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This week on Recode Media with Peter Kafka, Patreon CEO Jack Conte stopped by the studio to talk about why he started Patreon. As a musician on YouTube, Conte was spending all his money on making videos that got hundreds of thousands of views, but he was making barely any money. He decided to revive the idea of “patronage of the arts,” except this time it’s online. Conte’s site makes it possible for subscribers — called patrons — to pay creators for what they make and get bonus content or other perks in return. His idea has found its niche: The company is on track to process $150 million in 2017.
You can read some of the highlights from the interview here, or listen to it in the audio player above. We’ve also provided a lightly edited complete transcript of their conversation.
If you like this, be sure to subscribe to Recode Media on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.
Peter Kafka: This is Recode Media with Peter Kafka. That is me, I’m part of the Vox Media podcast network. I’m here in San Francisco with the CEO of Patreon, Jack Conte. Welcome, Jack.
Jack Conte: Yo. Thank you, thanks for having me.
How are you?
I’m doing great.
You have a different business model. You do not sell ads for a living.
No, I do not, no.
Nothing wrong with that. Explain what Patreon does for people like me, or anyone else who wants to make money.
Yeah, so Patreon is ...
Have I been pronouncing it wrong the whole time? Patreon, Patreon?
Oh, I mean, some folks ... If you’re from the U.K. or Canada, a lot of folks say Patreon, so it doesn’t ... Patreon, Patreon, no, it doesn’t matter.
God, this is embarrassing. I usually get the company name right.
Well, it’s all right.
All right. Patreon, like “patron.”
Patreon. Exactly like “patron,” yeah, with an E.
Mm-hmm.
Yeah, it’s a membership platform that makes it really easy for creators to get paid. It’s basically a way for a creator to get, you know, 10 bucks a month from a fan, or 15 bucks a month, or 100 bucks a month, in some cases, depending on the fan. And then you get a ... If you’re a creator with a big audience, you can get a thousand fans each paying 10 bucks a month, you can be making $10,000 a month from those fans for doing what you do best: Making podcasts, putting out webcomics, making YouTube videos.
So I say, “Give me some money.”
Yup.
Someone says, “I would like you to give me some money.”
Correct.
You help facilitate that process, and you take a fee.
Yes, and we have a CMS in the background to distribute content, so you can send things to only your $10 patrons, or your $5 patrons, or your $1 patrons. There’s a full robust CMS in the back, and plus creator analytics and tools, and things that you need. CRM, so you can find out information about individual patrons and store them in a database ...
Jack, you’re wrecking the joke. I was going to say, “That sounds like a fancy tip jar,” and then you were going to get mad.
I’m sorry, I totally ... I cut off your steam there. That sucked.
No, no, no, no, but you’ve explained why it’s not a fancy tip jar. But I described this as a tip jar because it seemed like a reasonable way to describe it, and you got upset with me.
That’s correct.
You didn’t yell. What’s wrong with calling this a tip jar?
Yeah, it’s ... So I feel pretty strongly about this.
Let’s go.
Which is why I may have, or may not have, yelled at you before. That would be like saying, “Ah, Starbucks sells milkshakes at 10 a.m.,” and everybody buys milkshakes from Starbucks. No, Starbucks didn’t come out with a campaign saying, “We’re selling milkshakes.” They said, “This is a coffee, this is a Frappuccino,” and then people started buying milkshakes, quote-unquote, at 9 a.m., at 10 a.m., and drinking them for breakfast. Nobody would drink a milkshake for breakfast. There’s a lot of baggage that comes along with a name, and a name like “tip jar,” gosh, I’m a professional creator, I don’t want tips. I want to be paid for the value that I’m bringing the world. I want a patron. It’s a big difference between the word “patron” and the word “tip jar.”
So the metaphor would be, you can play in the subway and put your guitar case out, and people can throw money in, and there’s nothing wrong with that ...
But that’s not what Patreon is.
Patreon is, you pay me some recurring fee so I keep making music all the time, regardless of whether someone’s putting money in the guitar case.
