Patreon’s novel idea of fans just directly paying the artists they love is having its hockey stick moment. Patreon tells TechCrunch that in a year, it’s doubled the number of monthly active paying patrons to 1 million, and the number of active creators to 50,000. It’s now on track to pay out $150 million to creators in 2017, which would make its 5% cut equal $7.5 million in revenue. That’s after paying out $100 million total since 2014.
Videographers, musicians, writers, illustrators, animators, podcasters, game developers and more artists are finding steady income through Patreon at a time when other platforms look shaky for creators.
After the PewDiePie scandal alerted advertisers that they were appearing alongside objectionable content, YouTube has started letting them filter out certain channels. The result has been a decrease in monetization for YouTube stars. Vine died. Snapchat has neglected creators, refused to offer them direct monetization options, and now has seen view counts fall due to ditching auto-advance and competition from Instagram.
Meanwhile, Instagram doesn’t offer an ad revenue splits with creators. Facebook has begun to give some video makers 55% of the revenue from ad breaks they insert in their clips, but the program has yet to scale. Ad supported platforms often pay merely $0.10 to $0.0005 per view, so creators have to be broadly popular to earn a living.
Yet on Patreon, contributors frequently cough up $5 per month to each of their favorite creators, who make 50X to 10,000X more per fan than on ads. In exchange, creators offer the art they’ve made that month, reserving premium access and rewards to those who pay more. 35 creators made over $150,000 in 2016, and thousands earn more than $25,000 a year.
Patreon itself has raised $47 million from investors including a $30 million Series B led by Thrive Capital in January 2016. By this time, it’s likely ready to go raise some more, which would explain why it’s trumpeting these momentum numbers to press. Patreon’s steady recurring revenue model could attract cash to grow its outreach to creators and build them more growth, analytics, and monetization tools.
Luckily since it doesn’t have to host advertising, Patreon can be a bit more cavalier about the types of creators it supports. It allows pornographers, but has also been criticized for its free speech perspective that permits blatantly offensive content makers to utilize the site. Patreon will also have to fend off competitors like Steady, and outmanuever bigger one-off project-based crowdfunding platforms like Kickstarter and Indiegogo.
The macro shifts of content creation on the Internet move in Patreon’s favor, though.
Free distribution through the web disintermediates artists and fans, opening the door for niche, polarizing creators that could never be distributed through mainstream mass-media channels like Hollywood film, television, radio, or newspapers. Payment and business software lets creators operate independently without the need for an overarching production studio, record label, or publisher. As physical media subsides and digital media becomes increasingly free, passionate fans are seeking ways to prove their love for artists and support their work.
And with each patron and each creator it adds, Patreon’s network effect grows. There are more contributors to appeal to on the platform, and more makers to discover and donate to instantly. This funnels more curational power to Patreon, which can dump attention on top creators when they join. At scale, even just taking a 5% cut build into a lucrative bridge between audiences and artists when others are discarding them.
[Image Credit: Ben Adams via Patreon homepage]
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