The rise of social media has democratized content creation and consumption, leading to a rapidly expanding digital creative economy. For example, G20 Insights anticipates that the creative economy could make up 10% of global GDP by 2030, while Deloitte projects up to 40% growth in creative industries within the same timeframe. Creators no longer rely on traditional media corporations to distribute and monetize content. Instead, they can directly connect with audiences across digital platforms like YouTube, Instagram, and TikTok. The audience for such content has grown rapidly. Consumption of digital content doubled in 2020, driven by the COVID-19 pandemic and global lockdowns. This increase persisted into the post-pandemic period through 2024, with 55% of people spending more time each day consuming digital content than they did pre-pandemic.

Despite the growing demand for digital content and the ability to leverage social media platforms for reach, creators struggle to monetize their content and build stable careers, with over half of influencers making less than $10K annually as of June 2024. The reliance on ad-based revenue from social media platforms can lead to unpredictable and often insufficient income due to fluctuating engagement and changes in ad rates. Creator funds provided by social media platforms are viewed as ineffective and unreliable. The competitive nature of the online content market, coupled with difficulties with monetizing, creates challenges for creators seeking to make content creation a full-time career.

While the term “creator” might bring to mind household names like Mr. Beast, most creators have much smaller followings. Fewer than 1% of content creators have over one million followers. These microcreators are especially common on platforms like TikTok and Instagram and fuel the creator economy. Their niche content attracts dedicated followers who are more likely to engage with and purchase product recommendations, merchandise, or educational materials — with about 47% more engagement on posts compared to larger influencers as of September 2024.

Patreon is a platform for digital content creators with loyal fanbases. By offering a membership platform that enables creators to monetize their work directly via subscriptions from their audience, Patreon allows creators to focus on their creativity without worrying about unpredictable ad revenue or platform policies. Creators can have various membership tiers with exclusive content, early access, and other benefits, fostering a sense of community and direct engagement with their audience.

Source: TechCrunch

Patreon was founded in May 2013 by Jack Conte (CEO) and Sam Yam (CTO).

While studying for his master’s degree in computer science at Stanford in 2006, Yam took a leave of absence to become one of the first engineers at a social-mapping startup called Loopt. Yam then founded AdWhirl in February 2009, which allowed iPhone developers to choose ad networks dynamically. In September 2009, AdMob acquired AdWhirl, before AdMob itself was purchased by Google. After a four-month stint at Google, Yam explored startup ideas for three years and spent time working out of the Dogpatch Labs, an incubator program to generate execute and ideas, where Kevin Systrom and Mike Krieger were developing Instagram.

Meanwhile, in 2013, Conte, a producer, songwriter, and filmmaker, found himself in a troublesome financial situation. He expected to spend $10K on producing a music video but the ad revenue he anticipated from YouTube would not cover the cost. At the time, Conte had built a YouTube following of about 100K subscribers, and he saw an opportunity. He believed that a subset of his fans might be willing to support his creative work directly, offering him a more sustainable income. With this in mind, he reached out to Yam, his old college roommate, to develop a platform where subscribers could support their favorite creators.

The pair met for coffee to discuss Conte’s idea. Yam, who was launching a freelance photographer marketplace named OurSpot, immediately saw the potential of a platform allowing fans to fund artists directly. Conte’s proposal impressed him. Initially, Yam dismissed the need for an NDA, emphasizing that execution matters more than ideas. Yet, he ultimately encouraged Conte to keep the concept confidential. As media interest in OurSpot grew, Yam followed his instincts and began developing Patreon while still managing OurSpot until Patreon secured its seed funding.

Patreon’s product is a membership platform designed to help creators manage, grow, and monetize their audience. At its core, Patreon allows creators to offer exclusive content, perks, and experiences to paying subscribers, known as "patrons." These patrons provide a recurring revenue stream, supporting creators monthly or per creation. Patreon bundles its services into three distinct membership plans: Founder, Pro, and Premium. Each plan offers a range of tools and features tailored to different needs:

• Direct relationships: Creators can develop relationships with their patrons through exclusive posts, messages, emails, and fan profiles (which patrons can set up upon joining), allowing for deeper connections. With built-in polling in community chats, creators can also gauge what excites their patrons most on their Patreon page.

