory going around is that separate payments would allow payments to be immediately sent to the creator instead of waiting until the end of the month. But Patreon hasn't been clear if one of these is the reason or if it was something else.
> The new fee structure is consistent with them desegregating the payments but it is not clear why they would do that.
From what I've read, the credit card companies are complaining about partial refunds, which apparently occur much more often with Patreon. If I've got 10 creators I'm supporting for $1 each, and I decide I need a refund for one of them, well, Patreon only ran one $10 transaction. Now it's kind of a pain in the ass for the credit card company because I'm telling my credit card company it should be 10 transactions @ $1 and I want to refund $1, but what they see is one $10 transaction.
Debit cards are subject to the durbin amendment (https://en.wikipedia.org/wiki/Durbin_amendment) so the fee for these micropayments is $0.21, or $0.22 rounded up. Debit cards have percentage fees formed on the basis of points, or ten thousands of a percentage.
What is missing from the blog post and from comments here as well is something I saw on Twitter: if they unbundle and charge on the "anniversary" of the join date of everyone then anyone shipping physical is utter screwed. They used to have a single day (say, the 6th) when they shipped out to everyone who paid and that was it. Shipping every day for small creators doesn't work -- they need time to create :)
I wonder how long companies will be able to do stuff like this.
I know Hanlon’s razor but lately I get the feeling that most of the companies try to push shitty stuff on their customers and in case of getting caught with the hand still in the cookie jar they apologize profusely and move on to another one.
I refuse to believe that it was innocent accident. As other commenter pointed out this was discussed for a long time and most likely WAS an educated decision. The only thing that was underestimated here is amount of outrage that followed.
You had one job, Patreon: aggregate payments to eliminate fixed transaction fees for the people exchanging money through your platform, replacing them with a percentage fee. You set the percentage too low and then, instead of simply raising it, you tried to stop doing the one thing that made you useful: eliminating fixed transaction fees. It's a pretty good corporate apology, but it demonstrates a surprising lack of understanding of their business.
One thing that bugs me about these types of 'we hear you loud and clear' statements is the stylistic use of the 'corporate first person plural'. I feel the "we" in this contexts sounds a lot less authentic than a first person singular statement from the founder / CEO.
While companies certainly do have a specific and sometimes even unique culture, do we really think that _they_ have "core beliefs"?
A patronage/donation model has no reason to worry about pledges being cancelled early since there no purchase or expectation of goods. Sure some people might have done that but it's already a community willing paying money to support people they liked so it seems that behavior filters itself.
Unless they were trying to become a real commerce and subscription business, it seems rather disingenuous to claim that as a reason, and it looks like that was the core foundation because taking that away leaves little more than saying that the existing system was "confusing", which could've be solved differently. Also I'm not sure how individual payments with even more fees could be less confusing than a single payment and fee per month but this is a rather unfortunate incident for all the patrons who have to suffer from the loss.
I wonder whether this rollback was caused by them actually listening to their users or the huge dip in revenue as people stopped donating.
Well. Either way. This looks like a good thing. Until the VCs start again to pressure for more revenue. Let's see what happens then. Probably higher fees for the creators.
No, they’re making significant losses, and according to rumors, credit card companies are seeing too high refund rates with Patreon, and are asking them to either fund that, or unbundle the payments.
I wonder if this came out of the SF/Bay Area style growth after taking on investment? I haven't heard if they've been hiring a ton lately but I saw this happen with SurveyMonkey when we went from 100 employees to 1500.
The first 100 understood EVERYTHING about our customers and the product. Something got lost in translation when we grew to 1500 in a few years.
I wonder if they have scaled out to the point where they are hiring people who don't quite understand the product but are just a butt in a seat?
I think a major issue that many commentators here don't touch is the idea that Patreon plainly lied to its users. They said "more money will go to creators" when the real action was "we're charging more money to users with barely any more benefit to creators". Everyone understands that $1 going to $1.37 is "more money going to Patreon" and the stated benefit was spin. It didn't make me change my pledges but I was shocked by the dishonesty.
Good sports. I have about $50/mo going to creators on the site. I would follow wherever they went. Hopefully they managed to keep this stuff from disrupting too many people.
A blog post as an apology? I can picture the CEO in a meeting, "Hey if this doesn't work out, we can just draft a really sincere sounding letter to our creators."
You should suggest the alternative response for the less imaginative of us, because what else could they do in response? It just comes across as snarky for people to hate the changes and dismiss them again when they rollback the policy everyone hated.
This is an unprofitable startup here, so I don't think they can start giving out money to everyone who lost support.
Businesses make mistakes, and I'd think it would be a positive when they listen to their users.
Not surprised. There's no way this made sense, and they already freaked out tons of people who cared only partly about the fee and partly about the feeling of helplessness when you rely on a for-profit platform that can change at a seeming whim and pull the rug out from under you.
Pulling back addresses the fee concerns directly and gives some feeling that the users can have some influence, although they'll stay wary.
None of this changes what drove the fee issue in the first place: Patreon tries to present itself as a donation platform but is primarily a paywall service. Since most "creators" use it to easily manage restricted access to shareable perks (i.e. perks that are non-rivalrous in nature and could be shared with the world), they will continue to have to serve that freemium business model.
