What Happens When Everyone Offers a Membership Model

A few months ago, iconic YouTube personality and pioneering vlogger Casey Neistat announced he was launching a startup  (opens in a new tab), and pointed out that he didn’t have a business model for it.

Another iconic YouTube personality responded, saying that he had some ideas to monetize the new company. He wasn’t blowing smoke.

Jack Conte, a well-known musician in his own right and the CEO of Patreon, responded with a video  (opens in a new tab) that liberally borrowed from Neistat’s slick visual style, announcing that he was coming to visit Casey and discuss some ideas for his new venture. The video was addressed to one person—Casey Neistat—but it gained more than 2 million views. (Neistat, despite having a case of what he calls “calendar anorexia”—aka, an aversion to meetings—took the meeting  (opens in a new tab), which also got more than 2 million views.)

It was a compelling pitch  (opens in a new tab), the kind that you tell other people about, which is why you’re reading about it at the beginning of this article.

Tech Tools for Every Creator

Patreon has been making that kind of pitch to a lot of people lately, perhaps not with a unique video but with a unique business model, one that takes the basic spirit of the Kickstarter model and applies it to continuous projects. (Kickstarter cofounder Yancey Strickler is the opening general session speaker at ASAE’s Annual Meeting & Exposition in Chicago on Sunday, by the way, just in case you didn’t know.)

The company, which brings sophisticated membership tools to individual creators, is one of the most interesting external business models for associations to watch, in part because it shares so many parallels with them. Effectively, it gives individuals the same access to the software needed to run a membership-oriented business as an association would have, albeit with a smaller scale, offering an alternative or complement to advertising or other separate models.

But its success is having something of a disorienting effect on the way that individuals make money online. Folks like Casey Neistat (who does not struggle for money) are one thing; new generations of creators who grew up watching Casey are picking themselves up with the model, along with just about everyone else. Heck, even up-and-coming musicians (and more established ones, like Amanda Palmer  (opens in a new tab)) are able to ignore major labels entirely  (opens in a new tab) by leaning on crowdfunding.

And tech companies are starting to pick up on Patreon’s tricks. Since I last wrote about Patreon about a year ago, Facebook added a paid membership component to its groups; Kickstarter created a Patreon competitor  (opens in a new tab) called Drip; and a number of competitors, such as Ko-fi  (opens in a new tab), Buy Me a Coffee  (opens in a new tab), and the open source Liberapay  (opens in a new tab), have gained steam.

Patreon’s response to this state of affairs is interesting: It’s gone on an acquisition spree, bringing on board Kit  (opens in a new tab) to help make it easier for creators to sell merchandise, as well as Memberful  (opens in a new tab), a service that builds out white-label subscription services for creators—effectively, a service for creators so prominent that they’d rather control the membership model themselves.

In the case of the latter acquisition, these kinds of creators—TechCrunch estimated 500 paying customers for Memberful—represent major startups and self-made media companies, like the prominent podcaster Gimlet Media  (opens in a new tab) and the one-man tech site Stratechery  (opens in a new tab) (whose success is so significant that it directly inspired a startup  (opens in a new tab)).

And that, I think, highlights how the membership-for-creators model is getting closer and closer to the association member-benefit model.

More Membership Than Ever

It’s one thing to have Patreon juice up a podcaster’s earnings by a couple hundred bucks every month. It’s another when one guy can make a million dollars a year with a newsletter. That suddenly feels like a model that associations are working a lot harder to attain for themselves, with a lot less overhead.

There are, of course, lots of reasons that associations have that overhead—there’s no Stratechery conference yet, and the revenue raised by associations generally helps serve their greater goals—but the rising competition for subscription dollars from sources that just five years ago would never have considered it as a model reflects a need for associations to keep up with their own approach and technology.

As I wrote a year ago, that’s probably a good thing. But it also means that strategically, and technologically, associations will have to step up, because in a world when a guy who sings a cappella music on YouTube can have nearly 4,000 people  (opens in a new tab) giving him money on a monthly basis, the stakes are rising for the old guard, even if the overlap between his audience and yours is low.

When everyone is offering membership, you have to go a step further than everyone else.

None of this is to say Patreon or its competitors are perfect. Far from it—last year, the platform drew a big outcry from its creators, often a passionate bunch, after it attempted to change its fee structure in a way that made creators more money but added an additional cost burden on individual patrons. Patreon quickly acquiesced  (opens in a new tab).

And this month, the company drew frustration after changing its payment processors, leading to a number of rejected charges  (opens in a new tab). Again, the problem was fixed.

Associations have these kinds of problems, too, but they’re a lot worse when they’re multiplied by a couple hundred thousand creators.

Whatever the case, in a climate where membership on its own is not a differentiator but a common thread, the pressure is on to up your association’s game when it comes to membership, especially in the digital realm.

In other words, your pitch needs to be more compelling than ever. You just saw Jack Conte’s; it was pretty great. What’s yours?

Patreon CEO Jack Conte shares his pitch to YouTube personality Casey Neistat. (YouTube screenshot)