There’s nothing magic about Patreon.
TL;DR don’t make a crypto trying to replace Patreon before looking at my cool diagrams.
Context:
YouTube has a highly unstable monetisation system for video creators.
Patreon, The most popular alternative revenue stream for creators, has been banning users due to political bias originating from inside the company, as well as pressure from the 3rd party payment providers it works with.
I am writing this article with a sense of anxiety, as things heat up for Patreon and YouTube creators, my concern is that people will start jumping on different technologies like ‘Patreon-clones’ or cryptocurrencies without due diligence.
We risk running into exactly the same or worse funding problems without considering these services carefully. This has already begun with companies like Subscribestar being severely hindered by PayPal.
The in-group of YouTube, Patreon, PayPal and Visa may seem powerful, behemoth and complex. The truth though is that big complex things are made of smaller simpler pieces. Small and simple pieces can be analysed and replaced. If we are to solve the systemic problems for creators and people in general in the digital economy, it would be prudent of us to get a holistic view of all the pieces of the infrastructure. With diagrams!
Maybe it turns out we just need a straight-up Patreon clone. Maybe we have a need for something different.
My thoughts are that we specifically need to verbalise clear distinctions between the types of solutions, their different shapes, contexts and benefits instead of vague use of buzzwords.
Why does Patreon exist?
Patreon is not magic — it is a website that lets you log in and make recurring payments.
To be more precise, Patreon allows time-based and action-based payments, or ‘subscriptions’ to be automatically paid to ‘creators’ from their ‘patrons’. You become a patron of a creator because you like what they create, and every month, or optionally every time they upload something new, Patreon will send them money on your behalf from your account.
Patreon’s service offering is unsophisticated, and is similar in complexity to a generic email server that sends emails on a regular basis. There’s certainly nothing magical about it. On technical grounds, the easiest part of the overall ‘Patreon funding solution’ to replace is Patreon itself. The trickier technical parts of the infrastructure are PayPal & Visa.
Patreon does however have great market visibility and a great ‘story’ as well as a very friendly and charismatic CEO. Thanks to this they’ve had great user adoption. They have also an established relationship with PayPal, though I can’t say if this is a net benefit for them or provides them an edge over any other funding service using PayPal.
Why does Paypal exist?
If PayPal did not exist, you would have to type in and expose your card or bank details to everybody that you wanted to buy or sell something with. PayPal hides this aspect. PayPal is a ‘Payment Provider’ or ‘Payment Gateway’ which provides an abstraction on top of the ugly patchwork of global banks. It is essentially a second-level ‘bank lite’ with services oriented toward easy transactions and e-commerce.
Why do Visa / Mastercard exist?
Companies like VISA, Mastercard and SWIFT provide globally reaching networks between thousands and thousands of banks. Without these networks underlying our daily purchases, life would be a giant pain in the ass for a million different reasons as customers, shops, banks would have no real-time way to connect and perform secure transactions.
Cryptocompanies like Ripple are aiming to distrupt these global finance networks but will likely be subject to the same pressure that everyone else in this story is vulnerable to as global banks have to willingly opt into the ripple network, and will likely be able to act as gatekeepers.
Summary of the status quo
We have a content platform, a payment subscription platform, a payment provider, and a payment network (YouTube, Patreon, PayPal, Visa) that are all profit driven, worried about their image and vulnerable to political pressure.
What does a direct copy of Patreon look like ?
SubscribeStar is marketed as an apolitical Patreon variant, but with no guarantees. Vulnerable to payment monopoly — currently they have been put out of business by PayPal and are transitioning to a new payment provider.
What does a copy of Patreon that is invulnerable to PayPal / Mastercard look like?
If you take SubscribeStar and switch it to using non-PayPal payment providers (they’re in the process of doing this now, good luck!). I’m pretty sure whichever payment provider they switch to will ultimately come into contact with Visa and Mastercard though. Ultimately they have to process the credit cards of the users, which are 99% likely to be Visa and Mastercard cards.
But what about Patreon alternatives that are invulnerable to all censorship and 3rd party payment dependencies?
Let’s discuss cryptocurrency solutions.