As everyone on the internet eagerly pointed out the moment this was announced, you can get a best-of-both-worlds solution by simply prorating the second month.
Nothing actually eliminates piracy issues; it's easy to discreetly mirror an RSS feed, for example. You're ultimately relying on the honesty of the vast majority of your patrons, a strategy which has worked out for Patreon creators very well thus far.
Totally. The point is that the Patreon folks made the stupid decisions about the new fee because they were blindly thinking about effective paywalls. If they had been thinking holistically about things, they wouldn't have been so dumb. Of course, there are better ways to handle even the paywall issue.
The stupidity was clear when they wrote “if you’re a creator on the monthly plan without the benefit of charge up front, you are constantly worried that your patrons are going to delete their pledges before they’ve paid”. From that, we can see how they were just hearing irrational paywall worries from people and responding irrationally around just trying to please those requests / address those worries.
Those worries should have been recognized as irrational. Patreon ought to be saying that this is about honesty and people who want to support you and that they aren't in the business to try to stop all possible freeriding, they are working to help everyone who actually wants to support the creators etc.
The For-Profit thing has continued to irk me about Patreon and Kickstarter. Why haven't we seen a 503(c) come out with these services so I can make my contributions to the arts as a tax-deduction?
If I donate to the local theatre, art-in-the-park, PBS, etc. then there is a non-profit organization accepting and then distributing the funds.
The reason YOU haven't seen them is because VC money funds marketing and thus network effects. It's like so much else in our economy. The winner is the best marketer, not the most deserving.
All of the creators I support use Patreon as a donation platform.
They paywall some stuff, but not nearly enough to justify the price.
This might just be selection bias though, as I mostly come to them through youtube; which means that the ones I see tend to release their work publically anyway.
Sure. But Patreon as a platform encourages extra paywalling, and in this fee fiasco they had blinders on, looking at those who were most concerned about effective paywalls.
I happen to think that paywalls are fundamentally bad and that we should reject them on principle even when they are used modestly. Certainly the worst of that approach is not the folks you support.
I encourage people to donate to the people who don't hold anything at ransom behind a paywall, the ones who release everything non-rivalrous. There's still other perks like thanks or custom stuff that's inherently scarce and can be limited to patrons without using paywalls.
The thing everyone is missing is that you CANNOT do $1 credit card payment at scale. Patreon has been taking a hit for every single dollar pledge made. They dont want your $1, it costs them too much!
Patreon decided that they were SICK of supplementing all the $1 pledges, and added a new fee schedule.
The internet, was too short sighted to care about this economic reality, and so they were forced to burn with fees once more.
And that's why the older model worked better: a donor would pledge $1 to twenty creators, and would get charged one $20 transaction fee at the beginning of each month.
The creators ate the Paypal fee (usually 4-5%), and then Patreon collected an additional 5% for simply coordinating these exchanges with their service.
I doubt there were many people who only pledged $1 to one creator and that was it. But if that was truly a problem, then sure, one 35-cent charge per month would be reasonable.
Thank you for explaining. I never understood the aggregation of donations process.
Maybe a majority of their customers are paying $1 to 1 person?
Are there really people that give away x $1/month to multiple random internet folks? I don't get it.
Hi, I pay $1-$3 to about 10 creators, plus some higher pledges.
A $1 pledge, to me, is a way to say "I enjoy your content. I want you to keep doing it, instead of needing to quit and get a 'real job'. And I use adblock so you aren't otherwise getting any benefit from my enjoyment.". When 1000s of other people make the same $1/mo decision as me, the creator has a stable income, and they create more and better content, which is good for me.
I like to listen to podcasts a lot, which is pretty common. Typically I'm going to consume a fair number of individual podcast episodes during a month, but they're all from a wide variety of podcast creators, many of whom I'd like to support on Patreon. I'm not going to pledge $10 to every single podcast I listen to, because then I'm paying hundreds of dollars a month for podcasts. I also don't want to send a bunch of money to just one among the many podcasts I like. I'd like to spread out my support across the different content creators, each of which I feel has given me something of value.
Uh that's the point of Patreon. I like a newsletter, I give them a buck a month, it's a popular newsletter, so it's not unreasonable to say if only a few thousand people give just a buck then the guy has made a living out of the newsletter. And so on. When throwing in a buck I am like "surely there are many others, hopefully this stays alive but oh well if not".
When throwing in five bucks or more especially per creation I am like "you are one of my favorite musicians please give us more" (and then I put in Taylor Davis' Carol Of The Bells and just feel good).
Are you serious? The Internet shouldn't have to know the financials of a private company to comprehend a significant change to their fee structure. If they did need to know it, Patreon should provide explanation (they did not). This is 100% Patreon's fault.
Patreon have built a kind micropayments platform, but suddenly they decided they weren't happy with being a micropayments platform anymore, charging PayPal-level fees on transactions, and many more artifically inflated transactions at that. We already have PayPal, we don't need Patreon as a second one which isn't competitive.
In 2017 it ought to be basically impossible to flatten a typical server dishing up static content. I suspect all that is getting hugged is the ads and tracking...
