Today’s guest on Decoder is Jack Conte, the co-founder and CEO of Patreon, a platform that allows people to pay their favorite creators directly in the form of monthly memberships.
If you’ve been listening to Decoder or reading The Stock Market Pioneer, you know that the idea of paying creators directly is popping up on social platforms like Twitter, Instagram, and Facebook, and in a range of new startups, like Substack. Basically, every platform is looking for a way to let creators charge their audiences directly, while taking a cut along the way.
The buzzword for all of this is the “creator economy,” which is just an overloaded way of saying that individual creatives can become businesses with multiple lines of revenue and a direct relationship with their audiences, instead of relying on a platform’s advertising model.
Patreon’s been supporting that economy for eight years now and has grown into a formidable business because of it, tripling its valuation to $4 billion just this past April. Several weeks after securing the investments that earned Patreon its new valuation, Jack announced the company was laying off 36 people from Patreon’s product and design team to refocus on a new product approach.
As a musician, Jack has specific ideas of what Patreon can and should provide, and a specific vision of where the company fits. His vision is focused on offering a way to support creatives who work across multiple platforms, and creating diverse streams of revenue instead of being tied to a single platform. It came up right away in our talk — Jack refers to Patreon’s business model as “membership,” which we took some time to figure out.
That also comes with a unique relationship to Apple and the App Store. Apple wants a 30 percent cut of every digital purchase on the iPhone, and Patreon lets creators sell things — but it doesn’t have to pay the cut, while other newer platforms appear to be stuck paying the tax. I asked Jack if he worries about an App Store crackdown, and how creators should feel about Apple and the App Store. If you ask me, the fight between Apple and creators is about to get really messy, and no one’s really ready for it. Jack’s answers here were pretty illuminating.
The following transcript has been edited for clarity.
It feels like the words “creator economy” come up in almost every conversation I have lately. You’re a recording artist yourself. You’ve seen this entire movement grow into the monster it is now — you started Patreon in 2013. It’s effectively a platform that allows people to pay creators directly.
That’s right. We are a membership platform. We allow folks to have subscription pledges to creators, in exchange for exclusive content, community, and stuff like that.
I want to dig in on why specifically you call it a membership platform. Basically, you’re transferring money from people who like things to people who make things, which is important. You’re very successful [at it] — I just read in the Wall Street Journal that in April you raised another $155 million in funding. That tripled the value of Patreon to $4 billion.
That’s quite a journey over the past eight years to go from startup, to $4 billion valuation in a world where everyone is trying to compete in the creator space. Give me a sense of that ride and where you think things are now.
In many ways, I’m not surprised that the world is waking up to this.
I remember this feeling, in 2012, I had spent three months working on this music video. I poured my savings account into the video — I spent 10 grand on it. I maxed out two credit cards. I was taking daily trips to Home Depot, swiping my credit card, getting supplies for this music video. I was listening to a lot of electronic music at the time. I’d released this EP and I wanted to make a video with these robots. And I built a replica of the Millennium Falcon cockpit in my studio. I had worked so hard on this video. I killed myself for three months to do this, spent so much money, and gave it everything I had.
I remember this feeling the night before upload, where I realized, I’m going to put this video on YouTube, it’s going to get a million views, because that’s what my videos would get at a time when I uploaded them, and my paycheck for that is going to be like $160 from YouTube. I remember thinking, “How the fuck is this still possible?”
What world are we in, where creative people are pouring their hearts out, uploading stuff to the internet, getting millions of views — this is not like the starving artists problem. A million people are seeing this. Ten football stadiums full of humans are about to watch this thing that I made. Thousands of comments and excitement and passion and energy from the community. And I’m going to get paid $160 for this? What world is this? And how is everybody not screaming about this problem right now? It felt so obvious.
I guess that’s why it doesn’t feel like a surprise to me now. I’m so grateful. I’m so glad that the rest of the world is waking up to this problem. I think the next decade is going to be awesome for creative people because they’re going to have options. They’re going to have the ability to generate revenue in whatever way they want. There’s going to be a bunch of companies building for them. Finally, the world seems to be waking up.
But yeah, eight years ago, there was nobody solving this problem.
Let me put that in an even longer timeframe, for context. In the ’90s, at the height of the CD era, a band would release a CD. A handful of radio stations and MTV would promote it. A lot of people would buy the CD, and the band would get rich. They made money selling the music directly. And if they monetized their work in other ways, like sync rights or movie licensing or whatever, there would actually be a conversation about authenticity and selling out.
That is gone now.
One of the reasons that’s gone is no one makes money selling the [music] itself anymore. You more or less give that away for free, or for $160 on YouTube. And then you’ve got to find all these other revenue streams around your work.
If we’re going back to the ’90s, let’s go all the way back. Let’s keep going.
For thousands of years, the way the arts were funded globally was wealthy people or institutions were like, “I enjoy what you make. Here’s a bag of coins, go make more of that stuff, and let me know when it’s done.”
And this sort of patronage model was the way that art was funded for literally thousands of [years]. Basically all the art we know in history books, the business model for that art was not unit sales. It was patronage. It was a person who made great stuff. And then an institution, a religious institution, a government, a wealthy individual, would pay that person to go make more of that. You name it, whether it’s the Sistine Chapel or the David or whatever, that art was funded through that business model. Those artists made money through that business model.
