The business of Patreon

TechCrunch | 2/6/2018 | Staff
hey13 (Posted by) Level 4
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Patreon provides business infrastructure to independent content creators: people making videos, music, podcasts, paintings, comics, games, magazines and other forms of media for fans online. It helps them turn the small subset of superfans within their broader fan base into paying monthly patrons and manage relationships with those patrons across the web. Patreon is angling to become the dominant platform for creators to build these membership businesses, a position from which it could expand into other products and services for creators.

In this section of the EC-1, I am digging into the structure, performance and health of Patreon as a business. The sections are organized as follows:

Analysis - Patreon - Product - Competitors - Thesis

My analysis of Patreon’s product, competitors, and overarching thesis have been spun out as their own articles.

Reading time for this article is about 20 minutes. Feature illustration by Bryce Durbin / TechCrunch.

Patreon - Business - Model - Creators - Percent

Patreon’s business model is straightforward, though it is becoming more complex. It charges creators 10 percent of their revenues through the platform, which is divided into a 5 percent platform fee and a 5 percent payment processing fee. Patreon has always had a flat 5 percent platform fee, but its payment processing fees have varied in the past.

Patreon has shifted strategy, no longer acting as a marketplace connecting fans and creators but as a SaaS platform with a suite of tools for creators. Rather than viewing its fees as a marketplace rake, a better analogy is to the commission model akin to that of a talent manager, agent or record label. Patreon’s incentives are directly aligned with its customers’ goal of generating more income from their fans.

Model - Patreon - Commission - Fees - Exchange

That simple model will get more complicated, as Patreon is poised to introduce additional commission fees in exchange for access to some new functionality and services. Plus, the company acquired two startups last year (Memberful and Kit), which...
(Excerpt) Read more at: TechCrunch
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