The Subscription Model of Crowdfunding

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CMF | Antoine van Eetvelde  | June 16, 2014

CMF Canada Media FundA significant development in the evolution of crowdfunding during the past year has been the advent of subscription-based platforms. Positioned as new ways to help fans and enthusiasts support and engage with the creators they already support, the subscription model of crowdfunding may be a means of increasing the sustainability of crowdfunding and/or of freeing many content creators from relying on revenue from advertising.

What follow is a closer examination of this emerging model of crowdfunding : The Subscription Model of Crowdfunding

There are two leading examples of subscription-based crowdfunding: Patreon and Subbable. Launched in May 2013, Patreon “lets fans support their favorite creators by becoming patrons. Unlike other fundraising services, which raise for a single event or project and for a limited time campaign, Patreon is for creators who create a stream of smaller works.” Similarly, Subbable is “a subscription service that allows audiences to connect with and fund the creators they love in a sustained, ongoing way.”

The key differentiator from sites such as Indiegogo and Kickstarter is how these platforms reflect the needs of creators making content on an ongoing basis, as opposed to one-off projects. For these creators, there is a need for sustainable and reliable income (vs. one big project that requires a lot of funding) as well as a need to connect with fans and communities in a meaningful, enduring way.

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How does the subscription model work?

While it may vary from site to site, on the whole the subscription model functions as follows.

The creator, that is to say musician, YouTuber, web comic, writer, blogger, independent gamer, video producer, author, podcaster, animator, artist and/or photographer – really anyone creating content on a regular basis, creates a project page to showcase their work and begin to promote the page to their fans.

Patrons or subscribers can visit the project page and choose to pledge towards a creator’s work. The pledge, or per content release fee, is the amount the patron or subscriber commits to contributing per new piece of content issued (e.g. new music video, webisode, recipe, blog post etc.). This pledge can be capped monthly. The platform takes a fee of every exchange (Patreon’s is approximately 8%).

As a patron or subscriber, you may enjoy certain privileges such as the ability to post questions and comments to a creator’s page. Creators may choose to reward their patrons and subscribers with perks such as limited edition content, tutorials and the chance to interact with the creators themselves in a Google Hangout for example.

A creator’s page serves to introduce the content they are creating and may also show the number of patrons they have secured and either what they earn per content release or per month.

Key Terms

  • Creator: Musicians, YouTubers, web comics, writers, bloggers, independent gamers, video producers, authors, podcasters, animators, artists and photographers – anyone creating content on a regular basis.
  • Patron / Subscriber: Loyal fans, friends and family who want to sign up and commit to pledging a small fee (e.g. $1) for every new piece of content released
  • Pledge / Per content release fee: The amount the patron or subscriber commits to contributing per new piece of content issues (e.g. new music video, webisode or blog post), and which can be capped monthly.
  • Perks: The rewards creators may offer patrons or subscribers who pledge a certain amount of money per month.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place. Join our growing network of industry stakeholders, fundraisers and investors. Increase your organization’s profile and gain access to a dynamic group of industry front runners. Learn more About Us or contact us at casano@ncfacanada.org.

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