Patreon Comes Full Circle

Patreon had a really simple and straightforward business: creators online could sign up for accounts on Patreon, and fans could give them money every month.

It was a welcome way to start earning money doing online content creation: instead of being subject to the whims of chasing clicks and the seasonality of ad spending, a creator could get some relatively stable income from their most supportive fans.

Patreon was seeing steady, organic growth that benefited from network effects; if you’re supporting one person on Patreon, it’s easy to support others, and it’s convenient to have all your patronages managed in one place, which enticed more creators to sign up on Patreon.

Patreon could have run with this and built a profitable and sustainable business.

Instead, Patreon decided to raise a bunch of VC money. Of course VCs want serious growth in exchange for that money, and there’s really only so much you can do to drive growth when your business is allowing creators to have patrons contributing money to them.

They blew some money on turning Patreon into a content posting platform (which was never really necessary; most people on Patreon create their stuff and post it on other sites, and were just using Patreon to collect their money). That strategy didn’t really move the needle.

And now, we learn that they are going to spend a bunch of their most recent $155 million round funding original programming (kind of an unoriginal move given how many other companies have been investing in exactly the same thing).

On the surface, the strategy sounds kind of reasonable. Patreon was created years ago largely because none of these other platforms were offering their own ways for creators to monetize. Now that patronage is becoming a bigger way for creators to be funded, companies are taking notice, and we even have new platforms like Substack and OnlyFans that are built from the ground up with monetization built-in. Even Twitter and YouTube are supporting patronage natively.

But that still doesn’t make Patreon’s choice here make sense. Patreon was cool because it was decoupled from these other services, allowing creators to create content just about anywhere, even on their own web site, and they could use Patreon just for collecting money from patrons. With this original content move, not only is Patreon entering a crowded market that requires a type of expertise it doesn’t currently have, they’ve essentially given up on what could have been a profitable but slower-growing business because they instead want to chase after scale.

Which is exactly the antipattern that left creators looking for a product like Patreon in the first place.

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