Apple, Patreon, the Big Tech Problem and what it means for creators and consumers

Back in the day content creators produced publications like magazines and had control over everything. You created exactly the graphic design look you wanted, selected a printer, distributor, newsagent and so on. If your printer decided to hike prices you could just switch to another, and your audience wouldn’t even notice. There was no dependency on any one company.

Today, any creator, even the largest, is very much dependent on one or more Big Tech companies. There’s a reason people are called YouTubers or TikTokers, and it’s because they have built a business on that platform. But the risk, the huge risk is lock-in. If that platform becomes difficult to deal with…you can’t just switch 1000 YouTube videos to anywhere else, even if that was technically feasible you’d lose huge amount of views and revenue. And if for whatever reason you run afoul of some rule, your channel can be deleted and aside from filling in a form, there’s no recourse, no ombudsman to mediate, just all your years of work, gone. To say that’s emotionally, and financially devastating is an understatement. I’ve expanded more on this point here.

There is also the related issue of the consumer being the product; on a free platform the way money is made is time-on-platform; so your attention is being mercilessly exploited as the platform tries everything it can to keep you on the app; scrolling, playing, clicking and it does that by exploiting your emotions, constantly. This is not good for your mental health. And it’s why Facebook is always stuffing around making it hard to post links which go outside Facebook.

I think one way forwards, and I’ve outlined this in my Content Strategy, is to shift to a paid platform such as Patreon. For the consumer that means no ads, no constant exploitation of your attention, you pay so now you’re a customer not a product. And it means being part of a like-minded community with focus from the creator, all benefits to everyone in my view.

However, one problem with Patreon is fees. For every $10 a Patreon donates to a creator, the creator get…less. Now exactly how much less is difficult to figure out, but I think it’s around 15-20%% by the time Payment Fees and Platform Fees are added up, more if you need to go via PayPal and convert to your local currency. Now I have absolutely no problem with Patreon charging a fee, because they provide a service with no ads, and while creators could ask for donations direct to their bank account, that wouldn’t get them the quantity of supporters Patreon can provide, and just as important, a platform to interact with them that doesn’t attempt to monetise their attention. So I’m happy to pay, as the free alternative – the Facebook model for example – is much worse.

But now Apple enters the conversation, and has just forced Patreon to include a 30% fee for new Patreon members who use the app for new memberships, which has to go on top of the reasonable Patreon fees. The net result is that my guess is something like 40-50% of a donation will end up with the creator. Now 50% of $10 is better than 0% of $10, but fundamentally, that’s still a lot, too much in my view, and where will it end? An 80% cut? And what can creators do? Well, if you’ve invested a lot into Patreon, you can’t say “hey could you all please switch to XXX” because people won’t, and there’s no guarantee you won’t find a similar problem at XXX in a while. Essentially, build market share, lock creators in, then turn the screws.

Here’s how it works using a Patreon chart:

Table excludes other fees like PayPal.

I’m never a fan of more regulation, but as the world of content creation has shifted to a few platforms which are in effect monopolies or duopolies, I think it is time the government looked at how these companies operate and their effect on creators who depend on them for their livelihoods. Banks are not allowed to do whatever they want, neither are telcos, nor utility suppliers, nor is any other large organization on which people depend, or even smaller ones such as the landlord/tenant relationship. Regulation is there to protect abuse of power, so why should Big Tech be different?