In what could be the biggest variation on the crowdfunding model to date, San Francisco-based startup Patreon has raised $2.1 million in funding for its subscription-based system, complete with an emerging content platform. Patreon offers a different kind of crowdfunding platform that allows fans to pledge recurring payments to a creator rather than provide one-off support to a single project.
The service has already experienced explosive growth after only a few months. Patreon seeks to solve the problem of creators funding themselves with low-CPM advertising by connecting them with their fans at an earlier stage of the creation process.
“It’s digusting,” says Patreon co-founder Jack Conte, when talking about the way creators frequently try to monetize their work online. “$100 checks from AdSense are a bad model.”
Conte, an independent musician perhaps best known for his work with the duo Pomplamoose, was looking for a better way to make money with digitally distributed content. Although he does not come from a web background, Conte is no babe in the woods. His YouTube channel has 242,000 subscribers and over 23 million views. Pomplamoose’s YouTube channel has 387,000 subscribers and over 91 million views.
Trying to think his way out of a revenue model that wasn’t working for him, Conte tweaked the idea of crowdfunding, shifting it away from people funding projects like books and video games, to people pledging regular support to what creators were already doing – making music videos, podcasts, webcomics and the like.
“You don’t give away your print book for free,” Conte explains, referring to the more conventional approach of giving away digital content in order to sell a physical good. “(Instead) you’re getting paid to make things (digitally).”
The difference between Patreon’s method and crowdfunding sites like Kickstarter and Indiegogo is threefold. Patreon patrons are backing a creator, not a project. The work being backed is digital, whereas Kickstarter and Indiegogo frequently have projects aimed at the creation of physical goods. Finally, and perhaps most importantly, the patrons are agreeing to re-occurring payments, not a one-time backing.
Patreon works as follows: a potential patron will go to a creator’s page, select an amount to pledge, and enter a credit card number. There are two structures to the pledging: a flat monthly fee (for creators that do things with high frequency, like a daily podcast or webcomic) or a per item fee (every time the creator posts a creation, this being a common method for music videos). In the case of the per item option, the patrons can install a cap on how much they’re willing to spend on a month in case the creator has a prolific month. Patreon itself takes 5% of the funds raised.
How is this doing? Nine months in, several creators have passed the $7,000 mark, either per item or per month. Conte himself has $7,234.07 pledged to him each time he posts a new music video (assuming he doesn’t run into pledge caps). Patreon released a chart of “Total Reoccuring Pledges per Created Work” showing January to be at approximately $150,000. While not extending back to the time of Patreon’s founding, that chart shows the exponential growth that Silicon Valley likes to see in the “hockey stick” chart of revenue and/or traffic for a startup.
The chart itself is a mash-up of the monthly and per item fees and doesn’t address how many items were created, just how much would be pledged if one of each were created and posted. It could represent $300,000 as easily at $75,000in actual pledges processed.
While Conte’s background is in music and brought many videos to the site, webcomics have started dipping their collective toe in the water. This is so new, many strips haven’t been through a cycle yet, but early winners include Zach Weinersmith’s Saturday Morning Breakfast Cereal with $7,657/month pledged, Jonathan Rosenberg from Scenes From a Multiverse and Goats has $2,356/mo pledged and Paul Taylor has $1,227/mo pledged for his Wapsi Square webcomic.
The larger successes have been with a monthly pledge for an ongoing strip, though Kenno Arkkan has been pledged a total of $447/page for his webcomics My Life with Kel and the item option could be adapted for a weekly chapter or monthly comic as the unit being paid for.
For the most part, this is a new stream of income for the creators, though some have pledged to do away with advertising if pledges reach a certain level.
“The added income, and (comparably important) income stability allowed me to make some hiring decisions which were desperately needed,” says Weinersmith who promoted a part-time staffer to full-time with the added funds.
“Right now Patreon is supplementing my current revenue model and helping free time up for me to spend more time doing actual writing and drawing on my comic,” Taylor told PW. “Time that was otherwise spent working on commissions and other illustrations to sell via Ebay.”
In a more qualitative sense, Erika Moen whose Oh Joy Sex Toy strip has been on Patreon less than a month, found an unexpected side benefit: “I've been keeping a near-daily Patron-only blog that updates them on what I've done to create my comic/run my business that day. It's actually been really affirming, which I wasn't expecting. It forces me to sit down and think "Oh hey, I got this done. And this. And this. And I made progress on this thing, too!" It makes me think about all my micro-successes.”
Multiplex's Gordon McAlpin has thus far raised $535 a month and is using Patreon to remove ads from his website. "It's currently only making enough to have replaced one of the ads, not all of them like I'm hoping it will eventually," he says. "but so far it's still an improvement on the revenue that I was making from the one it has replaced so far."
He notes that most of his backers joined in the first few weeks but "there's been a slow and steady increase since then. Long-term it has a chance of being pretty viable."
The webcomics achieving the largest success are established strips with large audiences. Saturday Morning Breakfast Cereal has roughly 1.5 million unique monthly visitors, not counting strips on The Nib and Buzzfeed. Wapsi Square has 54,000 unique monthly visitors. If a creator already has an audience, the early results seem to resemble the traditional crowdfunding sites: plug in your followers and convert them. It remains to be seen whether someone can build themselves up from scratch using the platform, although a new feature makes that an interesting question.
Patreon recently started having pages displaying all content funded by its patrons. In the case of music videos, that means a page with the YouTube video embedded. In the case or art, or webcomics, that means uploading the actual comic, effectively mirroring the comic’s site. Which means, in theory, that Patreon is becoming a free hosting service and a content platform.
Is having a mirrored site a problem for a webcomic?
“I think its fine,” aays Weinersmith. “I mean, consider that my daily audience is roughly 150,000 to 225,000 people. If every single patron (currently about 2800) stopped following, I wouldn't notice.”
Patreon is less than a year old and still evolving. It seems to be filling a previously unfilled and unknown niche in the ever-expanding crowdfunding world and if the way they're starting to showcase the material generated by pledges turns them into a bonafide content platform, it could evolve into even more unique spin on crowdfunding.
