Patreon: Crowdfunding for the Long Haul
Like many indie rock musicians, Jack Conte has vivid memories of not being paid what he was worth. Even when his band Pomplamoose became an Internet sensation, it was drawing only $100 or $200 a month for a hundred million views on YouTube.
Last year, he asked his friend serial entrepreneur Sam Yam to code the site that would eventually become Patreon. The idea was to create a subscription service that enables supporters to automate pledges for a certain number of works each month. Once it was up and running, "we just started seeing immediate traction," Conte says, "especially from the YouTube community."
Makes sense: Unlike most crowdfunding sites, which let backers support only one-time projects, Patreon is structured so that backers can support artists over the course of their careers. In exchange for financial support, artists offer whatever they like--be it music videos, comics, game criticism, or a Google Hangout on all three topics. Patreon makes money by taking a 5 percent cut of what's given to the artists, or "creators," as the site calls them.
"It's not for Rihanna, although she could use it if she wanted," says Conte. "But that's not who I care about reaching. This is for people on the cusp of making a living."
James McQuivey, an analyst with Gartner, says Patreon's model is a "good thing" for midsize artists or those with a regional following. But he wonders whether enough people are using Patreon to make it worth the artists' while. "If I were any of the artists on Patreon, I would go where there are more people, because that's where there's more money," he says.
Still, Patreon's growth is impressive. Since launching just over a year ago, the site has drawn 18,000 creators and 50,000 supporters, or "patrons." Not all those campaigns are active, but the site has helped patrons send more than $1.5 million to its creators and estimates that it's adding 150 creators to its community every day.
"We bootstrapped for the first two or three months, but we weren't able to keep up with our user growth," says Conte, who's based in San Francisco but tries to avoid being lumped with the Silicon Valley social scene. "I'm not an entrepreneur." Despite this assertion, he managed to raise $2.1 million in funding from some rather high-profile backers, including Reddit's Alexis Ohanian, SV Angel, and Gary Tan.
For now, the main goal is scaling and sending as much money to creators as possible. "Figuring out how to make that sustainable is the key," Conte says. "A lot of companies help people grow their fan base, but the truth with this new emerging creative class is that we don't need any other ways to engage our fan base. Social media has provided us with all the tools that we need. What we need at the end of the month is a paycheck."
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JILL KRASNY | Staff Writer
Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.