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Why designers didn't rely on websites, according to Patreon CEO Jack Conte.Who truly controls your crowd?

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Observe Everything by Nilay Patel

Jack Conte, the co-founder and CEO of Patreon, a platform that allows users to give their popular designers immediately through regular members, is tomorrow's host on Decoder.

If you've been listening to Decoder or reading The Verge, you know that the idea of paying authors instantly is popping up on cultural channels like Twitter, Instagram, and Facebook, and in a range of innovative businesses, like Substack. Basically, every platform is looking for a way to allow creators to charge their audiences directly while earning money along the way.

Instead of relying on a platform's advertising model, the" creator economy" is the buzzword for all of this. This overstates how creative individuals can establish businesses with multiple streams of income and a direct relationship with their audiences.

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. After obtaining the funding to give Patreon its new valuation, Jack made announcing that the company would be firing 36 members of Patreon's product and design team to refocus on a new product concept.

As a musician, Jack has specific ideas of what Patreon can and should offer, as well as a specific idea 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 was immediately brought up in our conversation because Jack refers to Patreon's business model as "membership," which we had to figure out.

That also includes a special connection to Apple and the App Store. I asked Jack if he worries about an App Store crackdown, and how creators should feel about Apple and the App Store. No one is really prepared for the conflict between Apple and its creators, if you ask me. The answers given by Jack were quite enlightening. 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.

For clarity, the transcript below has been edited.

In almost every conversation I've had in recent memory, the phrase" creator economy" seems to come up. You've seen this entire movement grow into the monster it is now- you started Patreon in 2013. It's essentially a platform that allows users to pay creators directly. You are a recording artist by profession.

That's right. We are a platform for membership. In exchange for exclusive content, a community, and other things like that, we permit people to pledge subscriptions to creators.

I want to dig in on why specifically you call it a membership platform. In essence, you're transferring money from people who make things to people who make them, which is crucial. That increased Patreon's value to$ 4 billion, tripled. You're very successful]at it ]- I just read in the Wall Street Journal that in April you raised another$ 155 million in funding.

In a world where everyone is trying to compete in the creator space, it has taken quite a journey over the past eight years to go from being a startup to a$ 4 billion valuation. Give me an idea of the ride and how things are now.

In many ways, I'm not surprised that the world is waking up to this.

I remember that I had spent three months creating this music video in 2012, and I still feel this way. At the time, I was listening to a lot of electronic music. I'd released this EP and I wanted to make a video with these robots. I had put a lot of effort into this video. I was swiping my credit card every day to get supplies for this music video and going to Home Depot every day. And I built a replica of the Millennium Falcon cockpit in my studio. To accomplish this, I committed suicide for three months, spent a lot of money, and gave it everything I had. I put my savings into the video; I spent ten thousand dollars on it. I maxed out two credit cards.

How the fuck is this still possible, I recall thinking.

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. How the fuck is this still possible, I recall thinking.

What kind of world are we in where creative people are pouring their hearts out, creating content for the internet, and receiving millions of views? This is not the same as the problem with starving artists. What kind of place is this? Thousands of comments and excitement and passion and energy from the community. And how is it that nobody is screaming about this issue at this moment? And I'll be paid$ 160 for this, right? Ten football stadiums full of humans are about to watch this thing that I made. It appeared to be so obvious. A million people can see this.

I guess that's why it doesn't feel like a surprise to me now. Finally, it appears as though the world is awakening. I'm so appreciative. I'm so glad that the rest of the world is waking up to this problem. I believe that because there are options, the upcoming decade will be fantastic for creative people. There will be numerous businesses building for them. They're going to have the ability to generate revenue in whatever way they want.

Yes, there was no one who could solve this issue eight years ago.

Let me put that in a much longer time frame for context. In the ' 90s, at the height of the CD era, a band would release a CD. Many people would purchase the CD, and the band would become wealthy. And if they made their work available for sale in other ways, such as sync rights or movie licensing, there would be a real conversation about authenticity and selling out. They made money selling the music directly. It would be promoted by a few radio stations and MTV.

That is now gone.

Gone.

One of the reasons that's gone is no one makes money selling the]music ] itself anymore. On YouTube, you almost certainly give that away for free or for$ 160. Then you have to look for all these additional sources of income for your work.

If we're going back to the' 90s, let's go all the way back. Let's keep going.

The way the arts were funded globally for thousands of years was influenced by wealthy individuals or organizations saying," 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 for literally thousands of years, this patronage model was the way that art was funded. Basically, all the historical literature we know about had a business model that didn't involve unit sales. It was patronage. It was a creator of outstanding work. Whatever it was, whether it was the Sistine Chapel or the David or whatever, the art was supported by that business model. Those artists made money through that business model. And then a government, a government, a wealthy individual, would pay that person to travel and make more of that.

