Forum > General discussion > Patreon lost: maybe look for alternatives
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"Patreon lost: maybe look for alternatives", 13 days ago, 9:58 PM #1
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I'm not sure anyone here has been following it, but 100+ people filled separate lawsuits against Patreon (as per their own TOS, you cannot file as a group/class action lawsuits), as previous patrons of a comedian, Owen Benjamin, who was banned from the platform for activity off site.

These lawsuits were moved to arbitration, Patreon attempted to sue the patrons and file an injunction, judge denied the injunction, ruled under California law that the company must pay the fees up front per arbitration..
Per lawsuit in arbitration, those fees may be upwards of $10,000. $10,000 x 100+
Those fees will increase if Patreon drags their feet on paying them.

Why does this matter to you? Why should it matter?
This current affair may send Patreon under. Those fees will multiply if they don't pay them, and they've already lost arbitration once.

This opens the door to supporters of other creators banned from using the Patreon platform to sue them under the same circumstances.



I think it would be a good idea if you have any money on the platform, to transfer it post-haste.
Even though they won't immediately go under, I would prefer people have their money as a safety precaution.

If anyone has any alternatives to Patreon, please post them!
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13 days ago, 10:42 PM #2
Kyo
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where did you hear about this? You had me kinda scared, but I googled it and the only thing that i could find about this is this article, and that doesn't say anything about them losing. other than that it was just like random people and youtube
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13 days ago, 10:50 PM #3
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Yeah I'm just hearing about this today, too.
Some people were covering it on Twitter- I'll see if I can dig up a link, Kyo!

Subscribe Star seems to be another platform similar to Patreon, it's the only other one I'm aware of off the top of my head. They also have a lot less content restrictions than Patreon, it seems from a cursory glance.

---

IMO Patreon needs to get their butts kicked over this. Them sneakily changing their ToS the way they did to make it so people couldn't bring forward lawsuits against them when they decide to arbitrarily pull the plug on creators was such a scummy move.

Though sometimes I gotta wonder- how much of their foolery in recent times has been pressure from payment processors and how much of it was decided by Patreon?
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13 days ago, 11:02 PM #4
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Here is the PDF from the San Francisco County Superior Court of the order denying the injunction (if the link doesn't work, use the link for the register of actions, you want "ORDER DENYING PRELIMINARY INJUNCTION" on 2020-07-29)

As for youtubers, there's a handful of lawyers that have explained the lawsuit, including the process and procedures.
The titles and thumbnails are clickbaity as fuck, but they are made by people who actually practice law professionally.


Here is the San Francisco Superior Court register of actions:
Case Number: CGC20584586
Title: PATREON, INC. VS. PAUL MICHAEL AYURE ET AL
Cause of Action: OTHER NON EXEMPT COMPLAINTS (VERIFIED COMPLAINT FOR DECLARATORY JUDGMENT)
Generated: 2020-07-30 3:57 pm
Keep in mind there are 10 pages of actions and documents relating to this case.

edit: Viva Frei mixes up Owen Benjamin and Sargon of Akkad, he admits that in the comments lmfao
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13 days ago, 11:23 PM #5
Owens a terrible person imo but Patreon is clearly biased as well and bans people who havenโ€™t crossed serious lines at times. Itโ€™s fine to curate your site based on your companies values and keeping people physically and mentally safe, but being picky choosey and changing their TOS is shady and shows theyโ€™re not being fair. Who knows if this will bring them down though, I doubt it. But if youโ€™re not a fan of them anymore I recommend Ko-Fi
13 days ago, 11:25 PM #6
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Darn it... right now when I decided to support CF on Pat.
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13 days ago, 11:31 PM #7
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Shekets:
Rekieta goes through the court documents previous to this injunction denial and explains the process a bit


Some of the comments on that Rikieta video had me in stitches.

Patreon should start a Patreon to cover their legal fees.


Patreon about to open a GoFundMe. then, when that fails, an Onlyfans


lolololol I'm dyin'
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13 days ago, 11:38 PM #8
From what Iโ€™ve read they lost the injunction but not the case. And a lot of alt right news sources are celebrating early. I donโ€™t see this going all the way through honestly. Not defending any side just saying.

