Menu
News
All News
Dungeons & Dragons
Level Up: Advanced 5th Edition
Pathfinder
Starfinder
Warhammer
2d20 System
Year Zero Engine
Industry News
Reviews
Dragon Reflections
Columns
Weekly Digests
Weekly News Digest
Freebies, Sales & Bundles
RPG Print News
RPG Crowdfunding News
Game Content
ENterplanetary DimENsions
Mythological Figures
Opinion
Worlds of Design
Peregrine's Next
RPG Evolution
Other Columns
From the Freelancing Frontline
Monster ENcyclopedia
WotC/TSR Alumni Look Back
4 Hours w/RSD (Ryan Dancey)
The Road to 3E (Jonathan Tweet)
Greenwood's Realms (Ed Greenwood)
Drawmij's TSR (Jim Ward)
Community
Forums & Topics
Forum List
Latest Posts
Forum list
*Dungeons & Dragons
Level Up: Advanced 5th Edition
D&D Older Editions
*TTRPGs General
*Pathfinder & Starfinder
EN Publishing
*Geek Talk & Media
Search forums
Chat/Discord
Resources
Wiki
Pages
Latest activity
Media
New media
New comments
Search media
Downloads
Latest reviews
Search resources
EN Publishing
Store
EN5ider
Adventures in ZEITGEIST
Awfully Cheerful Engine
What's OLD is NEW
Judge Dredd & The Worlds Of 2000AD
War of the Burning Sky
Level Up: Advanced 5E
Events & Releases
Upcoming Events
Private Events
Featured Events
Socials!
Twitch
YouTube
Facebook (EN Publishing)
Facebook (EN World)
Twitter
Instagram
TikTok
Podcast
Features
Top 5 RPGs Compiled Charts 2004-Present
Adventure Game Industry Market Research Summary (RPGs) V1.0
Ryan Dancey: Acquiring TSR
Q&A With Gary Gygax
D&D Rules FAQs
TSR, WotC, & Paizo: A Comparative History
D&D Pronunciation Guide
Million Dollar TTRPG Kickstarters
Tabletop RPG Podcast Hall of Fame
Eric Noah's Unofficial D&D 3rd Edition News
D&D in the Mainstream
D&D & RPG History
About Morrus
Log in
Register
What's new
Search
Search
Search titles only
By:
Forums & Topics
Forum List
Latest Posts
Forum list
*Dungeons & Dragons
Level Up: Advanced 5th Edition
D&D Older Editions
*TTRPGs General
*Pathfinder & Starfinder
EN Publishing
*Geek Talk & Media
Search forums
Chat/Discord
Menu
Log in
Register
Install the app
Install
Community
General Tabletop Discussion
*TTRPGs General
RPG Evolution: This Sounds Familiar
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="talien" data-source="post: 8890453" data-attributes="member: 3285"><p>Remember that time when a company abruptly changed course by focusing on their most profitable members at the expense of thousands of smaller creators? That was Patreon in 2017.</p><p></p><p style="text-align: center">[ATTACH=full]272097[/ATTACH]</p> <p style="text-align: center"><a href="https://pixabay.com/vectors/arrow-backward-forward-block-2502391/" target="_blank">Picture courtesy of Pixabay.</a></p><h3>Who's Patreon?</h3><p>Patreon is a membership platform that provides business tools for content creators to run a subscription service. It helps creators and artists earn a monthly income by providing rewards and perks to their subscribers. Patreon charges a commission of 9 to 12 percent of creators' monthly income, in addition to payment processing fees. It is a popular platform with a wide variety of creatives, including tabletop gamers of all stripes: authors, cartographers, artists, and modelers. It is now a staple of many creative's offerings and one of their multiple revenue streams. But it wasn't always that way.</p><h3>"We're Updating Patreon's Fee Structure"</h3><p>On December 6, 2017, Patreon made a <a href="https://blog.patreon.com/updating-patreons-fee-structure" target="_blank">surprising announcement</a>. In an effort to create "predictability and consistency around" creator finances, they introduced a change that pledged creators would be able "to take home exactly 95% of every pledge, with no additional fees":</p><p></p><p>This change was not made lightly. In preparation for this change, Patreon ran experiments and months and months of research to understand patrons’ potential reactions and found that "many patrons were happy knowing that the change will send more money to creators." Tucked into the announcement was this ominous statement:</p><p></p><p>This statement is revealing, because in Patreon’s eyes, not all patrons were created equal, and it clearly felt the patrons who would leave were no big loss to the company. As it turned out, “some patrons" had a lot to say about those changes.</p><h3>Uh-Oh...