How Does Patreon Make Money?

You might have heard your favorite YouTuber/Podcaster asking the audience to support them on Patreon, and in return, they offer benefits like early access to content, exclusive member-only content, merchandise, physical rewards, engagement with the creator, etc. Patreon is a platform connecting content creators with their supporters(Popularly known as Patrons on Patreon), where fans or supporters of the content creator can support their artists financially, and in return, they can access great content from their creators. Patreon is an intermediary between a content creator and supporter, and this platform earns money by charging a service fee on each transaction on Patreon. Let’s know how does Patreon make money.

How Does Patreon Make Money?

The Story behind Patreon

Patreon, headquartered in San Francisco, California, was started in 2013  by two Stanford friends Jack Conte and Sam Yam. Jack Conte was a musician who was looking for ways to make money through his YouTube music videos. Creators on YouTube are regulated through youtube policies, and they don’t get to decide the amount they want to charge for their content.

Jack Conte had similar problems on youtube, and he came up with the idea of Patreon, and with his friend, Sam Yam materialized this project into a Company worth around $4billion today.

How does Patreon work?

Imagine you are a content creator. A content creator is someone who offers value-based content online. For example- YouTube videos, Podcasts, Blogs, Webcomics, education, Songs, art pieces, etc. Now, most content creators offer services through various platforms, and they earn money based on the number of views or Ads on their platform. Their earning is pre-determined by ads.

As a content creator, you might have substantial support online, and you can connect with your audience on Patreon, where you offer them some extra benefits and charge money at your convenience. The advantage is that your earnings do not depend on the number of views or Ads. You earn through your audience directly. The creators on Patreon include:

  • Podcast hosts
  • Youtubers
  • Musicians
  • Authors
  • Visual artist
  • Writers and journalist
  • Local business
  • Non-profit organizations etc

Through Patreon, Creators ask their Patrons to support them on Patreon, which is by purchasing their membership, and Patrons(Supporters) gain access to exclusive benefits from their favorite creators, which are not available to everyone. The membership charges are decided by creators, where they offer different membership plans to their supporters.

Business tools offered by Patreon

Patreon offers various tools for content creators to help them earn money. Creators can manage their Patrons, engage with them, decide their subscription charges, Create different tiers of membership charges, track their monthly income, and offer exclusive content to their Patrons. Some important tools that Patreon offers include:

  • Hosted creator page – This is like your personal space on Patreon, where you provide your art and engage with various supporters.
  • Patron Communication tools- This helps a creator to engage with their audience through video calls, or messages, emails, and other options.
  • Workshops- These workshops are to help creators create a robust presence and support base on the platform.
  • Unlimited membership Tiers- Membership tiers are like different subscription plans, where under each option different kinds of benefits are offered. For example- A silver membership patron can have early access to the content, whereas a gold patron can interact with the creator and will have all the benefits of a silver patron.
  • Promo tools- A creator can offer special content for a limited time to attract more patrons to their page.
  • App Integration- Creators can link their various profiles from other platforms like discord, youtube to provide diverse content to their patrons.
  • Marketing opportunities- Creators can connect with Patreon to access expert advice to review their progress and access marketing opportunities through various niches and gain more supporters.
  • Insights- Creators can view data insights about their patrons and review analytics to perform better.

Patreon is a safe haven for content creators, just as elite Europeans used to patronize their favorite artist during the renaissance period, which led to the birth of many geniuses like Dante, DaVinci, and many more. Patreon is the digital concept of Patronage that promotes the growth of content creators and value-based content for their Patrons.

The Income sources of Patreon

Patreon provides its services to the Content-creators, and currently, Patreon hosts around 200,000 content-creators with 6 million active Patrons. Patreon’s business model has been a successful tool for content -creators. The platform earns money through various sources and services that Creators and patrons enjoy through Patreon.

1. Service fee: The most common source of income for Patreon is the service fee that content-creators pay for using its platform. When a Content creator signs up on Patreon, they have to choose among three plans offered by Patreon. They are Lite, Pro, and Premium. Each plan comes with tools for creators and with different pricing.

  • Lite – Patreon charges a service fee of 5% of the total monthly income on this plan and offers Hosted creator page, Patreon communication tools, and Patreon workshops. This option is suitable for creators who simply want to engage with their fans and earn a basic monthly income.
  • Pro- Patreon charges a service fee of 8% of the monthly income on this plan and offers extra benefits to creators like all the Lite benefits, Membership Tiers, app integration, customer support, Creator-led workshops, insights, Promo tools, etc. This plan is suitable for creators with a substantial following. They can create various membership tiers, earn a substantial monthly income, and grow their business.
  • Premium- Patreon charges a service fee of 12% of the monthly income on this plan. Premium plan includes all the benefits of Lite and Pro and added advantages like dedicated partner manager, Merchandise for membership, Team accounts, and many more. Creators with a minimum of 100k followers are recommended for this plan because they have a robust presence online and can easily make up to $5000 a month on Patreon.