Quickly browsing the meta tags, it's a Wordpress site, likely running on a tiny bit of hardware (possibly not even multiple servers). Those are easy to flatten.
Users who were upset with the change need to reckon with the fact that Patreon isn't profitable and that it's likely that it's impossible for them to ever become profitable with their 5% business model (Patreon is based in San Francisco and has over 100 employees, do the math).
Patreon is based in San Francisco and has over 100 employees
Neither of which are immutable laws of physics. I feel for those employees, but between giving money to them or to the creators - I'm giving to the creators.
They can just take a larger share of creators’ aggregate earnings if they need more money. Obviously the creators won’t be happy, but it wouldn’t destroy the “many individual $1-2 donations” segment, as this change would’ve done.
Hmm. I wonder if they could be profitable if they didn't live in SF. It's tough because a lot of the best engineers, minds and talents are on the west coast, either in the Bay Area or Seattle. Having moved to the other side of the country, I've noticed the difference in where companies are at architecturally. It's a tough trade-off for sure.
Patreon is a cool product, but do you REALLY need the absolute "best" minds to work on it? That's vastly devaluing the entire rest of the industry and makes me sick. I'm a decent software engineer, and I had fewer job opportunities because I don't want to drop 85% of my income on rent. Why am I not good enough to write an average Joe's app, or a simple payment processor/solution?
As usual. If you want a company to change, you have to affect their bottom dollar. Otherwise, you'll only get a "we have learned through this experience and will take it forward with us to prevent [our messed up thing we did] from [ever being noticed by you again]."
I waited a few days before canceling my $1-2 pledges, and completed my cancellations yesterday. So now today I had to spend some time going back through and re-pledging the stupid $1-2 pledges to lessen the screw to my beloved creators. What a clusterfuck!
It was my impression that patreon needs to find a profitable footing to continue existing. Generally I would see increased revenues as a good thing (it helps to ensure that a service people appreciate continues to exist).
Given that - why has there been such a push back against this?
A lot of people viewed Patreon as a microtransaction service. They give $1 to a bunch of creators. Creators liked this because it meant they could get a bunch of low value supportors instead of a relatively few high value ones.
Previously, Patreaon worked fine for this use-case. You support 10 creators at $1 each. Patreon charges you $10 each month, and credits $1 to each of your pledgies accounts. Patreon then eats $FEES from the pledgie's account and gives them the remaining money. Patreon would aggragate transfers so they only pay transaction fees on the single $10 charge to me, and on the final payment to the creator. As a result of this (and maybe other things), the fees were unpredictable to the creators, because they did not know how many other creators were splitting the transaction fees. In this example, a single creator would only see a ~$0.03 fee on my $1 donation; however, if I only had a single creator, he would see the full $0.30 on my dontation. (There are other fees at play, but this is the important one).
Under the new system, every donation pays the $0.35 transaction fee. This means that even if I support 10 creators, they all pay the full $0.35 on my $1 donation.
In contrast, if I instead had a single creator at $10, he would only see $0.38 in fees, or about $0.04 per dollar.
This means that the new system disproportional effects people making small donations.
It is also not clear that this was a pure money grab. This change coincided with a change to their payment system where they would stop aggregating charges. If they do not aggragate charges, it makes sense that they would charge smaller donations more, because those now have more overhead. The problem is that this breaks the service for small donation use cases.
You missed that the fee was going to be paid by the patrons, not the creators. Instead of being charged 1$, you would be charged $1.37ish for EACH pledge, meaning distributing your (for example) 35$ budget out to a bunch of different creators would screw you over.
Because lost income is as bad as increased revenues are good, and people lost income. Patreon aren't in a field where they get to experiment like that without affecting people's income, and that's always going to lead to pushback.
It seems to me that patreon thinks that its customers are the creators, and so it has been focusing its effort on pleasing them. In fact it is quite clear by asking "who pays the money" that their customers are in fact the patrons.
This seems straightforward, if only from a cash flow perspective-- customers are the people who give you money; vendors are the people you give money to.
Are there really that many patrons who feel the value they get from whatever they are supporting is a single dollar? Leave the transaction fees as they were going to be, and make the minimum amount of patronage $5 or $10.
One of my pledges is to a favorite author. $1/month means $12/year. She puts out about a book a year, at about $12 in Kindle format, so my pledge means I'm at least doubling the amount of revenue she gets from me annually (and I'd suspect significant portions of that $12 go to Amazon, agents, publishers, etc.).
I can do this casually, for a bunch of creators I like - comic artists, activists, authors, indie game devs - and it's not just me doing it, either.
I've made a number of $1-$5 pledges not to get a concrete amount of value in return, but as a way to vote with my wallet and say "I want more of this in the world".
Patreon lost my support when they banned Lauren Southern. They have every right to do so but I don’t want to support a company that refuses to work with people based on their political leanings.
Platforms aren't neutral parties and have to make calls like this. "Political leanings" is misdirection.
Participating in attempts to block NGO (affiliated with Doctors without Borders) ships performing maritime search and rescue missions for migrants is particularly heinous. If it must be spelled out, this is acting to prevent the rescue of drowning refugees.
