Time to get paid: Patreon CEO says creators have 'incredible leverage' now that they haven't had in many years

Even in a post-pandemic world, celebrities with millions of fans — as well as those with just a few hundred fans — are turning to platforms where they can control their relationships, data and the content they create. Patreon, which has amassed a $4 billion valuation in just eight years, is a platform for doing just that.

“This is such a great time to be a creative person,” co-founder and CEO Jack Conte said in an appearance on CNBC’s “Closing Bell” on Wednesday. “Creators have incredible leverage now that they haven’t had for many years because these platforms were so focused on driving content production instead of getting creators paid.”

The company, ranked No. 48 on this year’s CNBC Disruptor 50 list, allows illustrators, authors, podcasters, musicians and other independent creators to receive crowdfunding directly from their audience.

“I think now people are starting to realize ‘oh, these are real businesses and creators ought to be making money like everyone else’,” Conte said. “We’re hyper-focused on providing the business infrastructure to allow creators to be successful in growing and running their businesses.”

While social media influencers like Instagram and YouTube stars can receive big bucks, for the vast majority of creators, a new model was needed to connect directly with a paying audience. Platforms like Patreon free idea makers from reliance on the internet’s trillion-dollar gatekeepers like YouTube parent Alphabet and Instagram parent Facebook, which keep most of the advertising-generated revenue.

“A lot of the distribution platforms are starting to wake up to this and see that creators have a lot of earnings potential,” Conte said. “All the distribution platforms — whether it’s Spotify or YouTube or Twitter or Facebook — they’re all creating ways for creators to earn subscription revenue from their fans.”

Twitter made a recent decision to begin experimenting with a “Tip Jar” for individual accounts.

Patreon was, in fact, founded by former YouTube creators. The company is part of a wider trend influencing many creative endeavors, including journalism, where Substack has emerged as a way for journalists to be rewarded for their work through subscriptions and leave behind bigger media organizations. Clubhouse and Discord, two internet communications platforms that made the 2021 CNBC Disruptor 50 list, provide new ways for people to share ideas, and discover and engage with new audiences.

“Now I think the shift we’re starting to see is these platforms realizing that creators needing to get paid to,” Conte said. “Ultimately, our competitive advantage is that we’re the most creator-first company on the planet.”

Under its business model, Patreon creators receive the majority of revenue from their content while Patreon takes a 5% cut of monthly income and a fee for transactions. It also has Pro and Premium tiers with more support for businesses on the platform, but higher fees (8% and 12%, respectively).

Last month the company raised $155 million in the fresh round led by new investor Tiger Global Management, with participation from Woodline Partners and previous investors Wellington Management, Lone Pine Capital, New Enterprise Associates, Glade Brook Capital, and DFJ Growth.

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