And in exchange, you get all kinds of benefits that you can ... So we build rewards programming for creators, so your $10 patrons get a specific thing, like a once-a-month Google Hangout, or something like that. Actually, now, we integrate with a livestreaming platform called Crowdcast, so you can do patron-only livestreams to just your $10 patrons.
So does there have to be an award/reward associated with this, or “I just want to give you 10 bucks a month, you go do your thing.”
It’s up to the creator.
So some creators make special stuff for their patrons.
I would say most creators make special stuff for their patrons, yeah.
So in addition to making my awesome stuff, I’m going to make stuff that only you, the patrons of Patreon, can see.
Correctamundo.
I’m going to piss you off again here.
Great, do it, I love it.
Sounds like a fan club. That sounds pretty cool, like a fancy fan club. See, now I’m making you mad again.
Yeah, you’re making me so mad. I love this.
We kind of rehearsed this, just because we had a conversation like this before. I found all the trigger words that would make Jack mad.
Fan club.
Old idea, good idea. People do not want to call what they’re doing a “fan club.” Vessel, which was Hulu ... Son of Hulu, Jason Kilar’s thing, was basically a fancy fan club.
Yeah. “Son of Hulu.” Yeah.
But it didn’t want to be a fan club.
Yeah, fan clubs are nerdy, and I don’t want to be a part of them. How many fan clubs are you a part of?
We did this part too. None, but I’m a grown-ass man.
Okay, so, well, here’s the thing ...
But also, by the way, I wouldn’t mind being a member of, I don’t know, the Wilco fan club, if it got me in line earlier to get a ticket, and/or a special Jeff Tweedy song. That’s fun.
But this is where language matters, because there is no ... You don’t feel good about yourself, you don’t feel proud, you don’t feel like you’re giving back to the world for being in a fan club. When you are a patron of the arts, right ... Patronage is how thousands of years of art creation happened on earth, right?
I’m going to mispronounce Medici.
Great.
Did I get it right?
You did.
Okay.
Yeah, some people say Medicis, whether you’re Italian or whatever.
I’m like a Medici, Medici.
Medicis, Medicis ...
I’m a rich-ass guy who pays people to make stuff.
Boom, there it is. Like, that feels good. We’re making patronage ... We’re democratizing the ability to be a patron of the arts. It used to be reserved for the wealthy few. It was a privilege to be a patron of the arts. Everyone wants to support and give back, and at the same time, you want some of the stuff. You want the tickets, early access, you want the content two days early, you want the livestream once a month with the creator, you want the signed postcard. Think of it as like being a member of KQED, or NPR, or SFMOMA. Like, there are benefits that you get to being a member, and you also just want to support the arts. It’s both of those things. That’s what makes Patreon unique; that’s why it’s not a fan club.
So this is a real thing, by the way.
Yeah. Very real.
You’ve raised 50-some million bucks, and real venture capitalists have bought in, and people are using this platform at scale. Give me some top-line numbers.
Yeah, I mean, we’re going to send ... Let’s see, last year we crossed $100 million in processed pledges for creators.
That’s through the year, or in total?
In total. However, this year alone, in 2017, in just 2017, we’re going to process $150 million for creators. So we’re sending a lot of money to creators.
$150 million is going to flow through you guys this year alone.
In 2017, and it’s going to go to creators in over a hundred countries, from patrons in almost every country in the world save two, one in Africa and one somewhere else.
And your business is pretty straightforward, right? You take a flat fee?
Yeah, we take 5 percent.
So 5 percent of $150 million ... I’m not really good at math, which is why I’m doing podcasts.
Great, yeah.
But that’s real money, it’s a real business.
It’s a real thing.
And generally, people are spending how much through you? An average donation is ... Is “donation” okay? Can I say “donation”?
No, you can’t. It’s not a donation, because you get stuff, right? You get early-access tickets.
But you don’t have to get stuff, right? I’m signaling that I like something. I’m saying I want to support you.
Yeah, see, I wish ... It’s just not black and white. It truly is both. And actually, when we try to quantitatively understand it, we survey patrons and we say, “Why do you pledge? Why do you become a patron? What is the motivation?”
