There's a rising "creative middle class" -- Patreon raises $15M to make sure those artists get paid
Jack Conte, singer of the band Pomplamoose, just got his monthly check from YouTube, and it's nothing to write home about. His band's videos were viewed 3.5 million times last month, but all he and bandmate Nataly Dawn have to show for it is $149.
We've heard this story so many times before that it's no longer shocking. But instead of writing yet another angry blog post about how technology is ruining music, Conte decided to do something real about it.
A little over a year ago, Conte started a platform called Patreon which allows musicians, writers, cartoonists, and other creators to solicit donations for their work. What differentiates it from Kickstarter or other traditional crowdfunding sites is that users essentially "subscribe" to their favorite creators, paying as little as $1 per month or per work.
When I first spoke to Conte about the service, I was intrigued but skeptical. It's hard enough to convince users to pay monthly fees for services like Spotify, which offer millions of songs, let alone individual subscriptions to artists.
But here's the crazy thing about Patreon: It actually works, and Conte has the metrics to prove it. I'm not the only one paying attention: Today, Patreon announced a $15 million Series A round from a murderer's row of VC firms and angels, including Index Ventures, Charles River Ventures, SV Angel*, Reddit cofounder Alexis Ohanian, and ex-PayPal President David Marcus.
Patreon's revenue has grown tenfold over the past ten months, and it signs up 180 new creators every day. Since launching in May 2013, it's sent over $2 million to the 25,000 creators using the service, and $1 million of that came in the last 2 months. Sure, that's only $80 per creator, but like in any creative field there are winners and losers. "One of our most successful web comic writers has 150,000 daily readers, making $8,000 a month," Conte says.
Conte himself is living proof that Patreon works: Back to that YouTube check: While the platform's ads only netted the band $149, he tells me Pomplamoose makes "$5,000 per thing" it releases on Patreon.
Of course, Pomplamoose was already a popular band before Conte launched the platform, so the fact that they're doing well isn't so surprising. But Patreon isn't just a way for already-established bands to earn their keep.
"You have this emerging creative class right now," Conte says. We're moving out of the dichotomy of 'rich and famous' and 'starving artists.' It still exists but there's this whole new middle class -- sustainable, successful, small business artists."
The big question I returned to, and one that was asked by almost every investor Conte spoke to, was how big is the market for people who still pay for music? Even as Spotify continues to grow, its percentage of paid users has remained steady at only 25 percent. Sure, Patreon has seen massive growth now, but what about all those people (especially youngsters) for whom paying for media is as foreign and outdated as the 8-Track?
In the new media economy, there are more creators than ever and more availability of free content, meaning there's inevitably less money to go around. But if Conte is right, and his site's promising early metrics bear out, then at the very least the distribution of that cash will be much more equitable, leading to that "creative middle class" he talks about.
Here's how we size the market. YouTube's population size is one billion uniques a month. If we were to saturate that market alone and no other market, we look at the number of creators that we have, then the number of creators that are on YouTube, then we look at what the overall conversation rate between subscribers that they have and the number of patrons they have. And we know how much they are paying on average -- $9 per month, or $7 per thing. If we saturate the YouTube market, it's a big number. Big enough for investors to be interested.
Starting a band or a blog will always be a high-risk endeavor, as it should be -- not everyone is cut out to make it in these businesses. But if nothing else, Patreon's model will give artists the opportunity to make a decent living even if they aren't one of the tiny, tiny percentage of creators who are lucky and savvy enough to become the next Lady Gaga.
(*Disclosure: SV Angel and Stan Chudnovsky are investors in both Patreon and Pando.)
[illustration by Hallie Bateman]