Why Patreon’s $1 billion milestone is so significant
|Simon Owens||Nov 22, 2019|
(Image via Needpix)
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Why Patreon’s $1 billion milestone is so significant
I’ve always had a special place in my heart for Patreon. Born out of a creator’s frustration with YouTube’s paltry ad payments, the platform proved to be a gamechanger for allowing YouTubers, podcasters, musicians, and other content creators access to subscription tools that had once only been available to large media companies. It essentially took the subscription tools of a New York Times or Netflix and gave them to everybody.
This week, Patreon announced that it’s reached $1 billion in money paid out to creators over its six-year history. While I understand why the company focused on such a large, round number, there was actually a second number that bears even more significance: $500 million. That’s the amount that it’s paid out to creators just this year alone.
Why is this so significant? It’s because Patreon has now surpassed The New York Times in the amount of money generated each year from digital subscriptions. Though it hasn’t released its fourth-quarter earnings yet, the Times in on track to generate somewhere on the level of $450 million this year from digital-only subscriptions.
That Patreon has surpassed what is generally considered to be one of the most successful digital subscription operations in the world is a real milestone, one that signals the extent to which the web has allowed individual content creators to monetize their content outside of the confines of traditional media companies. It’s further evidence of the great unbundling that the internet has shepherded forward.
When Patreon launched in 2013, the internet was a much harsher climate for indie creators, but today there are a bevvy of platforms geared toward helping them thrive. From Substack to Medium to Glow to Famebit, the playing field becomes more level by the day.
Do podcasts sell books? Yes
More than a decade ago, before most people even knew what a podcast was, Macmillan, one of the largest book publishers in the world, launched a podcast network. Called Quick and Dirty Tips, the network consisted of short, scripted podcasts that delivered evergreen, practical advice on a range of topics from grammar to money management.
In the years since, Macmillan has continued to invest in its podcast division, expanding into narrative shows and even teleplays. For this episode of my podcast The Business of Content, I interviewed Kathy Doyle, vice president of podcasting, about where the company has seen the most success and how podcasting allowed it to diversify its revenue. [link]
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How to double your paying subscribers
I think it’s safe to say at this point that, when it comes to asking readers to pay for content, much of the low-hanging fruit has been snatched up. In other words, you can’t just throw up a “donate” or “subscribe” button anymore and expect readers, out of some sort of civic duty, to just whip out their credit cards.
So much of your success in this realm will depend on how effective you are at communicating your value proposition to readers and explaining why exactly they should pay up.
A new experiment from Politifact hammers this point home. Joy Mayer, the founder of Trusting News, teamed up with Politifact to test out different “donate” messages within its newsletter. The original call-to-action was relatively straightforward: “These newsletters don’t write themselves. This content is free to consume, but not to create. Donate today.”
Trusting News kept this phrasing as a control group and then a/b tested it with several different messages that more clearly drove home the value that Politifact is providing. Here’s a sample message: “Our fact-checks disrupt the agendas of politicians across the ideological spectrum. Support the truth today.”
At the end of the campaign, Trusting News compared the engagement for the control group to the experimental messages. The latter group had more than twice the number of click-throughs (411 vs 183) and generated double the amount in donations ($1,790 vs $805).
One of the best examples of a media organization communicating its value proposition is NPR. As anyone who’s been subjected to a public radio pledge drive can attest, the hosts spend an entire week heaping on every form of emotional manipulation and guilt they can come up with. They read off fundraising totals, promise to go away if they meet their hourly goals, and broadcast testimonials from previous donors. The underlying message during the entire pledge drive is that if you don’t pay up, you’re essentially a freeloader.
Which brings me to a favorite anecdote: during the early days of This American Life, local radio stations discovered that Ira Glass was particularly talented at guilting listeners into donating. They found that his fundraising segments outperformed all other segments by several multiples. So naturally, local public radio segments started asking Glass to record segments for them.
Which led to an ingenious revelation: Glass told these desperate radio stations that if they wanted him to record a fundraising segment for them, they needed to syndicate his show. Within a year, This American Life went from only being carried on a few stations to national distribution. And now it’s one of the most popular and well-known shows in existence.
Which is all a long-winded way of saying that the “if you build it, they will come” mentality really doesn’t work. You can’t just create amazing content. You have to explain its impact and the role your audience plays in amplifying that impact.
The reality TV-to-YouTube pipeline
It’s interesting that YouTube vlogs are starting to exist on a continuum with reality TV; someone gets a gig on a reality TV show and then uses that as a segue to launch their YouTube career. [link]
Why content creators should diversify their revenue
Imagine going from generating $3 million in ads per year to making $24k. A stark reminder that you should always diversify your revenue and traffic as much as possible. [link]
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