Then the 1900s rolled around — the late 1800s, to right around the turn of the century. Essentially what happened was humans figured out how to record what would otherwise be ephemeral art onto physical objects. We figured out how to record light onto celluloid. We figured out how to record sound onto wax cylinders. That replaced, eventually, the business model of patronage, with unit sales being the primary revenue mechanism for artists.
Starting in the 1900s, billions of dollars of infrastructure basically evolves — whether it’s jewel case manufacturers or trucking companies or brick-and-mortar retail — all this infrastructure evolved to basically help artists put their art on a physical object and then ship that physical object around the world to consumers who would purchase it and then enjoy the art. That became the primary business model for art and artists — whether they’re creating video or audio, music, talk, whatever it is — for a hundred years.
At which point, the internet hit and scarcity disappears. Unit sales disappear as a business model. And suddenly everyone’s running around with their hair on fire, trying to figure out how to get creators to make money again.
We’re right now in that time where I think humans are realizing [that] when we built the first version of the web, we wiped out a hundred years and billions of dollars of infrastructure to be the financial mechanism for artists to make money. And that needs to be rebuilt now in a digital-first age. That’s the place in history where I think humans are, with regard to creative people making money.
You described [Patreon] as a membership model, which is fascinating. Every one of the models you’ve described has huge inherent trade-offs. The church and some rich people are going to fund all art, is, like, the ultimate gatekeeper trade-off. A bunch of record labels and MTV executives funding all music had a huge set of trade-offs — MTV didn’t play rap music for the longest time.
The internet removed that gatekeeping ability, but it also removed the underlying economic model. Patreon did not go back to unit sales; you’re calling it membership. I want to know: why are you calling it membership?
I think that a really important insight is that all of these models have trade-offs. In a perfect world, art and commerce, I think, could be in vacuums and coexist in full purity. But the truth is, if you want to be a professional artist, [you’re] figuring out how to create a business model around your art.
Even with unit sales, there were certain inherent pressures of that overlap between art and commerce. Like a band goes through the classic thing: okay, there’s our first record. The second record, there’s a lot of pressure there. We want to sell a lot of copies of that second record. We want to get on Billboard charts. How do you do that? Well, here’s the big new sounds that are coming out.
[It’s] not just bands. Artists have always had that pressure — or rather, it’s the eternal question that artists ask themselves, “Am I doing this for me, or am I doing this for my audience?” And I think if you involve commerce in any way with your art, then you start to grapple with those trade-offs, as an artist. So I agree. I don’t think those trade-offs go away with a membership model, or with a unit sales model, or even with a patronage model.
But describe specifically what a membership model is, and why you call Patreon that.
Membership is a new category of essentially a business line for creators, where they can make subscription revenue from their most important fans, in exchange for benefits of membership. Things like early access to content, exclusive content, community, extra spaces, where they get to be a part of a group of people that are talking about a certain subject.
For me and my bands, Scary Pockets and Pomplamoose, some of our membership benefits are that we have a patron-only Discord and patron-only Discord events, where our singers will come in and they’ll play their favorite music for our members. And members get to hang out on Zoom with me, and my Scary Pockets co-founder, and singers, and listen to the band play music and talk about music, and people kind of get to have a little digital Zoom party together. And a few hundred people show up. It’s a really fun thing.
That’s an example of exclusive content community for members. So membership is this stronger connection that an artist has with their most important fans that really revolves around more stuff that they’re making, more art that they’re making, and then this sort of community of those members coming together and hanging out with each other.
I want to dive into that, because the unit sales model is based on releasing a CD — to stay with the music example — and then hopefully a million people go out and buy it. Hopefully the artists have negotiated a good record company contract, and they will get a bunch of revenue from sales.
Membership sounds like there is no transaction. I’m just handing over money and hoping that you do cool stuff.
That’s a really good point. The way I would describe it is, where a unit sale is, “you made something, and I want that thing,” membership is, “I believe in you as an artist, I think you’re going to keep making cool things. I want to be a part of that journey of you as an artist.”
It’s more of a belief in the future of that person and the things that they will make. It’s more of a commitment to that artist, that you want to be a part of their ongoing creative expression. It is still somewhat transactional because members have benefits and they’re paying for exclusive content and exclusive experiences. So there is a transactional component of it, but it is not purely transactional. And that separates it from the business model of unit sales, for sure.
We’re up in the clouds. Let’s get down on the ground.
Every platform has dynamics; every platform has best practices. At the end of the day, some people on Patreon are more successful than others. And some people have strategies to be successful on Patreon. What are the brass-tacks strategies to be successful on Patreon?
I’m going to stay up in the clouds and then come down.
Membership is about that stronger relationship between a creator and their most important fans and the belief in that creator and their ongoing artistic expression. The creators who do best are the creators who deeply love their fans and whose fans deeply love them back if there’s a really strong connection. We find this is true with podcasters, with video creators, and especially with a lot of web comics.
I’ll give you some hard and fast leading indicators of successful creators on Patreon. If you have a lot of subscribers, say, or followers, that is less predictive of your success than your daily or weekly engaged fans. If, when you put something out, a lot of your fans listen to it, watch it, review it, read it, etc., that is more predictive of your success on Patreon, than, say, the sheer volume of subscribers that you have. That’s one thing.