The late 1800s and right around the turn of the century followed, and the 1900s came and went. We figured out how to record light onto celluloid. We discovered a way to record audio on wax cylinders. That eventually replaced the patronage business model, with artists ' primary revenue sources based on unit sales. Essentially what happened was humans figured out how to record what would otherwise be ephemeral art onto physical objects.

Since the beginning of the 1900s, billions of dollars in infrastructure have basically evolved. Whether it's trucking companies or brick-and-mortar retailers, this infrastructure has evolved to basically allow artists to place their artwork on a physical object and then ship it around the world to people who would buy it and then enjoy the art. For the past ten years, that has served as the main business model for artists and artists, whether they are creating audio or video, music, talk, or whatever.

At which point, the internet hit and scarcity disappears. Unit sales vanish as a business model. And then suddenly everyone is frantically trying to recoup their money by doing it with their hair on fire.

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 in the digital-first era, that needs to be rebuilt. In terms of creative people making money, that is the point in history where I believe people are.

You described]Patreon ] as a membership model, which is fascinating. Every model you've described has a lot of inherent drawbacks. A number of record companies and MTV executives who were funding all music had a lot of trade-offs: MTV didn't play rap music for the longest time. The best arbiter trade-off is that the religion and some wealthy people will be able to finance all of the world's artwork.

The computer removed that gatekeeping potential, but it also removed the underlying economical design. You're calling it participation, certainly Patreon, because it didn't go back to product revenue. Why do you call it participation, I want to realize.

I think that a truly crucial understanding is that all of these types have trade-offs. In a excellent planet, I believe, artwork and trading was survive in absolute cleanliness. However, the truth is that you must figure out how to build a company design around your work if you want to become a expert musician.

Even with system revenue, there were certain fundamental forces of that intersect between art and banking. There is a lot of pressure it, according to the following document. Like a strap goes through the timeless adage," OK, there's our initial history." Also, how's the huge fresh sounds that are coming up. We want to be listed on the Billboard Hotspot. How do you accomplish that? We want to promote a lot of files of that minute archive.

It's not just singers, either. That stress has generally existed for painters, or instead, it is the unending topic that they ask themselves:" Am I doing this for myself, or am I doing this for my viewers?" So I agree. I don't believe that those trade-offs are eliminated by the account concept, the product sales design, or even the patronage model. And as an actor, I believe that if you engage in commerce in any way with your work, you begin to wrestle with those trade-offs.

But identify particularly what a account concept is, and why you call Patreon that.

Account is a new class of basically a business line for makers, where they can earn registration fees from their most significant fans in change for benefits. Things like early admittance to articles, distinctive content, community, additional spaces, where they can be a part of a group of people discussing a particular subject.

For me and my songs, Scary Pockets and Pomplamoose, some of our account gains are that we have a patron-only Discord and patron-only Discord occasions, where our artists will come in and they'll sing their beloved tunes for our individuals. And there are a few hundred people there. It's a really enjoyable experience. 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.

That qualifies as a member-exclusive content community. So membership creates a stronger bond between an artist and their most significant fans, which is more centered on what they're creating, what they're creating, and what sort of community of those fans coming together and hanging out with one another.

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 struck a deal with a reliable record label, and they will generate a ton of sales revenue.

Membership appears to be a transactional one. I'm just handing over money and hoping that you do cool stuff.

That is a really important point. In the same way that 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," that's how I would define it. I want to be a part of that journey of you as an artist".

It's more of a belief in the person's future and the choices they will make. And that undoubtedly sets it apart from the unit sales business model. It is still somewhat transactional because members have benefits and they're paying for exclusive content and exclusive experiences. It's more of a commitment to that artist that you want to be a part of their ongoing creative expression. Therefore, there is a transactional component in it, but it is not purely transactional.

We're up in the clouds. Let's get down to earth.

Every platform has dynamics, and every platform has best practices. What are the brass-tacks strategies to be successful on Patreon? At the end of the day, some Patreon users are successful more than others. And some people have methods for succeeding on Patreon.

I'm going to stay up in the clouds and then come down.

Membership is about a creator's stronger bond with their most significant fans, as well as their belief in the artist and their continued artistic expression. We believe this to be true of podcasters, of video creators, and of course of many web comics. 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.

Listen to Decoder, a program hosted by Nilay Patel of The Verge that explores big ideas and other issues. Subscribe right here!

I'll give you some hard and fast leading indicators of successful creators on Patreon. If you have many subscribers, let's say, or followers, your success is less likely to be predicted by your daily or weekly engaged fans. If a lot of your fans listen to, watch, review, read, etc. when you post something, that is more indicative of your success on Patreon than, say, the sheer number of subscribers you have, etc. That's one thing.