Because, by the way, when there’s an NPR pledge drive, or a PBS pledge drive, they give me a tote bag, or I imagine they give me a tote bag, or a New Yorker subscription.
Or a mug. Yeah.
But that’s not why I’m doing it. I would just rather go get a New Yorker subscription, right? I’m doing it because I want to support the company.
Yeah.
I’m donating money to them.
Or so you may self-report. But as patrons self-report, it is literally split, almost 50 and 50, with the desire to support a particular creator and the desire to get the things that that creator is offering.
So sorry, I got caught up in semantics. What is the average pledge?
Right. So the average patron on Patreon spends about $12 per month.
Real money.
Real money. More than you would spend on Amazon Prime or Netflix or Spotify.
So I can see why a venture capitalist loves this business, right?
Yes, you can.
Because you’re not selling anything.
Oh, I ...
No, no, I mean, you don’t ... There’s no inventory on your end, you don’t have to acquire everything, your overhead is relatively low, right?
Oh, totally. There you go. Mm-hmm.
Every venture capitalist wants to be in a platform company, where you’re a middleman in between someone who has something and someone who wants to sell or donate that thing.
Totally. I don’t like the word “middleman,” but yes. Yup.
Scales really well.
Yeah, totally. All of those things.
You should have a million competitors. We should have a Patreon business.
I know. I know, what the heck? But we don’t.
Because there’s ... Okay, and there are similar businesses, or things in the same category, right? And you’ll explain why you’re different than an Indiegogo or a Kickstarter.
Yeah, mm-hmm.
That’s your cue to explain why you’re different than Indiegogo or Kickstarter.
Oh, God. Okay, okay. I love Indiegogo, and I love Kickstarter, and we’re completely different businesses. We don’t even view them as being competitors. Kickstarter is a one-off ... And Indiegogo too, they’re both one-off, project-based crowdfunding.
You are recording a new album. You will record a new album if I get X amount of money.
And you need 200,000 bucks to do a thing, otherwise you can’t do your thing.
I’m going to make a pet rock if you preorder the pet rock.
That’s not membership. Yeah, but we are membership. We are ongoing payments to creators, and have membership benefits programs and rewards programs, or access to things. That’s a completely different business, and actually, a lot of our ... One of the ways we know it’s a different business is our creators literally use both. We have creators who run a Kickstarter in the middle of having a Patreon page, and then they do a second Kickstarter while they still have their Patreon page up and running.
I’m still trying to process that.
Yeah, isn’t that wild?
So people are pledging to your folks, they’re donating or pledging on Kickstarter, they’re ... I just had Clara Jeffery from Mother Jones in, I don’t know when that one’s going to air, but they’re supporting Mother Jones, they’re supporting the New York Times. A lot of asks being made of consumers who were, for a long time, used to how they’re getting things, they thought, for free, or at least heavily subsidized. Do you worry about sort of hitting a wall, as everyone starts saying, “Hey, I’d like you to pay for this thing”?
Yeah, I’m not worried about that, and I think the reason is because I’ve seen firsthand, I’ve seen the fervor and the excitement around people wanting to pay creators. Sometimes, a creator will say something like, “I don’t want to ask my fans for money,” and my response to that has always been like, “You don’t have to ask them. Literally just let them.” They can’t wait to pay. If you read YouTube comments, there are things like “I’m throwing money at the screen and nothing is happening.” So no, I don’t think that we are exhausting consumers. If anything, there are trends showing that there’s an increasing appetite for wanting to pay for content. Netflix has 100 million subscribers, Spotify has 50 million subscribers. People are starting to pay for media.
Right, they are, and then they’re going to pay for Spotify and Netflix, and X number of things, and they’re not going to support every single one of the artists, or whomever they like.
No.
What determines ... What tips somebody from liking something to taking out the checkbook and giving them 10 bucks a month?
Oh, that’s such a great question.
Thank you, thank you, thank you.
