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The Subscription Model of Crowdfunding

The Subscription Model of Crowdfunding

Regulatory Update #4 (May 2014)

The Subscription Model of Crowdfunding

A significant development in the evolution of crowdfunding during the past year has been the advent of subscription-based platforms. Positioned as new ways to help fans and enthusiasts support and engage with the creators they already support, the subscription model of crowdfunding may be a means of increasing the sustainability of crowdfunding and/or of freeing many content creators from relying on revenue from advertising.

What follow is a closer examination of this emerging model of crowdfunding : The Subscription Model of Crowdfunding

There are two leading examples of subscription-based crowdfunding: Patreon (patreon.com) and Subbable (subbable.com). Launched in May 2013, Patreon “lets fans support their favorite creators by becoming patrons. Unlike other fundraising services, which raise for a single event or project and for a limited time campaign, Patreon is for creators who create a stream of smaller works.” Similarly, Subbable is “a subscription service that allows audiences to connect with and fund the creators they love in a sustained, ongoing way.”

The key differentiator from sites such as Indiegogo and Kickstarter is how these platforms reflect the needs of creators making content on an ongoing basis, as opposed to one-off projects. For these creators, there is a need for sustainable and reliable income (vs. one big project that requires a lot of funding) as well as a need to connect with fans and communities in a meaningful, enduring way.

How does the subscription model work?

While it may vary from site to site, on the whole the subscription model functions as follows.

The creator, that is to say musician, YouTuber, web comic, writer, blogger, independent gamer, video producer, author, podcaster, animator, artist and/or photographer – really anyone creating content on a regular basis, creates a project page to showcase their work and begin to promote the page to their fans.

Patrons or subscribers can visit the project page and choose to pledge towards a creator’s work. The pledge, or per content release fee, is the amount the patron or subscriber commits to contributing per new piece of content issued (e.g. new music video, webisode, recipe, blog post etc.). This pledge can be capped monthly. The platform takes a fee of every exchange (Patreon’s is approximately 8%).

As a patron or subscriber, you may enjoy certain privileges such as the ability to post questions and comments to a creator’s page. Creators may choose to reward their patrons and subscribers with perks such as limited edition content, tutorials and the chance to interact with the creators themselves in a Google Hangout for example.

A creator’s page serves to introduce the content they are creating and may also show the number of patrons they have secured and either what they earn per content release or per month.

Key Terms

  • Creator: Musicians, YouTubers, web comics, writers, bloggers, independent gamers, video producers, authors, podcasters, animators, artists and photographers – anyone creating content on a regular basis.
  • Patron / Subscriber: Loyal fans, friends and family who want to sign up and commit to pledging a small fee (e.g. $1) for every new piece of content released
  • Pledge / Per content release fee: The amount the patron or subscriber commits to contributing per new piece of content issues (e.g. new music video, webisode or blog post), and which can be capped monthly.
  • Perks: The rewards creators may offer patrons or subscribers who pledge a certain amount of money per month.

What does the subscription model mean for Canadian-based screen content creators?

To help answer this question, Patreon was able to provide some relevant data. While they could not share the number of Canadian-based creators or patrons on its site, it confirmed that traffic from Canada accounts for the fourth highest traffic to Patreon.com internationally. Patreon also identified a handful of its Canadian creators (not necessarily screen-based) as presented in the table below:

Name

Location

Type of
Content

No. of patrons/ subscribers

Total revenue

URL

Patreon.com/[…]

Per Month

Per Release

Fraser Cain

BC

Website Publisher

167

$949

n/a

universetoday

Adam
Johnston

Van

Film Review Web Series

338

n/a

1,763

yms

Robert
Moran

Ontario

Video Games

366

$3,761

n/a

brucewillakers

Jonathan 
Burton

Ontario

Animation

395

n/a

$1,727

carbotanimations

Ryan North

Toronto

Web comic

538

$1,820

n/a

qwantz

 

Because of its emphasis on serialized or ongoing content creation, the subscription model seems to work especially well for web-series creators and YouTubers who typically face major monetization challenges (such as heavy reliance on often slim ad revenue).

Patreon: The Numbers (as of May 2014)

  • 50,000 Patrons
  • 15,000 Creators
  • 100,000 Registered Users (i.e., many still in “browse mode”)
  • Patreon estimates that it’s adding 150 creators and 850 patrons every day
  • Average monthly payment by Patron: $9.80
  • Creators, on average, post 1 new piece of content per month
  • In approximately 1 year, Patreon has helped fans pledge more than $1.5 million to some 18,000 creators (on average just $83 per creator but far higher for those with established fan bases)
Sources: Wired.com, Forbes.com, Patreon.com

 

In terms of more traditional film and television content (e.g. feature length films and television series), it is still early to predict what the implications of the subscription-based crowdfunding model will be. It is possible that sites such as Patreon and Subbable could be seen as ideal for testing out new serialized content, establishing a market need and audience willingness to pay and/or for nurturing fan-bases and niche communities of interest.

Subbable (Beta): The Numbers (as of May 2014)

  • 22 creators (currently handpicked by the Subbable team)
  • Around 40,000 supporters
  • Monthly regular subscriptions: $45,000 (as of December 2013)
  • Average donation: $5.4
  • Average completion of monthly objective: 42%

Sources: Pando.com, subbable.com

Is with other crowdfunding models, the subscription-based platforms will likely be most successful for creators who already have an established fan base or community to engage with meaningfully on an ongoing basis. To use Patreon’s language, creators must access those supports that already “love them.” What is clear, however, is that the subscription based model could represent a key breakthrough in terms of supporting emerging creators and storytellers in Canada with a more sustainable revenue model.

Further reading: