Patreon addresses EU VAT headache and acquires Subbable
A couple of positive items of news for Patreon this week as the crowdfunding platform - which allows fans of creators of all kinds to become their patrons by pledging a specific amount per piece/month - has announced the acquisition of competitor Subbable and addressed the concerns caused by the complex tax arrangements now necessary for revenues generated from the EU.
Patreon founder and CEO Jack Conte announced in an email to creators and patrons that his company and Subbable were joining forces. Although Subbable launched before Patreon, it only has 24 creators on board at the moment (they will all join Patreon).
This stark difference in numbers is a testament to the momentum Conte created around Patreon, with over 10,000 active creators and over $2 million paid out every month.
Even though Subbable has a small number of creators, the company had a much stricter vetting process and in fact the 24 creators that were on the site have generated over a billion views in aggregate (MinuteEarth alone for example has over one million subscribers on YouTube).
Subbable was facing a particularly difficult stumbling block due to Amazon’s decision to discontinue its Flexible Payment System, which would have required all existing supporters of the creators currently on the site to actively re-authorise their subscription using the “Login and Pay with Amazon” system. This would have likely led to a steep drop in contributions, which is why the company decided that joining forces with Patreon made sense.
Last Friday Patreon also announced that it would now handle the collection, filing and remittance of VAT payments on behalf of its creators. The company specified that the cost of VAT will be carried by EU patrons.
The EU’s new regulations mean that anyone selling digital content in Europe will have to file a tax return in the country where the end user is based. Initially it looked like Patreon would have left creators to their own devices - making it extremely hard for them to stick by the new regulations without hiring an accountant.
This created quite a bit of backlash from creators - especially as indie-friendly platform Bandcamp had announced that it would take care of this issue even before the new regulation kicked in at the end of December - so it is good to see Patreon invest in the technology required to make this happen.
Although Patreon is not intended to replace campaign-based approaches like that of Kickstarter, it will be interesting to see whether content creators will start to see the pay-per-month or creation model as a more viable/sustainable alternative in the coming months.