Second, if you're the kind of creator who cares about your fans and you win a T-shirt design contest, you'll be ready to make merch when it's time to make merch, and you're responding to emails and doing DMs on Twitter and you're there with your community. If you manage a really strong community, it has a big impact on your Patreon success.

If you offer exclusive pieces of content, it is highly predictive of your success on Patreon. We observed that when we added exclusive content to the creator page a few years ago, the conversion rate from a logged-out fan to a member literally doubled. Do the freebie 30-minute thing in the ecosystem and find a new audience if you have bonus episodes, which podcasters have seen do best. But then they do the hourlong, deep dive for their members only, and it drives a ton of conversion.

Good exclusive content, good engaged creators who care about their audience and who care about them, are just a few examples of those things. are two of the main things, in my opinion.

Let me be really reductive. Do a lot of things people like, as you're saying, sounds like what you're saying.

Yes, I suppose. Well, that sounds a bit more pessimistic.

Making a lot of things that people like is still kind of the formula when we're talking about art and commerce and the collision between the two. If you believe membership has actually altered the dynamics of that formula, I'm curious.

Well, I'll tell you a story. What was the best merch for creators, because they were experimenting with creator merch, and what could be used to predict a creator's success with a product line? I was asking this studio.

And their response was that the creator must adore the creation they are producing. You'll give up. I believe the overlap between things that make you feel creative and things that make your audience think. I don't believe you're going to be that successful as a creator if you just do things that other people will like. It's got to come from your heart. Otherwise, it's impossible to be a creator. It must be something you personally enjoy doing. So I would say the answer is a little similar for your analysis here.

I actually don't think you're going to be that successful as a creator if you just do things that other people will like.

Is Patreon a remedy for supply and demand and conventional economic principles? 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. Markets are still in operation, and there are also market forces at play. It's still commerce, and Patreon does not solve that problem. I need a new revenue line for myself, which Patreon solves. Not in my opinion.

How many people on Patreon are earning a full-time salary or something equivalent to it?

We don't have any information on how many creators are full-time creators, but we do believe the most recent number that we released is around 250, 000. That is beyond me.

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. If creators are just doing ads and streaming or something similar, they can use a solid, recurring, and trustworthy line of business to essentially increase their income by 50 %.

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. In some cases, they’re making a lot of money, sometimes much more than they made at their full-time jobs. A lot of writers are quitting their jobs and going to Substack, and that is their full-time job. We had Chris Best, the CEO of Substack, on Decoder a couple months ago.

Actually, I believe it to be pretty similar. Therefore, these are brand-new sources of income for these creators. Media firms employ thousands and thousands of poets, and they can left that position and work for Substack or Patreon. In the case of a lot of computer developers, they were never previously employed by a huge entity that was paying them a earnings. The main difference is that many designers did not work full-time as a originator for another corporation, as in the case of Substack.

" There are authors who are creating small-business creative press businesses," he said.

I'd claim that's one key distinction. That is being witnessed frequently. They are creating YouTube. They're doing apps, and they're doing whatever it is not just as a full-time task, but they're building multimedia firms. We're seeing individuals who are working as full-time makers. But in terms of the energetic of folks able to quit their careers and earn money on Patreon, it is totally true. We see designers who are leasing company area and hiring clubs.

I was discussing a history about Accurate Violence Obsessed monday. At our all-hands]meeting, we were showing photos of their workplace area. There are authors who are building basically what we're calling small-business inventive press businesses, which were not a factor 10 ages earlier.

There is a lot of risk in leaving your job, whether it's in the advertising or doing something else, before you can start an indie father or start a small business. You must have health plan. You've got to even out your income stream. In some circumstances, they may cover heath healthcare. People will benefit from Substack. I think that's utterly sensible, but they're doing it. In essence, they lower the risk. Who receives those provides and who doesn't is being questioned by them.

Patreon has done some of that products in the past. Is that the original prepare? You want to be a long-term facilities supplier for impartial makers, according to a quotation I have below.

Completely. We've talked a bit about the previous but way, but I'm optimistic about the future for inventive persons. I'm an idealist, so I might consider whatever I say with a grain of salt. It will provide creators with tens of billions of dollars. I think with all of the competition now to help creators make money, in aggregate, it will work over the next decade. I believe it will work.

According to me, YouTube just announced that they have given creators$ 30 billion over the past three years. TikTok announced a billion-dollar creator fund, and there's downward pressure on pricing now. I believe that Facebook and Spotify both announced 0 % fees for their subscription products up until 2023, while Spotify and Facebook both announced 0 % fees. How long does that last, we'll see.

