Patreon and Drip: An Analysis of Subscription-Based Crowdfunding Platforms

Update: More or less one year after its creation, Kickstarter ended the Drip platform. However, Kickstarter gives it a second life through a collaboration with XOXO, Portland's independent art and technology festival. Read our article on the subject to learn more about the reworking of Kickstarter's strategy.

If you were told that there is a model that enables you to control your creation and eventually quit your day job, admit that you’d be interested in knowing more even if you didn’t really believe it! This model is subscription-based crowdfunding driven by Patreon and now by Drip, a new Kickstarter acquisition.

Many creators and organizations are intrigued by this model that finally promises a steady revenue stream. In the case of artists, it’s a form of remuneration that resembles a monthly salary. For many, it’s unthinkable seeing as they convinced themselves that using the web to generate value was very difficult to do.

But, and it’s a big “but”, if Patreon were the author of this miraculous recipe, it would be known!

Before tackling what is wrong with this picture, here is what you need to know about how it works.

Two platforms and a seductive model

Founded in 2013 by independent artist Jack Conte, the Patreon platform is the reference in terms of subscription-based crowdfunding.

At the time, Conte was relatively successful on YouTube thanks to his music videos. Pedals, a video showcasing a hand-built dancing robot, has been viewed more than 2 million times to date. There is no doubt that the artist was able to use his creations to build up an audience, but the money did not follow.

In the case of Pedals, which cost him $10,000 to produce, he raised only a few hundred dollars… From that came to him the idea of a less savage model that invited fans to become members rather than ‘benefactors’ or ‘patrons’ in exchange for a monthly revenue or a payment at the delivery of the product.

Today, more than 108,000 creators animate the Patreon platform and close to one million donors contributed $150 million in 2017 to finance their work.

As for Drip, it’s the new kid on the block in the field of creative subscriptions. This crowdfunding platform was bought back by Kickstarter in 2015 with the objective of transforming it into an entity focused more on interactions within the artistic community and then on the sale of a product. The only thing up for sale is the subscription to the creator’s work. As is the case with Patreon, the creator does not need to reach his objective to get paid.

Drip offers a major advantage: seeing as it is incorporated into Kickstarter, Kickstarter subscribers do not have to register a second time. However, the platform only services invited creators for the time being. It is scheduled to be opened to the public in 2018.

To whom is this model addressed?

The simple answer goes as follows: to creators who produce on a regular basis, regardless of artistic or media discipline.

Contrary to the donation-based model proposed by crowdfunding giants (Kickstarter, Indiegogo, Fundrazr, etc.), subscription-based crowdfunding is done on an ongoing basis, generally on a monthly basis.

Rather than conducting a 30-day campaign to raise $20,000 to produce a short feature, the Patreon or Drip subscriber undertakes to deliver exclusive content on a regular basis in exchange for smaller amounts of money. Contributors can therefore support creators whose work they appreciate as patrons and the bond that develops between contributor and creator will probably be longer-lasting than in the case of a project-based campaign.

For example, Mike Ward uses it on a monthly basis to distribute his podcasts recorded at Montréal’s Bordel Comédie Club. Audio versions are sold for $2 and video versions are priced $3. To date, he has received the support of 3,177 donors who pay him a minimum of $6,354 per month—minus a 5% commission. That’s a non-negligible revenue stream.

Patreon also offers a ‘creation-based’ model by which revenue is paid out as creations are delivered, whether on a weekly or bimonthly basis. However, project promoters are asked to explain why they adopt this process instead of the monthly process (an approach preferred by 77% of all subscribers) as well as to establish the frequency at which they hope to deliver their treasures to earn the trust of eventual patrons.

So, does it work or not?

One of the main issues raised by this model is that it is infinitely seductive (the promise of recurring revenue), but it does not suit all artists. In an ideal scenario, something relevant must be delivered at least once a month.

However, one must not forget that contributors who use this model fund a creator’s creative process AND access to the community. For example, although it is possible to subscribe free of charge to Mike Ward’s podcast on iTunes, some will prefer to register with Patreon and pay $2 per month to show their appreciation.

However, the $150 million paid through Patreon in 2017 benefited only a very small proportion of the creators who are present on the platform. As with our society, a very low percentage of creators earn the jackpot, i.e., thousands of dollars per month. Most creators on the platform earn less than $100 per month.

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 How to figure among the most highly remunerated creators on Patreon?

A vast majority of the creators (87%) receive monthly revenue that is lower than the minimum wage, i.e., less than $1,000;The January 2018 statistics published on Graphtreon, a platform that gathers data on Patreon, shows that:

  • A small proportion of creators (2.9%) benefit from the support of 1,000 or more subscribers, whereas the majority (61.2%) have the support of less than a hundred or so subscribers;
  • The ten most highly remunerated creators produce podcasts, videos or video games.

Capitalizing on subscriber communities

What does 2018 have in store for Patreon? The platform still has fine days ahead of it because its model is seductive and relevant to the extent that subscription-based crowdfunding focuses more on community work than the donation-based model, which lasts only a moment. But then again, the artist needs to know how to build up a loyal community around his or her business.

Patreon would appear to have understood that and that is why it launched Lens, a Snapchat app that allows donors to go behind the scenes of a creation and access exclusive content.

The question is really to determine for whom this tool will be the most useful: small groups of creators funded by thousands of people or the others, who represent the majority and probably have difficulty reaching contributors outside of their circle of friends and family? At first view, Lens tends more to meet the community animation and management needs of the former, i.e., of those who generate significant revenue, than to compensate for the lack of visibility of the latter.

That being said, it would not be surprising that other platforms begin creating relational marketing tools because crowdfunding is based foremost on a strategic approach to communications.

Claudia Beaumont
Digital content coordinator, music programmer, radio producer, research assistant, community manager, columnist: Claudia Beaumont played many roles in the field of music broadcasting at Société Radio-Canada over a 10-year period. She then went on to work in the audiovisual industry, as a product manager for TV5 and Unis TV’s digital platforms. Over the past several years, she also developed an interest in the impact of digital technologies on artistic creation and its marketability. Her master’s thesis focused on crowdfunding and its role in cultural intermediation in Quebec.
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