Facebook wants up to 30% of fan subscriptions vs Patreon’s 5%

Facebook will drive a hard bargain with influencers and artists judging by the terms of service for the social network’s Patreon-like Fan Subscriptions feature that lets people pay a monthly fee for access to a creator’s exclusive content. The policy document attained by TechCrunch shows Facebook plans to take up to a 30 percent cut of subscription revenue minus fees, compared to 5 percent by Patreon, 30 percent by YouTube which covers fees, and 50 percent by Twitch.

Facebook also reserves the right to offer free trials to subscriptions that won’t compensate creators. And Facebook demands a “non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use” creators’ content and “This license survives even if you stop using Fan Subscriptions.”

Distrust of Facebook could scare creators away from the platform when combined with its significant revenue share and ability to give away or repurpose creators’ content. Facebook has consistently shown that it puts what it thinks users want and its own interests above those of partners. It cut off game developers from viral channels, inadequately warned Page owners their reach with drop over time, decimated referral traffic to news publishers, and most recently banished video makers from the feed. If Facebook wants to win creators’ trust and the engagement of their biggest fans, it may need a more competitive offering with larger limits on its power.

“Facebook reached out to offer Hard Drive early access to a “fan subscription” product” tweeted Matt Saincome, who also runs satirical news site Hard Times. “I asked my editors about it and the complete distrust amongst our team was kinda funny. We read through the terms and found a couple things that were hilarious when compared to Patreon’s 5% . . . Up to 30% and the rights to all our stuff? From the people who let us build an audience on their platform before pulling it out from under our feet? Hilarious. Here’s a crazy alternative: let people who signed up to see our content see it and then we can monetize that hahah.”

Instagram is refocusing on creators too. Instagram’s Android app reveals the prototype of a feature that lets users switch their profile into a Creator Account, similar to the Business Profiles it launched in 2016. Instagram first told The Hollywood Reporter about Creator Accounts in December but now it’s showing up in the code. Reverse engineering specialist Jane Manchun Wong generated this screenshot showing the option for Creator Accounts to hide their contact info or profile category. Fellow code digger Ishan Agarwal gave TechCrunch an exclusive look at the Instagram code that shows the Creator Accounts are “Best for public figures, content producers, artists, and influencers”. Creator Accounts give users “more advanced insights and reach more people with promotions”, “more growth tools” and “a new inbox that makes it easier to manage message requests and connect with fans.”.

Trading Control For Subscribers

Facebook began testing Fan Subscriptions a year to give creators a financial alternative to maximizing ad views after watching the rise of Patreon which now has 3 million patrons who’ll pay 100,000 artists, comedians, models, and makers over $500 million this year. This month Facebook expanded the test to the UK, Spain, Germany, and Portugal to allow users to pay $4.99 per month to a creator for exclusive content, live videos, and a profile badge that highlights them as a subscriber. While Twitch owns gamers, YouTube rules amongst videographers, and Patreon is a favorite with odd-ball creators, Facebook may see an opportunity to popularize Fan Subscriptions internationally and turn mainstream consumers into paid supporters.

The terms for Fan Subscriptions are not publicly available, and only visible on Facebook’s site to Pages it’s invited to test the feature. But TechCrunch has published the full policy document below.

Thankfully, Facebook isn’t taking a cut of Fan Subscription revenue during the test phase, and creators get to keep 100 percent of the money paid by any patrons it signs up before the official launch. Facebook tells me that it hasn’t finalized its percentage cut, though the terms permit it to take as much as 30 percent. That would qualify given Facebook tells me its rake will be in line with industry standards and creators will retain the majority of their earnings.

But whatever cut it takes will be after processing fees and the 15 to 30 percent tax Apple and Google levy on iOS and Android in-app purchases. We’ll see if Facebook tries a workaround that pushes users to their mobile browser where it can take their subscription money tax-free. And if Facebook decides it want to give users a free one-month trial or discount to any creator, they can’t stop it even if that lets people download all their exclusive content and then cancel without ever paying.