Are you really supporting freedom of expression by allowing your platform to support people who don't support others right to exist?
I think the argument is to do with political leanings. Some believe that NGO boats incentivize human trafficking. If this is true more people will die via human trafficking than would if these NGO were interrupted.
While that argument is not super solid it is a political one and to Ban her based on her intention to report on this seems political to me.
You can rephrase this as much as you want, but this is not just "her intention to report on this". This is obstructing humanitarian efforts in a way that leads to loss of life.
You're claiming the motivations here are to protect the lives of migrants by limiting "incentived human trafficking", but the motive is white nationalism.
Most of those quotes are from the activist group Hope not Hate. They are a group on the left saying a group on the right is bad. Can you see how this is a deeply political issue?
I hear far too often that people on the right are white nationalist, yet I see no one presenting evidence they are.
There are some white nationalist on the right but I don't think it's fair to tar everyone on the right with the same brush.
What's odd to me is that they don't seem to have understood that spreading this charge (basically the credit card fee) across several people the patron is sponsoring, is more or less their purpose. If a given patron is not (typically) sponsoring more than one artist (or whatever), then yes they would/will have a problem, but they also wouldn't have a reason to exist. It's not like there aren't other ways to accept a credit card online, on a repeating basis even. Enabling a "tip jar on a monthly basis" was their whole reason for existence. They may not have known this.
It creeps me out to no end when corporations mimic human social behavior using community relations teams. It's made worse by people thinking that anything about the content of the apology matters. It was literally crafted by an expert actor. The only thing we should care about is the reversal and whatever concrete action Patreon takes to prevent a new fiasco (which I see no mention of). The company executed a business decision with bumbling incompetence, then was forced to back it out because of their customers. That later bit is interesting, the fact that it was accompanied by something written by a trained parrot is not.
I'd still be looking for alternatives, the original decision was a gross breach of trust and revealed that Patreon's business 1decisions are not coming from the authentic place we may once have hoped for.
edit: to clarify, the content I'm looking for in a real apology is a plan of action so that this isn't repeated. Patreon needs to restore trust. Apology language doesn't do that. Rolling back the act of searing incompetence was step one. Making sure it doesn't happen again is the real apology.
People complain when you're a robot, people complain when you're a human.
> It's made worse by people thinking that anything about the content of the apology matters. It was literally crafted by an expert actor.
Yes they are a money making organization...that's why they were able to build such a useful service in the first place and yes they paid people to write this letter... who happen to be people that are good at communicating. Does that mean we should question every action they make as insincere because they are self-interested?
Most free/open-source projects are so over-burdened with work/bug reports that they neglect PR pieces like this as they simply don't have the time. It's a good thing it was written by an expert writer IMO, even if it does contain a bit of spin people typically have enough common-sense to know the difference where it matters.
The whole reason they rolled back this change is because they were ultimately self-interested... the customers were very unhappy about it and protested, which may hurt their business, so they rolled it back. It's win-win for everyone. They aren't forcing anyone to use the service, people use it because it's useful and the company gets rewarded for not pissing them off.
Not to mention there is a real action/behaviour behind this letter... it's not just PR-speak sidestepping an issue, as we've seen in the past. It's an announcement that they made a mistake and listened to consumer feedback and are reversing a bad decision.
I find many of these types of complaints (see: every FB group made after changes made to FB) are just people looking for something to whine about, or to feel superior to a company, and they typically aren't representing the average consumer. Most messaging like this is considering the interests of the average/majority customer. Not the cynical/high iq minority who is touchy about copywriting in press releases.
>Yes they are a money making organization...that's why they were able to build such a useful service in the first place and yes they paid people to write this letter... who happen to be people that are good at communicating. Does that mean we should question every action they make as insincere because they are self-interested?
Yes! As customers in a cold, realist world, we're doomed to have an adversarial relationship with the organizations trying to profit from us. The question is who wins: Joe Six-pack like you and me, or the suits with the lawyers and PR teams?
> The question is who wins: Joe Six-pack like you and me, or the suits with the lawyers and PR teams?
... who wins what? The most value which the company provides?
Apologies if I missed some sarcasm here, it’s hard to tell these days.
I’m curious what customers are potentially losing or being ‘manipulated’ here ... because a company wrote a human personal-style press release.
We’re not talking about the special advantages large companies or wealthy individuals get as a result of government policy or in the court room... where politicians and law makers can be bought off or influenced in in their favour, over competitors or consumer interests.
And if customers occasionally reacting negatively, in regards to a service they clearly care about enough to protect and protest to making a change, is ‘adversarial’ then you’re engaging in your own spin. This seems like a healthy give and take. The fundamental basis on which our society is built.
I disagree. The company needs to restore trust. An incorrect way to restore trust is to babble word-salad about feelings that don't exist in whatever business unit made this decision. A correct way to restore trust is to 1. rollback the decision (check) and 2. articulate and implement a plan of action so that it doesn't happen again (missing, and more important).
Trust is immensely valuable. They lost a trust fortune over night. No amount of posturing or PR babble can fix that, and accepting PR babble as trust currency is deeply misguided when dealing with a corporation. A good-faith plan of action is something we can put some stock in.