E: It's unlikely this will lead to serious consequences for Patreon imo. Not a lawyer, but I'd put my money on it. Whether that's just or not, I'm not asserting.
12 days ago, 12:01 AM #9
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I don't expect anyone here to parse through the entire register of actions, so the basic things you need to understand here are, in layman's terms:

-Patreon has been banning and censoring users' content on and off their platform, this includes right wing users, conservative users, comedians and NSFW/hentai artists
-They changed their TOS so they could do this
-Then they changed their TOS so you couldn't file class action lawsuits against them if you got banned from their platform
-100+ patrons of Owen Benjamin filed separate lawsuits, since they can't file a class action or as a group, they filed for arbitration
-Arbitration is less formal than a court trial and is decided by an arbitrator instead of a judge
-Arbitration is then enforced by the court
-Arbitration can determine which party will pay for attorneys' fees
-The arbitrator also has to be paid
-The arbitrator listens to evidence presented by each party and then makes the decision, which is called an "award"
-In California state law, if one party requests a trial, but they may not receive a judgement more favorable or better than what the arbitrator decided in their award, and the party that requested the trial will have to cover the additional costs and fees for that trial, in addition to what the arbitrator's award determined.
-Arbitration has some strict deadlines in terms of the span of time in which you can file, pay for fees, etc. and if a party fails to meet those deadlines/pay those fees, those fees increase.
-Arbitration must be dealt with case-by-case
-If a party defaults on arbitration, they waive their right to arbitration, but must pay more fees
-In California law, these fees for arbitration have to be paid in advance
-Patreon petitioned the courts to not allow these lawsuits to peruse in arbitration and instead to peruse those claims in-court
-Patreon did not pay those fees on time
-Patreon did a giant boo-boo by altering their TOS after these claims were filed, and did not disclose that, so they are proceeding under Patreon's old terms of service, in an attempt to avoid being held liable for these arbitration fees
-Patreon argues that they can alter their TOS, and that it should apply to current litigation
-Judges and arbitrators tend to REALLY dislike this
-Patreon files for an injunction to stop the arbitration
-Judge denies injunction
-Arbitration can proceed
-Patreon has to pay all the current fees + additional fees from continued arbitration

TL;DR: Patreon attempted to make all these arbitration claims move to court, the judge denied that injunction. Patreon must proceed with each claim individually.
Patreon shot themselves in the foot by making it so you can't file claims against them as a group, and now are going to pay quite a bit.
The next step is likely that Patreon will file to have each of these claims dismissed.

So they may have not lost the case, but they are looking at a lot of legal costs that could bankrupt them.


This opens the door for other people to file similar claims.

Merged Doublepost:

jampack:

Perhaps not, but given that so many people are unaware of what's going on, I do think it's a good idea for people to look into other alternatives as well as take their money out of the platform.
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12 days ago, 12:30 AM #10
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I think you are vastly overestimating the legal costs. The whole reason companies are pushing arbitration over courts in their TOSes is that it's cheaper for them, and has a tendency to side with businesses over consumers. And I'm not entirely sure what the people are suing Patreon over - their claims seem minor at best, and abuse of legal process at worst, from what I was able to read of your linked case documents. I highly doubt Patreon will have to pay them ten grand apiece - and even if they did, $1,000,000 is not going to sink Patreon. From what I can parse, they may have to put that much money into escrow in case they lose, but I honestly don't see any of them getting more than a few hundred bucks at most, and quite possibly nothing. Patreon losing the injunction simply means they have to actually resolve those cases - literally every corporate lawsuit I've seen includes the defendant filing some motion to quash the entire trial as pointless, and as often as not it's paired with the litigant filing some motion to go straight to a verdict because they're obviously guilty. It costs basically nothing, a couple hours of lawyer time, and even if unlikely to work, that's a good tradeoff. So "but they lost the injunction!" has about as much meaning as "they lost the coin toss!" has on the outcome of a football game.

But that's just my amateur legal sleuthing. The thing that really makes me doubt this is the pattern - I've seen it before. Someone starts a rumor that a big company is going to be bankrupted by legal fees in a minor case, and then people with a vested interest in damaging that company amplify the message, hoping that scaring away customers will hurt them, even if the actual lawsuit doesn't. And they can always find lawyers, or people who can convincingly pose as such, to make their bullshit seem serious.

Now, all that last paragraph does not mean that you're automatically wrong about this one. But it does mean I have a legitimate reason to set a high bar to be convinced this is actually an existential threat to Patreon. And the evidence you have provided simply reinforced my prima facie expectation - that this was some small-claims-court-type trivial cases, being inflated far beyond their actual importance by people with a personal interest in driving business away from Patreon.

Should people cash out their money? Yeah, if that's not too big a hassle, it makes sense to minimize exposure to risk, even if I think that risk is tiny. And it's always good to look into alternatives, just so you can find out if there's something better. But I would not even make a casual bet that Patreon is going away because of this.

