In 2009, David Pakman started “The David Pakman Show” on YouTube to talk progressive politics. Over the years, his audience grew, as did his earnings. Today he has about 365,000 followers who watch enough ads to fund his show.
At least, they did. But when YouTube started expanding protections for advertisers to keep their ads from showing up alongside controversial content, the money dried up. By the end of March, Pakman says he saw a 96 percent drop in ad revenue compared to what he was making on average during the six previous months. About a month later, things bounced back, but not by much—nowadays, Pakman makes just a little more than one-third of what he used to on his channel. (“If you’re seeing fluctuations in your revenue over the next few weeks, it may be because we’re fine tuning our ads systems to address these concerns,” a YouTube community manager post from March says. The post also gives YouTubers instructions on how to submit an appeal to YouTube if they think their videos lost ad revenue by mistake.)
But there could be another way. When Pakman saw his first big drop in revenue, he set up a crowdfunding page on Patreon, which let his fans pledge a small monthly fee to support the show. Pakman said this added revenue stream helped cover the costs of paying his small staff and kept the show afloat when YouTube’s ad revenue dried up.
He’s not the only one to find a lifeline thanks to this newfangled way of supporting one of the world’s oldest business models—people paying you directly for the work that you do. This week, Patreon announced that, since launching in 2013, 1 million fans have signed on to pay internet “creators” like Pakman every month to keep on producing stuff online. That’s double the 500,000 active patrons the platform said it had last year. Patreon says it’s also doubled the number of creators on the site in the past year to 50,000. Together, they stand to make $150 million in 2017—a pretty sharp feat considering Patreon earlier this year said it had paid a total of $100 million since it was founded.
Finding new ways for enterprising creative types to make money online is great. But where Patreon and the YouTube ad debacle meet, a more existential question simmers: What’s the best way to foster a better web? Maybe fishing for more clicks and more eyeballs watching more ads isn’t the way. Patreon’s CEO doesn’t think so.
“There’s a difference between what people will consume and what they will pay for,” says Jack Conte, who co-founded the site as a way to support his own music videos on YouTube. “People consume incendiary content like candy. They’ll click on that shit all day, honestly. But will they pay ten dollars for it? Nah. People won’t open their wallets for that fleeting, emotional burst.”
In other words, the incentive structure of the free web might encourage one type of content that differs dramatically from the kind incentivized by the paid web. The former rewards volume of attention while the latter depends on depth of interest and engagement. Which makes for a compelling proposition: Maybe subscriptions aren’t just a way for YouTubers and other content creators to make money—maybe it’s a way to improve the quality of the web.
Disappearing Ad Revenue
On YouTube, many creators are scurrying to figure out how to cope with ad revenue drying up, especially if their work delves into riskier subject matter. People who make easily categorizable, wholesome content for YouTube—woodworking, educational videos, and beauty, for example—have seen their earnings rebound to normal levels, according to Hank Green, a popular YouTuber and advisor to the Internet Creators Guild, which has been tracking the fluctuations in YouTube ad revenue. But video makers who deal in more potentially controversial areas, like gaming, sex, and politics, haven’t seen the same recovery. And that, Green says, hits smaller creators the hardest. “As you grow, revenue streams diversify,” Green says. “So smaller creators are more at risk, and smaller creators who make certain kinds of content have been hit very hard.”
All of which Conte says argues for a business model built around subscribers or patrons. The ad-supported web, he says, involves the four parties, each with their own interests: creators, fans, advertisers, and platforms. Paring that equation down to three variables by cutting advertisers out of the mix makes creators’ jobs simpler, aligning the interests of fans and creators more directly.
“You don’t have to deal with any of those restrictions or guidelines that brands might place on what they consider ‘advertising-friendly content,’” Conte says. When creators don’t have that worry, they can focus on the work itself instead of whether or not the stuff they make is monetizable in the eyes of ad buyers.
Still, fans are used to getting things for free online (or “free,” considering they typically pay in the form of watching ads and often by allowing platforms to gather and share data on their habits and preferences). But Green believes attitudes are changing. For one, as much as audiences don’t like paying for things, they also don’t like internet advertising. “It’s ignored, it’s blocked, people don’t like it,” he says. Younger users without disposable incomes—high school and college students in particular, may put up with the lousiness of those ads. But people in their 20s and 30s, as they become more financially stable, have the potential to fund a revitalization of subscription content, Green says. “That’s true everywhere from The New York Times to Patreon.”
Patreon doesn’t solve every problem. But it’s well positioned to help boost better content online because it rewards creators’ ability to stir passion and interest among their audiences. Subscriptions aren’t the best business model for everyone—creators still have to do the work to get enough people to reach into their wallets. But once they do, they certainly can help. Pakman says that between his current YouTube ad revenue and his Patreon subscribers, he won’t have to shut down his channel, though his expansion plans are on hold. What’s more, he says he wouldn’t likely switch over to an all-subscription model. Making his videos and podcasts free, he says, is the easiest way to spread the word. But once people find out and do convert to subscriptions, they offer a way for creators to diversify. Instead of having to depend on the whims of advertisers, subscriptions give them a way to depend on themselves.
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