[The] second thing is, if you’re the kind of creator who involves your fans, and you do a T-shirt design contest, when it comes time to make merch, and you’re answering emails, and you do DMs on Twitter, and you’re there with your community. If you’re a really good community manager, that’s highly predictive of your success on Patreon.
If you offer exclusive pieces of content, it is highly predictive of your success on Patreon. If you have bonus episodes, the podcasters that we’ve seen do best, do the freebie 30-minute thing to be out in the ecosystem and find a new audience. But then they do the hourlong, deep dive for their members only, and it drives a ton of conversion. We saw that when we added exclusive content to the creator page a couple of years ago — it literally doubled conversion rates from a logged-out fan to member.
Those are some of the things: good exclusive content, good engaged creators that love their audience and whose audience loves them back. I think are two of the main things.
Let me be really reductive. It sounds like what you’re saying is: do a lot of stuff people like.
Yes, I suppose. Well, that sounds a bit more pessimistic.
When we’re talking about art and commerce and the collision between the two, making a lot of things that people like — it’s still kind of always the formula. I’m curious if you think membership has actually altered the dynamics of that formula.
Well, I’ll tell you a story. I was asking this studio, what the best merch was for creators, because they were experimenting with creator merch and I was trying to figure out: what is predictive of a creator’s success with a merchandise line?
And their answer was, the creator has to love the thing that they’re making. So I would say the answer is a little similar for your analysis here. If you just do stuff that other people will like, I actually don’t think you’re going to be that successful as a creator. It’s got to come from your heart. It has to be a real thing that you yourself love. Otherwise, it’s too hard to be a creator. You’ll give up. I think it really is the overlap of things that light you up as a creative person and things that resonate with your audience.
Is Patreon a solution to supply and demand and traditional economic principles? I don’t think so. There are still markets and market forces that are at play. It’s still commerce, and Patreon does not solve that problem. What Patreon solves is, “I need a new revenue line for myself. I’m making $160 in ad revenue, and I want to grow a team and build a business and be a professional creator.” Patreon allows [you] to do that.
How many people on Patreon are earning a full-time salary or something equivalent to it?
I think the last number that we released is around 250,000 creators making money, and we actually don’t have data on how many creators are full-time creators. I don’t know that.
For my band, Scary Pockets, about a third of our revenue is membership, and we’re starting to see more and more creators whose business looks about like that, where a third to a half, sometimes more, of a creator’s income is coming from this membership line of business. It’s a solid, recurring, reliable line of business that creators can use to basically grow their income by 50 percent, if they’re just doing ads and streaming or something like that.
Let me put that in contrast to the new generation of creator platforms — I’ll pick on Substack. We had Chris Best, the CEO of Substack, on Decoder a couple months ago. A lot of writers are quitting their jobs and going to Substack, and that is their full-time job. In some cases, they’re making a lot of money, sometimes much more than they made at their full-time jobs. It seems like with Patreon, that’s not quite as direct of a conversion from one thing to the other.
I actually think it is pretty similar. The main difference is that — in the case of Substack — many creators did not have a full-time job as a creator employed by another company. Media companies employ thousands and thousands of writers, and they can leave that job and go to Substack or Patreon. In the case of a lot of internet creators, they were not previously employed by a big institution that was paying them a salary. So these are new revenue lines for these creators.
I’d say that’s one main difference. But in terms of the dynamic of people being able to quit their jobs and make a living on Patreon, absolutely. We’re seeing that in droves. We’re seeing people who are becoming full-time creators. They’re doing YouTube. They’re doing podcasts, and they’re doing whatever it is not just as a full-time job, but they’re building media companies. We see creators who are leasing office space and hiring teams.
I was telling a story yesterday about True Crime Obsessed. We were showing pictures of their office space at our all-hands [meeting]. There are creators who are building essentially what we’re calling small-business creative media companies, which were not a thing 10 years ago.
There’s a lot of risk in quitting your job, whether it’s your job in media or your job doing something else, and then going to be an independent creator or starting a small business. You’ve got to even out your cash flow. You’ve got to get health insurance. Substack will give people advances. They will pay for health insurance in some cases. They’re running into some questions about who gets those offers and who doesn’t. I think that’s totally fair, but they’re doing it. They’re basically lowering the risk involved.
Patreon has done some of that stuff in the past. I have a quote here that says you want to be a long-term infrastructure provider for independent creators. Is that still the plan?
Absolutely. We’ve talked a lot about the past so far, but when I think about the future — and I’m an optimist, so maybe take everything I say with a grain of salt — but I am optimistic about the future for creative people. I think with all of the competition now to help creators make money, in aggregate, it will work over the next decade. I think it will work. It will send tens of billions of dollars to creators.
YouTube just announced that they’ve sent $30 billion to creators over the last three years, I think. TikTok announced a billion-dollar creator fund, and there’s downward pressure on pricing now. I think Spotify has announced 0 percent fees for their subscription product, and Facebook announced 0 percent fees until 2023. We’ll see how long that lasts.