Yeah, let me first start by saying we don’t want ... We’re not shooting for a world like Facebook, where you have 150 ties to creators, and you’re paying all of them every month. We view the type of fan ... on Patreon, the patron, we call it the fans that matter most to that creator. Take your fans who are your most devoted, excited fans. It may only be two or three or four percent of your fan base, but it’s those fans that matter most. That’s what’s important. And, guess what, they’re not going to have 15, 20, 30 other pledges to creators. They like you, they like what you do, because you’ve changed their life, and you’ve given them meaning every morning when they wake up and listen to your podcast.
It’s your hardcore fans. And that two, three, four percent, is that sort of your guesstimate from ... If I’ve got an audience of 100,000 people, that two, three, four percent of them are the ones who are most likely to be supporting me directly?
Yeah. If I’ve got my tech company hat on, I’m going to say, “How do you define ‘audience,’ and is it engaged, and are they viewing your stuff every day, and are they casual fans or active fans,” and blah blah blah. But yes, it’s that small chunk of fans.
Okay. Over here at Recode Media, we have many fans. We don’t ask anything from you guys, except maybe to listen to fine advertisers like the one you’re going to hear from right now. Hang on, we’ll be right back.
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Back here with Jack Conte. Did I pronounce that name correct?
I say Conte, but you can say it however you want.
Conte, who runs Patreon.
Oh, you’re nailing it now.
How’d you get into this business?
I’ve been a professional creator for the last 10 years. Yeah.
Musician, right?
And YouTuber, yeah.
YouTuber.
I really consider myself to be a YouTuber.
You came out of YouTube.
I did. I used to be a self-hating YouTuber, and now I just say I’m a YouTuber.
Were you making money on YouTube?
Not on YouTube, but I was making money as a creator. Making very little on YouTube, maybe like a couple hundred bucks a month through ad revenue.
Through ad revenue.
Even though I was getting over a million views a month on YouTube.
For music, for being Jack Conte?
Music, videos, blogs. Yeah, for being me.
You were one of those guys who showed up relatively early on YouTube, and staked it.
Yeah, I was uploading videos in 2007.
So if ... And not to belittle that, but if you were there at the beginning of YouTube, basically, your chances of getting some sort of notoriety were much higher than they are now.
Much higher. Yeah, way higher.
So you got there, and then said, “This is great, but”? Or, “This is great, and I want to create a business on top of this”?
Oh, never wanted to create ... I mean, that wasn’t the plan. Yeah, so it faded in, is the true answer to that question. It was a slow love affair that I had with Patreon. It was really just to solve this problem of, like, “What the ...” Can I swear?
Yeah, yeah, yeah. Fuck it up.
Okay. “What the fuck?” Like, I’m getting literally a million views per month, and I’m seeing ...
You’re making a couple hundred bucks.
I literally open up my YouTube dashboard, it’s like, “You’re getting paid $166 this month,” and I’m like, “Fuck this, that sucks.” So it was that feeling, and especially after working on a video I’d spent probably three ... Yeah, over three months working on this video. Drained my savings account, maxed out two credit cards, flew in these roboticists from the U.K. and University of Tucson, built this amazing music video, posted it on YouTube, got a million views, my fans went crazy.
With the robots?
With the robots, the whole thing.
I’m going to watch this. For free.
This was an ... And I built a replica of the Millennium Falcon cockpit in my studio. It was the most intense music ... I did the whole thing by myself, took me three months. My hands were, like, broken and bloody and cut up at the end of this. It was an amazing feat, and I filmed the behind-the-scenes documentary, the whole thing, sent it to my fans. They went crazy about it, and then you’d see your YouTube dashboard, you’d see $150, and I just ... I lost it, I just ... That’s it. You can’t ... It’s so demoralizing as an artist to feel so successful, and to have such a discrepancy between the impact you feel you’re having on the world and then the paycheck that you get at the end of the month.
And YouTube, this has been a recurring thing for YouTube.
Oh, yeah.