• Business tools: Creators can track and manage patron payments, lifetime value, and notes to help manage relationships with them, while also accessing data to monitor page and post-performance.

• Flexible payouts: Patreon enables creators to get paid whenever they want, and receive monthly auto payouts from the creator balance via direct deposit, PayPal, or Payoneer.

• Membership tiers: Allows creators to offer various membership tiers to patrons, each with different prices and benefits. Patrons can also try out creator pages for free for a limited time before they commit.

• Patron support: Patreon handles patrons’ questions, payments, and concerns, ensuring creators can focus on their business.

• Creator-first education: Patreon helps creators learn how to run their creative businesses with workshops and resources.

• Mobile app: Creators can use the app to message their patrons and monitor the business. Patrons’ homepages are organized by creator, allowing them to see a creator’s latest work alongside community chats and updates.

Source: Patreon

Founders

The Founders plan is a legacy option available to creators who joined Patreon before May 2019. This plan offers a unique set of services and features at the original pricing, preserving the benefits for early adopters. Unlike the Pro and Premium plans introduced later, the Founders plan includes:

• Hosted creator page: A dedicated page on Patreon where creators can invite fans to become patrons, post exclusive content, and curate collections tailored to specific audiences.

• Patron communication tools: Features that allow creators to communicate directly with their patrons, including email, posts on the page, and direct messaging through Patreon’s platform.

• Workshops and creator support: Access to resources from Patreon’s Creator Success team, including workshops and personalized guidance to help creators maximize their use of the platform, expand their audience, and enhance monetization strategies.

Pro

Patreon Pro, the next tier of Patreon's platform, is designed for creators who want more control over their relationships with their patrons. It offers greater flexibility with branding, business analytics, and promotions, enabling deeper engagement with dedicated supporters through exclusive content, merchandise, and other perks. This plan includes all of the services included in the Founders plan along with:

• Customizable page: Creators have extensive options to personalize the look and layout of their landing page, where supporters can connect in community chats, browse digital products, and explore recent updates.

• Enhanced analytics and insights: Tools that give creators detailed views of patron behavior and page performance, including in-depth member data to understand audiences. This helps identify what resonates with patrons, guiding creators on where to focus for increasing impact.

• Special offers promo tool: Enables creators to offer promotional offers, pricing, or benefits to grow their following on Patreon.

• Creator-led workshops: Live stream workshops hosted by Patreon’s top creators who provide advice and guidance on building a sustainable career on Patreon.

• App integrations: Native integrations with other applications and platforms, like Discord, Vimeo, and WordPress, allow creators to streamline their workflow and manage their community more effectively.

• Priority customer support: Prioritized support from Patreon to assist with issues, questions, or inquiries that creators may have about the platform.

Premium

Patreon Premium is the most feature-rich tier of Patreon's platform, targeted at established creators and creative businesses who need a robust set of tools to manage their membership program. In addition to all the features offered by Patreon Pro, Patreon Premium provides users with dedicated partner support, team accounts, and a merch for membership feature, allowing creators to offer physical merchandise as part of a membership. The additional services include:

• Dedicated partner manager: A Patreon Partner Manager is a membership expert who assists a creator with growing their business, providing insights and a direct line of communication to the Patreon team.

• Merch for membership: A white glove merchandise service where creators can provide their patrons with branded merchandise while Patreon handles shipping, tracking, and merchandise support.

• Team accounts: Patreon Premium allows a creator to invite team members to manage their creator page and business with unique logins and permissions.

Source: Patreon

Many of these features, highly anticipated by creators on the platform, were introduced following Patreon’s 2023 rebrand. More features are in development as Patreon focuses on meeting creators' needs and making the platform a more engaging hub for patrons. The launch of free memberships and community chats has been particularly successful, with creators' communities on Patreon doubling and gaining over 30 million new free memberships in the first year alone.

Patreon also launched a new feature where a patron can gift a membership to someone else in November 2024. Additionally, Patreon plans to integrate AI to automatically create clips of posts and previews of podcasts, which can be shared off-platform to attract new fans and drive non-paying users to creators’ pages as of July 2024.

Customer

Patreon's customers come in two categories: creators who want an income from their work, and supporters willing to pay for exclusive content or to support the creators they love. The company's reach spans different industries, including music, podcasting, visual arts, writing, gaming, and more. A 2022 survey of Patreon creators revealed that most creators on the platform make videos.