But the point is, there’s a lot of effort and competition to send money to creative people, and I think in aggregate, it’s going to work. I think what’s going to happen is while the first 20 years of the web was really about distribution and helping creators figure out how to reach people, the next 20 years of the web is going to be — as a society — rebuilding the financial engine to get creative people paid. I think that’s going to create generations of full-time professional creators, full-time professional artists.
That category of people doesn’t really exist right now, or it’s starting to exist, but to a small degree of what it will be in 10 years. They’re going to need all kinds of things over the next 10 years — some of the things you mentioned. They’re going to need health insurance. They’re going to need systems for unification and organization. They’re going to need logistics. They’re going to need capital.
I mean, when I went to go get a loan as a creator, when I went to get a loan from the bank, I was in escrow for 90 days. The bank wouldn’t give me a loan when I tried to buy a house, because they didn’t understand how I made money. They said, “Send us your pay stubs from your job.” I said, “ What are pay stubs?”, because I didn’t have a job. They said, “The things that prove that you’re making money.” So I sent them my iTunes reports, which is where most of my money was coming from in 2010. Financial institutions are not set up to understand creative businesses.
I guess my point is there’s so much infrastructure that needs to be rebuilt for creative people in this new world, where there are hundreds of millions of creative people being professional, full-time creators. I think all of that infrastructure is largely unimagined and certainly unbuilt right now.
Are you providing capital to people?
Yes, we are. We launched an advance product on future expected earnings, on membership earnings, about a year and a half ago or two years ago. It’s in super alpha. We’ve only done a few deals. But we do deals, and we help creators understand, “How much am I making? How much am I going to be making?” Then we’ll give them an advance on those earnings.
How do you calculate future expected earnings?
We have very predictable growth in cohorts of creators. In aggregate, we know with a lot of accuracy how much this particular group of creators that signed up in June, how much that cohort is going to be making a year later. It gives us the ability to give these creators a deal they’re not going to get anywhere else, because we have such confidence in their earnings and in their businesses.
The thing about subscription businesses, and especially creator subscription businesses, is they’re built on trust. They’re built on a solid relationship with their fans. So they’re very predictable businesses. So that’s how we actually calculate it, and then we give creators an advance based on that calculation.
But it’s not everybody in the cohort, right?
I mean in aggregate. It evens out to be about whatever that cohort was doing.
Is that data transparent? Can I go look at it somewhere?
No, we haven’t released cohort data on core growth of individual months of creators that are joining the platform. I mean, we’ve announced overarching numbers of Patreon’s general growth, but we don’t publicize our individual monthly cohort data.
I ask because once you start handing out money, the question of who gets the money and who doesn’t becomes very fraught. You’re saying there is a calculation. You have some data that drives those decisions. I think it’s fair to ask to see the data and see how you’re making those decisions.
What we do is when we’re talking to a creator about a particular deal, and — again, this is not a thing that’s in our product yet, right? All these advances are happening with individual creators and individual team members at Patreon that are building out this product. So when we’re having those conversations, we’re obviously very transparent with creators, talking about the timeline, the fee, how much we think they’re going to be earning, why.
All that is happening with individual creators, but right now, yeah, we’re not going out and publicizing that particular creator’s earnings or cohorts of creator earnings.
Do you think as you make the program bigger, come out of alpha, you’re going to have to do some of that work?
Absolutely. I think we’re going to want to be very transparent with how we calculate that, and what the fee structure is and why, and how long the payback period is and why. But the way we’re doing it now is just giving creators options, like, “Hey, here’s the fee if the payback period is this. Here’s the fee if the payback period’s that. Here’s why.” So, again, all those conversations are happening ad hoc. But yes, when we put it in the product, we’re going to be making sure that’s very clear and transparent with creators.
So right now when you’re doing advances in this little alpha program, are you just focused on cash, or are you focused on all the other bits as well?
Right now, that is a cash advance program. We’ve done partnerships with health care companies to offer creators discounts on health insurance and things like that. But we don’t have a health insurance program yet. I would love to have a health insurance program. We don’t have it yet.
In the course of describing the things that the creators on Patreon do, you have mentioned like six other platforms. You’ve mentioned Twitch. You’ve mentioned Discord. You’ve mentioned YouTube. Those platforms are now careening into direct payments for creators.
Twitter has Super Follows. They just bought Revue, which is a newsletter platform. They’re obviously going to compete with Substack. Facebook, as you mentioned, is offering zero fees on their upcoming suite of creator revenue products. It’s an endless list of things. Clubhouse is going to do tipping and events.
Patreon isn’t a destination like those platforms. If I had to describe what I would imagine your biggest competitive pressure is, it would be, for example, that [right now] you can become Twitter-famous and then convert some of the people who love you on Twitter into paying for your Patreon. Then you give them some other stuff.
If, instead, a creator says, “You’re on Twitter, and you like me. Push the button. Give me some money,” they might never send those people off to Patreon. Are you considering making Patreon itself more of a destination, or is there another plan there?
On those platforms, those are not your fans, I bet.
We want to believe they are, but they’re not our fans, and they’re not our customers. They’re Facebook’s users. They’re Twitter’s users. When Twitter or Facebook can make more money by sending those users elsewhere, they will.
