[Patreon] Beware of the price hike!

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[Patreon] Beware of the price hike!

Postby Big Mac » Fri Dec 08, 2017 12:16 am

There are a lot of crowd-funded RPG projects out there. One of the crowd-funding providers is Patreon and Patron are set to hike-up the amount that they charge backers on December 18th.

But check out this video from AuldDragon: Patreon Fee Changes - Starting December 18th:
Image

Patreon have put out a press-release called What does Patreon's service fee mean for me?. I've added my own thoughs on what they say:
Angela at Patreon wrote:What does Patreon's service fee mean for me?

What exactly is the change being made to Patreon's fee?

  • What should I know as a creator?
  • What should I know as a patron?

_______________________________________________________________

Information on service fee changes for creators

Q: What exactly is the change that's being made?

A: With this update, creators will now take home exactly 95% of every pledge with no additional fees.

In the past, a creator’s income on Patreon varied because of processing fees every month. They could lose anywhere from 7-15% of their earnings to these fees. This means creators actually took home a lower percentage of pledges than their patrons may have realized.

A new service fee of 2.9% + $0.35 will be paid by patrons for each individual pledge starting on December 18th. This restructuring allows creators to take home a greater portion of their earnings, which is core to our mission of getting creators paid.


It's not an "update". It's a price increase. And Patron are blaming content creators for the price hike.

If Patreon really just wanted to increase the portion of earnings that content creators got, they could back-calculate the numbers from the existing pledges and make adustments to payouts without changing the charges to backers. But they don't want to do that as that wouldn't increase income.

Angela at Patreon wrote:Q: Why is Patreon doing this now?

A: Patreon exists to allow creators to get paid what they deserve to be paid, for the value they give the world. This is awesome and to continue this vision, we need to constantly evaluate our processes. As we work to deliver bigger and better features for creators and patrons in 2018, we felt like sooner than later made sense to put this change into effect.


This is just marketing hype. They want to increase fees. They should just own it.

Angela at Patreon wrote:Q: How did you determine these rates?

A: We standardized our fees because it helps creators by giving them more clarity and security regarding their earnings. Currently, creators can lose anywhere from 7-15% of their earnings to fees.

This means that on the 1st of each month, creators might see their expected take-home drop. Creators often take home a lower percentage of their Patreon income than patrons may realize. Standardizing our fees across the board provides consistent expectations and more money for creators on Patreon.


Again this is more hype. How hard would it be for Patreon to tell backers: You pledged $1.00 and of that $0.85 went to the content creator you are supporting.

Angela at Patreon wrote:Q: What action do I need to take as a creator?

A: As a creator, there are no actions you need to take at this time. The new service fee will be automatically applied to your patrons' pledges starting December 18th. You will see only 5% of earnings taken from your pledges from that date forward.


I think that content creators do need to take action. It's not down to them but (through no choice of their own) they will be charging their backers extra.

I think there is a relationship between content creators and backers. Sometimes a community, where people are friends with other people. Essentially Patreon are taking more money from the backers that creators depend on and saying that people don't need to take action. :roll:

Angela at Patreon wrote:Q: How does this impact my current pledges?

A: As a creator, this means this pledges that come from your existing account balance will see a service fee applied during the next billing cycle, January 1st, 2018.


Huh? So are creators getting charged a new service fee as well? :shock:

Angela at Patreon wrote:Q: How does this impact me as a per-post creator?

A: As a per-post creator, your patrons will see the 2.9% + $0.35 service fee added to all paid posts. For example, if you are a per post creator making two paid posts per month, your patrons will be charged 2.9% + $0.35 for each paid post.

Here's the breakdown for a patron pledging $5 to a per-post creator that publishes two paid posts:

Paid Post 1: $5.50
Paid Post 2: $5.50

Patrons still have the option to cap the amount of paid posts they are charged for as noted here. Again, this service fee is standardized from the fees you paid as a creator - we've split between you and your patrons to ensure that you can better estimate your take-home pay.


They don't really explain it properly. Do backers have the option to cap at one post or at $5.50 gross payment?

Angela at Patreon wrote:Q: What do I need to tell my patrons?

A: We are sending notification to patrons about the change so you do not need to send them additional communication. That said, patrons always want to hear from their creators. It can often be helpful for them to hear about the change from you as well. If a patron reaches out to you for more clarity, we’ve prepared a helpful statement you can share with them for more detail:

In the past, I was covering Patreon’s 5% fee and all of the processing fees in full for all of my patrons. This meant that every month I saw anywhere from 7-15% of my earnings taken out to cover those processing fees.

Starting December 18th, Patreon will apply a new service fee of 2.9% + $0.35 to each of your individual pledges. This service fee helps keep Patreon up and running and standardizes my processing fees to 5%.