There are literally thousands of cryptocurrencies. I’ve been involved with making 2 myself. It is highly likely that in the coming year, some cryptocurrency-based solutions for online video monetisation in response to ‘bad press’ surrounding YouTube and Patreon will come into the public consciousness.
I’d say its a massive opportunity hiding in plain sight. Just as Uber connects people who want to drive for money with people who need a ride, a crypto company could connect the crypto investor world ($130 billion market capital) who want to invest in something meaningful to the hundreds of thousands of video creators who are desperate for a less tyrannical source of revenue.
(If you’re interested in what precisely is meant by ‘alternatives that are invulnerable to all censorship’ please read up on what a DAO is. TLDR: A DAO is a Distributed Autonomous Organisation, an entity that exists without internal human agents to abuse or be pressured into changing it.)
Jordan B Peterson, a prominent figure in the debacle surrounding YouTube and Patreon monetization, has recently announced that he will transition away from Patreon, and he has started accepting bitcoin (and is also planning to launch a new funding solution with Sam Harris).
So one person accepting bitcoin is a great thing.
You get his personal BTC (bitcoin) address and send him some coins.
On a much larger scale though, things get messy.
Building your crypto solution
Let’s say you build a crypto-patreon clone that uses bitcoin, let’s call it Bitreon for now. You build the Bitreon website, and enable people to send and receive bitcoin. Or you make your own cool cryptocurrency. This is great. Users can freely exchange these tokens and subscribe, donate, tip, whatever. That’s fine in abstract.
Eventually you will have to choose a way for your users to bring money in and out of the platform into their banks.
Through a payment provider like PayPal, MangoPay etc.
Any adequately successful funding platform, crypto or no, will run into the same problem — compromised (or compromisable) payment providers.
Through a cryptocurrency exchange
An exchange is where people buy and sell ‘markets’ (buy gold with dollars, buying dollars with euros, trading A for B).
Making the users of your Bitreon platform move their money back into fiat currency ( euros, dollars etc. ) through an exchange does provide you with some form of buffer when it comes to the crucial payment provider stage. As it’s less clear to the payment providers and credit card companies that people paying in and out of that exchange are explicitly doing it for use in your Bitreon platform.
For both creators and donators, this is a little bit like setting up a new bank account, typically involves ID and address verification, and learning how making a trade, and then finally transferring the money into your actual bank account. That’s a lot of steps. Most people use cryptocurrency like this (leaving their crypto in an exchange) but its a lot of work, and has a history of being extremely insecure and corrupt (see MtGOX).
Physical space person-to-person trading
You’d have to download an app, decide on an exchange rate with a person who would like to buy the exact amount of crypto that you are trying to sell, and then travel to meet them.
Again this provides you with a buffer as it hides from payment providers that for which platform / service the transaction is happening. Instead of PayPal seeing “A transcation being initiated by Bitreon/Patreon etc.” they just see a normal transaction between random person A and random person B.
There is a physical risk to self and massive inefficiency at scale. you could build the physical trade finder directly into the Bitreon app to remove one step.
Apps like this already exist such as Mycelium.
Better person-to-person trading (probably still too complex)
You could theoretically provide a way to ‘facilitate trades’ between users without directly associating your company with PayPal. You could expose the recipient user’s paypal address and allow for the sender to the send the currency.
If you really want to keep track of users’ contributions and receipt of coins, you can still ask users to upload proof of payment, and then save the transferred amount. If the purpose of your service is to provide a means of exchanging value from one person to another, adding a cryptocurrency to the above system would add no value.
PayPal also already has subscription payments available for accounts with credit cards, so the existing Patreon is already kind of redundant.
How many shots do we have?
Imagine, It’s 2021 — Youtube and Patreon have collapsed under ideological tyranny, and there’s a chaotic diaspora of creators to 5–6 different and less than perfect funding and video websites…
How many times can the Youtube / Patreon community afford to jump ship and get it wrong, before they’re decimated, scattered and forever lost amongst many sub-optimal solutions? I know there are a thousand ways to solve the issue given all the technology out there, but let’s get it sort of right the first time please!
What about cryptocurrency payment providers??
Yes these exist. Bitpay, coinbase, blockchain.info and many other payment providers enable conversion of crypto assets ( bitcoin, monero etc. ) into fiat (euros, dollars ). Guess what though. They all eventually use PayPal, Visa, Mastercard or some other big scary monster.