But I don’t own that audience there. They’re not really my fans. On those mass media companies, on those sites that are destinations — those are not solid platforms on which I can build a business as a creator. With one change, they can cut my traffic in half. I’m left as a creator with suddenly half the views, half the ad revenue, and none of the control. Now I’ve actually lost touch with half of my audience.
Pomplamoose has been on the internet since 2008, putting out videos. Now when we make a post on Facebook, we get a little pop-up that says, “Congratulations. You’ve reached 1.3 percent of your audience. Would you like to reach 1.8 percent of your audience? Pay $200.” I have not been building a fan base on Facebook. I’ve been building Facebook’s user base, and I didn’t know it.
I think Shopify is thinking about this in the same way. People need a place where they can own their customer relationships, where there’s not a mitigator between the consumer and the author and the creator and the merchant or whoever it is. Those companies are of course getting into payments, as they should. I’m actually very excited about that world, because again, I think it’s a net positive for creators. I think all that competition is going to mean that creators are about to make, literally, billions of dollars over the next decade.
I think along the way, media companies and creators are starting to realize [they’re] not safe on these platforms. They don’t own their customer base on these platforms and there needs to be a better way. There needs to be a place where creators have the control and have the email addresses and can integrate with MailChimp and get access to their audience, regardless of the platform’s feeling about their algorithm that month.
That’s a good sell, but if you’re somebody who’s motivated to go viral on Twitter, it’s really easy to push that button and not worry about this problem. How do you get them to start thinking about their business in that way?
Buttons are helpful, but buttons are not the answer.
Again, membership doesn’t work because there’s a button that you can click. It works because there’s a relationship. I think if, as a creator, you turn on a button, it’ll work a little bit. You’ll get some extra revenue. But it’s not going to be like building a membership that you care about, and talking to your audience about that membership, and investing long-term in a space where you can be close to your members and have ownership of that audience. That is a completely different thing that we see happening.
I think that’s why the platforms, so far, have had trouble with things like membership. I mean, in many ways, YouTube has been working on this for 10 years. They released paid channels in 2011. They released fan funding in 2014. They released channel memberships in 2018. None of these things have really taken off. And I think, at the end of the day, it comes down to trust in these platforms. Pomplamoose, my band, we’ve learned not to rely on YouTube for our business. When we get up and authentically push something to our audience, we’re not going to push a YouTube-based monetization system. There’s too much risk involved with that, for me as a creator.
Let me flip that around on you. There are creators on Patreon who would say the same thing about Patreon. Patreon is a platform, it has a terms of service, it has a content moderation policy. There are extremely complex fanfic controversies. There are DMCA controversies. There’s a lot going on at Patreon, and people feel the same way about Patreon as you just described feeling about YouTube. How do you bridge that gap?
I actually think that the feelings are pretty different.
In YouTube’s case, in Facebook’s case, there’s 12 years of history of being cut off from my audience, of not being able to reach the people that I’ve built relationships with. Whereas on Patreon, 100 percent of your posts are delivered to literally 100 percent of your audience, 100 percent of the time. You get the email addresses of your members, you can download them in a CSV and take them somewhere else.
If you feel like Patreon isn’t serving you properly, you’re literally free to take your members and go to another place, and we’ve baked that into our business model and into our site. So that is, I think, a healthy layer of accountability, to make sure that we are always putting creators first. Which I think is, at the end of the day, the key differentiator. The business model in the creator-first culture.
Our customer is not an advertiser. On Facebook and YouTube, the customer is the advertiser. For us, our customers are creators. And so we’re doing things to make our creators be successful, and we’re not successful unless creators are successful. So we’ve baked those dynamics into Patreon in a way that these other platforms have not.
Now, are we going to have trust and safety debacles and content policy issues? Of course. I think all that stuff is going to get more heated over the next few years as the debate around [Section] 230 heats up, and as we really start to reckon with content policy over the next couple of years. So I don’t think that stuff is going away.
And our approach on that, I think, has been a little different than other platforms in a few ways. One, we’re just unapologetic about our stance with not allowing certain things on Patreon.
You can’t be racist on Patreon. And a lot of people don’t like that. A lot of people don’t like that we have a hard line around that policy. But again, we’re unapologetic about it and our feeling is they can go somewhere else if that’s what they want to do. So I actually think that yeah, we’ve made enemies along the way, but I think it’s the right move. I wish more platforms did that kind of thing.
And then the second thing that’s different is [that] humans make decisions at Patreon, not algorithms. There’s never a creator takedown without debate and conversation and a team getting together. Obviously, we’re at a scale where there needs to be automated flagging, so posts will get flagged and things will get flagged. But then humans review those things and there’s an escalation process. And at the end of the day, humans are making decisions. There’s recourse. Creators can call somebody and talk to them and understand what’s going on.
We also developed a system so that 90 percent of the time we work with creators to help them understand the content policy. And literally 90 percent of the time we’re able to help the creator stay on the platform. Because we want to have that human touch. We want to be reaching out to creators. We want to be in conversation with them. We want to be educating them around what I think is a broadly opaque field of content policy right now, because it’s changing and developing so fast as the industry changes and develops.
I’m not saying that we’re not going to have all those problems as we scale. We’re a platform that’s reaching a scale where there’s going to be all kinds of stuff uploaded to Patreon and we’re going to have to deal with it. But I do think, at the end of the day, it comes down to the creator-first approach, as opposed to a brand-first approach or an advertiser-first approach. Those are not the people we’re serving. There’s no advertisers on Patreon.
