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Patreon – Cracking the Revenue Code

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Steve Dotto here. Thanks for joining me today for the next installment in our journey towards 100,000 subscribers. Today, I want to talk to you about revenue again because revenue dominates my consciousness a lot as I look at my YouTube channel. Now I know I call this series Growing Your YouTube Channel to 100,000 Subscribers but it could just as easily be called can you make a living on YouTube? Is it possible to make a good living from YouTube? Those are the questions that I’m trying to discover the answer for. That number of 100,000 subscribers is important but nowhere near as important as how much revenue we can make and how many subscribers we need in order to attain a reasonable revenue. And is it subscribers at all or is it engagement? There are a lot of different factors. There are a lot of moving pieces. Today, I want to talk to you about revenue and I’ve been looking at a newer model. For some of you, it might be slightly old hat but it’s still fairly new – a service called Patreon. Now here’s what I’ve been doing so far as far growing my YouTube channel. I have added AdSense revenue and I’m making reasonable money from AdSense but it’s certainly not enough to make a living at this point sitting at 21,000 subscribers as we are at the moment that I’m talking to you right now. It’s trending in the right direction but I’m going to have to hit that 100,000 mark in order to make a living from it or even hopefully making a living from it, at least the way the numbers are sussing out right now. I can look for dedicated advertisers to find channel sponsors and get out and sell sponsorship but I’m kind of reluctant to do that because I’ve spent 20 years in television dealing with sponsors, going out and getting sponsors. It’s not that I don’t like sponsors. It’s just that side of the business is worn on me now. I’m not inspired to go out and sell to a variety of sponsors. I’m inspired by creating content so I’m hoping that within the YouTube environment, within the online environment, I can find some ways that I can concentrate on what I think I do best, which is creating good, compelling content and engaging with my audience, and hopefully the money will take care of itself. Now I know I might be a little bit naïve in dreaming that but what the heck? We are on a journey of discovery so if we can find that, wouldn’t it be good? Indeed, it would be good. And I may have found it. We may have found it. Patreon is the site. Let me take you to Patreon. Patreon is really Kickstarter for video or Kickstarter for content creators but as opposed to being project-based where you’re trying to launch and sell a project, it’s for ongoing creation so artists, video producers, people who create ongoing work can engage with their audience and ask them to support them on an ongoing basis. The commitment can be piecework, as in I’m going to produce a book every six months or I’m going to produce a song every two weeks or pay me per song, or it can also be time-based, support me this much per month for people who are doing serial type work. Now when I was first exposed to it, I thought I’m not sure how I feel about it. To be honest, I kind of feel funny if I set it up, going out and asking people to pay me to view the type of content that you’re watching right now. But at the same time, I’m doing that to a certain extent because I’m asking you for your time and your time is as valuable or more valuable than your money so obviously you’re already investing in my content by watching this. But I’ve been getting advertising so you know there’s a commercial relationship. You understand I have to make a living and as I thought it through I think audiences are more mature now, probably more mature than they ever have been but probably not as mature as we will be in a few years as we kind of get our heads around this a little bit more. We are now moving into, I guess a term might be a troubadour environment, where a smaller artist or a smaller creator of content can form a like interest group, a group of people that are really passionate and interested in the same topic as them, find value in what they have to say and then take a small amount of money from each of those to help support them. If you’re part of that audience and you really value the content, then you’re willing to put a little bit of money in each month or each episode in order to help get that content down to you. But of course there’s got to be a quid pro quo. I’ve got to give you something more than what I’m giving you now or take something away like take away advertising or something like that as I move along. So as you start to look at Patreon, if it’s something that you are going to look at yourself, probably what you’ll do is you’ll dive into the site and you’ll immediately go and look at who’s most successful and you’ll also look at people that are in your niche, trying to find out exactly how the people in your niche are doing and that’s exactly what I did to get a feel for how audiences respond. So there are a couple of technology creators, content creators that are doing quite well, I think at least quite well on Patreon and so those are the ones that I started with. The first one is right here. He’s right here, Chris Pirillo. Now you know Chris Pirillo, the Locker Gnome. He’s a funny, creative, energetic guy that gives great tech advice and he reviews products. He does real reviews and makes recommendations on products and his hand is in a whole bunch of different areas. He’s got a company that works for him. They do high quality video. Basically, he has a good business model and it’s been growing for quite some time. He has a solid following on YouTube and some other solid revenue streams, I’m sure. I’m not positive because I haven’t talked to him about it but I’m pretty sure he does. So he has set up a Patreon account as well. Now the cool thing about Patreon is you are able to have a conversation with your audience and they’re able to reach back to you on a far more intimate level than we used to have say when we were on broadcast TV. But you’re allowed to invest your audience in your success. I’ll show you what I