The creator economy is growing in significance. Ironically, this is a positive side effect of COVID19. People have had to spend more time working from home due to various lockdowns and have also had to find profitable ways to occupy their time while they are stuck at home. Many have turned to creative activities to earn income, and in the process, looked for new ways to make money. Crowdfunding platforms, such as Patreon, have existed for some time, but their use has exploded in recent times. But what is Patreon, and how does it work?
- 1 What is Patreon?
- 2 How Does Patreon Work?
- 3 Business Models Creators Can Use on Patreon
- 4 Using Membership Tiers
What is Patreon?
What is Patreon?
At its core, Patreon is a membership platform that makes it easy for creators to get paid. Creators make some form of product or perform some artistic service, and patrons are the fans and supporters who willingly pay for something from their favorite creators.
Patreon’s origins date back to 2013 when founder Jack Conte built a replica of the Millennium Falcon set from “Star Wars” and shot a music video in it. He uploaded his video to YouTube and inserted a short section at the end encouraging fans to go to a new website he had created, along with his friend Sam Yam, called Patreon.com. Fans would be able to download new music there for free and make pledges to help fund future music videos. Within the first few weeks of the original video being uploaded to YouTube, fans had committed to supporting more than $5,000 per future video. Conte, his girlfriend, and his roommate were the only creators on Patreon when it launched. However, before long, its popularity grew.
Many creators who use Patreon are also influencers; for example, popular photographers on Instagram or video makers on YouTube. They have made their name on these social platforms but need Patreon to make a living from their followers and fans on those platforms where they have become popular.
Unlike many other crowdfunding platforms that focus on raising money for a specific event or activity, Patreon campaigns tend to be ongoing, with patrons paying ongoing subscriptions.
How Does Patreon Work?
Patreon for Creators
Patreon provides a way for creators to generate payment for their creative works. Creators that Patreon highlight as suitable for fundraising on their platform include podcasters, video creators, musicians, visual artists, communities, writers & journalists, and gaming creators, along with nonprofits, tutorials and education, and indeed creators of all kinds.
Creators using Patreon set up a page where they explain why they are asking for subscription payments and explain the benefits to those who pay. These pages will usually specify multiple tiers and give specific benefits to those willing to pay the stated amount for access to each level.
You can adapt the way you charge on Patreon to suit your situation. You might enable your fans to pay a few dollars per month as support for your creative endeavors. Or you might choose to have them spend each time you release something new.
You can create exclusive content for your Patreon fans and a distinct community, giving them insight into your creative process.
Traditionally it has been challenging to make a living in the arts. You will often find a few superstars making a fortune, and thousands of less well-known creators, struggling to survive for their art. The development of Patreon and other similar platforms has made it easier for creators to survive financially. They now have ways to make small sums of money from relatively large numbers of supporters.
Depending on how you set up your Patreon account, you can develop a recurring income stream. This can be much more lucrative online than having to rely on advertising revenue. It also frees up creators to focus on their art rather than compromise on their artistic integrity to feed themselves and their families this month.
Patreon for Patrons
Patrons come to Patreon to support their favorite creatives. They become part of that creator’s community and pay to help them continue making the types of content they love. By doing so, fans can become real-life patrons of the arts.
Fans can become active participants in the work they admire by paying a membership fee, either as a monthly membership or whenever the artist produces new content. They receive exclusive creations and have the opportunity to feel they are part of a community. The creator gives them inside access to their creative processes.
Business Models Creators Can Use on Patreon
Patreon is relatively flexible in the ways its creators can use the service. As the creators earn money from their services, most technically operate some form of business, and they can opt to use one or more of the following business models.
1. Community Model
When a creator uses the community model, they use Patreon to enable access to a gated community. Many communities are based around a pivotal authority figure or teacher – a distinct community leader with expertise in some niche.
The creator might, for instance, give the community access to his knowledge and skills, or perhaps even set up a Mastermind Group – a group of peers who meet to give each other advice and support.
You could give people willing to pay to become a member of your community access to a private group on a forum like Facebook, Discord, Reddit, or something similar.
2. Educational Model
If you are knowledgeable about some particular topic, you could consider using Patreon to gain access to educational materials you create.
You could, for instance, set up some basic lessons for free and then charge for more advanced classes. Alternatively, you could regularly create new tutorials and have your followers pay a subscription to access your new tutorials as you upload them.
You don’t even have to have an overall educational focus to use the Educational Model on Patreon. You could, for instance, make videos documenting your creative process and offer them as one of the bonuses of buying a subscription to your site.
3. Gated Content Model
The gated content model is one of the more popular ways for creators to use Patreon. You could give patrons access to your past material for the payment of a fee or regular subscription. This is commonly known as a content library.
Alternatively, suppose you believe that people will consider your current content more valuable. In that case, patrons could pay to gain access to your new material as it comes out, with it changing to free after a particular time.
You might decide to charge only for your best content, leaving your lesser quality items available for free. This is technically a freemium model – a mix of free content to whet people’s appetites and premium content for those willing to pay. For example, you may create relatively general videos on a topic that you make free but require people to pay for your in-depth videos giving detailed instructions.
Another common practice is to offer bonus content exclusive to your patrons. These items are not necessarily premium, better content than what people can generally access, but they are usually of the same level but unavailable to those unwilling to pay for them.
4. Fan Relationship Model
A fan relationship model occurs when you give your paying followers greater access to yourself. This is similar to the community model, as your community is likely to have greater access to you, but there is less interaction between members.
This model often offers fans some behind-the-scenes access along with increased access to the creator. It also gives them recognition. Depending on what you create, you could give them shout outs or include their names in your content. Streamers on Twitch often use this method to raise funds, giving shoutouts to those giving them payments. There is even a push to offering non fungible tokens (NFTs) to fans in return for their donations.
5. Pay-what-you-can Model
Traditional crowdfunding tends to use the pay-what-you-can model. For example, if somebody’s house burns down and they open a crowdfunding account to raise funds to help them replace what they’ve lost, they will happily accept whatever people are willing to offer them.
When creators adopt this model, they generally offer the same rewards regardless of how much people are willing or able to donate. Sometimes creators word this along the lines of “pledge $XX or more per month.”
6. Service/Product Model
Some creators use Patreon to sell a specific good or service to their fans. This approach is much like a traditional business model.
For example, you may promise to give each paying patron a Skype call of a certain length in return for a payment of an agreed amount.
Using Membership Tiers
Often creators set up multiple membership tiers. Each tier has a different price in return for prescribed benefits. Usually, the cheapest tier gives a standard level of access, and each more expensive tier successively adds to the benefits. In other words, the larger a patron’s contribution to the creator, the greater the perks they receive.
Creators may place limitations on some of the tiers. This is particularly so if they offer access to the creator or some form of custom work, as the creator will only have so much time they can devote to this.
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