At the end of the day, we have just the stakeholder of creators to worry about and focus on.
Let’s talk about those rules for a second. As the creator economy conversation has heated up, another company at the forefront is OnlyFans. They allow people to subscribe to sexually explicit content from a variety of performers. There’s other stuff on OnlyFans, I’m aware, but that’s what they’re known for. That’s not a market Patreon is in. Do you want to be in that market? Do you see that as something you could expand into?
No, we’ve been pretty clear from the very early days that we don’t allow pornography on Patreon. And that’s just because our mission is about creators and podcasters and YouTubers and journalists and web comics and helping those people. So it’s not a values-based thing, it’s just a mission-based thing, who we’ve chosen to try and help and serve.
Here’s an easy question: define pornography.
I’ve thought a lot about, obviously, trust and safety and content policy. There’s that famous quote, “You can’t really define pornography, you just know it when you see it.”
The judge who wrote that quote regretted it very deeply. I just want to put that out there.
I strongly disagree with that quote.
You can define pornography in way more detail than I would care to define right now. And we have teams of people — 10 percent of Patreon’s team is trust and safety and content policy folks — whose job it is to lay out, in great explicit detail, what does and does not constitute pornography. And so, yes, we have defined that.
The thing is, you can’t define it with a headline. You have to define it with eight pages of text. And it includes a lot of detail because sexual themes in art are a thing that’s existed for thousands of years. And I think it’s an important component of art. So I would say Patreon’s content policy is more liberal than other content policies, partially because we don’t have to deal with brands and advertisers. We don’t have to have a place that is brand-safe, brand-comfy. We don’t have to make Clorox feel comfortable on Patreon. We don’t have that pressure.
We can allow a creator to be naked. And then the question is, okay, how do we define the difference between that and where we’ve come out and said, “Okay, we don’t allow pornography.” How do we draw that line? We draw that line very thoroughly with a very long, explicit content policy. By the way, it’s written so explicitly — when you’re writing a content policy, part of the way we approach it is that it should be so detailed that you could take a person off the street, with no training. They could come in, look at an image, read the text, and nine out of 10 times they would make the same decision that the team would make.
Have you tested this?
We haven’t brought in people off the street, but the level of detail that we’re shooting for is that. It’s explicit.
The other thing I’m curious about is the Patreon app on Apple’s App Store. The app stores have their own content moderation policies, they have their own rules. Do you think about what Apple will allow on Patreon as you make your policies?
We partner with a lot of companies. We’re not everything in a box, custom-built by Patreon; we exist in the infrastructure of the web.
More than Apple, it’s payments companies. We have to partner with payments companies and see how they’re thinking about trust and safety and content policy with all of our payments partners. That’s probably the biggest one that we think about and work with and have partnerships teams that are devoted to, is just understanding how their thinking is evolving. More so than Apple, because I’d say the payments companies are the most strict, in terms of content policy. So that’s probably the focus, more so than Apple.
What’s something Visa won’t let you do?
It depends. You can do a lot of things. You can pay for porn with a credit card on the web. It just changes what kind of policy you’re under, and what sorts of codes you use to process, and then the fees associated with those streams of processing. And so you can do things, even with Visa. It’s just like, what is going to be the fee structure associated with that? And is that the fee structure that we want our creators to be paying? It’s things like that.
Kayvon Beykpour was on the show a few weeks ago; we talked about Twitter Super Follows. I said, “Are you going to pay the Apple fee? Are you going to get around it?” And he very clearly said, “We are not in the business of getting around platform fees.”
As I understand it, Patreon does not have to pay in-app purchase fees. You’re talking about a direct relationship to payment providers, you’re directly ingesting people’s credit card numbers. Why don’t you have to pay the fees?
I wish we had some special contract with Apple. We don’t. We have to deal with the App Store policies and review process like anybody else. And sometimes we actually get delayed and have to make changes in the apps.
There was one point, years ago, where our app wasn’t approved and we got into some conversation with Apple. And then eventually, I think a few weeks later, we figured it out and we got approved and we had to make some changes. Honestly, it was four years ago; I don’t even remember what the changes were. But we have had to deal with the app review policy and the App Store fee policy for… since whenever we had an app.
Why don’t we have to pay fees? I think it’s because, for whatever reason, we’re within Apple’s guidelines, and we haven’t had to pay fees.
This sounds like something you should definitely know. Isn’t this a long-term risk to Patreon? That Apple will listen to this and wake up and give you a call and say, “Time to pay the fee.”
Well, the way people use our app, and the way Patreon has set up the business as a platform for creators, as you mentioned, there’s not a ton of discovery right now happening on Patreon. People are not coming to Patreon to find a bunch of creators and then supporting creators. They’re using the app to communicate and to hang out, between patrons and creators, to make posts, to talk to each other. And then a lot of the actual engagement is happening on other platforms. A big portion of our creators are using Discord to hang out with their communities and to be with their communities. People are not coming to Patreon like you would come to YouTube, to find a bunch of creators to support. So it’s just not the primary behavior that’s happening on Patreon.
Can you subscribe to a membership in the app?
