TheStreet

For many artists and creators using the internet to share their art, the ever-present problem is generating revenue from their creations while still building a following. From YouTubers to podcasters to writers, sharing art online and finding a fan base can be a rewarding experience - but not for their pocketbook. 

In fact, Fortune reported in 2018 that the top 3% of the most-viewed YouTube channels only made around $16,800 from advertising in a year - only slightly more than the U.S. federal poverty level. And for the rest of the 97%, content creators made a lot less. 

But with increasingly complicated ways to make money through posting art and content online - whether it be podcasts, videos, music and more - creators have sought new ways to generate revenue. And that's exactly how founders Jack Conte (a YouTube musician) and his college roommate Sam Yam founded Patreon in 2013. 

But, how does Patreon actually work, and how does it help creators make money online? 

What Is Patreon?

Patreon is a crowdfunding platform that enables fans (or patrons) to pay and support artists for their work. For producers of videos, webcomics, music, podcasts and more, Patreon is a way to earn extra money on what might otherwise be free content, and allows fans to contribute to their favorite artist's platform.

As a proverbial middleman for supporters to donate to creators, Patreon has become popular primarily through YouTubers and podcasts. 

According to the site, Patreon is "inviting [fans] to be part of something exciting that gives them unique benefits they want, like additional access, exclusivity, and engaging experiences," and allows donors to become members and provide financial donations to their favorite artists monthly.

"We want to fund the creative class," CEO and co-founder Jack Conte told The Verge in 2017. "Ten years from now, we want kids growing up and graduating college and high school to know that being a professional creator is possible."

According to the site, Patreon has over 100,000 creators earning salaries from over 2 million monthly supporters, and has earned creators over $350 million total.

The site also reports that they currently have 2 million members who donate an average of $12 per month per patron.

But, how does Patreon actually work? And how much do creators actually make? 

How Patreon Works

Patreon allows creators to earn income from devoted supporters - but how does this process actually work? 

Following recent changes in how YouTube pays creators - changes that now allow the site to demonetize videos for a variety of reasons - many accounts moved to Patreon to build a somewhat more consistent revenue stream. 

Patreon allows creators to set up monthly, subscription-style payment tiers, with different pledges for different levels of content or for various perks. For example, a patron could subscribe for $5 per month and receive early access to the creator's content.

The site allows creators to set up patron-only paid content as well (which is only visible to patrons and charges them to view the content). Additionally, other variations like patron-only unpaid content or public paid posts are also available.

Creators can also charge patrons up front instead of monthly. However, once chosen, the up-front option is permanent (you will not be able to change it back to subscription or per post). 

Patrons are able to join by creating an account and pledging money to their favorite creator, with subscription options sorted by different payment tiers or per-post options for content. 

Additionally, according to the site, Patreon tracks down declined payments, shields account users from chargebacks and tracks their patron history and value.

How Does Patreon Make Money?

But given that Patreon is a crowdfunding platform that generates income for creators, how does the site itself make money?

According to their site, Patreon takes 5% of the amount paid to creators in fees. Creators keep some 90% of their revenues, with an additional 5% going to transaction fees. 

Top Accounts on Patreon

According to Graphtreon in 2019, these are the top five accounts on Patreon that make the most money for the year: 

1. Global++

Although their revenues on Patreon were undisclosed in the report, Global++, creating PokeGo++ 2.0, had estimated earnings of between $66,000 to $791,000. The account has around 68,083 patrons monthly as of January 2018, up some 2,453.8% for the year. However, Global++'s patrons recently dipped for daily users, to sit at around 64,089 patrons. The account joined in March of 2017.  

2. The Together Team

Game-creator The Together Team is reportedly bringing in $32,455 from daily patrons, and some $17,328 per month - up a massive 655% from earlier in the year. 

The account boasts some 26,745 patrons, donating an average of $1.21 each. The Together Team joined Patreon in June 2017. 