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 believe that will lead to generations of full-time, professional artists. I believe that while the first 20 years of the web were primarily about distribution and helping creators figure out how to reach people, the next 20 years of the web will be about rebuilding the financial engine to get creative people paid.

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 will require logistics. They will require health insurance. They're going to need systems for unification and organization. Over the next ten years, they're going to need all kinds of things, including some of the things you mentioned. They will require financing.

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. Because they didn't understand how I made money, the bank refused to lend me when I attempted to buy a home. They remarked," The things that show 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 trained to understand creative businesses. Send us your pay stubs from your job, they asked. I said," What are pay stubs"?, because I didn't have a job.

In this new world, where there are hundreds of millions of full-time, professional artists, there is a lot of infrastructure that needs to be rebuilt for creative people. I believe that the majority of that infrastructure is already undeveloped and undoubtedly unimagined.

Are you providing capital to people?

We are, indeed. About a year and a half ago or two years ago, we introduced an advance product on future expected earnings, on membership earnings. How much am I going to be making? We'll then give them a discount on those profits. But we make deals and help creators understand," How much am I making?" It's in super alpha. Only a few deals have been completed by us.

How are future expected earnings determined?

We have very predictable growth in cohorts of creators. In general, we are well-versed in how much money this particular group of creators who signed up in June will make a year later. Because we have such faith in their income and their businesses, it gives us the ability to offer these creators a deal they won't be able to find anywhere else.

The thing about subscription businesses, and especially creator subscription businesses, is they're built on trust. They're based on a solid relationship with their supporters. So that's how we actually determine it, and then we give creators a discount based on the results. So they're very predictable businesses.

But not everyone in the cohort, isn't it?

I mean all at once. It evens out to be about whatever that cohort was doing.

Is that information accessible? 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. We've announced overarching growth rates for Patreon, but we don't make our individual monthly cohort data public.

I ask because it becomes very difficult to determine who receives the money once you begin to distribute it. You have some data that drives those decisions. I believe it is appropriate to inquire about the data and how you are making those choices. You're implying that there is a calculation.

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 of these advancements are being made by the individual creators and team members at Patreon, who are developing this product. So when we're having those conversations, we're obviously very transparent with the creators when it comes to the timeline, the fee, the expected salary, and the reasons.

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 believe that some of that work will be required as you expand the program or when it comes out of Alpha?

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. However, when we include it in the product, we will make sure that creators are completely aware of this. If the payback period is that, here is the fee. Here's why. " So again, all those conversations are taking place ad hoc. However, the current approach only offers creators the option to" Hey, here's the fee if the payback period is this."

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?

That is a cash advance program at the moment. However, we have not yet established a health insurance system. We don't have it yet. A health insurance program is something I'd like to have. We've worked with insurance providers to offer creators discounts on health insurance and other similar services.

In the course of describing the things that the creators on Patreon do, you have mentioned like six other platforms. You mentioned YouTube, right? These platforms are now turning into direct payments for creators. You've mentioned Twitch. You mentioned Discord, too.

Super Follows are on Twitter. Facebook, as you mentioned, is offering zero fees on their upcoming suite of creator revenue products. They're undoubtedly going to compete with Substack. Clubhouse will hold events and tipping. It's an endless list of things. They recently purchased the newsletter platform Revue.

Patreon is not a destination like those platforms. Then you give them some other stuff. For instance, if I had to describe what I would imagine your biggest competitive pressure would be right now being famous and then getting some of the people who adore you on Twitter to pay for your Patreon.

If a creator replies, "You're on Twitter, and you like me," instead. Push the button. Give me some money, and Patreon might never accept those donations. Are you thinking about making Patreon itself a more destination-based service, or is there another option there?

On those platforms, those are not your fans, I bet.

We want them to assume they are, but they are not our buyers or followers. They use Facebook, too. They are customers on Twitter. When Twitter and Facebook you increase their revenue by moving those customers abroad, they does.

But I don't possess that market it. They may split my transportation in third with one change. With half the opinions, half the advertising revenue, and none of the handle, I'm instantly left as a publisher. They're not really my enthusiasts. On those size advertising companies, those are not strong platforms on which I can create a successful inventor. I genuinely have lost feel with third of my crowd right then.

" On those systems, they're certainly our viewers, and they're certainly our buyers. They use Facebook, too. They are the customers of Twitter.

Pomplamoose has been on the web since 2008, putting out clips. You now have an audience of 1.3 cent. 1.8 % of your visitors, in your opinion? Nowadays when we make a post on Facebook, we get a minor pop-up that says," Gratitude. I've been expanding Facebook's person bottom, but I didn't realize it. Pay the$ 200. I have not been building a fan base on Instagram.