</h3><p>At just about 4 p.m. PST the same day, there was an edit to the blog post to clarify some points about the change. There were too many ways fees were being processed, and Patreon felt that they needed to address that with three options:</p><ul> <li data-xf-list-type="ul">Have creators deal with a huge increase in fees</li> <li data-xf-list-type="ul">Have Patreon eat the cost of the new fees (which was financially impossible given their rate of 5%)</li> <li data-xf-list-type="ul">Add a service fee so Patreon could cover the third party fees</li> </ul><p>They referenced their Net Promoter Score (NPS) ranging from -20 to -30. Net Promoter Score is a number that assumes most respondents to a survey will not share their true feelings on a topic unless you ask them if they would "promote" the topic in question to a friend or family member. Then you get the "real" response. To address its terrible NPS, Patreon went with option 3:</p><p></p><p>There are several quotes from creators in the clarifying blog post, all supporting this change. What could go wrong?</p><h3>"We messed up."</h3><p><a href="https://www.washingtonpost.com/news/the-intersect/wp/2017/12/13/facing-a-rebellion-of-furious-creators-patreon-backs-away-from-a-new-fee/" target="_blank">The change was a disaster</a>. Under the new payment model, a $1 pledge would have cost a patron $1.38, and a $5 pledge would have cost $5.50, representing a 38% and 10% rise respectively. Members with small pledges lost many patrons. Less than a week later, <a href="https://blog.patreon.com/not-rolling-out-fees-change" target="_blank">Patreon reversed course</a>:</p><p></p><p>But how did this happen? Patreon spent considerable effort testing and polling creators. The second blog post outlines what went wrong:</p><ul> <li data-xf-list-type="ul">The new payments system disproportionately impacted $1 – $2 patrons.</li> <li data-xf-list-type="ul">Aggregation was highly-valued, and Patreon underestimated that.</li> <li data-xf-list-type="ul">Fundamentally, creators should own the business decisions with their fans, not Patreon.</li> </ul><p>What motivated Patreon to make the change, and how did it massively underestimate the impact of what seemed like a well thought out plan?</p><h3>Money</h3><p>Christie Koehler posited that Patreon's problem was part of its fundamental value proposition to creators: <a href="https://subfictional.com/my-theory-patreon-doesnt-want-to-be-a-money-services-business/" target="_blank">it subsidized micro-payments</a>. As much as Patreon wanted to be about enabling creators, at heart it was about managing large amounts of small financial transactions:</p><p></p><p>With the burden of micro-payments unsustainable, Patreon chose to pivot. But why then?</p><h3>Investor Pressure</h3><p>In September of 2017, <a href="https://techcrunch.com/2017/09/19/patreon-60-million/" target="_blank">Patreon raised $60 million through Series C funding</a> with a market valuation of $450 million:</p><p></p><p><a href="https://www.pretty-terrible.com/start-up-suicide-patreon-style/" target="_blank">Series C funding</a> is used to scale the company up in an effort to receive a significant return on investment, key words being "scaling up growth." Or to put it another way, Session C funding is when a company gets serious about making profit happen.</p><p></p><p>With an estimated 15 different investment interests in Patreon, it's not surprising that there was pressure to maximize returns from Patreon's creators. Patreon needed to nearly double in size prior to their IPO or risk being de-valued. Although Patreon has never outright stated the reason for the timing of their decision to implement the new fee structure, it's easy to see how investors were likely pushing the company to fix a longstanding problem.</p><p></p><p>That still doesn't explain why Patreon launched a plan <a href="https://www.engadget.com/2017-12-08-patreon-fee-change-will-hurt-small-contributions.html" target="_blank">that was ultimately more harmful to the company's base</a>. And for that, we need to look Tal Raviv, the Growth Product Manager at Patreon.</p><h3>GMV and FSCs</h3><p>Raviv was upfront about who Patreon cared about the most: <a href="https://brianbalfour.com/essays/patreon-onboarding-growth" target="_blank">Financially Successful Creators (FSCs)</a>.</p><p></p><p>He later explains in that same interview that GMV (Gross Merchandise Value), is key:</p><p></p><p>GMV is the total value of merchandise sold over a period of time through a customer-to-customer exchange site. So who are these FSCs massively adding to Patreon's GMV? One way to measure them is Patreon creators who make more than the federal minimum wage. In total, <a href="https://theoutline.com/post/2571/no-one-makes-a-living-on-patreon" target="_blank">that's just 2 percent of Patreon members</a>:</p><p></p><p>And there it is, the remaining puzzle piece of how Patreon missed the forest for the trees.