These plans are offered with terms and conditions, and if a creator exceeds their income targets, Patreon might charge a high commission fee to support the creator.

2. Patron charges- Every person who supports a creator on Patreon is a Patron. Patrons purchase a monthly subscription plan from their creators to access their content with added benefits. A patron makes the transaction through Patreon, and when a Supporter pays for a monthly membership, Patreon gives 90% of the amount to the creator, and 10% of the amount goes to Patreon, Where 5% is the platform fee, and 5% is a processing fee.

3. Payment processing charges- Along with Content creators, Patrons have to pay payment processing charges to Patreon. For an amount of more than 3$, a patron pays a 2.9% fee+$0.30, and for an amount of $3 or less, a patron pays a 5% fee+0.10$ to Patreon. If a Patron pays from outside the US using PayPal, they need to pay an additional surcharge of 1% to Patreon. This helps Patreon to provide a monthly income to the creators.

4. Investors Investments- Every company runs with the help of its investors, and Patreon is no less. Patreon has around 36 investors who invest in the company and make it sustainable to support its business model. The company is worth more than $4 billion dollars4 billion dollars.

5. Acquisition of other Platforms- Patreon has acquired over 4 startups so far which include Memberful and Kit. These acquisitions have helped Patreon earn money and expand its business model.

The indirect income sources of Patreon

The Patreon business model might not generate much money, but over the years the Platform has diversified its services to earn money and to create value for a creator.

  • Workshops- Patreon offers exclusive workshops for creators to build a robust business model. The workshops are free, but sometimes they are paid as well. Patreon can earn money only when creators make money. Hence the platform tries its best to bring in patrons and provide value-based content to them.
  • Blog- Patreon provides user guides, business tips, through its blog on its platform, to help users navigate through the Patreon business model and understand various ways to grow on the platform.
  • Events- Patreon creators host events to discuss content creation and various other creative ideas. These events are paid where patrons have to pay to become a part.

How does a Content-creator make money on Patreon?

If you are a creator or an artist then, the Patreon business model is for you. A Creator charges a fee for their content on the platform. The content can be anything from a music video to a piece of art.

  • By providing exclusive content –  Creators on Patreon give access to exclusive benefits to their Patrons, and in return, they charge a monthly subscription or charge per content/post from their creators. Even artists can sell their exclusive art on Patreon and earn money.
  • By selling their Merchandise – Creators who subscribe to the Patreon premium plans can sell their merchandise like T-shirts, Mobile covers, Posters to their Patreon supports.
  • Huge supporters- The more followers you have on Patreon, the more money you make. Increasing your patrons by providing value-based content is the best way to earn on Patreon.
  • Per-creation Campaign- Creators and artists can create Campaigns to fund their projects. The patrons do not pay a monthly subscription but pay for a specific campaign to fund the project for a creator. The project can be a documentary or a new music album, Vlog, New podcast, or anything.

Why do creators enjoy Patreon?

Although platforms like Youtube, Facebook offer monetary options to their creators, Patreon is an altogether different game. If a creator/artist has a substantial following then, they can earn more on Patreon compared to other platforms. The advantages of being a creator on Patreon include:

  • No Ads- Be it Facebook, WordPress, or youtube. The only way you can earn money on these platforms is through ads, but the Patreon business model ensures content delivery to the Patron and monetary benefit to the creator. A transaction that allows you to earn directly without any ads.
  • No minimum followers- On youtube, you need at least 1000 subscribers to monetize your content, but Pareaon will pay you even if you have one supporter. You don’t need a minimum number of followers to earn on Patreon.
  • You decide your value- Creators are independent to decide the monetary value of their content. They don’t have to rely on views or subscribers on their platform to earn their income. 
  • Authentic content- Patrons can access authentic content on Patreon, and creators don’t have to request people to follow or subscribe to them. They just have to provide value-based content and earn money through loyal followers.

Who are the top-earners on Patreon?

Although you can find all kinds of artists on Patreon, still the top-earners are video creators or Podcast creators who offer insightful content to their Patrons. The highest-paid Patreon creators are:

  1. True crime obsessed – They are a podcast show that tells the story of murder mysteries.
  2. Chapo Trap house- A Political podcast that talks about contemporary politics in the modern world.
  3. Dark cookie- This is a visual novel game. Patrons can access the latest version of the game and also watch a live video stream.
  4. Jeff Wittek- Jeff is a Youtuber and podcast host who posts various content on comedy, vlogs, etc.
  5. You’re wrong about- A podcast that talks about the history and historical events from a different perspective.

Patreon made a revenue of $80 million in 2020 and around $160 million in 2021. The Patreon business model has not generated as much income as other startups, but the future is not bleak either. While content platforms like Google and Facebook are looking to monetize most of their services shortly, Patreon provides hope for creators and Patrons, where earning depends on the quality of your content. Patreon is experiencing a strong user base in recent times because there is too much nonsensical content available on the internet, and people want authentic content. Creators would like to engage directly with their supporters to offer valued content and earn their desired value for their work.

How Does Patreon Make Money?

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