Patreon, the service that allows creators to be financially crowd-supported by their patrons, has announced a few major changes coming to its fee structure later this month.
At the moment, Patreon deducts a 5% cut from every pledge, along with a transaction fee that varies between 2-10%. It’s important to note that these deductions are made from the creator’s cut, meaning that they do not burden the patrons. In the new fee structure, Patreon will still deduct a 5% cut from the creators, but spare them of the transaction fee. Instead, it will charge patrons a 2.9% + $0.35 service fee, for each creator that they support. Additionally, for creators that choose to be supported on a per-post basis, the patrons will be paying the service fee per post.
Simply put, in the old fee structure, if a patron pledged $1 to a creator, they would end up paying exactly that, with the creator getting anywhere between $0.85 to $0.93. In the new structure, the creator would get a predictable $0.95, but the patrons would be charged a service fee, making a $1 pledge cost $1.38 – and therein lies the problem.
If we take this a little further; a patron who supports 10 creators with $1 would have paid $10 with the old fee structure, but the new fee structure would charge them $13.80 – the service fee is charged per creator. As such, if the patron rather decided to support just one creator with $10, they would be charged a comparatively less $10.64. Similarly, if a patron pledges $5 per post from a creator, they would now be paying $11 for two posts, rather than $10.
In other words, the new fee structure puts the brunt of its negative impact on patrons who support several creators with smaller values - $1 to $5. Understandably, this has put creators in a worry, as it could lead to patrons dropping some of the creators they support.
Patreon says that this change comes in the wake of several complaints by creators on its platform about its current payment structure. The company states that, for the moment, “payments on Patreon are weird,” explaining its rationale and motivation for the changes best in its blog post; however, the gist of it is pretty simple: the variable (and high) transaction fee that Patreon was taking from a creator’s cut meant that it was never predictable how much money the creator would earn, and that’s setting aside the fact that this fee could be as high as 10%. This caused confusion for the creators, as it was never clear how much money Patreon would take, which in some cases also caused issues when filing tax returns.
As the new structure replaces the transaction fee on the creators’ side with a stable service fee on the patrons’ pledge, the creators would now get a stable – and predictable – 95% of their pledged amount.
Considering that this change affects patrons negatively, several creators have expressed the desire to cover the cost of the service fee for their patrons. However, Patreon states that this is not possible, stating that “the service fee will be extended to all patrons on the site.”
The new service fee will apply to patron pledges starting from December 18. Patrons that pay monthly will see their first payment with the new fee starting from January 1 next year. Patreon has also published a Q&A , answering some of the questions that people may have about the upcoming changes.
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