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Patreon Hits Donors With New Fees, Angering Creators (venturebeat.com) 143

Patreon's changing their fee structure to make donors cover payment-processing fees (standardized to 2.9%) -- plus an additional 35 cents for every pledge. Long-time Slashdot reader NewtonsLaw reports that Patreon's users are furious: Despite Patreon's hype that this is a good thing for creators, few of these actually seem to agree and there's already a growing backlash on social media... many fear that their net return will be lower because the extra fees levied on patreons are causing them to either reduce the amount they pledge or withdraw completely... For those patrons supporting only a few creators the effect won't be large, but for those who make small donations to many creators this could amount to a hike of almost 40% in the amount charged to their credit cards. Without exception, all the content creators I have spoken to would have:

a) liked to have been consulted first

b) wanted the option to retain the old system where they bear the cost of the fees.

As a content creator, I've already seen quite a few of my patreons reducing their pledge and others canceling their pledges completely -- and I understand why they are doing that.

"Everyone hates Patreon's new fee," writes VentureBeat, adding "Many creators are saying it's unfair for patrons to have to pay transaction fees. In addition to that, most people support multiple creators and not just one, and they'll have to pay the extra fee for each pledge they make."

Tech journalist Bryan Lunduke is already soliciting suggestions on Twitter for an open source or Free Software solution that accepts donations from multiple payment systems, and while the change doesn't go into effect until December 18th, NewtonsLaw writes that "it's starting to look as if many content creators will be getting a slightly larger percentage of a much smaller amount as a result of this lunacy by Patreon -- something that will see them far worse off than the were before."
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Patreon Hits Donors With New Fees, Angering Creators

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  • by Eric Sharkey ( 1717 ) <sharkey@lisaneric.org> on Saturday December 09, 2017 @11:42AM (#55706611)

    I had been pledging $1/month to several different creators. With the new fee structure, it's better to only fund one creator each month and rotate that creator every month. That's ridiculous.

    I canceled all my pledges this morning in protest.

    • I support several creators on Patreon. I have 2 categories of pledges: large ranging from $7 to $20 per month, and small of $1 per month, for a total of about $55 per month. Or better said I _had_ 2 categories of pledges. Since receiving the notification I had to drop all of the $1 pledges to keep the balance. It's regrettable but it is what it is.

    • Actually, I was contemplating supporting a few YouTubers with just that, 10$ a month or so and split it among the ones I liked. Then I read about the change in policy this week and I was like "Wait, this means I have to pay for *every* creator? Who came up with this nonsense?"

      So that means no Patreon, simple. Sorry Big Clive, 8-Bit Guy and Today I Found Out.

    • by Anonymous Coward on Saturday December 09, 2017 @04:39PM (#55707969)

      It's even worse than that:

      Pledges aren't aggregated at the end of the month any longer, they'll be billed on the monthly anniversary of the pledge date.

      For ALL pledges under roughly $10 (in countries WITHOUT VAT), the creator takes home a smaller percentage of the overall pledge + fees than they did before.

      Credit-card companies will trigger on fraud for the same amount pulled multiple times in one day and lock the card, so you can't just re-pledge to sync everything on the 1st again like before. And even if you did you'd still pay the fee on each individual pledge.

      For pay-per-post entries, that means every time that creator hits 'post' it'll charge everyone's card. How long until someone hits it half a dozen times by accident and their patrons all get their cards locked?

      - WolfWings, still too lazy to login to /., but this is too damn important.

    • by Cederic ( 9623 )

      Hopefully you (and all of the people that replied in agreement with you) let the creators know why you're not now supporting them.

      It's easily inferred that this is the reason, but making it explicit should help.

  • by malchus842 ( 741252 ) on Saturday December 09, 2017 @11:44AM (#55706615)
    As a creator with several hundred patrons and about $1500/month in pledges, I had agreed to the terms where I paid the fees. Nobody asked if I wanted to change the deal I had made. I had no problem paying the fees because it kept things simple for my patrons. It almost feels like "I have altered the deal. Pray I do not alter it further."
    • I had agreed to the terms where I paid the fees.

      That would be fine for a one-time transaction (e.g. purchasing a car).