Shopify may be thinking this way too, in my opinion. Again, I think it's a online good for creators, so I'm basically really enthusiastic about that globe. I think all that contest is going to imply that authors are about to create, virtually, billions of dollars over the next generation. These businesses, of lessons, are entering bills, as they ought to. People require a location where they can control their client relationships, where there is no mitigator between the buyer and the creator and the father and the vendor or whoever it is.

I think along the way, press businesses and authors are starting to realize]they're ] hardly protected on these programs. There needs to be a better way for them to serve their customers who don't use these systems. Regardless of how the platform feels about their engine for the month, there must be a spot where makers can connect with MailChimp and have control over their email addresses and access to their viewers.

That's a nice market, but if you're something who's motivated to proceed zoonotic on Twitter, it's actually easy to push that option and no worry about this difficulty. How can you encourage them to begin thinking about their company in that manner?

Switches are valuable, but they are not the solution.

Afterwards, enrollment doesn't function because there's a box that you can visit. Because of the relation, it succeeds. That is a fully distinct phenomenon that we observe occurring. But it's not going to remain like building a membership that you care about, and talking to your visitors about that account, and investing long-term in a place where you can be near to your associates and have equity of that market. You'll earn a little extra money. If you click a button as a creator, it will work a little bit, in my opinion.

I think that's why the platforms, so far, have had trouble with things like membership. In 2011, they released paid channels. In 2014, they announced fan funding. They released channel memberships in 2018. None of these have really taken off. And ultimately, I believe that trust in these platforms is what matters. There's too much risk involved with that, for me as a creator. My band, Pomplamoose, has come to the realization that we shouldn't rely on YouTube for our business. In many ways, YouTube has been working on this for ten years. When we get up and authentically push something to our audience, we're not going to push a YouTube-based monetization system.

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. How do you bridge that gap? 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.

Actually, I believe that the emotions are quite 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, your posts are delivered to a whopping 100 percent of your audience consistently and consistently. You can download your members ' email addresses in a CSV and transfer them elsewhere once you have received them.

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. The creator-first culture's business model. So that is, in my opinion, a good layer of accountability to ensure that we always put creators first. Which I think is, at the end of the day, the key differentiator.

Not an advertiser, our client. We've thus baked those dynamics into Patreon in a way that other platforms haven't. And so we're doing things to make our creators be successful, and we're not successful unless creators are successful. Our customers are creators, in our opinion. The customer serves as the advertiser on YouTube and Facebook.

" Are we going to have trust and safety debacles and content policy issues? Of course.

Will there be content policy debates and trust and safety scandals at this point? Of course. As the debate over [Section] 230 heats up and as we really start to think about content policy over the next few years, I believe all that will become more heated over the coming years. Therefore, I don't believe anything is disappearing.

And our approach on that, I think, has been a little different than other platforms in a few ways. One, we simply can't be bothered by the fact that we don't allow certain things on Patreon.

On Patreon, you can't be racist. 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 believe that yes, we've made enemies along the way, but I believe it's the right course of action. And that is not liked by many people. I wish more platforms did that kind of thing. Many people don't like the fact that our policy is rigid.

And then the second thing is [that ] humans make decisions at Patreon, not algorithms. There's never a creator takedown without debate and conversation and a team getting together. However, as humans review those things, things escalate. There is a remedy. Creators can call somebody and talk to them and understand what's going on. We're obviously at a point where automated flagging is required, so posts will be flagged and things will be flagged. And ultimately, people are making decisions.

We also developed a system so that 90 percent of the time we work with creators to help them understand the content policy. And we actually help the creator stay on the platform for 90 % of the time. Because we desire that personal touch. We want to be in conversation with them. We want to be instructing them in a field of content policy that is currently largely opaque because it is evolving and developing so quickly as the industry changes and evolves. We want to collaborate with creators.

I'm not saying that we're not going to have all those problems as we scale. We are not serving those at all. There are no advertisers on Patreon. 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. We're a platform that's reaching a stage where there will be a lot of content being uploaded to Patreon, and we're going to have to deal with it.

Let's face it, we have only the creators ' stakeholder to worry about and focus on.

Let's talk about those rules for a second. Do you want to enter that sector? Do you believe that to be something you could change? That's not a market Patreon is in. Another company leading the charge is OnlyFans, which is currently at the forefront of the creator economy discussion. They permit people to subscribe to sexually explicit material from a variety of performers. There's other stuff on OnlyFans, I'm aware, but that's what they're known for.

No, we've been very clear about this on Patreon from the beginning. And that's just because our goal is to assist those people who are creators, podcasters, YouTubers, journalists, web comics, and YouTubers. 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.

What is a simple definition of porn?