(Edit: man that was weird. Post disappeared, except not really? It showed up if I previewed another post but not in the actual thread, but did show up on the index and it merged when I tried to post it again. Removed the duplicate because even I don't want to read my posts twice.)
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12 days ago, 1:05 AM #11
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The thread is glitching out on my end LOL

It's important to understand their business model takes 10% of payments, but they only receive 5%, whereas the other 5% goes to the payment processor (Paypal).

Just because a company may be worth a couple million dollars doesn't mean they have that money in the bank.

They recently started the Patreon merchandise program. The initial investments for the equipment and raw material involved for the merchandise manufacturing alone are pretty costly, and instead they purchased KIT.
Patreon did not disclose how much they acquired KIT for, however KIT did have a $15 million value in gross merchandise value alone.

Patreon CEO says the company's generous business model is not sustainable as it sees rapid growth
Part of the reason why Patreon acquired KIT was to increase the percentage earned from subscriptions, although a large majority of those costs will go into manufacturing and raw material.
I cannot find any data or information about their earnings from the merchandise program or their acquisition of KIT, nor how many creators actually use or produce merchandise using the service.
I can, however, see the costs of these products, and the overall costs vs profit margins for creators aren't particularly great compared to other print on demand services such as RedBubble, Spreadshirt, etc. It does include global shipping, however the production costs are a bit much.


If Patreon has so much money, why didn't they pay the arbitration fees upfront, like they are required to by California state law, instead of dragging their feet and filing a motion for injunction to cease the arbitration? They had more than enough time to do so and more than enough time to avoid an increase in fees.
Granted, we are talking about 72 separate arbitrations, and must be dealt with case-by-case.
edit: My point in mentioning this is that overall, it may have significantly been less costly for them to just go through arbitration, pay the fees and the award. If the injunction had gone through, would've been significantly less costly, but they proceeded knowing their TOS changes would not be favorable for them.
I don't know how much money Patreon has in their pockets, but it is a bit odd when other multi-million dollar companies will simply chose to settle or pay arbitration.

We must also keep in mind that they did extend the time for defendants to respond to Patreon's complaint until September 25th.

Again, keep an eye on this one.

Merged Doublepost:

GMan003:(Edit: man that was weird. Post disappeared, except not really? It showed up if I previewed another post but not in the actual thread, but did show up on the index and it merged when I tried to post it again. Removed the duplicate because even I don't want to read my posts twice.)


Yeah, I don't know what's happening on the site end. At one point the site completely crashed on me for about 10 minutes.
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12 days ago, 1:12 AM #12
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Always a good rule of thumb to have backup strategies anyway, regardless of how this pans out.


Personally, I think they have the money but it's a stubborn pride thing.
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12 days ago, 1:13 AM #13
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Shekets:If Patreon has so much money, why didn't they pay the arbitration fees upfront, like they are required to by California state law, instead of dragging their feet and filing a motion for injunction to cease the arbitration? They had more than enough time to do so and more than enough time to avoid an increase in fees.


Patreon is claiming that these are frivolous lawsuits - not intending to actually win, but simply to cost them money in legal fees. Look at the very earliest document in that list you linked. California actually has pretty strong laws against malicious lawsuits like that, I'm actually a bit surprised the injunction failed - but the SLAPP laws were written mainly to protect little guys from big guys, not big guys from a bunch of little guys, so that might have something to do with it. Or maybe it doesn't apply in cases of arbitration, or a million other potential reasons. As much as I play one on the internet (this is the third legal debate I've been in today), I don't actually know everything.

But I do know that "Patreon is doomed!" doesn't pass the sniff test. I still can't even figure out what they're being sued over, specifically. Arbitration is strictly for civil cases, contractual disputes - the only thing that makes sense is if Patreon is holding onto money that patrons had given them to be given to someone they've banned, and no way is that amount of money enough to sink them, even with damages, from just a hundred people.
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12 days ago, 1:33 AM #14
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GMan003:I still can't even figure out what they're being sued over, specifically. Arbitration is strictly for civil cases, contractual disputes - the only thing that makes sense is if Patreon is holding onto money that patrons had given them to be given to someone they've banned, and no way is that amount of money enough to sink them, even with damages, from just a hundred people.


Tortious interference with a business relationship-in this case interfering with the business relationship between a creator and their patrons. In these circumstances, that monthly support is seen as a contractual agreement between the creator and their patrons.

If only this would also be applied to someone like, say, Yandere Dev. (Hahaha)

But I do know that "Patreon is doomed!" doesn't pass the sniff test.