      With recurring transactions, there's also a period during which the contract is in effect (e.g. renting an apartment for a year). Once you're beyond that term, what happens next is either defined elsewhere in the contract, or is totally up in the air. Usually it switches to month to month. The two parties continue each month as they were under the original contract. But either party

      • by malchus842 ( 741252 ) on Saturday December 09, 2017 @11:59AM (#55706677)
        Yes, they are free to change the terms, obviously. I simply wanted to be asked. Mind you, my patrons are not leaving, and I'll come out ahead on this deal, but the original deal was simpler to explain and created less friction. A simple solution would be for Patreon to allow pre-funding your account which would allow for a single fee. It also helps non-USD patrons with exchange fees and other bank fees the incur outside of Patreon's fees.
        • by Anubis IV ( 1279820 ) on Sunday December 10, 2017 @10:31AM (#55710685)

          A simple solution would be for Patreon to allow pre-funding your account which would allow for a single fee.

          Exactly. There’s no reason Patreon can’t batch the payments together to reduce processing fees for everyone involved. Moreover, the incentives are misaligned in this new system.

          When I buy stuff from Apple, I generally don’t see the charge show up on my card for 2-3 days. If I end up buying multiple apps in that time, they batch them together in the same transaction, saving them those processing fees. And that works out well for them, since those transaction fees come from their slice of the pie.

          Patreon should be doing something similar, either by allowing people to prepay, allowing people to be charged once per month for whatever has happened that month, or allowing people to be charged as things occur, but then batching them like Apple. Even if Patreon did the same but then passed those fees onto content creators instead of taking it from their own slice, it’d still be an improvement over what they had (since creators would effectively be splitting the fees, rather than paying them by themselves) and what they’re doing now (which seems designed to give credit card companies as much money as possible).

  • If if the only way we can get away from these life sucking vampires is to quit using their currency, then so be it. They aren't providing value commensurate to the fee. It has to stop.
    • by Dwedit ( 232252 )

      Yeah, quit using currency with a %2 transaction fee and switch to Bitcoin with a flat $20 transaction fee.

      • by suutar ( 1860506 )

        It's not the 2% (actually 2.9 iirc, call it 3), it's the 35 cents per. If it was just 3% and nothing else, I doubt anyone would be stressed.

        • by grahammm ( 9083 )

          It's not the 2% (actually 2.9 iirc, call it 3), it's the 35 cents per. If it was just 3% and nothing else, I doubt anyone would be stressed.

          Or even if each patron was only charged $0.35 on top of the 102.9% of the total of their pledges each month.

          • by Cederic ( 9623 )

            I have to admit, that's the bit that confuses the hell out of me.

            That's such an obvious way to minimise transaction fees (which are to the detriment of creators, patrons and patreon themselves) that it just doesn't make sense not to do it.

    • by DogDude ( 805747 )
      Well, people are too selfish and lazy to shop locally, with cash, so nothing is going to change.
  • by alvinrod ( 889928 ) on Saturday December 09, 2017 @11:47AM (#55706631)
    This just seems like a cash grab on the part of Patreon. There's no reason that they couldn't combine all of the pledges into a single transaction with respect to billing the customer and then split the fee equally across all transactions. So if someone is pledging $1 to 10 different individuals,
    • by Anonymous Coward

      That's how the pledges are processed already. Patreon bundles up a bunch of $1 pledges and does them all at once, to keep fees down.

      This is purely a cash grab on the backs of users.

  • Drop Patreon and setup Dogecoin and Reddcoin wallets. It's free for you and the cost per transaction is only ONE COIN.

    Seems high? It takes a few Dogecoins or Reddcoins to make ONE CENT. That's extremely cheap transaction fees.

    Problem solved.

    • Monopoly money also has very low transaction costs of zero monopoly dollars. Additionally one monopoly dollar is worth zero actual dollars.

      • by Anonymous Coward

        If you really believe Dogecoins are worthless, send five million of them to D9scjyKETYZesSmhjCR4vye4bc6iDqXPd6.

  • "Many creators are saying it's unfair for patrons to have to pay transaction fees. In addition to that, most people support multiple creators and not just one, and they'll have to pay the extra fee for each pledge they make."

    On the contrary, the patrons were already paying the transaction fees before. They'd send donations to the creator, and the creator would use some of those donations to pay the transaction fees.

    The only thing that's changed is that the patrons now know how much of their donation i

    • by Leuf ( 918654 ) on Saturday December 09, 2017 @12:30PM (#55706789)

      If someone was supporting 10 patrons for $1/month each, then Patreon would bill them ONCE for $10 each month and the single transaction fee was split between the 10 creators. The result being each creator would get around 90 cents. This is what made the ecosystem of small donations actually work.

      Now that person is billed 10 times with 10 transaction fees totaling $14 and each creator receives 95 cents.

      Before the creators were getting 90% of the donation. Now they are getting 68%. People are upset because it breaks the system that only existed because of the way the fees were originally structured.