I think what we do now is we kick you to a web flow. If you try to subscribe, we don’t have an in-app purchase button.
And Apple hasn’t come to you and said, “You need to add the in-app purchase button.”
That’s fascinating because we just did a story on another platform called Fanhouse. They’re very upset because they had a model much like Patreon’s, and Apple demanded that they add the in-app purchase button. They say, “We don’t want to pass that on to creators. We don’t have the money to just front 30 percent of the costs.” And they made a direct comparison to Patreon. Did you see this story?
I saw one of the tweets, yes.
There were many tweets. But I’m curious, did that light the lightbulb for you? [Did you think] “hey, I need to make sure that we’re actually under the rules”? If you have an app, there’s only two distribution methods. It’s Apple and Google, and they change their terms all the time. So I’m wondering how much stability you feel there.
Honestly, with the app review policy, we’ve never really felt a ton of stability. I think, again, we’ve had conversations where the app hasn’t been approved. That doesn’t feel great. And then we have to make changes and do things. So far, it’s always worked out, but does it feel stable? No.
Again, such a tiny portion of pledges actually happen on Patreon [in the app]. The way members find new creators — on YouTube, on Facebook, on Instagram, on wherever it is, a creator will mention their Patreon. Then they’ll go to the creator’s Patreon page. And that’s almost always mobile web or web. And then the fan will become a member, and that almost always happens outside of the app. Then the member will download the app and use it as a communication channel for key updates and things like that. But even then, a lot of the engagement is happening through partners, through MailChimp, through Discord, etc.
It feels like you don’t really want to build that destination with algorithmic recommendations. If I was like, “You should make the Patreon app more like Instagram,” I feel like you would just tell me to go away.
That world is bad for creators. Again, the world that we’re building is where a creator owns the relationship between those fans. If we become a mitigator of that relationship, if we start building algorithms to determine, you’ve made a post as a creator, are we going to give this to your fans or not? That’s terrible for creative people.
But discovery is not terrible for creative people. I open the Patreon app, and it says “you’re subscribed to these four creators, here are two more just like them. You can push the button and subscribe here.” That seems like a very natural thing to want to do.
Yes, both creators want that and fans want that. Finding new members is hard. And I think that’s good for creators. But when you say “Turn Patreon into Instagram,” into a destination mass media platform, like a feed product where you have thousands of connections and you’re trying to choose where you’re going to give your time today, that’s a bad world for creators, where the platform ends up mitigating the relationship between a creator and their fans.
I want to confirm with you that you haven’t had any direct conversations with Apple about what rules you fall under and where your limits are in terms of accepting payments in the app.
Well, we have multiple times as we’ve gone through the review process. That has come up. I think it came up again a few years ago, and that’s when we actually got delayed. And again, I don’t remember what the changes were, but we made some changes, and then we passed the review process. And it worked.
The thing that I’m circling around, and I’ll be more direct about it, is that you want to build a suite of tools for creators, but you are bounded by what payment processors will allow you to do and by what the operating systems’ stores will allow you to do. I don’t know that those boundaries are transparent back down to the creators. And I think that’s actually a tension here as the creator economy grows.
Ben Thompson, who writes Stratechery, has riffed on the very famous Kevin Kelly idea that all a creator needs is 1,000 true fans — if you have 1,000 true fans who buy everything that you make, you will make a good living. But Ben has pointed out that because of all the fees along the way, you actually need something like 1,700 or 1,800 true fans because you have to pay the tollbooths along the way. I don’t think the creators quite understand that Patreon has to deal with gatekeepers of its own, potentially pay those gatekeepers money, and then [the creators] will be on the hook for those fees.
Facebook, for example, is trying to make it abundantly clear to the creator economy that Apple is going to charge them fees, or that Google is going to charge them fees, and that Facebook is not going to charge those fees until 2023. I’m wondering if you are trying to make that more transparent to creators as well.
We spend a lot of time talking about fee structures with creators. The biggest fee structure is payment processing fees. When a creator signs up for Patreon, we have a whole page that explains that, and we have sections of our dashboard and our creator dashboard that explain fees, and how much fees are costing a creator and what those fees are and why.
But I do agree with you that a lot of the fee structures of the internet, and especially with regards to the creator economy, are going to be reconsidered over the next few years. At the end of the day, as a creator, if you’ve got a membership, and you’ve got a merch line of business, and you’re touring, but then you have to give up 30 percent of your revenue, that’s a big hit as a small business. That’s a big hit as a creator that’s trying to build a creative media company.
I don’t think that’s going to work over the long run, because I think essentially what’s going to happen is, for competitive reasons, platforms are going to be trying to get creators paid as much as possible. Platforms are going to be trying to help creators reduce those fees and take home as much as they can. And I think overall what that’s going to do is just create pressure on the industry to make sure that creators are taking home as much as they possibly can.
So I agree. I think a lot of this conversation is going to drive better outcomes for creators over the next 10 years as all this stuff gets figured out.
There’s a question I ask every executive who comes on the show. You’ve been at Patreon for a long time. You’ve seen this economy grow up. How has your decision-making framework changed? And what is your decision-making framework now?
I’ll give you two answers. First, the hard part is — when you can apply a framework to decisions, that’s actually quite easy. Then you just run your process and make a decision. The hard part is recognizing when a decision falls out of the framework or that there is a decision that needs to be made, and there’s a decider who needs to be appointed.