Source: Patreon

YouTube, the go-to platform for many digital content creators and podcasters, is also where most Patreon creators first built their audience. The typical Patreon creator falls between a beginner and a seasoned professional, with Patreon representing 41% of their income. Well-established entities and influencers also use Patreon to offer premium content to their fans. Creators on Patreon tend to have a dedicated following, often cultivated through various social media or content platforms. They leverage Patreon as a means to monetize their following and offer additional value to their patrons.

As a result, patrons range from fans seeking additional content or closer engagement with their favorite creators to those who wish to support the arts or specific creators whose work they believe in. Patrons are generally characterized by their willingness to pay for digital content and their desire for exclusive or early access to content. Since 2020, TikTok's "For You" feed and its adoption by other social media platforms have shifted the focus from following creators to an algorithm-driven, highly personalized content experience, often overshadowing the creators themselves. This change has made it harder for creators to build tight-knit communities and sustainable businesses as the traditional “follower” has faded. Patreon aims to bridge this gap with new features focused on community connection and development.

Market Size

Patreon operates within the creator economy, a market segment comprised of artists, content creators, influencers, and anyone who monetizes their content directly with their audience. The global creator economy was estimated at $250 billion in 2023 and is expected to grow to $480 billion by 2027. The primary drivers of this growth include an increasing number of creators looking to monetize their content, expanding internet penetration leading to a larger potential audience for creators, and the rise of creator-friendly platforms that enable monetization through direct-to-audience models.

Source: Epidemic Sound

As of 2024, over half of creators who had monetized their content were working full-time, with most feeling fairly compensated. YouTube was their primary income source, followed by TikTok and Facebook. Key revenue streams include live streaming, ad-revenue sharing, and brand sponsorships, with paid subscriptions through platforms like Patreon also contributing. As of May 2024, more than 80% of creators were investing in digital marketing and analytics skills to advance their careers, reflecting a growing view of content creation as a business. However, with wealth and audience reach still concentrated among top creators, just 4% of creators earned $100K or more annually as of 2024.

Content Creation Platforms with Monetization Features

YouTube: Founded in 2005, YouTube is the world's largest video-sharing platform, and the second-most visited website in the world. It was valued at approximately $455 billion as of July 2024 and was acquired by Google for ~$1.7 billion in October 2006. YouTube’s Partner Program, which allows creators to monetize their content through ads, channel memberships, and merchandise shelves, is a competitor to Patreon. YouTube's audience and content monetization options provide creators with an alternative to Patreon, particularly for video content creators. In particular, channel memberships on YouTube allow viewers to join a paid community, similar to Patreon, with perks, feedback options, and loyalty rewards. However, YouTube takes 30% of the revenue (more than Patreon) and has stricter terms of service and copyright policies. Furthermore, YouTube's expansion of its Super Chat and Super Sticker features, allowing fans to pay creators directly during live streams, has also increased its competitiveness in the creator economy.

TikTok: Since its global launch in 2018, TikTok has been the most utilized social app by US adults as of April 2024. Its success is driven by its focus on short-form video content, a large music library, and a powerful recommendation algorithm. As of November 2024, TikTok is valued at $300 billion. In 2022, TikTok introduced TikTok LIVE Subscription for creators with over 1K followers, allowing them to make money from live streaming. Subscribers gain exclusive benefits like badges, custom emotes, and subscriber-only chats, with pricing expected to start at $4.99 per month, similar to Twitch. In 2023, TikTok also launched TikTok Shop, enabling creators to sell merchandise and monetize through affiliate marketing. However, while TikTok offers emerging creators more exposure than other platforms, its emphasis on algorithm-driven content discovery makes it challenging for creators to build and maintain a loyal following. TikTok competes with Patreon by offering creators monetization options like fan memberships, gifts, and tipping features, allowing them to earn directly from their content and fan engagement on the platform.

