Magical Couch of Truth Bombs - Episode 3 - Patreon

This week Kim & Adrian talk about Patreon, a startup valued at $450M who have beat the odds by convincing stingy consumers to pay for stuff 😮! 

Transcript:

- There's been a recent article in TechCrunch.

- Okay.

- Where Patreon has, so they're a platform that allows creators to make money. So, you create a page as an artist, as a musician, as a someone who's into video, whatever, and you can, or podcast actually, this is what Zach uses it for, and you can donate money towards it, or you can pay for the content. It's basically solving the problem where that creatives don't make money anymore, unless they are working for an agency or whatever, or they can't make money on their own. And they recently raised an undisclosed, probably very big amount, at a $450 mil val.

- Wow.

- You're a musician--

- Yeah.

- So. What's been your experience making money, or trying to make money in that industry?

- It's really hard, yeah, like, I probably wouldn't be doing startups if it was really easy.

- It's crazy how big a band you can be, and still need to work a job. In the music industry, there's so many cuts taken, you have a manager, you have a booking agent, there's legal, there's like tour, that your tour managers and stuff like that, like there's a lot of mouths to feed, and then after all of those costs across the top, down the bottom what's left, if you're a band, you then got four or five people to split that revenue with. So to get to a point where you're even earning a $40 or $50 grand salary each in the band, is an enormous amount of revenue that, you have to be a band that kind of, everyone has heard of before. I was running a programme last night, and I asked the group, how many of you are paying $11.99 for Spotify Premium? Only half, so only half of the people were prepared to spend $12 bucks a month for unlimited music from all the labels, and all the independent, like amazing user experience, unlimited, and it's still only half? So, the value in music to the consumer's completely gone. The concept of a musician getting, like, subscription revenue, and actually scaling up revenue and sort pushing their audience, like if you like me that much, then give me fucking $2 dollars a month. If you really dig me, then support me?

- Yeah.

- And then you give them some exclusive value or content in exchange, that I think is epic, I reckon it's really, really cool.

- You know we've got lots of creatives in our team, and musicians and creatives, and I think people empathise with that problem. Do you feel like they've got a long battle ahead, in terms of changing perspective of stingy customers that aren't willing to pay?

- What I like about Patreon is that the music, bands are very much like startups in the sense that the ones that work the best now, and this will have longevity forever, so that I don't think music will, it can't die. And good music won't die, but it's more and more as we understand the value of brand, and cults, like a great startup is a cult. A great startup institution is a cult, and a great band or artist or creative in any way, creates a cult around them. So, no one ever struggles to get money from, when you build a cult audience, you never struggle to get money from them. Of course, it's going to be hard to change behaviour, but I think the behavior's already happening, and those customers already buying from that cult, but there's limited purchase capability, right? It's like, buy our t-shirt, overpriced t-shirt for $45 dollars, come to our show for $25 dollars, when we're in town, which is fucking hardly ever.

- So there's very few monetization options, as we know subscription revenue for startups is the strongest business model, so I think it's really cool.

- Zach pays $2 dollars a month to get access to this podcast, $2 bucks a month, he gets access to a podcast, I can't remember the name.

- Of shitty ideas?

- Yeah, it's just two guys talking about really shitty ideas.

- That's how Zach comes out with all those really great ideas.

- I don't know if they're great.

- They're not great.