> 2. articulate and implement a plan of action so that it doesn't happen again.
It seems to me like they did? The plan of action is articulated here:
"we’re going to fix them in a different way, and we’re going to work with you to come up with the specifics, as we should have done the first time around."
And it is implemented here:
"If you haven’t sent us a note yet, or if you don’t see your concerns listed above, please leave us your feedback here[LINK]."
(And of course part of the implementation is actually listening to the feedback in the future.)
I understand that you don't find this satisfactory. However, I don't know what you would find satisfactory. What would a response that legitimately addressed #2 look like, concretely? Could someone give an example response?
EDIT: Ah, you say elsewhere that the people involved in the decision should be "replaced, retrained, or otherwise required to alter their behavior". Do you want Patreon's press release to say, e.g., that people were fired/demoted/retrained as a result of the decision? If so, you should have said so!
I think his point is that any words used in an apology are meaningless, because we have no way to differentiate between a genuine apology and a PR apology based on the words.
Instead, only pay attention to the actions that follow, because those cannot be faked.
Exactly. I could have used more positive phrasing: "they have an opportunity to demonstrate sincerity by taking substantive action to correct their decision making process," but I missed that opportunity.
I am also not exactly sure what makes an apology from a company that much different than an apology from an individual; in both cases, they could either be sincere or lying, and there is no real way to tell from the words alone.
Individuals lie, just like companies do. The rate of lying might be different, but that doesn't really change much.
True, companys just have professional liers, called marketing/pr.
But well, yes. It might be an exaggeration. To look at it positively, marketing people are just good at communicating ... only the borders to missleading and plain lying are very blurry ...
You're complaining that a company is framing a certain situation in a given way and yet that's exactly what you're doing here, framing it in a different way trying to convince us of your point. I don't see the difference.
It seems to me that at this point in time, the only substantive action they can take is
- cancel this change
- consult with the community about how to solve the perceived problem
Both of which they appear to be doing. I get that the proof of sincerity is in what solution they eventually move forward with, but I think what people are pushing back at you on is your apparent argument that what they've done so far to fix this isn't good enough. I think what they've done so far to fix this is literally all they can do at this moment.
More seriously. My takeaway is not "I wish Patreon hadn't issued an apology", but to beware promises without binding contracts or strong signals of fidelity.
The same strategy works with people. Intentions matter because they let you reason about a person's likely future actions, but often the only way to ascertain another's intentions is to scrutinize their actions as opposed to their words.
>It creeps me out when organizations of individuals employ someone to communicate their organization's intentions and policy updates in a clear manner.
If they are acting in a clear manner they would explain how they undo the damage. This is a business after all and they can be sued for things they "mess up"
> This is a business after all and they can be sued for things they "mess up"
Only if the things they mess up are illegal. Are you implying they could be sued for making a stupid business decision? The overwhelming majority of business screw-ups aren't illegal, just bad decisions.
Clear communication means cutting the fluff and getting to the point. The point I'm looking for isn't there. Did the PR unit responsible for writing this even have access to the information that would allow them to communicate a real point? I doubt it.
Sure, it's creepy, but unfortunately many people are still predominantly looking for tone and little else. It's hard to ask companies to stop doing it when people keep rewarding it.
Aren't most advertisements also creepy and manipulative? Do you expect companies to start having informative ads? Maybe when people stop rewarding bad behavior. If you don't do it, people will say you are tone deaf!
> It's made worse by people thinking that anything about the content of the apology matters.
Is it inaccurate to think that they will not be enacting the fee structure change they had announced before? What are you even talking about? They said "sorry", and "we won't do the thing that made us have to apologize", what more are they supposed to do?
People are comprised of neurons. That is part of the reason they act like neurons.
...wait, that isn't quite the whole picture is it? It's almost like a group of entities, considered as a whole, has different properties than the individuals that comprise it.
people will down vote you because anything counter corporate/capital is blasphemy and this kind of messaging has been so noticed that almost no one even considers it for a second but you're completely correct and I agree with you.
It's probably not so black and white. Companies are ultimately comprised of people, who may or may not be trying to manipulate you. With all the hostile corporate nonsense out there, it seems strange to categorize every supposed act in good faith towards the customer as a manipulative lie.
They are a young company dealing with money and playing in a very controversial space (they will be attacked and targeted for providing a service to people like Sam Harris - who is seen as a bigot by large swaths of the left). They are going to get things wrong as they mature. It will take time.
I really liked that people voted with their wallets. I funded $10/month to a couple of people and pulled everything out. I'm glad they reversed the fee. Will start funding again.
I wish we could all do the same with our taxes to make a point to GOP.
You could organize a taxpayer's strike. Obviously not paying your taxes is illegal, so it's a risky move. If you get enough people to join your strike, you'll probably have a lot of leverage. But good luck getting enough strikers.
Companies do that all the time, that's why Apple is "striking a deal with Ireland" rather than having execs and accountants go to jail.
How does the proverb go again? If you owe the bank fifty thousand dollars you have a problem, if you owe the bank fifty million dollars the bank has a problem?
Ireland would much rather keep its word with Apple and not make them pay anything more than previously agreed to, but the EU is forcing its hand.
