Patreon's updated service fee could do more harm than good

Shawn Knight

TechSpot Staff
Staff member

Patreon, a platform that makes it easy for people to financially support the artists and creators they love, is making a controversial change to its service fee structure.

Up to this point, a creator’s income from Patreon has varied due to monthly processing fees that could account for between seven and 15 percent of their earnings.

Starting later this month, however, Patreon will implement a new service fee of 2.9 percent plus $0.35 per pledge that’ll be paid for by patrons. According to Patreon, this means that creators will take home exactly 95 percent of every pledge with no additional fees.

Putting more money in the hands of creators sounds like a great idea but dig a bit deeper and you’ll see where this starts to become a problem.

Specifically, creators that rely on multiple small pledges from patrons could be in trouble. Consider this example: pledging $100 to one creator will soon cost $103.25 but if you pledge $1 to 100 creators, it’s going to cost you $137.90. Ouch.

Sure, creators are technically netting more money under the new fee structure but if the changes discourage patrons from donating (especially those that like to support multiple artists with small donations), it’s going to be a net loss overall for creators.

Patreon said it is notifying patrons about the change so artists won’t have to do so via additional communication.

If the hit is as bad as some are predicting and lots of supporters abandon the platform, it’s possible that Patreon could tweak the policy or abandon it entirely. For now, however, it appears set to go into effect on December 18.

Lead image via Medium

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Evernessince

TS Evangelist
This could take out creators that rely on smaller pledges from many backers. I really don't get why patreon is charging PayPal like fees when they don't provide banking services and purchase protection like they do. Patreon should always be charging a percentage. I'm sure they ran the numbers and are well aware that charging a flat fee on top of a percentage would net them a profit.
 
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mbrowne5061

TS Evangelist
This could take out creators that rely on smaller pledges from many backers. I really don't get why patreon is charging PayPal like fees when they don't provide banking services and purchase protection like they do. Patreon should always be charging a percentage. I'm sure they ran the numbers and are well aware that charging a flat fee on top of a percentage would net them a profit.
You answered your own question.

I know I'll be cutting the number of patreons I support down to just one because of this. I don't like the others enough to eat the extra fees.
 

Evernessince

TS Evangelist
You answered your own question.

I know I'll be cutting the number of patreons I support down to just one because of this. I don't like the others enough to eat the extra fees.
That's really sad too, I'd hate to see the innovation I've been seeing from small time guys stymied.
 
T

TheSolarisGuru

I’m worried this is going to cause me to lose supporters... kinda sucks. I’d rather them charge me than charge my supporters.
 
J

Jamlad

What a blatant moneygrab.

Just in time for Xmas too! I'd prefer to post my patreons the money than enable greedy MBAs to suck more money.
 

captaincranky

TechSpot Addict
It sounds like a great opportunity for some enterprising individuals to start a clone service, based on Patreon's former pricing structure. After all, this move by Patreon does create a blatant tear in the world's cyber-fabric.

Which in turn would be based on a time honored paradigm, "the king is dead, long live the king"! No? why not?
 

Sum Guy

TS Booster
I am a cheapskate. I am the one who will only donate a dollar. I guess that means they pay a 35% fee. Yea this ain't good for them. Thanks for the heads up. I won't drop any more dollars. maybe they are better off using PayPal. They charge a flat 3.5%.
 
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