Page 42 - Forbes - USA (February 2018)

Technology CROWDFUNDING

than the cost of a basic subscription to Spotify or ators that the internet has largely eroded. PROTOTYPE

Netflix, which offers access to immense catalogs of Patreon’s artists-first ethos may be lucrative

video and music. (Some users pledge per piece.) for some, but it comes with pitfalls, especially in a
Dozens of artists make more than $30,000 per world where digital business models change fre-
month, including video reviewer Blind Wave and quently. “Creators need to diversify their incomes
a capella singer Peter Hollens, who made about as much as possible so the rug can’t be pulled out
$400,000 on the site last year. from under them,” says Laura Chernikoff , execu-
From the start, Patreon has taken a 5% cut of tive director of the Internet Creators Guild.
each pledge. That’s the same cut taken by Kick- For Conte the mission is personal. He grew

starter and Indiegogo but far less than revenue- up in bohemian-chic Marin County, just north
sharing programs on YouTube and Apple iTunes, of San Francisco, and was hooked on music from
which keep 45% and 30%, respectively. “Th e mis- age 6, when his father taught him the blues scale.
sion is to send as much money to creators as pos- While studying music and composition at Stan-
sible,” Conte says. The commissions generated an ford, he started making YouTube videos with his

estimated $8 million in revenue last year. then girlfriend, Nataly Knutsen, in 2007. (Th e THREE’S
Pledgers sign up for “tiers,” generally ranging two married in 2016.) In 2013 he drained his sav- COMPANY
from $1 to $10—though some pay much more— ings account, maxed out two credit cards and
You often have to
for access to the artists’ perks. Ukulele performer spent three months making an electronic music multitask. Why

Cynthia Lin, who offers fans live lessons, derives video, complete with robots and a replica of the shouldn’t your phone?
about half her income from Patreon and grew her Millennium Falcon cockpit. His fans loved the Researchers at
video, which got more than Dartmouth and two
Canadian schools—the
HOW TO PLAY IT BY JON D. MARKMAN a million YouTube views in Universities of Waterloo
its first year. However, Conte and Calgary—have built

Payment pioneer Square was born in 2009 when its co- a new three-in-one
pocketed just $54 from ad
founder couldn’t accept credit cards to sell his artwork. smartphone, with a trio
revenue over the video’s fi rst
Today you see its iconic card readers at hair salons, of screens nestled into
month. To date, it has generat- a single, 3-D-printed

neighborhood coffee shops and weekend art fairs. The
ed about $1,000. Not including case. The primary
compact white squares leverage the functionality of phone, with the largest
smartphones to bring fast, reliable credit card process- Conte’s time, it had cost more display, can monitor,
ing and inventory management to artisans and small businesses like the than $10,000 to make. “It was control app access and
ones also helped at Patreon. Now the company is betting on the little this rock-bottom moment for share the screen with
guy again, with Square Capital. It uses the company’s data to make in- two smaller peripheral
me as a creator,” Conte says.
stant loans to small businesses left behind by traditional banks. Square handsets. Powered
He knew he’d created some-
Cash, its new payment app, allows peer-to-peer money exchanges by a custom version
thing of value but would never of Google’s Android
without the need of a bank. Square shares rose 154% in 2017 and are up
30% so far in 2018. With sales growth averaging 77%, it’s still a buy. be paid for it. “Th at discrep- operating system, the
ancy led directly to the forma- unit is designed so a
Jon D. Markman is president of Markman Capital Insight. parent can, say, check
tion of Patreon,” he adds. work email while the
Conte discussed his idea kids watch YouTube
fan base from 400 to 1,400 in the past year. With with Yam, who programmed the site in months. It and mine Bitcoin. The
video “sketchbook tours” and chats, Chilean il- went live in May 2013, and within minutes more early version is ungainly,
but the developers
lustrator Fran Meneses pockets more than $4,000 than 100 fans were pledging upwards of $700 a are finessing its looks

per month, which supplements income from her month to support Conte’s work. Within months and functionality (for
diversions such as
Etsy shop and Instagram presence. Patreon had investors. multiplayer games). We
Creators join Patreon for free and don’t have to Conte is now eyeing a number of opportuni- all dislike sharing our
promise exclusivity. The site offers them instructions ties for growth. First is overseas expansion: Th e sacred devices, but this

on how to use it most effectively. It also provides a site is in English and takes only U.S. dollars, yet nascent contraption
points one possible

growing list of back-office tools such as analytics 40% of patrons are outside the U.S. Over time, way toward a more
and email management to help creators run mem- Conte imagines more immersive features, such as communitarian friends-
bership campaigns modeled on those of NPR sta- virtual reality concerts. Farther out are somewhat and-family smartphone
tions. For now, Patreon is designed for creators who fuzzy notions of turning Patreon into a provider future.
already have established followings but aren’t house- of small-business services, including ticketing and
hold names. Long term, Conte hopes to help fund merchandising, to help artists turn their passions
bigger names and prove that technology can help re- into professions. “Artists don’t have to starve any
store the financial underpinnings for content cre- more,” Conte says. PROTOTYPE BY KATHLEEN CHAYKOWSKI

FINAL THOUGHT
“I don’t believe in art. I believe in artists.” —MARCEL DUCHAMP
40 | FORBES FEBRUARY 28, 2018