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[Strife26]

Rate hike! Rate hike! Tra, la, la! And please include our Space Program in the budget

Long story short, instead of having creators eat the cost of transaction fees, Patreon is rolling out a new fee system of 2.9% plus .35 on every pledge. Not monthly bill, pledge. Anyone sending a dollar a month to a bunch of people will now see their bill increase by up to 36%. There's a claim that this results in more money for creators, but that doesn't seem well reflected in any of the numbers or creator posts that I've seen. It might pan out if enough users don't react to the increased price, but if any number of users adjust their monthly patreon spending (much less all the people leaving right out) looks like the artists definitely lose, rainbow and puppy claims from Patreon nonwithstanding.

Seems to me that this is much more focused on Patreon's recent run of VC money, where they're looking to disincentivize small transactions in general. They want whales spending money and rock starts, not college students on the street paying buskers.

Shame, but I've sent everyone I patreon a message to ask about other options to support them, and I'll be killing my account on the 17th. Bastard companies suck.

https://patreon.zendesk.com/hc/en-us/articles/115005631963
https://www.engadget.com/2017/12/08/patreon-fee-change-will-hurt-small-contributions/
https://techcrunch.com/2017/12/07/patreons-new-service-fee-spurs-concern-that-creators-will-lose-patrons/

Edit: math error


Edit:

And apparently the new plan is to charge people on the month anniversary of when they pledged? Which means that the new system would have patreon charge my credit card repeatedly throughout the month? 

[Reelya]

Personally I think it's a good thing. Overall, the percentage fees a lower, you're still free to donate how much you like, but you now have additional information about where your donation is going. Sure, people will gripe that "patreon is getting a cut" however, that was always true. But now, you can see how much Patreon is taking. Really, the only real gripe is that now you know how much is taken in fees, rather than being blissfully unaware. Complaining about it is a little like complaining that you don't want to know whats in the sausages you're eating.

Here's some info on what merchants pay on credit card transactions:
https://www.paypal.com/us/webapps/mpp/brc/demystifying-credit-card-processor-fees     

Usually, the first three fees (the percentages) are all added together and quoted as a single rate, while the transaction fee is quoted separately (e.g., 2.9% + $0.30).

e.g. each transaction costs 30 cents for the vendor to pay to the processor, plus 3%. 99% of this is literally just passing on the transaction processing fees. You already paid these, except they were hidden and charge to the Patreon creator.

Now, you can see what it actually costs to do the transaction processing. Therefore, patrons can make an educated decision about how to divide up their total donations. e.g. if you donate $10 to one vendor, you saves $3.5 in base transaction fees, or you can split that money up more ways, but you know that the banks (not Patreon) are charging you that overhead, so you're really only donating $7 out of your $10. This isn't any different, it's just visible now. Basically, doing lots of little $1 donations was giving about 1/3rd of you money to banks not creators, and not Patreon.

Did you ever go to a shop that won't let you use a card if the value is under $10? That's because the processing fees eat up their profits, and if the total sale isn't worth at least $10 they're better off not selling you anything than letting you swipe a card for the sale. This is basically the same deal. With $1 donations and them having to pay the transaction fees out of that $1, the creator was only getting cents on the dollar.

And apparently the new plan is to charge people on the month anniversary of when they pledged? Which means that the new system would have patreon charge my credit card repeatedly throughout the month? 

Well that fits with the idea that they'd prefer you pledge a medium amount to less creators. It would be more efficient if everyone did that, as the amount that the banks get would be lower.

[scriver]

And apparently the new plan is to charge people on the month anniversary of when they pledged? Which means that the new system would have patreon charge my credit card repeatedly throughout the month?

Solution: only pledge for new patronees February 29's.

Edit: I am an idiot.

[Criptfeind]

 Reelya: They didn't just make the fees visible, but changed how the formula works. Previously it was a flat percentage fee, which meant that everyone paid the same percentage. Now that it's smaller percentage, but with a flat fee on top, which basically means you're paying more money and the creator is getting less unless the money saved by the percentage loss overcomes the flat fee, which it obviously won't for most people. But most importantly instead of spreading the burden of those fees over everyone, this massively disproportionately levies the fees against people with lots of one dollar pledges. The people making mid tier pledges in you know, 20+ dollar range might see a tiny increase in the effectiveness of their pledges, and the people pledging hundreds of dollars at once will see a couple extra dollars getting to the creators, but the people who pledge their pledges all split up are going to see a massive (over 1/3) hike in how much they have to pledge for the same amount to get to the creators.

As for the economies of scale involved with transaction fees and this basically heavily encouraging people to make less but bigger donations, I'm not sure that argument making sense. IE: If you before had 100 patrons giving 1 dollar each to 100 creators, they'd charge 100 dollars from each patron, calculate how much money goes to each creator, and then give each creator 100 dollars (rather, 93 too 85 dollars). Which is 200 transactions. Now if you have 100 patrons giving 100 dollars to a single creator each (which is what this change is trying to encourage). You'd charge 100 dollars from each patron, calculate how much creator gets, then give 100 dollars to each creator (rather, 96.75 dollars). Which is 200 transactions.

[Reelya]

Percentages plus a flat fee is how credit card transactions for vendors actually work. They were absorbing the set fee per transaction before, but exposing it as visible information lets people make better decisions about whether to make a few larger donations or many small ones. Creators would be better off if everyone donated $5 to single vendors rather than 5 donations of $1 to single vendors. If you assume the 30 cents per-transaction set cost, which is normal, then $1.50 of your $5 was already being eaten up by doing the $1 ones. Say 5 people stop doing 5x$1 donations and donate $5 to single vendors, then there's an extra $1.20 now to spread around that's not disappearing into the banking system.

Basically, the old system meant that you felt that you were doing "more good" by splitting up your donations as many ways as possible, however, it was extremely sub-optimal due to how the banking system works. By exposing the base transaction cost and the percentage that's actually in line with how credit-card processing works, this means you have correct information about how you can maximize the amount of your money that creators get.

Basically, in the old system, big donators were subsidizing the transaction fees of small donators, and there was no incentive to consolidate your donations, which is what actually minimizes the amount the banks take. e.g there were "perverse incentives".

[Criptfeind]

It's only relevant directly when you were making exactly one donation to one creator, otherwise you're not actually getting multiple transaction fees because there isn't actually multiple transactions. There's just one big transaction to patron per patron, and a big transaction from patron per creator.

This is why patron exists. Otherwise you could just have every creator having a donate button on a web page or whatever.

[Max™]

If I'm giving patreon $10 to divvy up to 10 people and each of those 10 people has a total of 10 patrons, is there a reason patreon has to make 10 transactions to said creators each?

They know how many people signed up and how much they're giving, this isn't a labor cost or transaction fee issue, it's not even complicated enough to need more accounting than any computer is capable of performing, they need to get the lump from me and push bits it into the lump for the various creators, I make a transaction to them, they make a transaction to the creator, right?

Are they seriously doing every individual bit of interaction with the banks one at a time cause holy shit I think I need to go make my own version of patreon maybe?

[penguinofhonor]

.

[nenjin]

I figure with so many youtubers turning to Patreon for their revenue, Paetron decided to restructure their fees to maximize their profits and capitalize on the trend.

[Jopax]

And it seems they've reversed the decision. Last few months have been really good in terms of consumers kicking up shitstorms over greedy moves by companies and subsequently having those moves reconsidered and scrapped in most cases.