The thesis of Patreon

TechCrunch | 5/7/2013 | Staff
oxboy (Posted by) Level 4
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Can Patreon become a powerful, multi-billion-dollar company at the heart of the global media and entertainment industry? It’s founders and investors certainly believe so.

In this Extra Crunch EC-1, I dove into Patreon’s founding story, product, business model, and competition. Now I want to dissect the foundational thesis of where Patreon could unlock massive economic value. If it turns out they got the thesis wrong, tactical and product details won’t save it.

Patreon - Thesis - Hypotheses

As I see it, Patreon’s thesis includes four hypotheses:

There’s a ton of untapped economic value in getting the mid-tail creator market to adopt membership business models.

Creators - Membership - Business - Models - Idea

Creators will adopt membership business models once they become exposed to the idea.

Creators need a dedicated “membership” service independent of the platforms they use for most of their content distribution and social interaction.

Membership - Patreon - Products - Services - Creators

By owning membership, Patreon will be able to expand into providing numerous other products and services to creators.

I agree there is substantial untapped opportunity for mid-tail creators to leverage memberships, that Patreon can secure meaningful market share even amid competition by the largest content distribution platforms, and that being the dominant infrastructure provider for creator memberships is a highly strategic position from which to expand into numerous other products and services for creators. Where I’m more cautious is regarding the pace by which creators will adopt this and the percent of mid-tail creators for which this is a good fit. Let’s dig in.

Time - Article - Minutes - Feature - Illustration

Reading time for this article is about 11 minutes. Feature illustration by Bryce Durbin / TechCrunch.

1. There’s a lot of untapped economic value in getting the mid-tail creator market to adopt membership business models.

Creators - Media - Content - Others - Online

Creators produce media content for others to consume online and are independent (and not employees) of large media companies. The “mid-tail” creator is an individual who has a dedicated base of “true fans” probably numbering in the hundreds...
(Excerpt) Read more at: TechCrunch
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