Evidently, I've given a lot of thought to content policy and trust and safety. There's that famous quote," You can't really define pornography, you just know it when you see it".

The judge who wrote that sentence deeply regretted it. I simply want to let that be known.

I strongly disagree with that quote.

You can define porn in much more detail than I can currently. And we have teams of people whose job it is to very clearly define what does and doesn't constitute pornography- 10 % of Patreon's team is made up of people who are trusted and safe, and who are responsible for content policy. And so, yes, we have defined that.

The problem is that you can't define it with a headline. That stress is absent from us. You have to specify it with eight pages of text. I may declare that Patreon's material plan is more progressive than different willing policies, partly because we don't have to deal with advertisers or brands. Because physical styles in craft have been around for a long time, the work is detailed and has a lot of information. We don't have to generate Clorox sense pleasant on Patreon. And I believe it to be a significant element of arts. We don't need a comfortable, brand-safe environment.

We you enable a inventor to be nude. Then, cool, how do we define the distinction between that and where we've come out and said," Okay, we don't allow pornography." How do we draw the line? We draw that column pretty carefully with a pretty lengthy, obvious information coverage. They had enter, examine an image, and read the text, and nine out of ten days they do make the same choice as the group. By the way, it's written therefore clearly:" When you're writing a material scheme, part of the way we approach it is that it should be so detailed that you could acquire a guy off the streets without any instruction."

Have you tested this?

We haven't imported any off-the-shelf folks, but the information we're aiming for is what. It is specific.

The additional factor I'm intrigued about is the Patreon apps on Apple's App Store. The game stores have their own guidelines and information tolerance procedures. Would you consider what Patreon plans Apple will let as you develop your guidelines?

We spouse with a lot of organizations. We're not everything in a field, we're custom-built by Patreon, we're in the facilities of the web.

In terms of content plan, I'd suggest the bills businesses are the most stringent, compared to Apple.

More than Apple, it's bills businesses. That's possibly the emphasis, more so than Apple. We must work with payment providers to see how respect, health, and material plan are being thought about by them all of our payment partners. More so than Apple, because I'd claim the repayments businesses are the most rigorous, in terms of willing coverage. Only understanding how their contemplating is evolving is probably the biggest some that we work with and care about, and that's probably the biggest one.

What is something Visa didn't let you do?

It depends. You have a lot of potential. On the internet, you can use a credit card to pay for movie. And so you may complete items, actually with Visa. And how much do we desire our developers to get paid? That's what it's like. It's just like, what is going to become the price structure associated with that? It simply changes the policies you're under, the standards you use to system, and the costs associated with those channels of handling.

We discussed Online Super Follows on the show a few weeks ago, and Kayvon Beykpour was one of them. Are you going to get around it? We are not in the organization of getting around app taxes, he extremely evidently stated. I said," Are you going to spend the Apple charge?"

As I understand it, Patreon does not have to paid in-app obtain costs. You're straight inhaling women's credit card numbers because you're talking about a strong connection with payment processors. Why are the charges not to be paid?

I wish we had some particular agreement with Apple. We don't, though. We have to go through the App Store reviews and laws like everyone else. And often we basically get delayed and have to produce changes in the applications.

Decades before, there was a time when we had a talk with Apple after our game wasn't approved. Since it was four years ago, I can't even recall what the modifications were. And therefore finally, I think a few weeks eventually, we figured it out and we got approved and we had to make some changes. However, since we've ever had an game, we have to deal with the App Store cost and apps critique policy.

Why do we not have to spend taxes? I think it's as, for whatever reason, we're within Apple's suggestions, and we haven't had to paid expenses.

This seems like everything you ought to be completely aware of. Isn't this a long-term danger for Patreon? That Apple will listen to this and wake up and give you a call and say," Time to pay the fee".

There isn't a lot of breakthrough happening on Patreon right now, as you mentioned, and how people use our software and how Patreon has structured the enterprise as a platform for creators. Additionally, a significant portion of the real commitment takes place on different systems. Persons are hardly coming to Patreon to find a handful of authors and therefore supporting developers. It's just not the norm on Patreon, then. They're using the apps to talk and hang out between users and creators, to post content and connect with one another. A great part of our makers are using Discord to stand out with their societies and to be with their areas. Individuals are finding a lot of makers to help on Patreon unlike they do on YouTube.

You you sign up for a enrollment in the software?

I think what we do today is we kick you to a internet movement. We don't have an in-app acquire switch if you try to listen.

And Apple hasn't reached out to you and said," You need to put the in-app buy box."

No.

