Hey, georgeb, I really appreciate this comment of yours. I’m a by-creation model creator too, and I’d like to give you a bit of a hard time.
You say “We encourage most of our per-creation creators to upgrade to a monthly billing cycle”: you do? Like, I confess I don’t read every newsblast Patreon sends out, so maybe I missed it, but never once has Patreon reached out to me to communicate, in words, “Hey, we prefer that creators use by-month”. That Patreon has an opinion one way or the other on it has been something I have been able to infer, by how poorly by-creation campaigns are often treated by Patreon, but wow is that not a nice way to do business.
It’s pretty offensive to me that you refer to by-month as an “upgrade”. It is not. It is not a premium feature one has to pay for, it is not portrayed as an “upgrade” anywhere in the user interface. I really dislike how Patreon, corporately, and its employees, individually, often use language to suggest, hint, insinuate, pressure creators into doing what Patreon wants. I, like most people, respond extremely well to polite asks. And this differential between official Patreon policy – by-creation is a thing, and as of right this second, new creator accounts can use it! – and Patreon’s behavior – oh, don’t use by-creation, we don’t like it and wish you wouldn’t, and support of it is half-baked – is really maddening. Quite aside from the specific issue of by-creation model campaigns, this “We’ll give you features but some of them we’ll punish you if you actually use them – now guess which ones, ha ha ha!” thing is really, really uncool.
Obviously an option here is to stop supporting by-creation. That’s not the one I’d prefer Patreon choose, for reasons I’ll explain in a moment. I would certainly prefer Patreon double down on supporting the by-creation model.
To explain where I’m coming from, I need to tell you a little about where I’ve been. I have two pertinent expertises. One is web development – with a specialty in the back end. One of my job duties used to be to serve as an internal consultant on new web development projects, and, by sitting with the stakeholders and doing some initial requirements discovery, coming up with the E-R diagram, and from that projecting out the development schedule and costing out how much the budget would have to be.
So when I tell you that I get that the by-creation model is a bit of a development nightmare, I do get it, at least in the broad outlines. The by-creation model takes what are, in the by-month model, nice crisp scalars, and makes them arrays. Everything about that – from representing it in the RDBMS to figuring out how to show it on the screen for the user to how to express it in the JSON/XML exposed in an API – is just miserable. Especially in comparing how easy and simple it is to do the same thing for by-month campaigns.
Thing is, from my perspective as someone who is using it, it really is worth it.
My other relevant area of expertise is psychology. And one little corner of that field is the psychology of pricing.
When I signed up for Patreon as a creator, it was because Patreon supported by-creation. I didn’t need a Patreon-type platform for one-off or monthly contributions – Paypal can do that, and I already had a Paypal account. (And I have never needed Patreon for patron management.)
No, when I heard that Patreon supported by-creation, that changed everything, because I immediately saw the pricing ramifications.
People respond to prices in “predictably irrational” ways, something every retailer knows. It’s why things get sold for $14.99 instead of $15.
I was pretty sure based on what I know about the psychology of pricing, that for just about anybody making more than two items a month, you will make more money charging by item.
Shortly after I went live with my campaign, Ursula Vernon, of whom I am a fan, went live with her own. Ursula Vernon is a world-famous, award-winning author and artist, who has literal thousands of fans and followers on social media. She was pretty much pressured into setting up a Patreon by her fans who wanted additional ways to send her money out of adoration and admiration. And I remember checking in on how her campaign was going, about a year later, and was bemused to see that I, who have never had more than 200 supporters, was making more money per month than she was. This wasn’t obvious, because Patreon nowhere shows the public how much I make per month. But I know, of course, And it’s a multiple of the number it says on my page.
I chalk this amazing thing up entirely to the fact that she was by-month and I was by-creation.
There’s a reason that charities say things like “for less than the price of a cup of coffee per day” or “for just pennies a day”. When people are deciding how much to donate or pay, they look at the bottom line and try to evaluate that: does that amount seem like a reasonable amount to give? Left to their own devices, they don’t have any real basis but a nebulous feeling for deciding how much to give. They certainly don’t do the math of “how much does this work out to by item”. If you confront them with how much per-item it is, suddenly their sense of what is a reasonable contribution becomes more in line with reality. Ask someone how much they’d be willing to pay monthly for a daily comic strip, and they’re likely to say something like, “Ehhhh, $4?” Ask them how much they’d chip in for each strip, and the same person might say, “Oh, I don’t know, $0.25 each?” Well at $0.25 per strip, times 30 days a month, is $7.50.
I don’t think DysonLogos, to whom you respond, is unusual. I think I make way more money by using the by-creation model than I would by-month.
In fact, I expect most by-creation model campaigns do better than they would by-month.
So I understand: looking at costs, by-month is better for Patreon’s financial interests. But looking at revenues, by-creation is better for creators’ financial interests.
These are not equally balanced considerations. For any business, revenues need to greatly exceed costs – which means multipliers on the revenues side have a bigger effect on the bottom line than multipliers on the costs side. All things being equal, things that increase revenues are better for your bottom line than things that decrease costs.
I suspect that because Patreon was clearly aware of the costs of supporting by-creation, but not the earnings consequences of the two different models, Patreon has made the understandable mistake of focusing on these costs without reckoning their associated advantage in earnings – an economic misstep, that has resulted in Patreon leaving money on the table.
But don’t take my word on it.
Check the evidence.
This is what data science is for. Patreon is sitting on a magnificent trove of pricing data. Figure out some way of doing a simple assessment study where you “match controls”, between by-month and by-creation campaigns – say campaigns that started in the same month in the same creative field lasting the same duration, and see whether by-month or by-creation averages the most money per month.
I expect you’ll find that by-creation campaigns, matched against by-month controls of the same start month, will make, on average, at least 30% more than the by-month controls. Furthermore, I think you’ll find that in fields where more frequent releases are normal – comic strips, podcasts – you’ll find an even higher rate of earnings than for fields where it’s more typical to release once a month (e.g. music videos, writing.)
I think that if you do this study, you will find that while by-creation is a tiny fraction of campaigns, it punches above its weight in terms of earning power. And that, frankly, if Patreon, itself, wants to earn more money, it should be encouraging creators to use the by-creation model. Especially the small fry in the long tail. I think you’ll find, if you look into it, that it’s just more lucrative on average. Sure, the not-inconsiderable additional headache of supporting by-creation is costly, but that’s an investment that I think you’ll find could be having a very nice ROI – if only your creators weren’t discouraged from using it!
But, again, I don’t expect you to take my surmise as gospel. Go check the numbers.
If I’m right? Hit me up for more of my thoughts on how Patreon could be doing better at maximizing its income, because this is not the only thing I think Patreon’s missing.