Patreon CEO says the company's generous business model is not sustainable as it sees rapid growth

Key Points
  • “Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business,” said Patreon CEO Jack Conte.
  • Patreon will send content creators more than half a billion dollars to fund their membership businesses in 2019.
  • More than $1 billion will be paid out to creators since the company's inception in 2013.
  • There are more than 3 million patrons supporting more than 100,000 creators on Patreon.
Vasily Pindyurin | Getty Images

Crowd-funding service Patreon announced its latest benchmark Wednesday, with more than 3 million patrons supporting content creators each month through the company's platform.

Patreon allows illustrators, authors, podcasters, musicians and other independent creators to receive crowd funding directly from their audience.

The number of active patrons supporting artists on the platform in 2019 has seen significant growth, up 1 million over the last year, the company said. The company is also on track to pay out $500 million to content creators in 2019, pushing the company to surpass $1 billion in payouts since its inception in 2013.

Under the company's current business model, 90 percent of funds are paid directly to content creators. Patreon takes 5 percent, and the remaining 5 percent covers transaction fees.

Jack Conte, founder of Patreon

Patreon CEO Jack Conte said in an interview with CNBC that the platform will soon be facing the challenge of maintaining a profitable model as the company continues its growth.

"The reality is Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business," Conte said.

The company does not currently provide contracts, which allows users to retain 100 percent ownership of their work and full control of their brand.

The company plans to provide creators with new "value services," like options for merchandising, to generate new revenue. Creators will be given the opportunity to participate in these services, and it could ultimately reduce Patreon's generous 90 percent pay-out model.

Crowdfunding for starving artists
Crowdfunding for starving artists

"We will have to re-examine how we charge for new services as we put them out," Conte said.

Conte said with added revenue streams the company will continue to redefine the space of creative content creation and aggregation – currently dominated by YouTube, Spotify and other various subscription services.

He said the "feeling of support and connection with artists" along with the "transactional benefit of membership" encourages users to pay for content that they can otherwise receive for free.

Patreon is no stranger to the editorial controversies that plagued other big tech companies in 2018.

Top Patreon creator, author and podcaster Sam Harris deleted his Patreon account in December, and accused the company of political bias after several conservative accounts were removed for being associated with hate groups.

"We don't allow hate speech, which other platforms say they don't as well and Patreon really means it," Conte said. "You can't just say anything you want in the world and we don't want to build that platform."

The company also revised its content policy in 2017 to eliminate the site's use for the exchange of adult-themed photos, videos and content.

Conte said as the company grows it plans to build more enhancements, features and integrations to help every creator easily activate their membership business and focus on creating.

Susan Wojcicki, chief executive officer of YouTube Inc., introduces the company's new television subscription service at the YouTube Space LA venue in Los Angeles, California, U.S., on Tuesday, Feb. 28, 2017.
YouTube introduces paid subscriptions and merchandise selling in bid to help creators monetize the platform