Twitch: Founded in 2006 and acquired by Amazon in 2014 for $970 million, Twitch is one of the largest live-streaming platforms for gamers. It had an estimated valuation of $46 billion as of July 2024 and reported an average of 31 million daily visitors in March 2023. The Twitch Partner Program, which allows streamers to monetize their streams through subscriptions and ads, is a direct competitor to Patreon, particularly for creators in the gaming industry. While Patreon offers a more generalized platform for various types of creators, Twitch’s focus on live streaming and its integration with Amazon Prime via Twitch Prime gives it a unique position in the creator economy. As of March 2024, Twitch prioritizes helping creators grow their communities and earn more. Twitch also allows creators to start offering subscriptions relatively early — once they reach 50 followers and meet Twitch Affiliate criteria. After that, creators can offer subscription tiers at $4.99, $9.99, and $24.99 per month. Viewers can also support their favorite streamers by purchasing virtual currency to express excitement or gratitude during live streams.

Substack: Founded in 2017, Substack is a publishing platform that allows writers to monetize their newsletters directly from their audience. Substack provides an alternative to Patreon for creators looking to directly monetize written content, offering a revenue split of 90% for the creator and 10% to Substack. Creators can also customize their subscription plans, including monthly and annual options. Unlike Patreon, Substack focuses on written media. It had grown from 500K paid subscriptions in February 2021 to three million by February 2024. With $100 million in funding as of November 2024, it is valued at $650 million.

Discord: Originally launched in 2015 as a communication platform for gamers, Discord reached over 200 million monthly active users and a valuation of $14.7 billion in 2024. In 2023, Discord improved its server subscriptions, allowing subscribers to access exclusive text or voice channels, premium emojis, and special or early content from creators. Creators receive 90% of the revenue from these subscriptions. In June 2024 it also introduced customizable tier pricing and premium roles on servers, which can be offered to subscribers or sold separately. Discord competes with Patreon by enabling creators to monetize their communities directly through subscription-based access to exclusive channels, content, and interactions.

Medium: Medium is an online publishing platform founded in 2011 by Twitter co-founder Evan Williams. Medium's Partner Program pays writers based on how much members engage with their articles and provides direct competition to Patreon for writing and blogging creators. Unlike Patreon's subscription model, Medium allows writers to earn money directly from their readers' engagement. It offers an alternative for writers to monetize their work without maintaining a subscription base. Medium's reader base and built-in distribution tools also give writers a larger audience than they might reach via Patreon. Medium has raised $176 million in funding as of November 2024 and is valued at $600 million.

X: Founded in 2006 as a microblogging service, X has grown to become one of the world’s largest social media platforms, with a valuation of $9.4 billion as of October 2024, a decline from when Elon Musk bought it in October 2022 for $44 billion. It has served as a distribution network and growth engine for content creators of all stripes, though it has historically struggled to enable them to monetize on the platform itself, with efforts like Super Follows seeing limited success. Musk emphasized creator monetization as a desirable substitute for advertising revenue, relaunching Super Follows as Subscriptions. Creators with over 500 followers can join Subscriptions on X, receiving 97% of the revenue until reaching $100K in lifetime earnings, after which their share drops to 90%. Similar to Patreon, subscribers can unlock exclusive posts, one-on-one communication with the creator, private discussion spaces, and badges.

Snapchat: Snapchat, founded in 2011 as a photo-sharing app, has evolved into a multimedia messaging platform for sharing pictures and videos with effects with a market cap of $17.8 billion as of November 2024. Creators with over 50K subscribers who regularly post stories can qualify for the stories revenue share program, where ads are placed between their Snaps, and they earn a portion of the ad revenue. Like Patreon’s upcoming gifting feature, Snapchat allows users to send virtual gifts to creators using Snap Tokens as a way to show appreciation.

Meta: Formerly named Facebook and founded in 2004, Meta is a holding company for Facebook, Instagram, and other businesses, with a market cap of over $1.4 trillion as of November 2024. Facebook is a social media platform for connecting and sharing content. Facebook Subscriptions allow some creators with over 10K followers to offer exclusive content and perks. Creators also keep 100% of the subscription revenue after platform fees. Instagram is a photo-sharing app that lets users upload, edit, and share content. Instagram Subscriptions (similar to Facebook’s model) enable creators to offer exclusive content, including live streams, stories, badges, posts, reels, and social channels, where creators keep 100% of the subscription revenue, unlike Patreon.