The creators, big media companies, and especially individuals like yourself, are saying, “Look, I’m putting all this in, I’m not getting very much out,” and they’ve replied with various answers over the years. “We’re going to try to improve the money,” “We’re going to fund you, we’re going to seed you guys,” or, “By the way, don’t worry so much about the money, you should also have other income streams, and YouTube is just part of that.” And you said, “Actually, I’m just going to do something else entirely.” Are you still making YouTube videos?
I am still making YouTube videos.
Okay, so you haven’t learned.
Yes, I am. But yes, the reason that I felt like it needed a drastic change, I think there a few things, in retrospect, that make sense. First of all, the advertiser as a stakeholder in the ecosystem, on the concept of the platform, I think, is ultimately detrimental to the long-term success of the creative class.
No, no, we love our advertisers. They’re the best.
Oh, I think advertisers are ... They absolutely help people.
I’m wearing those Mack Weldon socks right now.
For sure. And the current manifestation of the platform ecosystem that takes into account shareholder, and user, and creator, and advertiser, has misaligned incentives that create broad problems for the creative class.
Everyone is really down on advertising, but advertising has supported large businesses and lots of creators for a long time. Do you think that there’s something about technology now where that’s breaking, or do you think we’ve just sort of gone through a cycle, we’ve exhausted what advertising can do for media?
I think there are a lot of problems. One of the biggest problems that I see is — and I’m going to get a little technical and specific here — but CPMs online, the rates that advertisers will pay for online content, literally, are like over 10 times lower than what they pay for television. And so the creative class, then, as a unit, because they use the internet to distribute their work, they’re being undervalued by a factor of 10, compared ... So when you say, like, “Ah, for a long time, advertisers have been funding the creation of art through cable and other ecosystems,” I mean, yes, and online, that model hasn’t been replicated so it makes sense.
So you sort of have built this business to rectify that, right? Saying, “All right, look, these are undervalued assets, and instead of having Viacom or Time Warner or whomever come buy these people and figure out other ways of exploiting them, I’m just going to allow people to exploit themselves, to value themselves higher, and to talk directly to their fans and get paid by people who want to pay them.”
Exactly. The first version of the web was free. That’s just a fact. I don’t necessarily think that’s the best version of the Web, and I think it’s changing pretty quickly. I mean, we’re starting to see now, a lot of areas of the web are being hidden behind a paywall, which I think is ultimately good.
Should this podcast be a paywall podcast?
That depends on how you want to run it. I actually don’t ... I don’t advocate for your primary content being behind a paywall, because I think that creates too much friction, and it means that people can’t become fans and hear you at happenstance, things like that. But secondary content, absolutely. That stuff should be behind a paywall. The extras, the stuff that fans want to support you because of, and contribute to, and be a part of, that stuff should be behind a paywall.
Oh, I really want to call this a fan club. But it’s ... And to get all ad-techy, advertise-y about it, you’re not saying the free stuff is the funnel, and you’re eventually going to get to Patreon as sort of the end goal. You’re saying Patreon is one of the things you can do when you have a big fan base.
Absolutely, yeah. It’s one of the many ways to monetize, yeah. It’s complementary to the rest of the ecosystem.
We were just talking about podcasts, like this one. That’s one of your big success stories, right?
Yeah.
Your most successful ... What do we call your clients?
Categories? Oh, creators.
Creators. I think your most successful creator is a podcast, right? It’s a podcast group?
No.
No?
No, but they’re up there. We have some podcasters making, you know, 70,000 bucks a month.
The Chapo guys, right?
Yeah, mm-hmm.
And it’s a free podcast?
So, half of the podcasts are free. They do two a week.
This is Chapo Trap House?
Chapo Trap House.
Got it.
One of them is free. There’s two a week; one of them is free, one of them is you have to be a $5 member in order to listen to.
And they’re making real money.
Over $70,000 per month.
Yeah, we should do that.
And some folks ... We have this one group called Kinda Funny. They started with a podcast in their kitchen, four guys talking around a table, very much like this, except in their kitchen. And now, we’ve been sending them over $50,000 a month for three years to do their thing, and they have leased office space, and they’ve hired a team, and now you walk into their studio, and it looks like freaking ESPN. There’s, like, screens in the background, there’s a six-monitor setup to edit videos and do color correction and broadcast live, and it’s a ... They’ve got a huge facility now, because we’re sending them over half a million bucks a year.