When you have a hammer, everything looks like a cryptocurrency
99% of cryptocurrencies are awkward, unused, add no value to the world and have no real reason to exist.
A lot of people shoehorn crypto into their projects because they think the hype will sustain and fund them. Heck they might even get rich!
In reality though, including crypto opens you to a world of confused users, valid skepticism, price volatility and regulatory uncertainty.
Does your project resemble Twitch’s ‘bits’ donation system or Patreon’s subscription system? Then it has no reason to include cryptocurrency unless you’ve solved the Payment Provider / Payment Network bottleneck problem somehow with it.
Existing crypto alternatives
Apart from SubscribeStar mentioned above, these two crypto Patreon variants are currently being built:
Patreos — https://www.patreos.com/
Patreos has an interest in helping creators, and I think are doing a great job but their message is not loud and clear enough in my opinion.
The project name ‘Patreos’ is clearly an allusion to ‘Patreon’ ( as well as EOS, the platform they are based on ) but unfortunately everything else about the project is shrouded in the typical jargon of the cryptocurrency world ( airdrops and tokens and such ). The team behind it certainly seems smart enough to build something relatable for average consumers. I’m very interested to see how they get regular users from Patreon to Patreos or how they handle the cash in/out problem.
Plastic
“what about something we can choose to be paid in YouTube or in Google stock or in some sort of way that would appreciate along with the growth of the company — I know that would make me feel more vested in the platform as a creator”
— Casey Neistat
I built Plastic throughout 2018 with some really smart people, and we’re currently critically reviewing the situation with payment gateways, and carefully considering usability before launching.
Plastic has an interesting economic shape. Creators should have their own organisation, that really reflects the value they generate in the online video world. Their supporters can pay into it, and the creators receive tokens much like shares, proportional to their individual view counts on their YouTube channels.
This is the premise of Plastic. It’s an attempt to transplant a new ‘monetary source’ into the YouTube creator ecosystem to replace the existing monetary source of advertisers with a source funded by an enthusiastic audience. This is essentially what both people investing into cryptocurrency and people paying into Patreon are doing already.
So that’s the landscape. What should we do?
I for one would like to see a censorship-resilient clone of Patreon emerge, which has the absolute minimum cognitive overhead for migrating creators. There is, as discussed above, no reason to add crypto to this equation.
If anyone tells you otherwise it’s because they think they can get rich and are blinded by that fact. I’ve been there, and I’ve also seen it happen to others. This ‘censorship-resilient’ clone of Patreon would be much better off just integrating as many payment providers (sure, some of those providers could be crypto ones too) as possible for users to switch between until we find one with a backbone (Google Pay, WePay, 2CheckOut, Authorize.Net, Skrill, Intuit, ProPay, Dwolla). Unless the whole world starts using cryptocurrency as normal cash tomorrow, adding cryptocurrency to your project architecture solves no problems in this scenario.
Securing a stable income for creators should be our primary focus. After that we can start dreaming big about other more magical platforms.
I’d love to hear from creators and entrepreneurs of all shapes and sizes.
If you are serious about solving the current issue and would like to talk, please direct message me here. I would love to foster an open conversation about this before we end up with a lot of redundant work and many useless platforms.
Who am I?
I’m Christopher, a huge fan/junkie of YouTube. I’m an engineer in Europe, started my own cryptocurrency company in 2018, and I now work at another cryptocurrency company.
Other remarks:
If you’d like to read and critique through the whitepaper of my currently dormant cryptocurrency that I built with a team of smart people in 2018, click here. I’m more interested in a critical public dialogue before throwing out half-baked solutions.
I have a lot of thoughts on this topic. To stop myself from writing a bible, I’ve omitted the following topics from this article:
* The damage done by bitconnect to the image of crypto
* kickstarter, indiegogo and other funding platforms
* The ICO, airdrop, pump ‘n’ dump world
* mention of the handful of decentralised video platforms like livepeer etc.
* microtipping platforms ( brave, flattr, satoshipay, stellar lumens )
* other cryptocurrency projects that in my opinion have too large a scope such as current.us
* non-crypto token systems such as Twitch’s ‘bits’ currency
