The title of this post is taken from Jillian Tamaki’s tweet, which sparked a lively discussion around artists, platforms and ownership. In the original tweet, she asks us:
OK but seriously: how can we artists build and maintain our own platform(s)—accessible, cheap, independent—to sell our work via subscription or otherwise
Her question was prompted by the recent announcement of a new fee system at Patreon, a place that many comic artists (myself included) had cozied up to previously. While they did reverse their decision after significant public outcry, this incident was a sharp reminder that venture-backed internet platforms might not have our interests in mind after all. Personally, Patreon’s initial lack of of transparency and their later faulty justifications that cited some seriously poor diagrams (see below) and arguably-dodgy NPS surveys were discouraging, to say the least.
As a cartoonist who works in tech – and as someone who hosts their own online store – I noticed some glaring gaps in the discussion around the incident. So I wanted to offer my two cents here to help fellow artists promote and sell our works online.
The recent kerfuffle at Patreon
If you know about this already, feel free to skip to the next section.
In early December, Patreon put out an announcement to its users that it would a) charge a flat transaction fee of 2.9% + $0.35 to each individual pledge (instead of the current variable fee but the new fee would also be shouldered soley by patrons on top of their pledge rather than taken off after payment) and b) switch from bundling all charges at the beginning of the month to one that is rolling. The former is meant to guarantee that creators took home more, steady money while the latter was, they claimed, “by far, the most creator-requested feature over the last 2 years” – they even proffered some NPS survey results to prove this.
The chart they use to demonstrate these changes is actually quite telling about their intentions:
Notice the absence of an axis/scale? That’s because while the above chart is roughly accurate for a creator charging, say, $5 per month (the amount used in the example in their Q&A), this is what it looks like for a creator charging $1 a month:
N.B. Chart photoshopped by yours truly.
In other words, they were optimizing their product for their vocal, $5+ per month creators and not the comics community who are known for having hundreds of single-dollar patrons.
Luckily, the public outcry reached their ears after five days and they retracted their new fee structure. But it left a sour taste in everyone’s mouth and left the artist community yet again pondering their fate at the hands of a venture-backed startup.
The elephant in the room: payment processors
The fee that Patreon wanted to charge its users – 2.9% + $0.35 – is actually more or less exactly what it costs to process a credit charge once on the internet today. Most web platforms we know use one of two services to do this: Stripe and PayPal. Both charge 2.9% + $0.30 for every transaction in the US. (I don’t know why Patreon added an extra 5¢.) In essence, what Patreon wanted to do was the pass the cost of these payment processors off to the patrons rather than the creators. This magic number (2.9% + $0.30) is a sort of standard on the web today – even Amazon payments adheres to it – and so transactions on Kickstarter, Gumroad, Uber, Lyft, Shopify, etc. are all subject to this processing fee.
This magic number is per transaction: which means that had Patreon moved their payments from being bundled together once per month to a rolling basis, the fees would’ve skyrocketed for single-dollar pledges. But this bundling together is also, I suspect, why the fees vary right now: Stripe charges patrons once a month at 2.9% + $0.30, and it charges creators once a month at 2.9% + $0.30. I’m highlighting this per-transaction aspect because I want to point that giving creators one dollar a month can be extremely wasteful depending on how many creators you’re backing:
- If you back 1 creator at $1, 33¢ of your dollar goes to Stripe
- If you back 5 creators at $1, 45¢ or 9% of your money goes to Stripe
- If you back 10 creators at $1, 59¢ or 6% of your money goes to Stripe
Two major side effects become apparent from this analysis. One: we artists can’t replicate Patreon ourselves on our personally-hosted platforms, because we’d lose the network effects of our patrons backing multiple creators. Two: patrons who only back one or two creators on Patreon for $1-2 are really wasting their money. Neither of these factors makes me very keen on monthly subscriptions for artists.
Note: Kickstarter’s new Patreon-like service, Drip, also suffers from the same constraints. But they seem a bit more aware of the problem: so far, all of their private-beta creators all charge $3 and up per month. Still, if I only supported one creator at $3 a month, 13% of my money would go to Stripe.
As it stands, monthly subscriptions or anything that charges people $1-2 regularly are a pretty bad deal. Until Patreon or its competitors switch to charging people every two or three months or find some other workaround, I think I’m going to hold back on using their services.
It also aggravates me that this cost analysis is not readily available to working artists today. For many of us, our artwork is one of our major sources of income, and the lack of transparency about how the numbers pan out hurts us as well as the friends/fans/patrons who want to support us. Instead, the details are buried in a curt support article while artists and fans alike are simply handed glib marketing demonstrations, such as this one on the frontpage of Patreon.com:
Financial literacy is important.
In part two of this article, I’m going to do a deep dive on Gumroad’s recent opportunistic press releases (hot on the heels of the Patreon kerfuffle), outline how it can be useful to have our own independent platform, and give some recommendations on platforms (self-hosted or otherwise) that have come up in the course of my research. Stay tuned!