We were looking at this before. It’s $150 million going through your platform?
This year.
This year. I couldn’t build a self-driving car, couldn’t do anything that Elon Musk does. It seems like I could probably hire some people in Estonia, or some country where they work fairly cheaply, and build a patronage app/website.
I love your questions. Such good questions.
So I’m not going to do that, because I’m busy, and I’m probably not very good at actually running a business. But I would assume other people are trying to do the same thing. What’s your moat, in business terms?
Yeah. Yeah, you have amazing questions.
Mm, more praise.
So ... Yeah, feed it. So there’s actually a lot of ... It turns out there’s a ton of complexity to running a membership program. Everything from minimizing declines on a credit card, to automated email flows when a patron’s card declines, and how to reactivate that user and bring them back onto the platform in an optimal way, to CMS systems where you can gate particular types of content for specific tiers of patrons — $10 patrons, $50 patrons, etc. — to understanding the analytics and back end and CRM of your patron base, and who they are, and where they’re coming from, and why they’re pledging, and what they’re entitled to. So it turns out there’s actually a lot of complexity on the back end that is very difficult to replicate. I mean, it would require a very large team to build out the feature set that we offer creators.
Is there a network effect of this? Is someone who’s supporting one creator more likely to do this for others?
Yeah, so the number of patrons with multiple pledges has been increasing over the last year, especially.
So that’s part of your pitch, right, to the next breed of podcasters? “Look, this is working for Chapo, you can come to me, in fact, since I’m already doing this with Chapo ...”
Well ...
No?
No.
No.
No. The real network effect that I think Patreon is going to experience — and what we’re really starting to build out now — so we’ve had the ability ... we’ve had an API for a little while now. Hasn’t been, like, fully staffed, but we’ve gotten some amazing results back with that API, so we’re starting to integrate with other platforms, like Crowdcast, like Discords. Now you can ... When you go onto Discord, you can have a patron-only chat room on Discord.
Wait, so, I was going to say, before we get to Crowdcast and Discord, just explain what the API does for you and other people.
Ah, I’m sorry. You know when you see “log in with Facebook” on another website?
Yup.
So we have “log in with your Patreon credentials” on a different website that is not Patreon. So now, on Discord, which is like a chat platform, you can log in with your Patreon credentials and get patron-only chat rooms with a specific creator. That ends up creating wonderful network effects.
So basically, this billing system that you created — because in the end, it is a billing system, right? — can then be added on to other platforms.
Exactly, and you can understand the entitlements on other platforms, and that is definitely a big component of our strategy. So imagine ... The vision for this is, being a member on Patreon should make the web look different to you. The whole web should look different to you if you’re a member on Patreon.
So I’ve got a FastPass, or pick my metaphor.
You have special experiences everywhere you go on the web.
Kind of like it.
Yeah.
Should make ... What do you think, Eric? A Recode FastPass?
Eric Johnson: Yeah.
Yeah, Eric’s very amenable to everything.
Eric Johnson: Yeah.
He’s a good guy. Wait, let’s hear from one more advertiser who supports this podcast before we come back to Jack.
I love it. Let’s do it.
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I’m back here with Jack Conte, who is eating a cookie, so I’m just going to vamp ...
Just finished.
Oh, he’s back.
Hello.
He’s the CEO of Patreon.
Hello.
You know that because you were listening to the podcast like a minute ago. You’re still here. We explained why no one has successfully ... I can’t believe that other people have not tried to ... If there’s $150 million flowing through your company — and again, you’re not under the radar, right?
Yeah.
People like Index have given you a lot of money.
Correct.
Hasn’t someone else come at this? And, by the way, I know that YouTube has tried adding this on as sort of a bolt-on that has not worked.
Yeah. Oh, lots of people have tried.
But you swat them all down.
