In this post we discuss the Revenue Model of Patreon.
The lives of online content creators might seem enviable at the first glance.
With their videos garnering millions of views and their Instagram fan page overflowing with Likes, comments and shares, it is easy to imagine that they are raking in thousands of dollars from advertisements and brand endorsements alone.
The truth, however, is a little different from this.
Successful content creators have to spend a lot of time, money and effort to make their content stand out from the crowd.
Professional content creation often involves a dedicated team of writers, editors, and artists who combine to create content appealing enough to be liked and shared by millions of individuals.
Revenue from advertisements/affiliate sales, however, often tend to be erratic and brand endorsements hard to come by.
The high costs of producing content coupled with low advertisement yields, mean that content creators often find it difficult to recover their costs, let alone turn a profit.
A recurring income stream is what most creators hope for.
This is where Patreon comes in.
What is Patreon?
Patreon is a platform that allows content creators to have a recurring income stream by offering their fans a monthly subscription option.
Patreon helps create an ecosystem where fans show support for the content creators they love by directly sponsoring their work through a monthly subscription option.
The content creators in turn can return the love by giving subscribers access to ad-free or exclusive content through the platform.
A steady income stream funded by loyal followers allows content creators to chase creativity rather that endorsements.
How does Patreon make Money?
We have seen how Patreon helps Content Creators build a steady income stream from fan subscriptions.
But, this brings us to the question how does Patreon make Money?
Patreon has two revenue sources interlinked with each other.
Patreon makes money by charging content creators a fee for the right to access their platform as well as a fee for accepting payments from fans (known as patrons) on their behalf.
Patreon offers creators the option to set up their own page on Patreon where they can host exclusive content for their patrons as well as offer various subscription options. For this it charges a fee based on the monthly subscription income of the creator.
This ranges between 5% and 12% of the monthly subscription income.
Further, it also charges creators a standard online payment processing fee for accepting subscription payment from their fans on their behalf.
Hope you liked our presentation on the Patreon revenue model.
You might also be interested in understanding the CRED revenue model.
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