Creator Monetization Platforms

Gumroad: Founded in 2012, Gumroad is a platform that enables creators to sell their work directly to their audience. Gumroad presents an alternative to Patreon for creators seeking to sell digital products, such as ebooks, courses, and music. Gumroad's pay-what-you-want model, which allows customers to set their prices for products, is popular among creators. Gumroad also charges no monthly subscription fees to creators, differentiating it from Patreon’s subscription model. It has raised $16.1 million in funding and is valued at $100 million, with notable early investors including Naval Ravikant, Jason Fried, and Max Levchin.

Ko-Fi: Founded in 2012, Ko-Fi is a platform for creators to receive one-time donations and tips. With an estimated annual revenue of $9.4 million as of November 2024, Ko-Fi stands out for its simplicity and affordability compared to Patreon. Creators can use Ko-Fi to build memberships, receive donations, sell products, and offer commissions or requests from a single page. They can set their membership tiers with various benefits, such as exclusive content and Discord roles. On its free plan, creators keep 95% of their revenue with no flat fees, while the Gold plan charges a $6 monthly fee and allows creators to keep 100% of their earnings. Ko-Fi’s approach enables creators to manage one-time donations, store sales, and memberships all in one place.

Buy Me a Coffee: Founded in 2018 by Jijo Sunny, Joseph Sunny, and Aleesha John, Buy Me a Coffee simplifies monetization for creators with minimal setup. The platform allows creators to establish monthly or yearly subscriptions in exchange for exclusive content and includes a shop feature where creators can sell digital and physical products, like one-on-one calls, art commissions, and ebooks. Buy Me a Coffee takes a 5% fee from every transaction made on the platform. It has an estimated annual revenue of $4.9 million and $150K in funding from Aaron Levie and Ankur Nagpal, among other angel investors.

Ghost: Launched in 2013, Ghost is an open-source, non-profit platform that offers an independent alternative to Patreon. It allows creators to run their websites, collect signups, publish private content, manage payments, and send newsletters. Unlike Patreon, which takes a percentage of earnings, Ghost operates on a subscription model starting at $9 per month, with the $25 per month creator plan offering unlimited theme access and custom integrations. Ghost appeals to creators who want more control and less interference from the platform they monetize on.

Source: Patreon

Patreon operates a commission-based business model with two main plans, catering to the needs of creators at different levels of their careers. The Pro plan, with an 8% fee of income earned on Patreon, offers tools and features for creators aiming to grow and engage their audience more effectively. For creators on the Pro plan, the payment processing fee is 2.9% + $0.30 per payment over $3. The Premium plan, with a 12% fee of income earned on Patreon, is tailored for established creators requiring advanced features and personalized support to manage and scale their operations. For creators on the Premium plan, the payment processing fee is 5% + $0.10 per payment under $3.

The Founders plan, which charges a 5% fee of income earned on Patreon, is Patreon’s original plan available only to creators who joined before May 2019. For creators on the Pro plan, the payment processing fee is 1.6% + $0.30 for all payments. Patreon also earns revenue by charging a 5% fee on all product sales made by creators on the platform.

In 2018, Patreon facilitated income generation for creators from over three million active patrons, a 50% year-over-year increase from the two million patrons it processed payments for in 2017. In May 2018, Conte stated that it would process $300 million in payments that year, implying $30 million in revenue in 2018. By April 2021, the company stated that it hosted over 200K creators, earning over $100 million monthly from more than seven million patrons. Patreon said it added more than 30K creators during the pandemic in the first weeks of March 2020. According to an unverified source, Patreon had over 250K creators supported by eight million patrons as of September 2024.

Graphtreon uses publicly available data from Patreon to estimate the total monthly payouts on the platform. While some creators elect not to make their monthly earnings public, who are therefore excluded from this total, the graph indicates a general growth trend, including a spike in the early months of the COVID-19 pandemic and less aggressive growth since 2021.

Source: Graphtreon

Data from Graphtreon shows that on Patreon, video creators were the top performers as of 2024. They have over four million paying members and earn the most money each month compared to other types of creators. Video creators' earnings reached their highest point in 2022 but have been decreasing since then. Podcasters on Patreon are facing a similar issue. Since 2022, both their earnings and membership numbers have remained stagnant at nearly two million members. In contrast, gamers on Patreon have experienced an increase in paying members. In 2023, it had about 800K paid members while as of November 2024, it has about 975K paid members.