That's interesting because we just did a history on another program called Fanhouse. We don't have the funds to cover the costs by simply paying 30 %. They also made a clear evaluation to Patreon, they said. Did you view this history? They are extremely unhappy because they had a concept that resembles Patreon's and Apple demanded that they add the in-app buy option. They assert," We don't want to go that on to makers."

I saw one of the posts, yes.

There were numerous comments. So I'm curious about your sense of steadiness that. It's Apple and Google, and they change their words all the time. Did you consider the statement, "hey, I need to make sure that we're really following the rules"? There are only two transmission techniques for an software if you have one. But I'm inquisitive, did that mild the lamp for you?

Sincerely, we've never felt a lot of security with the game assessment plan. It's usually worked out, but does it think steady? And then we have to make adjustments and complete points. No. I believe there have been instances where the apps hasn't been approved. That doesn't sense fantastic.

" To be honest, we've never really felt a lot of balance with the app overview coverage."

Suddenly, only a small portion of commitments are basically made on Patreon within the app]. The means members find innovative creators- on YouTube, on Facebook, on Instagram, on wherever it is, a publisher did discuss their Patreon. Then they will visit the author's Patreon site. And that's essentially often web or mobile. Next the participant likely download the app and use it as a communication network for important updates and stuff like that. However, a significant portion of the interaction occurs through companions, via MailChimp, Discord, forth. The lover may eventually sign up to join, which is a process that almost always takes place outside of the software.

It feels like you don't really want to construct that target with analytic advice. I feel like you would really remind me to leave if I said," You may create the Patreon game more like Instagram."

That is awful for makers, in my opinion. That's awful for artistic persons. Suddenly, the earth we're creating is one in which a publisher controls how those enthusiasts interact with one another. Are we going to give this to your enthusiasts or not if we become a mitigator of that connection, if we start building algorithms to determine that you've made a blog as a originator?

But finding is not bad for innovative individuals. You're subscribed to these four developers, and here are two more just like them, says the Patreon game when I launch it. You may adhere to this website by clicking the subscribe option. That seems like a pretty normal thing to want to do.

Sure, both authors and followers want that. However, when you turn Patreon into Instagram, change it into a getaway size media app, like a nourish product where you have thousands of connections and are attempting to decide where to spend your time right now, it's a poor world for creators because it ultimately compromises a creator's relationship with their fans. And I think that's good for creators. It's difficult to find new members.

I want to assure you that you haven't had any direct conversations with Apple about the restrictions you may have on accepting payments in the app.

Well, we have multiple times as we've gone through the review process. That has been raised. And it succeeded. I think it came up again a few years ago, and that's when we actually got delayed. We made some changes, and we were successful, but I can't recall what they were.

You want to create a suite of tools for creators, but you are limited by what payment processors will let you do and by what the operating systems ' stores will let you do. This is the thing I'm circling around, and I'll be more direct about it. And I think that's actually a tension here as the creator economy grows. I'm not sure if those boundaries are open to the creators.

Ben Thompson, the author of Stratechery, has made a powerful riff on the well-known Kevin Kelly maxim that if you have 1, 000 genuine enthusiasts who buy whatever you produce, you will earn a great life. But Ben has pointed out that because of all the costs along the way, you basically need someone like 1, 700 or 1, 800 correct followers because you have to spend the tollbooths along the way. I don't consider the authors fully grasp that Patreon must offer with gatekeeper of its own, that they might have to pay those guardians wealth, and that they will then be held accountable for those costs.

For instance, Facebook is making it abundantly clear to the publisher sector that neither Apple nor Google will be charging them any costs, and that Facebook will not start to do so until 2023. I'm wondering if you are trying to make that more visible to developers when properly.

We talk to makers frequently about cost constructions. We have sections of our screen and father screen that explain fees, and what those fees are and why when a publisher signs up for Patreon. Additionally, we have sections that explain fees in our screen and originator dashboard. The biggest payment architecture is pay control costs.

However, I do believe with you that many of the cost institutions of the computer, particularly those relating to the inventor market, will been rethought over the coming decades. At the end of the day, if you have a account, a shirts line of business, and are touring, but you have to give up 30 % of your income, that's a great hit as a small business. That's a huge beat as a father that's trying to build a inventive multimedia firm.

I don't believe that will work over the long run because I believe that essentially what will happen is that systems will be attempting to obtain authors paid as much as possible for economical reasons. And I believe that ultimately will only serve to put pressure on the industry to ensure that designers are obtaining the maximum compensation possible. Channels are going to be trying to help makers decrease those charges and taking apartment as much as they does.

So I concur. As all this thing is figured out, I believe a lot of this discussion will lead to better results for designers over the next ten centuries.

There's a query I ask every ceo who comes on the show. You have witnessed the growth of this business. You've been a member for a while on Patreon. And what is your decision-making platform today? What changes have you made to your method of making decisions?