mean. You set milestones and you set goals. Right now, Chris is getting just about $5,000 per month. He set this milestone. First of all, he’s reached a milestone. If I click here, he’s reached a milestone so when he hit $3,000 a month, he promised to produce a 15 to 30-minute will happen every day, a 30-minute video. So he’s offered basically to increase his publishing and I imagine he’s honoring that. Look at his next milestone, which he is within a couple of hundred dollars of, all Patreons get a new, exclusive, monthly deep dive video on a hot topic, the podcast relaunch on iTunes and SoundCloud and we can begin to add other types of geeky video content. So he’s got some soft benefits there but he’s basically articulated some benefits. Now some creators put in very hard benefits, in other words this is what I’m going to do at this point here exactly. As I’m looking at possible incorporating this myself, I’m saying at what threshold could I offer to pull the advertising from YouTube? Can I say that this revenue is going to replace AdSense revenue or are there enough people that I can dual publish or find another way to strip advertising out? That’s a hard benefit that you might appreciate, you might not appreciate. Or maybe you have direct email access to me for questions, a certain number of questions or a video conference, a single Skype video conference that you get a chance to do based on your patronage. It’s very similar to Kickstarter Rewards. You set different levels for this and there’s nothing saying that patrons have to be only individuals. You can set up patron levels for companies as well. You could say I’m thinking of setting up a level that might say if you want me to do one of my screencasting tutorials on your product, this is the level of patron that gets that benefit. So my mind is kind of firing in a lot of directions as I’m trying to understand and trying to figure out exactly the best way to approach this. You want to do it right. I think you want to take your time. Evaluate it rather than just throw something up right away. You want to go look and see what others are doing. So Chris has done a great job. I’m going to take you into Tom Merritt’s because Tom has been doing tech news for ages and recently he was with Leo Laport’s [phonetic 00:06:25] team. He did a year with Leo and now he’s gone off and spun off onto his own. He has a great success story in this space and I think this is one of his main revenue streams. He does a daily tech news show and look at that. He’s only been up for a little while. He’s got over 3,000 patrons and over $10,000 a month in revenue. That warms my heart because I know he’s got a rabid following. I know he does a great job on his content. Heck, I listen to him on a regular basis myself. So here, he’s set up. Let’s walk through his offer here just a little bit to get a feel for the structure of the Patreon offer. It’s not a lot different from a Kickstarter offer. They recommend you start with a video that describes all of the benefits of it. Then you do a written summary of what you’re all about, kind of like a bio. Down the left-hand side, the milestones and the goals, just like we saw with Chris Pirillo’s but we can see that he has hit a few milestones already. His first one was $5,000 a month. He basically upgraded the production, he upgraded his studio. At $10,000 a month, he made the minimum to make the shows happen without ads. So he’s now making enough revenue from his supporters, from his audience, to tell the ad networks to go away. That is awesome. Think about just the fact that you’re not going to have all those little pop-up ads, you’re not going to have to wait a few seconds before the video loads when you view his content. That is excellent. Another milestone is video feed. Now this amount we can do the kind of video production we want to justify promoting an official video RSS feed of the show. So he’s going to upgrade the bandwidth in and out. Look at that. I don’t think it’s wrong to think that he can hit this level of $50,000 a month. Then he says he’s going to take it on the road. He’s going to do roadies, road trips, with his show. So he’s got some lofty goals but he’s already, I think, doing exceptionally well. The beauty is think about this as if you’re the producer of the content. If your fans are your customer—they always are; we know they always are—but if they’re actually paying a little bit of money into your jeans and that adds up to enough to keep you in business, well then you could have total editorial integrity. You don’t need sponsors anymore. Or you can get to the point that you don’t need sponsors anymore, which really adds to the editorial integrity which is a big problem online because there’s kind of a fog about what is paid for and what’s not paid for. We see it all the time in the blogging community with the mommy bloggers and the daddy bloggers, what are they writing about that they’re being given by the company versus what are they writing about that they’re really interested in themselves. This creates a nice distance so I love the concept of this model. The accounting behind it, Patreon takes of course a very small cut and people can pledge any amount they want, as little as $0.25 or $0.10 a month if they wanted to, I guess, or per episode and it goes on up. Certainly, tech is not the only type of channel that there is on Patreon. We’re seeing a variety of different things. I see a few of these ones, these called ASMR. They’re people that they talk and that creates a sensory thing. They talk about feathers brushing through your hair and you kind of get the shiver down your back. It’s actually pretty cool. They do a pretty neat job. There are several people that are doing that. We have a lot of composers and musicians that are creating music in Patreon. We have a lot of people that are vlogging. Basically, there’s a really interesting mix. A lot of them are not making a lot of money yet. That’s kind of my fear. I’m going to put it up and I’m going to be up for three months and I’m going to be at $120. So there’s kind of a negative social proof to that. With Tom at 3,700 people willing to give him some money, that is a lot of what we call social proof. There’s a lot of value in the fact that he’s got valuable product