</p><h3>Putting it All Together</h3><p>Adding this all up, Patreon was at a crossroads in the company's evolution. They had just gotten an infusion of cash from investors who likely expected growth from a model that was no longer sustainable. Patreon knew it had to make a change in how it managed micro-transactions.</p><p></p><p>We'll never know if Patreon's data gathering was biased by its focus on FSCs, but we do know that the change they implemented disproportionately harmed small creators, <a href="https://www.patreon.com/join/talien" target="_blank">my Patreon included</a>. With its focus on an elite group laid bare, Patreon's creator-friendly brand took a hit.</p><p></p><p>Worse, Patreon’s business model still needed those small creators. Small creators amplified Patreon’s brand, which in turn made FSCs more successful, and potentially became FSCs themselves over time with Patreon’s help.</p><p></p><p>The parallels between Patreon's struggles and the current controversy with the Open Game License are eerily similar. The good news is it's not too late to pivot. In the next article, we'll look at how Patreon clawed itself back from the brink and what game companies can learn from their mistakes.</p></blockquote><p></p>
[QUOTE="talien, post: 8890453, member: 3285"] Remember that time when a company abruptly changed course by focusing on their most profitable members at the expense of thousands of smaller creators? That was Patreon in 2017. [CENTER][ATTACH type="full" alt="thissoundsfamiliar.jpg"]272097[/ATTACH] [URL='https://pixabay.com/vectors/arrow-backward-forward-block-2502391/']Picture courtesy of Pixabay.[/URL][/CENTER] [HEADING=2]Who's Patreon?[/HEADING] Patreon is a membership platform that provides business tools for content creators to run a subscription service. It helps creators and artists earn a monthly income by providing rewards and perks to their subscribers. Patreon charges a commission of 9 to 12 percent of creators' monthly income, in addition to payment processing fees. It is a popular platform with a wide variety of creatives, including tabletop gamers of all stripes: authors, cartographers, artists, and modelers. It is now a staple of many creative's offerings and one of their multiple revenue streams. But it wasn't always that way. [HEADING=2]"We're Updating Patreon's Fee Structure"[/HEADING] On December 6, 2017, Patreon made a [URL='https://blog.patreon.com/updating-patreons-fee-structure']surprising announcement[/URL]. In an effort to create "predictability and consistency around" creator finances, they introduced a change that pledged creators would be able "to take home exactly 95% of every pledge, with no additional fees": This change was not made lightly. In preparation for this change, Patreon ran experiments and months and months of research to understand patrons’ potential reactions and found that "many patrons were happy knowing that the change will send more money to creators." Tucked into the announcement was this ominous statement: This statement is revealing, because in Patreon’s eyes, not all patrons were created equal, and it clearly felt the patrons who would leave were no big loss to the company. As it turned out, “some patrons" had a lot to say about those changes. [HEADING=2]Uh-Oh...[/HEADING] At just about 4 p.m. PST the same day, there was an edit to the blog post to clarify some points about the change. There were too many ways fees were being processed, and Patreon felt that they needed to address that with three options: [LIST] [*]Have creators deal with a huge increase in fees [*]Have Patreon eat the cost of the new fees (which was financially impossible given their rate of 5%) [*]Add a service fee so Patreon could cover the third party fees [/LIST] They referenced their Net Promoter Score (NPS) ranging from -20 to -30. Net Promoter Score is a number that assumes most respondents to a survey will not share their true feelings on a topic unless you ask them if they would "promote" the topic in question to a friend or family member. Then you get the "real" response. To address its terrible NPS, Patreon went with option 3: There are several quotes from creators in the clarifying blog post, all supporting this change. What could go wrong? [HEADING=2]"We messed up."