Acquisitions

Patreon expanded its features set through strategic acquisitions. In October 2023, Patreon acquired Moment, a digital ticketing experience platform. This acquisition enhanced Patreon's ability to offer interactive digital experiences and opened the door to new opportunities for creators to monetize and connect with patrons.

Patreon’s prior acquisitions focused on subscription-related services. In August 2018, it acquired Memberful, a subscription platform that lets creators sell exclusive content through their sites, rather than on Patreon’s central platform. Then it acquired Kit in June 2018, which is a platform that helps creators bundle merchandise with their subscriptions, allowing them to offer physical products alongside digital content and membership perks. It also acquired Subbable in March 2015, which was a subscription-based funding platform for artists, which helped Patreon enhance its initial subscription model.

In April 2021, Patreon announced a $155 million Series F round led by Tiger Global, which valued the company at $4 billion. Existing investors from prior rounds included New Enterprise Associates and Woodline Partners. As of November 2024, the company has raised a total of $413.3 million.

In April 2021, Patreon reported that over 200K creators collectively earned over $100 million per month, translating to approximately $1.2 billion annually. According to an unverified source, Patreon charges creators between 5% and 12% of their earnings depending on the subscription plan, suggesting the company’s annual revenue for 2021 could range between $60 million and $144 million. Given this revenue estimate, Patreon’s Series F valuation of $4 billion reflects a multiple of approximately 27–66x revenue. This calculation excludes potential contributions from other revenue streams, such as transaction fees or premium services, which could impact the actual valuation multiple.

In 2021, Patreon was considering going public and had been approached by special purpose acquisition companies (SPACs). As of November 2024, it has yet to go public. The company issued layoffs for 17% of its workforce and went through a 70% drop in its 409A valuation, which is an appraisal of value for a private company’s stock, in 2022. As a result, Patreon’s valuation as of September 2024 was estimated to be around $1.4 billion. According to an unverified source, it is predicted to pursue an IPO by late 2025.

Creator Sponsorships

Expanding to include corporate sponsorships for creators represents an opportunity for Patreon. By providing a platform for businesses to sponsor creators, Patreon could tap into a new revenue stream while facilitating direct, meaningful connections between brands and niche audiences. The global influencer marketing industry is expected to grow to $50.3 billion by 2028. This could be particularly appealing to businesses looking to reach specific demographics or engage with communities centered around particular interests or passions.

An expansion into corporate sponsorships could be a potential revenue driver for Patreon and a means to make the platform more attractive for creators. The additional financial support could help creators continue producing content, reduce their reliance on individual patrons, and attract more creators to the platform.

Creator Financial Services

Patreon could expand by developing a financial services platform to further support its community of creators, adding value to its platform and generating additional revenue. The irregular income streams and unconventional business models of many creators can make it difficult for them to secure financing from traditional institutions, which may struggle to assess income from brand deals and social following, hindering creators’ ability to take on new projects. Patreon has unique insight into creators’ income and financial position based on their history and performance on the platform. This could allow Patreon to offer tailored loan products that consider the unique circumstances of creators, providing them with the funding they need to invest in their work and grow their businesses.

Additionally, as many Patreon creators are independent and may not have access to traditional employment-based benefits, health insurance is another potential area for expansion. Patreon could partner with insurance providers to offer health insurance plans tailored to the needs of self-employed individuals or small businesses. This could add an attractive benefit for creators and help to attract and retain users on the platform. Karat Financial is one of the few startups seeking to address the unique financial needs of content creators in credit, insurance, loans, and taxes. As the creator economy expands and more monetization options arise, the demand for personalized financial services may increase as well.

Increased Patron Involvement

In 2024, Patreon’s introduction of free memberships and community chats has proven successful, with communities on the platform doubling and over 60% of free members joining to stay updated with creators’ work. This growth highlights the demand for closer connections between creators and patrons. Moreover, data shows that over 90% of Patreon creators with active communities earn $1K or more per month, underscoring the financial benefits of involved fanbases.

Gen Z spends the most time engaging with digital content on social media with 65% identifying as content creators and 89% identifying as fans. This demographic follows more individual content creators than previous generations and seeks participatory experiences when continuing content trends. By giving patrons more agency to organize fan-led events and shape store inventories, Patreon can cater to its audience’s desire for personal connection and active participation.