    • by mark-t ( 151149 )
      I was under the impression that the *donor* would be charged this additional fee, over and above whatever their pledge amount was.
    • by Anonymous Coward on Saturday December 09, 2017 @01:01PM (#55706955)
      You have no idea what you are talking about. The monthly donations are batched into a lump sum transaction, so the fee per pledge did not exist. Out of a $1 pledge, $0.05 was a Patreon fee and a variable amount up to $0.10 maximum was the "transaction fee." Now for a "$1 donation" the charge to the donor is actually $1.38, so the initial amount has changed significantly and it is not really $1 we're dealing with. Out of this $1.38, $0.95 goes to the creator, $0.05 is the Patreon fee, and the remaining $0.38 is the "transaction fee" which Patreon largely pockets since they STILL batch all donations by a person into one lump sum withdrawal. That's a 280% increase in the transaction fee. Once donation amounts are normalized to only charge the donor $1 total for a "$1 pledge" the creator takes home $0.62 instead of $0.85. For what's now being called a "$1 pledge" Patreon is now taking a 31% cut of what the donor gives instead of a 15% maximum. Of course, if you donate $40 a month to one person this percentage goes down relative to 40x $1 donations, so it pressures people to dump most of their recipients in favor of giving all the money to very few. Many are just bailing completely in protest.

      It's a money grab for Patreon. I suspect it's a golden parachute deployment tactic by the executives because there's no other logical explanation for this; they knew the backlash would happen.

      You should take the time to understand what you're commenting on before you put fingers to keyboard. I have nothing against you but you spouted a bunch of false numbers as facts. The information is very easy to get so there isn't an excuse.
      • by Dahan ( 130247 )

        Out of this $1.38, $0.95 goes to the creator, $0.05 is the Patreon fee, and the remaining $0.38 is the "transaction fee" which Patreon largely pockets since they STILL batch all donations by a person into one lump sum withdrawal.

        They currently batch all donations into one monthly credit card charge, but this whole discussion is about how they're changing things, not what they currently do. And they will be changing to charge each pledge separately. E.g., if you donate $1 each to 10 creators, your card currently gets charged $10 one time. But after Patreon's change, your card will be charged $1 ten times.

  • I'm not a patron or creator on Patreon, but here's what I've been able to piece together from recent news:

    The credit card processors charge a swipe fee on the order of 30 cents per transaction in addition to a rake of 2 to 3 percent of the value. For debit cards processed through card-present EFTPOS, only the swipe fee applies, which is part of why stores default to "debit" instead of "credit". But in either case, the swipe fee is why many convenience stores have a minimum charge for small purchases, and Amazon charges sellers a minimum commission of $1 per item.

    The use of "de-aggregate" in this Tweet [twitter.com] implies that Patreon used to aggregate pledges from multiple donors when charging patrons' credit cards. But there were reportedly a couple abuses of this. One involved people who would pledge to a particular creator, view the creator's patron-only posts, and cancel the pledge the user's before billing date. Another is that a chargeback by a cardmember who doesn't remember his pledges would affect all pledges. So instead, Patreon switched to separately on behalf of each creator.

    I can think of a few ways that Patreon could reduce the impact of a swipe fee on $1 and $2 pledges.

    Annual billing
    Let the user pay 12 months of a pledge in advance with one transaction. Print magazines, for instance, have used this for decades.
    "Reset my billing date" button
    Reintroduce aggregation as an opt-in choice, where patron-only posts remain locked until a patron submits a form that charges a pro-rated fraction of the existing pledges.
    Gift cards
    Let a patron top-up Patreon credit. Prepaid mobile phone providers use this.
    • by shess ( 31691 )

      But there were reportedly a couple abuses of this. One involved people who would pledge to a particular creator, view the creator's patron-only posts, and cancel the pledge the user's before billing date. Another is that a chargeback by a cardmember who doesn't remember his pledges would affect all pledges. So instead, Patreon switched to separately on behalf of each creator.

      Like, someone does this ... once? Because if they do it routinely, presumably to access the same content, wouldn't it be easier to just terminate their account, rather than restructure your entire fee system?

      Also, I don't fully understand the chargeback point. AFAICT, I only can chargeback my entire monthly aggregate pledge amount, not a portion of it. Patreon may have a policy of honoring such things at their level, but I'm not sure why that would need to involve the credit-card chargeback system at all

      • by tepples ( 727027 )

        Like, someone does this ... once? Because if they do it routinely, presumably to access the same content, wouldn't it be easier to just terminate their account, rather than restructure your entire fee system?

        The claim, as I understand it, is that a substantial fraction of the user base has done this once.