that lots of other people are willing to give money on. So then I think my money might be well spent, a kind of almost peer pressure to join in on that. I don’t know what the tipping point is that’s going to cause fast growth or rapid growth in that area or reasonable growth but it is something that I’m sure we will find out. So what’s my plan in growing my subscribers to 100,000 subscribers and growing my bank account to supporting me or growing the revenue off this show to supporting me? Well, I’m halfway through composing and building my own Patreon page. I’ll just show you where we are so you can see what the steps are that you go through. This is what I’ve got so far. I’ve just been playing with the ideas and haven’t decided on any of it yet. So I’m working on getting advertising-free videos at $4,000 a month—that sounds like a big number right now. Maybe I should make it $40 a month. I don’t know—a weekly love show, which is something I’d love to do—I’d love to be able to broadcast a live show, something where we really upgrade the technology and start to deliver live and no, I do not trust Google Hangouts Live as a delivery system for this just yet—and then even a daily live show. That would involve me having staff. That’s why the number is fairly large there. Those are my goals. ‘ And I didn’t mention this earlier. You also set benefits to individuals that pledge each month. At this point here, you get my undying gratitude and your name mentioned within our supporter page or something like that. I’m still reading through what other people are doing to get good ideas of what sort of benefits and perks I can give to my supporters as we move ahead but that’s kind of what I have at this point here. But it all formats into a nice, simple interface. Let me go in and edit the page and just kind of walk you through the steps. You set up your page, choose what categories you’re in, and upload a picture. That’s not going to be the picture I’m going to use; I’ll edit together something a little bit better in Photoshop. So you put all that together and then your Patreon page which describes what you’re doing. I haven’t done anything on it at all but this is going to be a URL that’s going to drive people right to it, that’s going to have an overall explanation of what DottoTech is all about. Then this is the one that I’ve been spending the most time in. It’s trying to figure out what my goals might be and what might look reasonable. I don’t know whether this is normal or not but I think that I’ve got to take a step back and determine whether or not my goals should be ones that look good to others or ones that are really my goals myself, whereas if you put up a reasonable looking goal that people think you can attain so they’re willing to support it, there’s kind of that dialogue playing in my mind. At the same time, taking a step back and going how much money do I need to really do that? For me to cut out the advertising and everything I’m expecting to get from YouTube advertising, what’s that going to cost me and at what threshold can I do it? And there’s a beauty and a terror in this. The beauty is right now most of my revenue from YouTube is going to be coming from AdSense. It’s awesome to have them but very scary to have a single source. So now I’m going to have a second source but I don’t want it to cannibalize my first source. But I like this idea of setting up a second revenue source and I know that I need to set up a third revenue source as well. That’s going to be something coming a little farther downstream but this definitely has the potential of being a good, solid second revenue source that could probably end up making more money than AdSense as we grow if I do a good job. You see the thing is again, if you do a great job on your content, you have a compelling story and people are willing to buy, then more will buy and you should see natural growth by just creating great content. I know I’m rambling a bit on this. And that boils back to what I like the most about Patreon is it allows content creators to concentrate on what they do best – create content. If I had good support on this or if we developed good support on this, I can spend all my energy worrying about telling our stories better, finding better products to demo, finding better candidates to interview, editing them together better, making a better narrative of each of the videos that I create. I find that to be quite exciting. You set up your rewards on the final page here. The final page of the whole process is setting up the different rewards and those are the extra things that you give to people based on the level. Now they’ve got a fairly robust backend of the membership system. Since I haven’t made mine live yet, I can’t show it to you but you can email people. You have access to send messages, send rewards, and give access to people at different levels based on the membership and that’s a big thing that Patreon brings to the table, that whole membership system. Now the negative to this is I am not sure that the subscribers in Patreon, that you actually hold their contact information. So getting them to cross post and cross promote into your mail list and stuff like that, that’s still something that I have to figure out and I’ll do a little bit more research on as I move ahead. As I said, I’m about a week into my research on it so I haven’t quite made all of my decisions yet but I thought it was an interesting enough topic that it would make for a fairly compelling journey to 100,000 subscribers entry. Have you found it interesting? Has this been good? I hope so. Please if you haven’t subscribed, subscribe to us. Down below is a Like link and depending on when you see this, there might even be a Patreon link somewhere in this video saying please, please, please support me and help me continue on with my quest to make a living from YouTube. If I do say that, I think you should experiment and see what it’s like to become a Patreon supporter of DottoTech. Don’t you think that would be a fun thing to do to kind of wrap things up today? That’s it. This is an exceptionally long one, I imagine. Thanks so much for spending time with me today. I’m Steve Dotto. Have fun storming the castle

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