Native Platform Creator Tools

Patreon's business model could face risks as other platforms continue building their tools for creators. These platforms integrate monetization features directly into their product offerings, potentially reducing the need for creators to rely on Patreon for their income. Social media companies like YouTube, Facebook, Instagram, TikTok, and Twitter are developing monetization features, many of which have been rolled out. For example, YouTube has a channel membership feature, Instagram offers a "Badges" program for live videos, and TikTok has a creator fund. These platforms provide creators with ways to earn money directly from their platforms, creating a potential competitive risk for Patreon.

As these platforms continue to integrate monetization tools, they can offer a more seamless experience for creators and their fans. For instance, a YouTube creator can offer channel memberships directly within the YouTube ecosystem without directing fans to an external platform like Patreon. This integrated experience could be more attractive to creators and fans alike, potentially drawing users away from Patreon. Creators could migrate their fan base from Patreon to their respective platforms if they find the integrated tools more convenient or lucrative.

Content Moderation

Patreon's reputation and platform integrity are contingent upon its ability to moderate content and ensure adherence to platform guidelines effectively. However, content moderation is a complex and resource-intensive task. In 2018, Patreon suspended many adult content creators on its platform due to pressure from payment partners. If Patreon is perceived as too strict or inconsistent in its moderation policies, it could face backlash from creators who feel their freedom of expression is unduly limited. Creators Jordan Peterson and Dave Rubin announced they would leave Patreon in early 2019, citing perceived political bias in moderation decisions.

As of May 2024, Patreon required adult content creators to obtain and retain written consent from all participants in their content to comply with updated payment processor regulations. Additionally, Patreon joined the Tech Coalition, a global alliance committed to combating online child exploitation and abuse, in March 2023.

Future changes in laws and regulations around digital content could impose further obligations on Patreon, increasing the costs and complexities of content moderation. US regulators discussed repealing Section 230 in February 2023, a law that protects internet platforms from liability for what third parties say or do to them. Repealing Section 230 could require tech companies to moderate their platforms or face potential liability.

Creator Retention

Patreon risks losing creators if it isn’t able to scale with its growing audiences. As the number of creators selling digital products has surged since COVID-19, these products have become a top revenue stream for creators earning $100K and over. While Patreon is initially attractive because of its easy setup, it’s less effective for selling products like online courses. Creators with dedicated followings may find greater success by establishing their membership sites or making use of platforms focused on course or merchandise creation and sales, allowing them to avoid sharing revenue with Patreon. This challenge is further compounded by ongoing frustrations among creators regarding financial stability and transparency of income streams, as discussed at the first White House Creator Economy conference. These factors suggest that while Patreon is seen as helpful for early and mid-career content creators to make a living, it may struggle to retain seasoned creators seeking more business-oriented monetization options.

Source: Kajabi

Platform Instability

Patreon's growth trajectory could face risks due to external platform instabilities, in turn affecting the business model and revenue streams. One major change comes from Apple's App Store policy, which is set to take effect by November 2025. Apple mandated that Patreon must adopt its subscription-only billing for iOS transactions to maintain App Store compliance, allowing Apple to claim a 30% commission on all in-app transactions which could significantly reduce Patreon's share. Although as of November 2024, Patreon's mobile app ranks number 26 in the entertainment category on the App Store, this change may force Patreon to choose between covering the fee costs itself or passing it on to creators, risking dissatisfaction and potential distancing from the platform. Compounding this issue is the potential TikTok ban in the US. As of May 2024, 65% of creators expressed concern about how such a ban could impact their earnings, potentially prompting them to seek revenue diversification. This trend towards multiple income streams could dilute creator engagement on Patreon, potentially negatively impacting the platform's user base and revenue model.

Patreon has carved out a niche in the creator economy by providing a platform for creators to monetize their content through recurring subscriptions from their fans. This direct monetization model gives creators a more predictable income stream, reducing their reliance on ad revenue and sponsorships. Patreon's success, however, has drawn the attention of larger social media platforms, many of which have begun to roll out similar subscription-based features, posing a competitive threat. Maintaining and growing its base of creators and patrons, essential for Patreon's business model, could become increasingly challenging in an environment where creators can monetize natively on popular platforms. To maintain its leadership position in the creator economy, Patreon must continue delivering value for both creators and patrons, while carefully managing the potential risks associated with platform moderation and content policies.