What is Patreon?
Simply put, Patreon is a platform on which consumers can directly pay creators for content and merchandise. Content can be videos, streaming content, artwork, audio, etc. The content does not have to exist or be served via Patreon, but bonus content/merch or early access content/merch maybe provided through the website. The overall goal of Patreon is to provide a more direct and reliable source of income for the work creators provide their audience.
Beyond a means of communicating with their consumers, Patreon allows creators access to a veritable CRM tool worth of analytics and data on the people they are targeting. Patreon also offers various kits to help creators maximize all the tools and resources within the platform.
Patreon can sustain the platform by charging a percentage fee to the user subscriptions creators provide their consumers. This percentage is 5%, 8%, or 12% based on the features the creator wants access to. Per a Productmint article, while still considered a startup, Patreon has processed over $500 million in payments in 2019 and has raised a total of $413.3 million in venture capital funding.
Patreon as a disruptor
Patreon is unique in that it has utilized both footholds that define a disruptor per Clayton M. Christensen’s original theory.
Patreon used the low-end foothold by offering creators one of the least expensive routes to access payment from their consumers. Prior to this, creators had to personally foot the cost of advertising their content, they had to partner with a series of platforms and receive residuals on views or associated advertising content, or they had to be offered opportunities with traditional outlets such as music studios, film studios, gaming studios, etc. In place of these options, Patreon offered the percentage-based fees listed above, undercutting both the cost and time needed to drive success through traditional outlets.
Patreon also used the new-market foothold by being one of the first platforms whose primary purpose was just direct payment to creators, not as a means of access to created content. Prior to Patreon, platforms such as Band Camp and Kickstarter were accomplishing a very similar task, providing creators direct income for their content. The difference being both of those platforms were telling consumers that their payment was in exchange for content or a product. Patreon required neither.
Over the last almost 10 years, Patreon has the disruptive innovation model to almost a “t”. They have moved upmarket by adding features expected from services such as the aforementioned Band Camp and Kickstarter that mainstream customers require while retaining the low-cost low-effort subscription base that drove their early success. Mainstream customers have finally started to adopt the platform as it has become the primary means for consumers to directly pay their creators. We have also seen larger scale platforms, such as Spotify, start to adopt the same concept of allowing Spotify users to directly pay artists within the platform.