But what’s sure to raise the most hairs is the clause about “Supplemental Data” that gives Facebook a license to display a creator’s content as they might expect, but also a royalty-free license to use it however they want, even after a creator abandons Facebook Fan Subscriptions. A Facebook spokesperson confirmed that Supplemental Data does in fact cover all content provided by the creator. They claim it’s so if a creator made a custom fan sticker, a subscriber could use it in their own Facebook post, but the rule gives Facebook vast power beyond that. Patreon has a similar clause, but gets the benefit of the doubt in a way Facebook doesn’t after so many scandals.

Facebook’s spokesperson claimed that the Supplemental Data terms were similar to Facebook’s standard terms, but the normal Facebook terms say “You can end this license any time by deleting your content or account.” Not so with Fan Subscriptions. I don’t expect Facebook is going to try to outright steal and resell creators’ content, but it will have jurisdiction to use their art however it wants to fuel its war with Patreon, Twitch, and YouTube.

Creators will have to decide whether access to Facebook’s 2.3 billion users is worth the platform risk of building a following somewhere they don’t control and that has other business priorities. If Facebook’s strategy suddenly veers away from Fan Subscriptions, it could be hard for creators to score new signups or retain their old ones. At least with a dedicated site like Patreon, creators know the platform can’t abuse them without the threaten of ruin.

Here’s the full Terms Of Service for Facebook’s Patreon competitor Fan Subscriptions:

Fan Subscriptions Creator Terms

The fan funding feature (“Fan Subscriptions”) allows Facebook users to support their favorite pages, creators, group administrators, gamers, or others (“Pages”) through a monthly subscription with Facebook (“Subscription”) that gives those people (“fans”) access to digital content offered by Pages, such as exclusive digital content, fan recognition, and merchandise discounts. These Terms (“Terms”) govern how Pages use Fan Subscriptions.

With regard to your use of Fan Subscriptions, you agree to the following:

1. Your use of the Platform with respect to Fan Subscriptions is subject to, and you agree to comply with, the Platform Policy currently available at https://developers.facebook.com/policy/.
2. Your use of Fan Subscriptions to offer digital content and/or services to Facebook fans is subject to, and you agree to comply with the (a) Monetization Eligibility Standards currently available at https://www.facebook.com/help/publisher/169845596919485, and (b) Content Guidelines for Monetization currently available at https://www.facebook.com/facebookmedia/get-started/monetization_contentguidelines. You agree to follow any additional instructions and/or technical documentation we provide to you for Fan Subscriptions.
3. You will provide accurate information to fans in connection with your use of Fan Subscriptions, including but not limited as part of any digital content or services you choose to offer to them. You must clearly and conspicuously disclose all material terms regarding your offer and the nature of content or services you will provide to fans once they choose to subscribe. You agree to comply with all laws applicable to your use of Fan Subscriptions.
4. You confirm that the content you offer via Subscription does not infringe upon the intellectual property rights of any third party and that you have secured all rights necessary to distribute, copy, display, publicly perform, or otherwise use the content.
5. You will not use, incorporate, or provide any music or physical goods in connection with your use of Fan Subscriptions without FB’s prior written approval (email is sufficient).
6. You will not offer discounts on physical goods that exceed 80 percent of the offered goods’ retail value.
7. Your fans’ Subscriptions may be processed as payments to Facebook via Apple’s In-App Purchase or Google’s In-App Billing services, which are subject to Apple’s and Google’s separate payment terms and conditions. Apple and Google may charge Facebook a revenue share and/or other fees for such payment services according to their respective terms and conditions. FB will pay you a revenue share calculated as a percentage (“Your Share”) of what’s left after deduction of those fees/charges and of any other fees or taxes incurred by Facebook. As a the date of these Terms, Your Share of that net revenue is 100%. However, Facebook may in the future change these Terms such that Facebook keeps a revenue share of up to 30%. We will give 30 days’ notice of any such change.
8. Facebook reserves the right to offer discounted and free trials for fans from time to time in our discretion, whether to incentivize Subscription sign-ups or otherwise. Where we do so in relation to your Fan Subscriptions, your revenue share will be reduced accordingly: we only pay you a revenue share based on the amounts fans actually pay (less fees and taxes we incur).
9. If you have accurately completed and timely provided to FB any forms or documentation that FB reasonably determines are required to set up payment to you, and subject to and only in the event that you are in compliance in all respects with these Terms, payment of any net amounts FB receives from Apple and Google for Subscriptions made by your fans during your use of Fan Subscriptions will be on a monthly basis, within approximately 60 days after the end of the applicable month. Facebook will not be responsible for any subsequent fees applied by your financial institution to complete payment of the Monthly Fee to you. Furthermore, in the event the payment due to you would be less than One Hundred U.S. Dollars ($100.00), Facebook reserves the right to roll such payment over month to month until such payment threshold is met, at which time Facebook will make the applicable payment to you. Facebook also reserves the right to set off and/or withhold any amounts that Facebook reasonably considers are or are likely to be payable by you to Facebook under these Terms (including under any indemnities).
10. If you are providing (or allowing us to access) any data, content, or other information in connection with your use of Fan Subscriptions (collectively, “Supplemental Data”), then you grant us (and our affiliates) a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use such Supplemental Data. This license survives even if you stop using Fan Subscriptions. You are responsible for obtaining the necessary rights from all applicable rights holders to grant this license.
11. You are responsible for paying any applicable taxes owed with respect to any amounts you receive through your use of Fan Subscriptions. Facebook will charge you taxes with respect to such amounts if it is required to do so under applicable law.
12. Facebook can terminate or suspend your use of Fan Subscriptions at any time in our sole discretion, and we may change or stop offering Fan Subscriptions at any time in our sole discretion. In no event will we be liable in any way for terminating or suspending your use of Fan Subscriptions, for the discontinuation of Fan Subscriptions, for the removal of or disabling of access to content, or for the withdrawal of the content or Fan Subscriptions.
13. If you change what’s included in a Subscription in a way that could be considered material, you must give fans reasonable prior notice such that they have a reasonable opportunity to cancel their Subscriptions if they so choose, with the change only taking effect after their next Subscription fee payment.
14. If you are using Fan Subscription on behalf of a third party (including, but not limited to, as an agent or representative of a Creator), you represent and warrant that you have the authority as agent of such party to use such features on their behalf, agree to these Terms, and hereby bind such party to these Terms. You agree to indemnify and hold Facebook harmless from any claims, suits, losses, liabilities, damages, costs, and expenses resulting from your breach of the Terms. If you are accepting these Terms as admin of Facebook Business Manager for your business, these Terms shall apply to Content on all Facebook Pages and profiles owned or operated by your business at the time of acceptance and thereafter.
15. By using the Fan Subscriptions feature, you agree that we may communicate with you electronically any important information regarding your use of Fan Subscriptions, including without limitation as to Your Share and any payments. We may also provide notices to you by posting them on our website, or by sending them to an email address or street address that you previously provided to us. Website and email notices shall be considered received by you within 24 hours of the time posted or sent; notices by postal mail shall be considered received within three (3) business days of the time sent.
16. Facebook reserves the right to update these Terms from time to time. If any change to these Terms will materially disadvantage you, or materially affect the availability of the Subscription, we will provide you with notice before the changes become effective and you can choose to cancel your Subscription. Your continued use of this feature constitutes acceptance of those changes.
17. Fan Subscriptions is part of the “Facebook Products” under Facebook’s Terms of Service(“Facebook Terms”), and your use of Fan Subscriptions is deemed part of your use of Facebook Products. In the event of any express conflict between these Terms and the Facebook Terms, these Terms will govern solely with respect to your use of Fan Subscriptions and solely to the extent of the conflict. These Terms do not alter in any way the terms or conditions of any other agreement you may have with Facebook. Facebook reserves the right to monitor or audit your compliance with these Terms and to update these terms from time to time, and your continued use of Fan Subscriptions constitutes acceptance of those changes.