This ensures that creators like me keep more earnings in order to continue creating high-quality content. I hope you understand and continue your pledges on Patreon. You can read even more about the service fee here.


I would strongly advice people not to push out this "helpful statement". Essentially Patron are asking content creators to give voice to their decision and push out Patron's marketing hype.

The reality here is: "Patreon are changing the way that they charge backers, costs to backers will go up and backers should check out the new charges to see if they want to change their pledges."

I think there is going to be some annoyance over this (both inside the RPG crowdfunding community and the greater crowdfunding community) and content creators probably should not act as apologists for Patreon, even if it would be better for them to get paid more money. If you do need to put up prices (like Reward Levels) it's far better to be honest and say that your costs have increased and that you need X amount more money to continue to do something. People are far more likely to respect honesty (and simple pricing) that a bunch of mumbo-jumbo designed to blame content creators for on-the-top fees very similar to concert ticket booking fees.

Angela at Patreon wrote:Q: What if I want to take the hit for my patrons? Can I pay those fees?

A: We understand that some creators might wish to take the hit for their patrons. That said, the service fee will be extended to all patrons on the site and there isn’t an option to remove the service fees from your patron pledges.

The best step is to make sure your patrons are fully educated on the benefits of this change for creators and we’ve made sure to send them notification of this.


Here is the clear indication that this is not about doing what the content creators want. "What if I want to take the hit?" - "Tough luck!".

There are going to be content creators who enjoy the support of low level backers who are going to have a difficult conversation where backers, who may have become friends are going to have to say that they can no longer afford to remain within the community the creator and their backers have forged together.

It's pretty sad really.

Angela at Patreon wrote:Q: If my patrons have questions, where do I point them?

A: If your patrons have questions, we’ve prepared a robust Q+A here so your patrons can get all the information they need. There's a section specific to your patrons below.


I can imagine that Patreon is going to be getting bombarded with questions on the social media.

Angela at Patreon wrote:Information on the service fee for patrons

Q: What action do I need to take as a patron?

A: As a patron, there are no actions you need to take at this time. The new service fee will be automatically applied to your pledge starting December 18th.


This is not true. The action you need to take is to find out how much extra you are going to be charged and see if you can afford it.

Angela at Patreon wrote:Q: When do the new rates apply to my monthly pledges?

A: The new rates will apply to your monthly pledges starting December 18th so you'll see your first payment with the fee included January 1st, 2018.


I'll be interested to see how many RPG Patron programs take a hit after December. I'm already seeing people complaining about this on social media.

Angela at Patreon wrote:Q: When do the new rates apply to my per-creation pledges?

A: If you are pledging to a per post creator, the service fee will be applied to your pending paid posts due during the billing cycle that begins January 1st, 2018. If you delete your pledge to a per post creator after December 18th, you'll see the service fee applied to any pending bills. You can check to see if you have pending bills due here.


I wonder how many content creators are going to work overtime to churn out their December content before the 18th of December.

I'm also wondering when the 18th of December starts, according to Patreon. I can see someone in the western part of the world seeing content published in the Eastern side of the world and thinking it was published on a different day. Is there an official time zone for Patreon? :?

Angela at Patreon wrote:Q: How do these service fees help creators on Patreon?

A: This helps creators by giving them more clarity and security regarding their earnings. Currently, creators can lose anywhere from 7-15% of their earnings to processing fees.

This means that on the 1st of the month, creators might see their expected take-home drop. Creators often take home a lower percentage of their Patreon income than patrons may realize. Standardizing our fees across the board provides better expectations and more money for creators on Patreon.


In the long run these new (confusing) fees might help content creators get more money. In the short term, I can see some content creators haemorrhaging backers.

Angela at Patreon wrote:Q: Do I have to pay this new service fee?

A: We have sent advanced notice so that you and all patrons have an opportunity to cancel your pledge if you no longer wish to continue your membership with the updated service fee.

This fee gives creators more security as they can now better estimate their true earnings prior to the end of the month. This is vital for all creators, especially those that use Patreon to support their business full-time.


No. They have sent advanced notice as it is illegal for them to not forewarn customers. But instead of just explaining the truth behind the price hike, they have played and played and played on the emotional attachment that backers have for the content creators they support to get them to swallow any displeasure they have about price increases.

I bet there are going to be a lot of content creators who are really concerned that their backers are aware of the price increase (and able to afford them). I'm sure that there are some content creators who just want to make money, but I'd bet that a large number of content creators want their backers to be able to afford their pledges.

Angela at Patreon wrote:Q: How much time do I have to change my pledge before the change?

A: You have until December 31st, 2017 to edit a monthly pledge. If you are pledging to a per-creation creator who makes a post between December 18th and December 31st, then you will see the service fee added to those posts.


Huh? So surely, if you want to avoid the service fee, you need to bail out before December 18th. :?

Angela at Patreon wrote:Q: How can I cancel my pledges?

