Why Patreon’s business model is under threat

The recent history of the Internet, however, warns that we shouldn’t necessarily expect the endearingly homegrown nature of these 1,000 True Fans communities to persist. When viable new economic niches emerge online, venture-backed businesses, looking to extract their cut, are typically not far behind. Services such as Patreon and Kickstarter are j... See more

Patreon is a good example of why generic community platforms are not the future. You could certainly say that Patreon is already at the center of content, social, and commerce. But of course, Patreon has for years been getting unbundled into A, B, and C type businesses. The reason for Patreon’s erosion is that its product design is totally unsuitab... See more

A more pessimistic prediction is that the current True Fan revolution will eventually go the way of the original Web 2.0 revolution, with creators increasingly ground in the gears of monetization. The Substack of today makes it easy for a writer to charge fans for a newsletter. The Substack of tomorrow might move toward a flat-fee subscription mode... See more

Now that Patreon has been around for seven years, many founders see the platform as an incumbent to be disrupted.

Silicon Valley accelerates its investment in products and services for individual creators. Platforms explore new ways to let creators monetize their audiences directly, while taking a cut for themselves. Still, a gulf begins to appear between those who pay for content and those who do not. Subscription fatigue will turn out to be real. And perhaps... See more

Because the market size of total creators who can potentially monetize through non-ad-based means is uncertain and appears small, and because direct user payments represent a lower-margin business than advertising (Patreon’s take rate starts at 5%, whereas ad-based platforms often keep 100% of ad revenue), incumbents are not incentivized to iterate... See more

So, if Super Follows and YouTube Payments are examples of under-selling, how can platforms get it right?