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Patreon raises big round at $450M valuation

techcrunch.com

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Re: Patreon raises big round at $450M valuation

#21

Post by Retric »

zanny wrote: post #10
charrondev wrote: post #8

Earlier quoted context omitted.

Well luckily for them they don’t have to take no money in order to be the good guys here. They only need to take less than the other methods of monetizing videos (youtube). I’d imagine they’ve expored what kind cut they will need to take to be profitable and how that will affect the decisions of the people paying in.

Not really. Youtube is indirect monetization thorugh advertisers. The audiences (that the respective companies care about) are completely different. Patreon wants creators and their fans on their platform moving money through them so they can take their fees. Youtube doesn't care at all about content creators or viewers but about advertisers - as long as advertisers are happy Youtube would cripple the user or creator…

I think he was referring to things like selling t-shirts. Basically how sites like xkcd make money without advertising.

Re: Patreon raises big round at $450M valuation

#22

Post by [deleted] »

jasode wrote: post #19
dandermotj wrote: post #13

That's a P/E of 60... Also this: > In exchange, Patreon takes only a tiny 5% cut. I hope this is sarcasm, because if I had to pay 5% to make any other transaction I'd be fuming. With a marginal cost of facilitating a new patron near zero, I don't think creators or patrons will suffer this as Patreon grows.

>if I had to pay 5% to make any other transaction I'd be fuming. Fyi... for comparison, Kickstarter fee is also 5% of funds raised. https://www.google.com/search?q=kickstarter+fee

[deleted]

Re: Patreon raises big round at $450M valuation

#23

Post by gourou »

vollmond wrote: post #12
gourou wrote: post #7

They probably have the biggest platform for paying creatives, I wonder when they'll ditch YouTube to get more control over their user base and increase their 5% margin.

What do you mean by "ditch YouTube"?

A lot of Patreon content is private YouTube videos

Re: Patreon raises big round at $450M valuation

#24

Post by falcolas »

dandermotj wrote: post #13

That's a P/E of 60... Also this: > In exchange, Patreon takes only a tiny 5% cut. I hope this is sarcasm, because if I had to pay 5% to make any other transaction I'd be fuming. With a marginal cost of facilitating a new patron near zero, I don't think creators or patrons will suffer this as Patreon grows.

Apple takes 30%. So does Google. Kickstarter takes 5%. Many online stock trading firms take somewhere around 10-15%. That fairly well justifies the qualifier of "tiny" in today's world.

Given that the basic cost for processing credit cards and other such minutia is already around 2%, the benefit of not having to worry about chargebacks, fraud, or PCI compliance... worth that extra 3% IMO.

Re: Patreon raises big round at $450M valuation

#26

Post by toomuchtodo »

jerf wrote: post #18
sschueller wrote: post #11

Earlier quoted context omitted.

Patreon is falling into the same problem, banning people who they don't agree with. People are moving all their eggs from Youtube to Patreon.

"People are moving all their eggs from Youtube to Patreon." That's less of a concern though, because Patreon is easier to replace than YouTube. The problem with YouTube is that, at least as long as the Internet chatter I hear is still accurate, YouTube itself is still losing money, so replacing YouTube involves being able to immediately hugely subsidize people watching lots of video, and to be willing to do so when i…

> Patreon can't literally be replaced in the legendary "HN denizen claims to be able to replace $X in a weekend", because dealing with taking payments takes longer than that.

Stripe literally has an offering just for this use case: https://stripe.com/connect

Forum + Stripe Connect + CDN for Video (Cloudfront, Fastly, Whatevs) = Patreon replacement.

You could literally replace it with a weekend Hackathon.

Re: Patreon raises big round at $450M valuation

#27

Post by rcthompson »

dandermotj wrote: post #13

That's a P/E of 60... Also this: > In exchange, Patreon takes only a tiny 5% cut. I hope this is sarcasm, because if I had to pay 5% to make any other transaction I'd be fuming. With a marginal cost of facilitating a new patron near zero, I don't think creators or patrons will suffer this as Patreon grows.

If Patreon was doing nothing but a processing payments, I would agree with you. But it's also a platform for delivering the content that patrons are paying for, providing a space for discussion among patrons and creators, and other features that facilitate building a community. I have no idea if the actual costs of developing and maintaining that infrastructure actually approach 5% of total patron contributions, but I find it acceptable that 95 cents of my dollar goes to the creator and 5 cents goes to maintaining the infrastructure that makes the whole thing possible.

Yes, you could technically use Patreon as nothing more than a payment processor by hosting all your stuff elsewhere and just linking to it from Patreon. But you still have to pay for that hosting, either directly or indirectly via ads. And part of the point of Patreon is to move away from ad-supported funding models. Of course, you currently have no choice but to use external hosting for some types of content, like videos, that Patreon can't host directly. But even then you still get all the community-building benefits of Patreon (and with YouTube comments being notoriously bad, providing a separate comment section might be a significant value-add). I wouldn't be surprised if Patreon added video hosting in some form in the future, probably via a partnership as they have done with streaming video.

Re: Patreon raises big round at $450M valuation

#28

Post by IshKebab »

joelthelion wrote: post #5

That means they're going to expect a lot of revenue. Which they plan to take on money that people give freely. I don't see that ending well.

They have a fee of 5%. Let's assume they have a price/earnings ratio of 20, that means they expect people to spend something like $450m/year on Patreon.

According to Wikipedia they are at around $150m/year already. I think it is totally feasible that they could increase that to $450m/year and not have to increase their 5% fee.

Seems like a reasonable valuation to me.

Re: Patreon raises big round at $450M valuation

#29

Post by IshKebab »

falcolas wrote: post #24
dandermotj wrote: post #13

That's a P/E of 60... Also this: > In exchange, Patreon takes only a tiny 5% cut. I hope this is sarcasm, because if I had to pay 5% to make any other transaction I'd be fuming. With a marginal cost of facilitating a new patron near zero, I don't think creators or patrons will suffer this as Patreon grows.

Apple takes 30%. So does Google. Kickstarter takes 5%. Many online stock trading firms take somewhere around 10-15%. That fairly well justifies the qualifier of "tiny" in today's world. Given that the basic cost for processing credit cards and other such minutia is already around 2%, the benefit of not having to worry about chargebacks, fraud, or PCI compliance... worth that extra 3% IMO.

It's actually 5% plus payment processing costs. Plus payout costs.

Re: Patreon raises big round at $450M valuation

#30

Post by nilved »

falcolas wrote: post #24
dandermotj wrote: post #13

That's a P/E of 60... Also this: > In exchange, Patreon takes only a tiny 5% cut. I hope this is sarcasm, because if I had to pay 5% to make any other transaction I'd be fuming. With a marginal cost of facilitating a new patron near zero, I don't think creators or patrons will suffer this as Patreon grows.

Apple takes 30%. So does Google. Kickstarter takes 5%. Many online stock trading firms take somewhere around 10-15%. That fairly well justifies the qualifier of "tiny" in today's world. Given that the basic cost for processing credit cards and other such minutia is already around 2%, the benefit of not having to worry about chargebacks, fraud, or PCI compliance... worth that extra 3% IMO.

Nobody should be okay paying Apple or Google 30%. That is highway robbery.
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