        • Like, someone does this ... once? Because if they do it routinely, presumably to access the same content, wouldn't it be easier to just terminate their account, rather than restructure your entire fee system?

          The claim, as I understand it, is that a substantial fraction of the user base has done this once.

          Then they shouldn't be whining.

  • by Jack Zombie ( 637548 ) on Saturday December 09, 2017 @12:10PM (#55706715)

    Tech journalist Bryan Lunduke is already soliciting suggestions on Twitter for an open source or Free Software solution that accepts donations from multiple payment systems.

    This sounds like a job for GNU Taler.

    https://taler.net/en/index.html [taler.net]

    • I'm pessimistic about Taler. Quoting from taler.net:

      To receive Taler payments, a merchant needs a bank account in the desired currency.

      Ever tried opening a bank account in a foreign currency? Ever tried opening 50 of them for 50 different currencies? It's not impossible in the strictest sense of the word, but if you somehow manage it it's going to cost you a small fortune in fees.

      And that means Taler will only ever be a system for Americans to receive money from other Americans. I don't even believe the

  • by Anonymous Coward
  • by mordred99 ( 895063 ) on Saturday December 09, 2017 @12:48PM (#55706881)

    This seems like Patreon is read to IPO. A few months ago they went after game developers (who use the system and provide monthly updates to patreons) and started objecting to sexual content in the games. Now they are changing the system to start charging more to the patreons, instead of charging more to the people who benefit from the donations. There was a time (I am showing my age) where Paypal did the same thing before it IPOed, by changing the payment method just before it became public so that they could have predictable revenue methods to describe to investors.

    I don't know if it is for the best or now, I just know that people don't like being screwed out of money. In the US, we are conditioned to not know what prices are as everything we buy is the price of an item but tax is figured by the computer at the register. Yes sometimes in some states it is simple math but when you live in a province with tax rates like 9.417% you have no freaking clue what you are going to pay until the cashier tells you. That is exactly what people are pissed off about with this new policy change at Patreon. They knew it was a dollar (or ten) that was spent, now it is some formula that they have to figure out and it is not easy to figure out what is going on. Patreon is not mentioning if you get charged fees multiple times, single transactions, etc.

    • Seems like it is ready to IPO (I couldn't edit it and realized it after I posted).

    • by DogDude ( 805747 )
      r. Yes sometimes in some states it is simple math but when you live in a province with tax rates like 9.417% you have no freaking clue what you are going to pay until the cashier tells you.

      Jesus Christ kid, take a math class. Move the decimal place over one spot, and there's your tax.
      • While my point was more for hyperbole than factual, I think you either are being obtuse or silly. I know how to estimate, I said to know what the actual answer was. Growing up in Wisconsin, 5% tax rate, I was in third grade and I knew how many weeks I would have to save up for a GI Joe I wanted to buy $3.99 plus $0.20 cents tax, that is five weeks to cover it at a dollar a week. Being a professional with 4 semesters of college calculus behind me, and living in Kirkland, WA, with 9.14% tax, I didn't know

    • province with tax rates like 9.417%

      Hmmm, this item is $19.95. Lets round it up to 20 bux. 9.417 percent tax, well, lets round it up to 10 percent. I'm going to wind up paying slightly less than 22 bux at the cashier.

  • My Patreon account usually gets $350-450 per month with like 80 supporters-ish and I've seen zero drop off. People have to learn how payment processing systems work. If you give 3 people $1, it costs a static amount plus a percentage to run your credit card. That's just how it works. Why should Patreon be responsible for eating all the profit and potentially losing money for exceptionally low payment amounts? That doesn't make any sense. You ever try to buy $0.50 collectible cards on ebay for MTG, Yugioh, P
    • by jarkus4 ( 1627895 ) on Saturday December 09, 2017 @01:51PM (#55707217)

      1. Patreon was newer responsible for covering fees, it was always on creator side
      2. Fees have two components: percentage of amount and fixed sum. In current system all payments are made together so the fixed part is paid once only. In new system all payments will be made separately so fixed amount is added to every payment. Basically for every extra pledge I make I waste the fee amount. For large pledge its largely irrelevant, but for small ones it means huge increase in costs
      3. Patreon takes 5% as their fee. Now that they don't offer payment aggregation service and so become the LEAST efficient way of supporting the creator, why should I give it to them? So far the cost of convenience was low as aggregation lowered the external costs, but now they will be just taking 5% on top of other ways to support for a "fanpage" and paywall system of questionable quality.

    • It has nothing to do with knowing how payment processing works, it has to do with knowing what your payment is. People unconsciously budget their money and want to know how much stuff costs. When you throw variable rates into the mix, it is hard for some people to do the math. There are two, big issues here which have nothing to do with entitlement or what ever your indignation is.