The only deal being struck is between the EU and Ireland to make Apple pay additional tax that Ireland says Apple doesn’t owe, and it’s more of a threat from the EU than an actual deal.
Tax evasion is not paying taxes on income you know you should pay taxes on and is unambiguously illegal. Tax avoidance is structuring your income so as to pay as little tax as is legally possible. The first is legal, and done in secret. The second is legal and done quite openly.
A tax strike is illegal and done openly in an effort to get other people to do the same illegal thing openly. Neither tax evasion nor tax avoidance.
Apple is not striking a deal with Ireland nor does it want to. The European Court of Justice has ruled that Ireland’s tax policy constitutes state aid and Apple should pay more tax. Ireland and Apple both disagree and are appealing the ruling. Until such time as the appeal is ruled on the money is being held in escrow.
Also in Finland: a new additional tax on motorcycles was canceled after citizens removed so many motorcycles from the registry that the new tax with fewer motorcycles was going to bring in less revenue than the status quo before the law proposal.
In a mostly unrelated sidenote, I'd love to experiment with this in a simulation of my hometown. The city is pathetically dependent on cars in it's culture and urban planning. I'd find it interesting to apply crazy taxation to automobiles with all of the revenue being funneled into public transport.
I had cancelled my pledges and re-added them all today (and added one even). I know unfortunately a lot of creators will never get back a good chunk of their pledges, but I feel it's important for us to both revoke our money when a company makes a bad decision... and resume it when they make a good one.
Companies recognizing that good decisions make them money is the key. If they figure they're going to lose money no matter what they do, they're less likely to take our feedback into account.
If I didn't vote for them, and they vote diametrically to my views, they do NOT represent me.
Just because mob mentality vote says X candidate wins means little. Especially if we were to hold to the initial representation in the constitution of 30k people per representative. But that number has ossified at 535 for how long now?
That's not what representation means. They may not represent your viewpoint, but they do very much represent you and all the other constituents within their region.
I'm never quite sure what people who make these kinds of arguments as you did are attempting or hoping to achieve. It's trivially impossible to represent every single viewpoint within a constituency with anything other than direct voting. So that's fine if you want to advocate for direct voting, but just come out and say it. Otherwise, any other system involves intermediate representation, which will then have this exact problem.
> I'm never quite sure what people who make these kinds of arguments as you did are attempting or hoping to achieve. It's trivially impossible to represent every single viewpoint within a constituency with anything other than direct voting.
You can approximate it much better than FPTP does by any system which produces more proprotional results, which is just about any system of democratic representation you don't deliberately try to make worse; FPTP for legislative seats is pretty much the bubble sort of election methods.
Well if it were just FPTP, it would be bad. But still not as bad as what we have now. We have known, admitted gerrymandering that disenfranchises and de-represents voters intentionally to split them up and make their decisions not valid.
I'm sitting with a -3 on my main post, and I still believe my points are still valid. I live in a liberal city in Indiana, and the republicans have gerrymandered us down the middle to split our votes to 2 different republican districts. Prior to 2010, we had better representation and would get more moderate republicans or democrats. No longer.
Because the US is not a strict Democracy, it's a Constitutional Republic that uses an electoral college as a layer of separation.
Further, even if Trump had won the popular vote, your floated premise would remain: the popular vote only represented a modest minority fraction of all adults in the US. So how can that possibly represent the actual full will of The People?
Regardless, history has proven on countless occasions that the will of the people is not always the ideal thing to follow. The Bill of Rights exists precisely to protect the minority from the all-too-often irrational will of the people. (you'll note that I specifically didn't justify the current state of affairs in US politics as being somehow good or positive, I'll pre-empt that conflation)
> Especially if we were to hold to the initial representation in the constitution of 30k people per representative. But that number has ossified at 535 for how long now?
That 30,000 number was decided before many advancements allowing for much higher population densities. London had a population of around one million in its first census in 1801. That's 33 representatives. New York City alone now has around 8.5 million people, or 285 representatives. The entire US would be 10820...
Yep, I was aware it was going to be around 11k legislators. Makes it a hell of a lot harder to buy them out, and use the money->influence pipeline.
And with newer tech, like the Internet (which was an academic curiosity when the 535 rule was enacted) can now easily network 11k representatives. There's now very little reason to meet physically in a room. Especially if we value transparency.
I'd like to see that there is an effective communication going on between citizens and their representatives.
Right now, with the current system, I see a few ways to communicate.
Physical letter: form letter or nothing
Phone: automated system recording
Email: form letter or auto-subscribed to email list
Facebook: Ignored, form statement, or banned
Twitter: Ignored, form statement, or banned
What I do see that works is what lobbyists do: they have face-time with their legislators. The current contention rates of up to 500k people per representative makes that avenue nearly impossible currently. Unless you happen to get a glimpse at a talk, you have close to 0% chance of talking with your rep.
With a contention ratio of 30k to 50k/rep, would make meeting your representative much more likely. It would also reduce money effects, since now elections are a local thing instead of a moneyball contest.
As I said, that was definitely a devil's advocate position, and on this I very much agree with you in principle but not on approach. The approach I would rather see is to devolve power the federal government has managed to aggregate back down to the states, and hopefully even more local levels.