3. Chapo Trap House

(In)famous left-leaning podcast Chapo Trap House reported earnings of about $117,926 a month - with an estimated $4.47 per patron. The account boasts some 26,409 patrons as of 2019, up 2.9%.

The podcast group joined in May 2016.

4. Brandon Stanton 

Creator of "Humans of New York" Brandon Stanton's account brings in an estimated $30,000 to $214,000 - although official numbers are not published. 

With 21,782 daily patrons, Stanton launched his Patreon in August 2018 - the most recent of the top five accounts. 

5. DarkCookie

The "NSFW" (not safe for work) adult-game account DarkCookie reportedly earns some $48,295 a month from patrons, with an average of $2.83 a patron. 

The account has around 17,076 patrons since joining in August 2016. 

Patreon and Minimum Wage

Recently, Patreon has attracted some criticism over the percentage of accounts on the site that actually make federal minimum wage.

According to an analysis by The Outline in 2017, only 2% of Patreon users make more than the federal minimum wage (during the time of the study, $1,160 a month in October 2017) via earnings data.

In fact, according to the data from Graphtreon, the vast majority of users made only between $1 to $100 per month. 

So, what is the average income for a Patreon account? 

Average Patreon Income

According to the site, Patreon claims several factors feed into how much a creator might make on the site, including "the size of your fanbase, the portion of your fanbase that's interested in your membership offering, and the attractiveness and value of your membership offering."

For example, the site offers different reward tiers that have different price tags and can be connected to different perks. For example, if a creator offered $2, $5, $10, $25, and $100 rewards tiers, the site claims the average patron would pay around $7 - and could potentially earn a creator with some 30,000 followers (with roughly 1% to 5% becoming patrons) a decent sum. The creator could "hope to earn $315 on the low end and $1,575 on the high end following the first promotion of their page."

Still, several reports claim the average patron donates $12 a month. So, depending on the percentage of the creator's subscribers who converted into paying patrons, monthly income could vary greatly.

But that still leaves the vast majority of creators on Patreon made between $1 to $100 a month, according to Graphtreon.

Patreon Controversies

Still, Patreon hasn't been spared from multiple controversies - especially regarding payment issues and how the company has dealt with the content users are posting.

Banned Users

Notably, Patreon received heavy criticism from some users and patrons in December of 2018 for banning popular controversial YouTuber Carl Benjamin, also known as Sargon of Akkad, among other accounts deemed to be part of conservative hate groups. 

The move by Patreon was part of a widespread movement in the tech space to ban extremist users from their sites, including the likes of PayPal (PYPL) , Twitter (TWTR) and Facebook (FB) . 

According to Business Insider, the purging of several accounts associated with hate groups caused several other creators on the site to stop using it. 

Former Breitbart editor and far-right activist Milo Yiannopoulos was also banned from the site, according to Vice News.  

Not limited to Patreon, the movement to ban users from tech or social media sites has incurred some backlash. 

In response to the ban, top Patreon user Sam Harris reportedly deleted his account on the site, citing political bias.

Payment Issues

Additionally, Patreon encountered issues after the site began denying patron's payments and even flagging some as fraudulent in July of 2018. 

According to The Verge, some patrons reported problems with their payments going through, and even some of them being flagged as fraud, seemingly due to "a combination of banking issues and changes to internal company operations," The Verge reported.

But the payment snafu wasn't the first time Patreon was in hot water over cash - the crowdfunding site also faced controversy following an announcement to tack on an additional patron fee of 2.9% for individual pledges in addition to a 35 cent fee. However, the company quickly reversed their position, saying there would no longer be a fee change.

The Bottom Line

Although the crowdfunding site has faced some bumps in the road, Patreon has helped thousands of online creators generate more consistent income through patron-based funding.

And while the majority of creators won't make hundreds of thousands of dollars a month, many are able to subsidize their income through the funding structure.