Crowdfunding's Patreon Takes Aim At YouTube's Business Model

Crowdfunding's Patreon Takes Aim At YouTube's Business Model
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By Noah J. Nelson (@noahjnelson)

"I can't see any possible future where there isn't a media site that isn't paired with crowdfunding," Jack Conte tells me. We'd been talking for a half-hour about how the current way artists make a living online sucks.

"How can you have a site where there are millions of people enjoying content from millions of creators and there's no direct monetary interaction between those people?" Conte has his eyes on YouTube here. "That future does not exist. It's impossible."

Conte is the founder of crowdfunding site Patreon which, as their name suggests, offers a patronage model for artists. Fans pledge a set amount of money per month, or each time a creator releases new work, instead of relying on the small rates that internet advertising usually brings in.

Patreon has been providing this framework since May of last year. Each Patreon-powered creator--from YouTubers to journalists with a blog--has a hub page where their audience can make pledges and interact with the maker. Today they are adding a new wrinkle that the founder is bullish on: a "creation page" that gives each piece of work its own landing page within Patreon's system.

"I think the creation page is really going to bust open that door between audience development and audience monetization," said Conte. "A place where you can share a piece of content and make money from that content without a paywall."

The creation page is modeled after the YouTube watch page with one major difference: no ads.

"It's entirely platform agnostic," said Conte. "It doesn't matter if you're posting your videos on your own website or if you are hosting them on YouTube or if you've got music on Soundcloud or Bandcamp. It doesn't matter where your stuff is, we offer a place to embed it on the page."

Instead of page views the creation page billboards the amount of money that has been pledged for that work. It also shows how many new patrons have jumped on board thanks to the latest release. Below the work there is a comments section, again like a YouTube watch page, only you won't find the dreaded Google+ here. To the right is the all important "Become a Patron" button.

Conte is both the founder of Patreon and one of the site's users. It was his frustration with the pittance made on YouTube that drove the creation of the platform.

"My YouTube catalog gets a million views a month and that generates $50 in ad revenue. That's so, so broken. How is that the system to monetize content?"

The strategy so far in digital media has been to "build brands" and "gather followers" which will magically turn into money. That's been the promise, but until the crowdfunding revolution began that promise was not being kept.

"How is someone with 10,000 readers of their blog, with a Google adwords banner on the top and they're only making 200 bucks a month? With 10,000 readers? If that doesn't make us throw up...but we're used to it. These numbers get thrown around and we're like 'that's just how it works.'

"That's insanity. Imagine what 10,000 is: that's a basketball stadium full of people."

Put in those terms the things that culture workers online have to do to make a living does seem crazy. A quarter from each of those 10,000 people--the price of a newspaper in the 1980s--would cough up $2,500. That's a king's ransom compared to many artist's YouTube ads revenue.

According to statistics that Conte provided, in just eight months of operation Patreon has already gathered 30,000 "unique and active" patrons. It has reached just under 2 million page views a month, and those are growing by 70% each month. Soon the site will be home to 10,000 creators.

Conte believes that the creation page model Patreon is adopting will spread.

"I think we're doing it first. Whether or not we do it someone's going to build it, it's just that we're coming out with it now."

Public media's, covers tech and digital culture from the West Coast.

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