I've commented on this before; I'll just link those instead of repeating myself:
They're doubling the standard deduction, which will cut taxes for the majority of all middle-class tax payers. Most of the middle class pays no or little in the way of net income taxes as it is, with 85%-90% of all income taxes being paid by the top 20% income bracket. The tax cuts the middle class will receive, will drive their net income taxes that much closer to zero.
85% of all the value of the SALT / local income tax deduction goes to people making over $100,000 per year.
97% of all home owners own homes worth less than the new proposed cap on mortgage interest deduction.
Both of those tax increases will almost exclusively hit well-off people.
Do think about whether lower taxes is even a good thing in the long-run. Accruing $1 trillion national debt just kicks the burden to the next generation, as does gutting public services to fill the gap. I also live in Washington, and honestly it's rather disgusting that we don't pay any income tax... our overreliance on property taxes is inefficient and leads to systemic funding problems for some programs.
why should the Federal government finance the tax methods the states impose on their citizens. this change is good because it will bring the methods of taxation, the value of taxes taken in, and their usage, to light.
far too often high taxation states have lived with the idea that the rich won't complaint too much since they can deduct a large portion from their federal taxes. yet all those not rich enough to itemize got stuffed.
people need to understand that deductions of state, real estate, and similar taxes, only serves the wealthy. Yet oddly the very same people who complain about the wealthy and taxes instantly pivot when they learn how its all done and that they will be affected.
We are the rich, the vast majority posting here make far more than the average if not in multiples. people think it takes millions to be rich, but its not true when you look at the numbers.
Why should states like California finance the federal government's handouts to other states that refuse to actually tax their own population, do you mean? And why are you ok with the federal government financing states that use property taxes, but not other types?
> why should the Federal government finance the tax methods the states impose on their citizens
The underlying assumption to your question is that the money belonged to the government in the first place.
By that logic, you go to work, produce economic value, various levels of government take what they want, and you receive whatever is left at their pleasure. That's your income: whatever part they decide to let you have after they're done dividing up the money that your employer desired to pay to you.
Thus by not "allowing you to deduct" taxes paid, one level of government is literally trying to tax you for money that has been taken by another before you got any of it.
> why should the Federal government finance the tax methods the states impose on their citizens.
It should be neutral to them, which is why State/local taxes should be deductible; non-deductibility creates an artificial incentive to avoid tax-funded programs that are a net economic benefit before considering the distortion produced by federal taxation.
The fact you didn't engage with the community initially or ask for feedback speaks far more about your arrogance, incompetence and mendacity that the nature of the change itself. If I was using Patreon I would be looking for alternatives anyway...how long until the next "surprise"?
Rageposts are not cool here, regardless of how badly someone or their company messed up. If you keep posting like this, which we've asked you repeatedly not to do, we're going to ban you.
Any good faith view is possible to express thoughtfully if you want to, so if you want to comment on HN, please do it that way.
The issue is that there is no current alternative to Patreon’s ease of use for gathering funds from a large number of fans, and a Patreon competitor can’t be built overnight. (Kickstarter’s Drip is not public yet)
Of course, being a pseudo-monopoly allows you to test the limits of monetization.
I've definitely seen numerous people looking for alternatives and trying to reduce their dependence on a single platform, and they won't get all of that trust back.
That said, this could be an opportunity for them. Patreon should have some test audiences (from both types of Patreon users) for potential changes like this, to evaluate what they look like. Creating some kind of advisory council (and ensuring that it does not just include high-profile creators the way YouTube's equivalent does) would help address this.
That's pretty harsh. They made a mistake and then apologize. While they didn't "initially" they did "eventually" - don't they deserve some credit for that?
No. Allowing companies to continuously treat its customers poorly as they test out pricing structures to maximise profits is how gambling become common in computer games and makes up 50% of EAs profits. It shows their intent, to work out how to maximise their earnings and keep everyone grumbling but still using their service. Look for an exit if you are funded this way, this company is going to keep trying until it sticks.
I'm sure the deserve some credit, but that doesn't wipe away the fact that they behaved in a way that reeks of 'arrogance, incompetence and mendacity'. Bad decisions are bad, and walking them back doesn't undo the initial decision.
They made a mistake that indicated they had a faulty understanding of their entire value proposition. And they made a mistake that had a profound negative effect on their user base (there are almost certainly many creators who were forced to scramble to be able to make rent or pay their bills during the holidays). Sweeping that under the rug of "a mistake" is silly. They hurt people, and it didn't have to be that way. They could have announced their plans with a longer timeline (6 months or a year, perhaps) with the expectation that things might change depending on feedback. Instead they rode roughshod over their user base. For a service that is supposed to be about changing people's lives for the better they did not take those lives as seriously or treat them with the gentleness they deserved.
One of the greatest victories of Human Rights in the past few hundred years came down to philosophy and goodwill, not economics. The abolition of slavery cost the British government and Navy a considerable amount in their enforcement effort. The US paid a terrible price for it.