I'm not sure about that one--changing your TOS on the fly like they did does not look good to the public, to general users and especially not to the legal system.
Patreon's TOS:You may not bring a claim against us for suspending or terminating another personโ€™s account, and you agree you will not bring such a claim. If you try to bring such a claim, you are responsible for the damages caused, including attorneys fees and costs.
That is not how arbitration works in California, and Patreon attempted to shoehorn this in to avoid paying these fees after the arbitrations were filed.

May we be reminded of when TAPAS changed their TOS and then had to revert it back after they faced major outcry from their userbase.

edit: I would also like to note that my stance on this isn't one of celebration. I'll continue to use the platform until presented with better alternatives with better TOS, and support the people I'm already subscribed to on-site.

My point is that the issue isn't well-known and may have lasting effects on small creators, many of which are users on this site. I don't want people to get cut off and having those alternatives available is extremely important.
Maybe Patreon will further increase their cuts from transactions, maybe they'll look at accounts with more scrutiny in the future. Maybe they'll tighten their TOS. Who knows?

Like I said:
I think it would be a good idea if you have any money on the platform, to transfer it post-haste.
Even though they won't immediately go under, I would prefer people have their money as a safety precaution.

Mentioning it now gives people time to look into alternatives.

edit edit:
GMan003:California actually has pretty strong laws against malicious lawsuits like that, I'm actually a bit surprised the injunction failed - but the SLAPP laws were written mainly to protect little guys from big guys, not big guys from a bunch of little guys, so that might have something to do with it. Or maybe it doesn't apply in cases of arbitration, or a million other potential reasons.

Looking further into it, the judge explains exactly why the injunction was dismissed.
1. Patreon failed to show they will suffer any irreparable injury or interim harm if the injunction does not issue (i.e. frivolous lawsuits).

2. Patreon claims that the issues brought forth in the claims are not arbitrable, which is not for a judge to decide. That is strictly for the arbitrator to decide, as that is the arbitrator's jurisdiction.

3. California courts rarely grant the relief that Patreon is requesting (injunction that would interfere with arbitration), as arbitration is meant to be handled without courts, but Patreon is, instead, attempting to take it to court when, again, this is within the jurisdiction of the arbitrator and not the court. Patreon is requesting the review of JAMS, but the court does not have the authority to review the administrative decisions within JAMS' orders.
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12 days ago, 2:42 AM #15
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I know plenty of alternatives. Someone already mention Subscribestar so I won't list it here.

For weekly/monthly donations only and no rewards:

Liberapay and Flattr

Has paywalling feature like Patreon:

BuyMeACoffee.com , Tipeee, Gumroad, Sther and Payhip(requires Paypal/Stripe business account)
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12 days ago, 3:10 AM #16
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Never heard of some of these that you listed.

Trying to look at their TOS/legal stuff and Liberapay's so far is straight forward and to the point, although they are subject to French law and EU law. They also process payments through Stripe and Paypal. Seems to be good for staying anonymous. Maybe be more favorable for European users.

Sther is more socially curated towards minority creators. Parsing through their TOS, it may not be for some creators who handle objectionable or heavy content in their creations. Was started by an Asian woman previously banned from Patreon. Their transaction costs per credit/debit card transaction are 2.9% + $0.30, but they do take crypto.

Need to do more research into this, but will personally consider Gumroad since they also work as a shopfront.

Thank you for recommending these, Sinister!
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12 days ago, 7:32 AM #17
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Hoo boy, Patreon and sketchy behaviour are certainly not a new pair.

I can second Gumroad and Subscribe Star, I've seen lots of people of all sorts use the former, and folks that are spurned by Patreon tend to head to the latter.

Another alternative I haven't seen mentioned is Ko-fi. I see it used quite often on Tumblr. It can be used for both one-off and monthly donations.
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12 days ago, 8:24 AM #18
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looks like they won against the owen lawsuit, BUT patreon LOST against the counter sue. still has to pay the huge filing arbitration fees because the judge stated their TOS were BS.

twitter feed that tracked the whole case
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12 days ago, 10:00 AM #19
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Typical. I start a patreon and then this happens! I always seem to get on the ship when it`s about to hit the iceburg!

I do have KOFI as an alternative, fortunately. :) I`ve learned!
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12 days ago, 10:39 AM #20
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i am personally gonna wait till after Christmas or sometime next year before moving. see where everything falls first and weather patreon will just be a little shaken or on the verge of collapse.
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Forum > General discussion > Patreon lost: maybe look for alternatives
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