But it doesn’t work so well. Well, no, I mean, it’s a very ... I’ve said before, this is a very hard thing to build. There’s a lot of complexity here, and so people ... Many, many ... Our list of, literally, the competitive landscape doc that we have internally, that we use for doing competitive analyses, is pages and pages. It’s got to be over a hundred potential competitors. And they range, you know, big to small, and some of them are around and then disappear, like there was a company called Recurrency, there’s a company called Tubestart. I mean, there have been attempts. We acquired a company very early on called Subbable that was founded by Hank Green. So, I mean, there have been ...
Yeah, he’s amazing, and is now an advisor to Patreon, and is just absolutely amazing to work with. He’s, like, one of my favorite people in the whole world.
His brother is the one who does ...
“Fault in Our Stars.”
“Fault in Our Stars.”
Correct.
I know.
They’re a crazy story.
Power brothers, wow.
They run VidCon.
Oh my goodness.
We should have the Green brothers on.
Yeah, you should.
But they’re, like, in Montana.
They are. Missoula.
Not like in Montana, they’re in Montana.
Yeah. Some of the coolest people I know, for sure.
All right, I’m going to Montana, we’ll do the next podcast there. So you’ve raised 50-ish million bucks from VCs.
Yeah, 50 million bucks.
They are not a charity, they intend to get their money back.
Absolutely.
In the next three to four years, how are they going to get their money back?
Oh, no, no, no.
No.
Not the next three to four years.
Well, if they invested three to four years ago, that’s their timeline, right?
So one thing I told folks — and I was nervous about telling them this, because I thought maybe they wouldn’t want to give us money — but I actually had these conversations with folks when they signed up to give money to Patreon, and the conversation was basically me saying, like, “Hey, we’re not going to ... The ideal outcome here is not to sell Patreon. We don’t want to do a quick flip. We want to ...”
No, well, how about a longer-term sale?
A long-term outcome, we want something that is ... We want to build something that is meaningful and valuable for creators, that’s beneficial to creators, because they’re underrepresented by tech and by media, and I feel like the creative class needs a seat at the table. I feel like Patreon has the potential to be that seat for the creative class.
And we talked about this very plainly, and they said, “Okay, so what are we talking about here?” And in my mind, we’re talking about ... You know, the eventuality is to become a public company. I would be very happy about the public owning Patreon, and I understand that that comes with all kinds of difficulties and circumstances and nuance, but at the end of the day, I think that’s Patreon’s best option of being dominant and winning, and being a voice that is pounding the table for creators.
So whether it goes public or whether you sell it to someone, how do you build in assurances that the sort of stuff you do, the relationship you have with your creators, stays the same, whether it’s a public owner or another company that buys you?
Yeah. I think we constantly have to think about the balance of creator and patron and shareholder and employee.
Because someone’s going to start saying, “Things are going great, but you should really bump that up to 6 percent.”
Totally. And how we do those things, and how we make sure that Patreon is a sustainable business while making sure that our creators are being taken care of, that’s a balance where there’s no silver bullet. So instead, we just integrate it into our culture.
We have a thing called core behaviors. A lot of companies have core values or core behaviors or whatever. Our first, No. 1 core behavior is “Put creators first.” Everything that we do, every decision that we make, every product that we build, every line of code that we write, we’re thinking about it through the lens of “Is this creator-first? Are we putting creators first?” That’s a necessary component to being Patreon. Ultimately, that’s what I think of ... That’s what Patreon is to me. Patreon is creator-centrism.
Do you have any filter that says, “You know what? We can’t work with you, or we don’t want to work with you, because you’re a Nazi,” or something unpleasant?
Oh, you mean like content policy.
Mm-hmm.
Oh, of course, yeah. That’s crucial, especially as you’re hitting scale and sending 150 million bucks. You’ve got to make sure you’re not sending 150 million bucks to terrorists. So yes, we have a very thorough, robust content policy. We hired this amazing guy, I can’t say his name, but he helped a very large — one of the largest in the world — tech companies build their content policy and scale their team to literally, like, two million page takedowns a week for all kinds of awful stuff.
Rhymes with ShmyouTube?