Economics is one of the biggest factors deciding what people do. (I'd put it at #2 or #3) However, there are even mightier factors than money and livelihood. Otherwise, we'd be Ferengi, not humans, and the Ferengi characters in Star Trek which are written to be different would be the main characters. That economics reigns supreme is one of the false cornerstones of the original Marxian economics which experts in the field now know to be false, but which persists in zombie form in the popular consciousness.
That's a comforting fiction, however the truth has more to do with the industrial revolution, and the fact that a joule from coal is significantly cheaper than a joule from a slave.
Future high primary energy cost economies will almost certainly be based on slave labour, like they have in the past.
That's a comforting fiction, however the truth has more to do with the industrial revolution, and the fact that a joule from coal is significantly cheaper than a joule from a slave.
Then why not have slaves running your coal powered machinery? The truth is that the free labor of slaves was just a particular (and ultimately inefficient) pattern of organizing society, and the human capital of knowledge is the real driving force. If energy was the ruling force, then West Virginia wouldn't be so poor and rural, and Japan wouldn't be a world economic powerhouse.
Future high primary energy cost economies will almost certainly be based on slave labour, like they have in the past.
Even in the historical US, slaves that worked in agriculture and industries that required knowledge and attention to detail were paid. Otherwise, there is no motivation for energizing the human capital of skill and knowledge.
If the way you see the world were accurate, then totalitarian societies would be the wealthy ones. Instead, those with some degree of free trade and individual freedom are the wealthy ones.
This is what I wrote: "a joule from coal is significantly cheaper than a joule from a slave", read my comment again. In your reply you stated the same.
My point is that it was cheap coal energy that freed slaves, the economic realities of coal joules vs human joules, not high justice, economics.
My point is that it was cheap coal energy that freed slaves, the economic realities of coal joules vs human joules, not high justice, economics.
Then you are clearly demonstrating that you didn't carefully read the entirely what I wrote. The "free" labor of slavery was of little relative utility over other forms of social organization. In effect, it was just another (particularly egregious) form of social organization. All forms of human organization back then had about the same access to human joules. In all cases, the value of the human joules and coal joules was greatly increased through the addition of human capital in the form of skill and knowledge. Having the power of life and death obedience over people only goes so far. It gets you only a very crude application of those human joules. In order to get the maximum value out of your working population, you need forms of motivation beyond life and death obedience.
The key fact is that the productive capacity of human capital intelligently combined with energy far outstrips the output of poorly applied energy. The key is the human capital, not the energy. If it was just the energy, then you'd just have slaves running coal powered plants. You would not have had slaves running business as in the Roman Empire, or artisan slaves and paid specialist agricultural in the US.
High justice, as a form of human capital, enables economics.
The sad part is that Patreon has to backtrack and apologize so aggressively. I read the email the other day while sitting on the toilet and thought nothing of it. Was there any actual blowback or just a couple of loud mouths on Twitter that can't afford to rub a few pennies together? You can't make everyone happy, especially in the quest to make money.
There was a substantial blowback from both creators and patrons. The problem wasn't really the switch to having patrons cover overhead, it was that no attempt was made at all to aggregate pledges in order to reduce that overhead. This disproportionately affected patrons who pledge small amounts to a lot of people.
I'm not sure how patreon is supposed to work; i signed up a long time ago, and I haven't seen a red cent from them. In the meantime I've gotten hundreds of dollars from Amazon and add AdWords.
1. Make a thing and post it online for free with some degree of regularity.
2. Every post had a small link: "Pssst! Wanna help crowdfund a pagerate for me? Support my comics on Patreon."
3. Every time I made a thing, I'd post it to Patreon; at the end of the month, my backers would get charged based on how many things I made.
4. Over the course of a year, my Patreon went from "paying for my drink at the weekly cartoonist meetup sometimes" to "paying most of my rent on a productive month". And I am doing this by drawing a complicated graphic novel about a lesbian robot with Philip K Dick problems.
I make far more from Patreon than I ever did from ads, and I'm delighted to have been able to turn them off for good.
If not for their initial response to the first round of feedback, namely to put a "we're still doing it" at the bottom of their original blog post (with completely unreasonable and unjustified explanations for why), I'd give them full credit for responding appropriately. As it is, though, at least they fixed this. They're still going to need to deal with the giant pile of patrons they drove off; many people lost a significant fraction of their support because of this change, and that won't necessarily come back.
Between 1 and 2 years ago, I talked to some folks at Patreon about an unrelated topic (namely, trying to use Patreon for registered charities). They mentioned at that time that they had a change in the works to shift processing fees from creators to patrons, which they said at the time would be "better for creators" for various reasons, but that didn't want to talk about the details yet. (Since the issue is now public, I don't see any issue with saying that now.) That discussion naturally didn't include any information about fee structure or un-aggregation of charges with associated additional fees, e.g. the "$1 costs $1.37" problem, since that wasn't the topic; the impression they gave at the time was that the only change was to pass on the (presumably still aggregated) fees to the patrons, which wouldn't have been as serious a problem, and wouldn't have killed Patreon's suitability as a wildly successful microtransaction platform the way this change did. So, they've been thinking about this for a long time, and yet they sprung it on people without warning and without running the full details by anyone.
Update: there's now a survey from Patreon asking for feedback: https://twitter.com/Patreon/status/941010263385374720