Patreon CEO Jack Conte on why creators can?t depend on platforms

Filed under:Who really owns your audience?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 Verge, 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. 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. It’s effectively a platform that allows people to pay creators directly.That’s right. 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. 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. 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. 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. 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. 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. 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. And their answer was, the creator has to love the thing that they’re making. 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. 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. 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. 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. 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. I think with all of the competition now to help creators make money, in aggregate, it will work over the next decade. 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. 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? 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. 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 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. 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. 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. There are creators on Patreon who would say the same thing about Patreon. 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. Do you think about what Apple will allow on Patreon as you make your policies?We partner with a lot of companies. 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 like you would come to YouTube, to find a bunch of creators to support. 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. 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. 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. 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. 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. 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. 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. 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 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. But there’s a lot of creators who also want to make that really easy in the Patreon app. 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. 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? 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. 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?