I’m not going to say who it is. But yeah, I mean, there’s a lot of responsibility there, and you’ve got to make sure that you’re being fair.
Because are you ... Is a human approving each one of these accounts? You can’t, right, at the scale you’re at?
So we don’t proactively police the content on ... Not YouTube. You’ve got me with ShmyouTube. We don’t proactively police; we respond to users and takedown notices. So we have a policy for filing takedowns, and we have a queue, and we go through that queue.
How often does someone get kicked off?
It doesn’t happen that frequently, but it happens occasionally.
If you’re going to create a platform, you’re going to have people abusing it. It seems like the more scale you have, the more abuse you have.
Totally. Absolutely. Yeah, and at the end of the day, like, if you’ve ... I’ve been convicted of money laundering, you can’t get paid on Patreon. Like, even if you’re raising money for your weekly flute music podcast, if you have been convicted of money laundering ...
You have not been convicted of money laundering.
Me personally?
You’re saying if someone has.
If someone has, they cannot raise money on Patreon. So we have policies like that.
Don’t be a criminal.
Don’t be a criminal.
Don’t be a terrorist.
Don’t be a terrorist. And it’s not just illegal stuff, right? There’s going to be some things like ... In many countries, hate speech is illegal, and in many countries, it’s not, but on Patreon, you can’t use hate speech.
What’s the most surprising use for Patreon that you didn’t ... Well, “surprising” means you didn’t expect it. What’s the most surprising use you’ve seen?
Yeah, gosh, there’s this one magazine called Knitty. It’s an ezine. They’re getting paid 19,000 bucks per issue. It’s like a magazine about knitting, or an ezine about knitting.
Oh, it’s about knitting.
Cool.
Yeah. Well, that ... And by the way, that was sort of the original ... I don’t know if it’s the original promise of the internet. It was one of the ideas, sort of early as the internet grew up and the media business was growing up, was that it would support these passionate niches. And what you’re generally seeing now, as the media business is growing and growing, is actually niches don’t work. We should support businesses, they ... You need real scale. You can’t have a Persian longhair cat business.
Disagree.
Right.
Yeah.
No, there should be some version of this for someone who’s really into knitting or Persian longhair cats — I always go with that one, I don’t know why — should be able to get what they want, but generally, the focus is “No, no, no, make it broader, make it broader, make it broader.”
Totally, and so what is so beautiful about the internet to me — and what the internet failed to do in 2013 that it’s starting to do with services like Patreon — is if you had 20,000 monthly readers, listeners, watchers of your podcast, webcomic, whatever, 20,000 people, if you translate out that number to ad dollars, it’s literally going to be a couple hundred bucks or less per month. Think about, though, 20,000 people who can’t wait to see your thing every day, or every week, or whatever it is. That’s a basketball stadium full of people who can’t wait for the thing that you’re making. Like, in what world have we created that that’s $100 a month? That’s stupid, it’s just broken.
But, to be clear, you’re saying that two to three or four percent of them want to give you money on a recurring basis.
Totally, but if two or three or four percent of them give you 12 bucks a month, suddenly, you’re making a lot of money now. So it ends up working out when it’s a consumer payments model. In an ad model, those niche things, you know, if you have 50,000 fans, it’s not enough to make a living. But in a consumer payments model, if you have 50,000 fans, it’s enough to make a living.
Jack, I’m kind of half-sold. I think we’re going to end this podcast so I can go create an ancillary podcast for you.
Yes. Do it.
What should the ancillary Recode Media podcast ... We’ll take your suggestions via Twitter.
Afterparty.
Email, you can talk to me in person. Afterparty?
Mm-hmm.
The problem is, the afterparty would involve me. You don’t want to pay for the Peter Kafka afterparty; that’s not a fun party.
Kinda Funny does an afterparty with their fans after they record a podcast.
All right, we’ll find someone to sub in for me who’ll be entertaining. We’ll figure it out. Jack, you’ve been great.
Thank you.
Thanks for coming.
Yeah.
Thanks to you guys for listening.
Thanks for having me on the show.
This article originally appeared on Recode.net.