      * Patreon switched the model 180 degrees without much notice. They are now making the Patreons pay more where as before it w

    • by Cederic ( 9623 )

      Could you come back in a couple of months and let us know whether it's changed?

      There'll be a lag on the impact, as a lot of people wont realise how much extra this is costing until it's hit their credit cards. That'll be the test.

  • That is what happens when you outsource a basic business function like collecting revenue. Similarly, content creators complaining about Googleâ(TM)s YouTube or Facebook policies should rethink their decision on where they host content.
  • We trusted them with our wallets and they have told us that OUR wallets are THEIR property. It follows from that that Patreon cannot be trusted. I've canceled my smaller donations and am going to contact them about alternatives, since I do want to support their work. I'm also going to be contacting my bigger beneficiaries about alternatives.

    Patreon is toast as far as I'm concerned. There is NO way they can apologize their way out of the attitude they have demonstrated.

  • by Barefoot Monkey ( 1657313 ) on Saturday December 09, 2017 @01:54PM (#55707237)

    According to Patreon's blog entry, previously creators received anywhere from 85%-93% of donations. Now they receive exactly 95% of pledges, but only a part of the amount paid by the patron counts as "the pledge".

    Let x be the total amount paid by a patron for a pledge, and p be the value of the pledge.
    x = 1.029p + 0.35

    Solving for the worst case, where the 95% of the pledge that the creator receives is at least 85% of all money donated, to match that under the new system the patron would need to pledge at least $3.95, which would cost the patron $4.42. That's what a patron will need to pay to avoid the creator receiving less than the worst case under the old system. Paying $5 is hardly better - let's look at the $1-$5 range, which is what most patrons are probably giving:

    From now on, patrons who pledge $1 have to pay $1.38, and the creator receives less than 69% of that. Patrons who want to pay $1 to each of their recipients are out of luck, and must choose between increasing their monthly Patreon expense or give up donating. When patrons spend $5 the creator sees less that 86% of that, which is basically the same as the old system's worst case.

    Okay, but at what point does the new system work out better for the creator than the old system's best case? The answer is: never. Even if a donor pledges a million dollars a month the creator gets barely over 92% of it.

    ---

    To sum it all up, Patreon is raising its fees dramatically, so instead of creators receiving 85%-93% of money given by patrons, they will now receive 69%-86% in practice.

    In addition, they will also have fewer patrons because new hidden fees on the payer's side will turn many potential and existing patrons off.

    And on top of that, the minimum pledge of $1 now costs 38% extra, all the patrons who used to sponsor multiple creators at $1 each but aren't willing to pay 38% extra per month on Patreon will now have to choose between dropping more than a third of their sponsored creators or dropping out of Patreon entirely. Either way, creators lose many of their patrons.

    If Patreon simply hiked their fees honestly instead of instead of adding the extra "35c plus 2.9% of your pledge that that count as part of your pledge" hidden service fee for patrons to disguise the fee hike then it would creators would grumble about losing roughly an eighth of their net revenue but at least wouldn't be losing patrons too. Keeping all the fees on the receiver's is better for everybody.

    • I now support two content providers. I'm not dropping them (yet) as $1.78 isn't that big a deal, but I sure won't be adding any to the list or increasing the amount of my support. There were a few others I was considering adding, but no longer. I just see this as a cash grab by Patreon. Perhaps the CEO or CFO is getting ready to abscond with the money :-)
      • Apparently they've received a lot of VC and are priming for IPO. It's a cash grab to boost revenues.

    • The worst part is, they now levy the transaction charge on every single post, rather than on the single monthly payment.

    • Charging the patrons 35 cents per pledge is excessive. What Patreon should do is charge them 35 cents per MONTH, and then do the sensible thing and put through only one charge transaction per month no matter how many creators the patron supports. Those charge transactions are what create most of their monthly costs.
  • Am looking around for alternatives, and wondering if anyone here use either Flattr or Liberapay, either as a creator or a supported ?

  • Fees are under 5 cents. Who knows about a system that lets me do scheduled payments (onchain, not via an exchange)?

  • Are they closing soon?
  • Presumably the point of the 35 cent per pledge fee is to cover transaction costs. But Patreon can aggregate those for patrons that pledge money to more than one creator each month, and simply put through one charge transaction that covers all the pledges. (They're running their business badly if they're not already doing that.) Patreon would have gotten a lot less pushback if they had instituted a single monthly fee to patrons, and would still get enough revenue to cover their processing costs. Other than w

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