I'll respond to you in two ways. Initially, the difficult component is- when you can implement a model to choices, that's actually quite easy. Then you simply conduct your decision-making process. The challenging part is recognizing when a decision departs from the framework or when there is a decision that needs to be made and a decision-making person is required 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. I'm trying to move things along because I believe that the more quickly you can identify that, the sooner those decisions are addressed and properly made. The difficult part, in my opinion, is when decisions don't clearly fall under the framework, and you need to identify that before deciding whether to make a decision.

Then another thing I try to do is]that ] I try to make as few decisions as possible. Something is wrong if I'm the one making a lot of decisions. However, if I'm making a decision, one of the things I like to do is consider, okay, what's the world like where I'm not the one making the decision, and how do we get there? So that's another thing I think about. Do we need to relocate right away, or should we do it over the course of a few years? And that makes me consider whether to grow the business and ensure that we're bringing in the right people to scale. For me, I wouldn't go to the extreme where if I'm making a decision, then there's a failure.

Finally, I'll let you know one more thing about making decisions. So let's spend some time putting our swords together on this topic so that we can make the best decision possible rather than just saying, "let's just make this decision." We spend time debating and discussing and sharpening our swords on a particular issue. We hired a new executive a few months ago, and I'm really enjoying having a lot of conversation with her rather than making quick decisions. When you have the time set aside to work on challenging subjects, it just produces a lot of clarity of thought over time. I've actually found that it's really helpful to think about it like that. And he refers to it as" sharpening our swords" on particular thought.

Then, presumably, use the sword.

Then do you ]have ] to make the decision at some point? Yes.

Let's discuss what will come next for Patreon. At the beginning of the pandemic last year, you laid off 13 percent of your workforce. You only raised a lot of money in April. You posted a video about it on YouTube explaining the reason and saying that we're changing the product team. And then tell me what this new round of funding is for. Tell me about the alteration and reconfiguration.

That was a very difficult task for the team. 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. We hired a new product leader, and we spent a few months with him or her thinking about our plans for the future, why, and how the company's vision should be addressed. So we made the adjustments.

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. What does that vision represent? So for instance, when a creator wants to use our Vimeo integration to post a video to Patreon, they must do so right away, which is fine, but it should be very simple to do so. The vision is better content and community on Patreon.

A creator must use our Discord integration when they want to host a community jam with their fans. They want to be able to connect directly with their Patreon community and members. And so a lot of the future focuses on content and community, at least in the near term. That is actually fantastic. However, many creators in the Patreon app want to make that very simple as well. They don't want to have to download another app. Because I believe a lot of creators adore Discord, I believe we should keep that integration at the forefront.

A second Renaissance will result from the competition to help creators get wealthy.

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. I'm optimistic, once more, but I believe it will succeed. Hallelujah. It's such a good thing for the world of creative people. It's a significant step for the internet. And I believe that it will lead to, essentially, a second Renaissance, is how I've been defining it.

I think it's going to make the first Renaissance feel small. That's a big statement, I am aware of.

That is a significant statement. It also implies that we're in the Dark Ages right now.

We're not in the dark, in my opinion. That's such a creative time for artists and creators. 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. And I believe that will require a significant infrastructural overhaul, covering everything from payments to crypto to health care. There are many things that creative people will need to successfully build businesses over this next chapter, and all of these things are intertwined. I think this is the most exciting time to be a creative person ever.

You're building a native video player, so that new product strategy? You're creating native Discord functionality, right?

No, not native Discord. It's more community tools, ways for creators to be more in touch with their fans. Although we haven't distributed it, it's essentially a way for creators to better host communities on Patreon. It's a whole company, and there's a lot of great people that are doing that. And what exactly that is still unreleased, we haven't disclosed it.

And you're going to maintain the integration with Vimeo, or will you create a native video product?

We want to keep integrations. So, yes, absolutely. It's a very significant component of the strategy. Part of the way that we want to build things is giving creators options. We don't want to let creators decide how and where to run their businesses. Many designers want to operate a Misunderstanding society, but we're going to include the connectivity. Many designers want to internet their subscribers, so we have a MailChimp connectivity.

What do you anticipate Patreon will do next in the near future? What if people get focusing on?

I believe it's because Patreon is focusing so heavily on providing better glad encounters. Better material offerings, greater material firm, better material firm, better material discovery, and better content use are things that creators genuinely desire. We're most soon working on better willing equipment in basic.

When did I notice it as someone who has a Patreon account with numerous makers?

This season, you can see it. At this point, we're making incremental advancements to everything.

Decoder with Nilay PatelA radio from The Verge about large concepts and another issues.

Editor-in-Chief Nilay Patel

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