Patreon: A New Service and Pricing Strategy for Subscription-based Crowdfunding

Launched in May 2013, Patreon was the leading subscription-based platform in the online crowdfunding market. For over five years, the company operated successfully and expanded its large base of artists and content providers (known as “creators” on Patreon) and their fans and contributors (known as “patrons” on the platform). Patreon charged its content creators a standard 5 per cent fee, plus transaction costs, offering the artists over 90 per cent of the crowdfunded amounts. However, the founder and chief executive officer of Patreon realized that the company could not survive by maintaining the current uniform pricing and services structure. Patreon had to develop a set of more advanced tools to attract new content creators to the platform and enhance the experience of the contributing patrons. Patreon had to revise its pricing strategy to pay for the development of new services, grow its customer base, and improve the company’s profitability.

This case is intended for courses and modules on digital marketing, marketing strategy, digital business, e-commerce, and information technology strategy at the undergraduate and graduate levels. Students are asked to consider the implications of the various strategies and environmental conditions. They will also outline what marketing strategies and actions will help a company achieve long-term sustainable growth. Students will determine how to formulate a new pricing model and assess how it will affect the company’s future business plans. Students will also consider what marketing strategies the company should adopt to fully leverage a new pricing model and achieve sustainable growth. By addressing these issues, students will explore the implications for a company’s pricing and marketing strategies in the context of rapidly changing online services, such as crowdfunding platforms.<br><br>After working through the case and assignment questions, students will be able to<ul><li>understand the key differences between subscription-based and reward-based crowdfunding, as well as other traditional online media platforms; in particular, examine the pros and cons of the different business models in terms of the benefits they provide for artists and their fans;</li><li>examine the marketing strategy process (e.g., segmentation, targeting) in online marketplaces, especially in markets that serve content providers and their supporters;</li><li>formulate and propose new strategies and services with different pricing tiers to increase customer retention, expand the customer base, and improve profitability; and</li><li>understand the challenges associated with designing and implementing different services and pricing strategies for attracting new types of clients, while retaining existing customers.</li></ul>

• Pricing
• Market segmentation
• Crowdfunding
• Subscription-based crowdfunding
• Creator
• Platform