[/HEADING] [URL='https://www.washingtonpost.com/news/the-intersect/wp/2017/12/13/facing-a-rebellion-of-furious-creators-patreon-backs-away-from-a-new-fee/']The change was a disaster[/URL]. Under the new payment model, a $1 pledge would have cost a patron $1.38, and a $5 pledge would have cost $5.50, representing a 38% and 10% rise respectively. Members with small pledges lost many patrons. Less than a week later, [URL='https://blog.patreon.com/not-rolling-out-fees-change']Patreon reversed course[/URL]: But how did this happen? Patreon spent considerable effort testing and polling creators. The second blog post outlines what went wrong: [LIST] [*]The new payments system disproportionately impacted $1 – $2 patrons. [*]Aggregation was highly-valued, and Patreon underestimated that. [*]Fundamentally, creators should own the business decisions with their fans, not Patreon. [/LIST] What motivated Patreon to make the change, and how did it massively underestimate the impact of what seemed like a well thought out plan? [HEADING=2]Money[/HEADING] Christie Koehler posited that Patreon's problem was part of its fundamental value proposition to creators: [URL='https://subfictional.com/my-theory-patreon-doesnt-want-to-be-a-money-services-business/']it subsidized micro-payments[/URL]. As much as Patreon wanted to be about enabling creators, at heart it was about managing large amounts of small financial transactions: With the burden of micro-payments unsustainable, Patreon chose to pivot. But why then? [HEADING=2]Investor Pressure[/HEADING] In September of 2017, [URL='https://techcrunch.com/2017/09/19/patreon-60-million/']Patreon raised $60 million through Series C funding[/URL] with a market valuation of $450 million: [URL='https://www.pretty-terrible.com/start-up-suicide-patreon-style/']Series C funding[/URL] is used to scale the company up in an effort to receive a significant return on investment, key words being "scaling up growth." Or to put it another way, Session C funding is when a company gets serious about making profit happen. With an estimated 15 different investment interests in Patreon, it's not surprising that there was pressure to maximize returns from Patreon's creators. Patreon needed to nearly double in size prior to their IPO or risk being de-valued. Although Patreon has never outright stated the reason for the timing of their decision to implement the new fee structure, it's easy to see how investors were likely pushing the company to fix a longstanding problem. That still doesn't explain why Patreon launched a plan [URL='https://www.engadget.com/2017-12-08-patreon-fee-change-will-hurt-small-contributions.html']that was ultimately more harmful to the company's base[/URL]. And for that, we need to look Tal Raviv, the Growth Product Manager at Patreon. [HEADING=2]GMV and FSCs[/HEADING] Raviv was upfront about who Patreon cared about the most: [URL='https://brianbalfour.com/essays/patreon-onboarding-growth']Financially Successful Creators (FSCs)[/URL]. He later explains in that same interview that GMV (Gross Merchandise Value), is key: GMV is the total value of merchandise sold over a period of time through a customer-to-customer exchange site. So who are these FSCs massively adding to Patreon's GMV? One way to measure them is Patreon creators who make more than the federal minimum wage. In total, [URL='https://theoutline.com/post/2571/no-one-makes-a-living-on-patreon']that's just 2 percent of Patreon members[/URL]: And there it is, the remaining puzzle piece of how Patreon missed the forest for the trees. [HEADING=2]Putting it All Together[/HEADING] Adding this all up, Patreon was at a crossroads in the company's evolution. They had just gotten an infusion of cash from investors who likely expected growth from a model that was no longer sustainable. Patreon knew it had to make a change in how it managed micro-transactions. We'll never know if Patreon's data gathering was biased by its focus on FSCs, but we do know that the change they implemented disproportionately harmed small creators, [URL='https://www.patreon.com/join/talien']my Patreon included[/URL]. With its focus on an elite group laid bare, Patreon's creator-friendly brand took a hit. Worse, Patreon’s business model still needed those small creators. Small creators amplified Patreon’s brand, which in turn made FSCs more successful, and potentially became FSCs themselves over time with Patreon’s help. The parallels between Patreon's struggles and the current controversy with the Open Game License are eerily similar. The good news is it's not too late to pivot. In the next article, we'll look at how Patreon clawed itself back from the brink and what game companies can learn from their mistakes. [/QUOTE]
Insert quotes…
Verification
Post reply
Community
General Tabletop Discussion
*TTRPGs General
RPG Evolution: This Sounds Familiar
Top