There’s something that’s falling in the white space between functions because the company is going through a phase of growth where you haven’t established a new function yet or you haven’t broken apart a function into its constituent parts — you need to identify that. So I would say the hard part is when decisions don’t clearly fall within the framework, and you have to identify that and then identify that a decision needs to be made. That is something that I’m trying to get faster at, because I think the faster you identify that, the faster those decisions end up getting addressed and made properly.
Then another thing I try to do is [that] I try to make as few decisions as possible. If I’m the one making a lot of decisions, something’s wrong. For me, I wouldn’t go to the extreme where if I’m making a decision, then there’s a failure. But if I’m making a decision, one of the things that I like to do is think about, okay, what’s the world where I’m not the one making this decision, and how do we move toward that? And do we need to move there now, or do we need to move there over a couple of years? And that helps me think about building the company in a healthy way, where we’re bringing in the right people to scale and make decisions as the company grows. So that’s another thing I think about.
Then last, I’ll give you one more thing around decisions. We brought in a new executive a few months ago, and one thing I’m really enjoying with this person is a lot of conversation as opposed to cutting to decisions quickly. And he calls it “sharpening our swords” on particular thoughts. I’ve actually found that it’s really helpful to think about it like that. We spend time debating and discussing and sharpening our swords on a particular issue. And what it does is over time it just yields a lot of clarity of thought, when you have that time set aside to engage on difficult topics. And so rather than even thinking of it as, let’s just make this decision, it’s, let’s spend some time sharpening our swords together on this topic so that we make the best decision.
Then, presumably, use the sword.
Then do you [have] to make the decision at some point? Yes.
Let’s talk about what’s next for Patreon. You just raised a bunch of money in April. At the beginning of the pandemic last year, you laid off 13 percent of your workforce. You made a video about it on YouTube explaining why and saying we’re reconfiguring the product team. Tell me about that change, that reconfiguration. And then tell me what this new round of funding is for.
That was a really hard thing for the team. We brought in a new product leader, and we spent a couple months with this new product leader thinking about our path forward and what we wanted to build and why, and this vision for the company. And then at the end of this process, we looked up and realized we didn’t have the right folks and skill sets and things that we needed to execute on that vision. So we made the change.
Very painful, very difficult thing for the team to go through; the right thing for the business, the right thing for Patreon, the right thing for executing on that vision. And what is that vision? The vision is better content and community on Patreon. So right now, for example, when a creator wants to post a video on Patreon, they have to use our Vimeo integration, which is fine, but it should be really easy to post a video on Patreon and make a video available to your members.
When a creator wants to host a community jam with their fans, they have to use our Discord integration. And that’s actually great. I think we want to keep that integration front and center because I think a lot of creators love Discord. But there’s a lot of creators who also want to make that really easy in the Patreon app. They don’t want to have to download another app. They want to be able to have a jam with their community and their members right there on Patreon. And so a lot of the future focuses on content and community, at least in the near term.
And in the long term, it’s all the things that we’ve been talking about: again, this competition to help creators make money, to help creators build viable, sustainable businesses. Hallelujah. It’s such a good thing for the world of creative people. It’s such an important step for the internet. And again, I’m optimistic, but I think it’s going to work. And I think it’s going to create, essentially, a second Renaissance, is how I’ve been framing it.
I think it’s going to make the first Renaissance feel small. And I know that’s a big statement.
That is a huge statement. It also implies that we’re in the Dark Ages right now.
I don’t think we’re in the Dark Ages. I think this is the most exciting time to be a creative person ever. But I think what we’re about to experience is a number and degree of creative people and creativity that the world has never seen, a total breaking apart of genres, and niche markets that are huge, and independent creativity that has both the distribution and the financing to work at a global scale. That’s such an exciting time for artists and creators. And that, I think, over the long run, is going to require a massive infrastructural overhaul with everything from health care to payments to crypto. All these things are intertwined, and there’s clearly a lot of things that creative people will need to successfully build businesses over this next chapter.
So that new product strategy — you’re building a native video player? You’re building a native Discord-like functionality?
No, not native Discord. It’s a whole company, and there’s a lot of great people that are doing that. It’s more community tools, ways for creators to be more closely connected to their fans. And what exactly that is yet, we haven’t released it yet. We haven’t put it out, but it’s essentially ways for creators to better host communities on Patreon.
And you’re going to keep the Vimeo integration, or are you going to build a native video product?
We want to keep integrations. Part of the way that we want to build things is giving creators options. A lot of creators want to email their members, and so we have a MailChimp integration. A lot of creators want to run a Discord community, so we’re going to have the Discord integration. So yes, absolutely. It’s a really important part of the strategy. We don’t want to tell creators how to run their businesses and where to run their businesses.
What do you think is next in the short term for Patreon? What should people be looking out for?
I think it’s that hyperfocus on better content experiences on Patreon. That’s something that creators really want, better content offerings, better content organization, helping members find their content better, better content consumption. Just better content tools in general is most immediately what we’re working on.
When will I see it as somebody who subscribes to multiple creators on Patreon?
You’ll see it this year. We’re making iterative improvements on all that as we speak.