Patreon is unsustainable on a 5% rake. It cannot exist unless they raise the average fee.

https://www.fastcompany.com/90295558/patreon-is-on-track-to-reach-1-billion-in-total-payments-to-creators includes an estimate that Patreon will clear $500MM this year. That means they have to run off $25MM.

A mid-career software engineer in California costs about $200K in direct compensation. Benefits and overhead are usually estimated at equal to comp, so a SWE costs $400K. Patreon can pay for approximately 60 SWEs with their money assuming they pay for literally nothing else.

Patreon cannot live on SWEs alone. It is a content distributor, so it incurs substantial server costs and ops costs. Ops engineers cost the same as software engineers. Patreon also has customer service staff, including Trust & Safety, attempting to deal with social issues across the entire platform. Add the cost of office staff, administrative staff, executive staff, and the many assorted other professionals required to run a modern, Internet-centric business ready to respond to a world that demands rapid answers for everything.

I don’t have estimates for these costs. I do know that while SWE and ops engineer staff costs scale sublinearly with service cost, customer service costs and server+bandwidth costs scale *at least linearly* with use, and diseconomies of scale (more staff requires more management, so salary growth is at least O(n lg n) instead of O(n), disregarding how employee pay expectations tend to increase as a company ages and individual staff can gain increasing seniority) suggest these costs are super linear.

Patreon is not a 20-SWE project. Since they allow adult content, they have to do an awful lot of reinventing the wheel on payment processor stuff; entire companies with hundreds of engineers do that work alone, and they are also a content distribution and content feed platform. Is it a 60-SWE project? Maybe, except then they can’t pay for any computers or any customer service staff or any managers or any Internet bandwidth.

As they grow, SWE costs don’t increase as much as income can, but what about their per user costs - servers, bandwidth, and the statistically guaranteed increase in problems Trust & Safety must cover? Those are linear and superlinear. If there’s a sweet spot where Patreon so much as breaks even, it’s a small one.

Patreon is essentially increasing their fees to 8% and trying to pretend users get something for it. No, this is not a better deal for creators compared to today, but it’s probably a better deal for creators compared to Patreon not existing, and I’m pretty sure that’s the alternative. I’m surprised they think they can do it at 8%.