A: You can find the steps to cancel your pledges here.


It's a shame they are not showing backers how to reduce their pledge, so that they end up paying an amount similar or lower to what they already pay. It's like they want you to feel guilty about content creators or push off.

Angela at Patreon wrote:Q: Is VAT included in the service fee?

A: Value Added Tax (VAT) is not included in this service fee.

VAT is a consumption-based tax that’s assessed on the value added to goods and services -- including digital. It’s charged as a percentage of price (so on Patreon, a $1.00 pledge with 23% VAT will see an additional cost of .23 cents.)

If you are located in a country that charges VAT, you’ll continue to see this charge and be delivered VAT invoice on the 1st of each month.

For creators, Patreon will continue to remit VAT on your behalf, as described here.


Oh. So are there even more hidden charges on Patreon?

What do they mean about VAT? Are they charging it to backers in VAT areas or content creators in VAT areas...or both? And where does the VAT go? I know there are a lot of multinationals that pretend to be based in other countries to avoid paying my own government. Does Patreon pay VAT to the governments of every country in the world that has content creators and backers?

Angela at Patreon wrote:Q: If I use my debit card, are the service fees different?

A: The service is standardized for all payment types, so the rates are the same - even if you use a debit card to pay for your membership.


This sounds OK. It doesn't seem to be related to the price hike, though.

Angela at Patreon wrote:Q: What other payment options are there for me on Patreon?

A: Patreon will continue to have the option of paying via credit card or Paypal for their memberships. Since the service fee has been standardized, it will remain at 2.9% + $0.35 regardless of their selections.


Again, this doesn't seem to be related to Patreon's price hike. But I guess that it is worth backers finding out if it is more economical to pay Patreon via PayPal or a credit card.

I can imagine that if someone had one of the cashback credit cards* and they paid for a number of Patreon programs and want to keep paying for them, they could be earning back some money which might counter some of the price-hike. And that might help them to keep helping the content creators.

* = These cashback credit card are only any good for people who can afford to pay them back IN FULL every month. Otherwise fees are usually larger than the income they raise.
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Re: [Patreon] Beware of the price hike!

Postby Big Mac » Fri Dec 08, 2017 12:40 am

Change.org have a petition: Patreon: Drop The External Service Charge which has gained over 2,000 signatures in 15 hours!
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Re: [Patreon] Beware of the price hike!

Postby timemrick » Fri Dec 08, 2017 1:09 am

Thanks for the info, Mac! I've been meaning to look into Patreon, both as a patron and a creator, for some time now, so this is one more thing for me to keep in mind.
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Re: [Patreon] Beware of the price hike!

Postby RobJN » Fri Dec 08, 2017 1:42 am

As a lowly $1.00 supporter, this makes me sad, as I will have to withdraw my pledge for the project I support before the turn of the new year.

This, too, has me re-thinking exploring crowd-fund-age
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Re: [Patreon] Beware of the price hike!

Postby Big Mac » Fri Dec 08, 2017 2:03 am

It looks like this is hurting Raddu (the guy behind The Burnt World of Athas). He posted this on Patron's Facebook page:
Robert Adducci on the Facebook page for Patreon wrote:Thanks Patreon, due to the fee changes I've lost 4 patrons today. EDIT: now 6


I know that Thorf and Anna Meyer are both doing stuff supported by Patreon. I hope this has not affected what they are able to do. ;(
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Re: [Patreon] Beware of the price hike!

Postby Big Mac » Sat Dec 09, 2017 3:32 pm

Owen K C Stephens seems to have found a way to hack the price levels in his Patreon campaign, so that he is dropping them by the same amount (or by a very similar amount) the the amount that Patreon is charging with their price-hike! See his New Pledge Levels statement:
Owen K C Stephens at Patreon wrote:Heya Folks.

As you may or may not have heard, Patreon is changing how you are charged for supporting people. Instead of you being charged the amount you pledge, and all fees coming out before I see it, you are now charged a cost of 35 cents, plus 29 cents per $10 of your pledge.

So if you pledged $3 to support me, in January you'd be changed $3.44, instead of $3.

And that's BS.

I don't control how Patreon charges my patrons, but I do control the cost of my reward levels.

So I have opened new pledge levels, with the same reward as the old ones but which are cheaper by 35 cents plus 29 cents per $10. In other words if you back me at the $2.57 level, you should be changed $3. (I confess I'm not sure how they are rounding things to it might be a cent or two off, but it won't be an extra 44 cents).

I urge all of you to pick the new pledge levels appropriate for your current level of desire to support me. because I want your support!

But I don't want you to be gouged!

Thanks,

Owen


Owen doesn't have a backer level lower than $3.00 (now being dropped to $2.57) so it's possible his trick would not work with $1 (and maybe even $2) backing levels. But it's a genius move!
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