Or, how I learned to stop worrying and love the network.

Facebook reached out to offer Hard Drive early access to a "fan subscription" product. 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%.

— Matt Saincome (@MattSaincome) February 26, 2019

Now this is pretty interesting! Facebook would be one of the biggest, if not the biggest, player to build out a subscription platform.

I think there are a few reasons why this platform could succeed, but Facebook’s, shall we say, “brand issues,” might make the platform a non-starter for creators.

Pros

As I’ve written before, Patreon can’t really charge a lot for its product, since the key elements are so easily reproduced. Facebook is charging 30% vs Patreon’s 5%, but creators can get a lot more for their money. The higher margin is also a more defensible business – after the approx 3% transaction fees, Patreon’s only picking up 2%. 2% for a hackathon project is pretty good, but not if you’re taking that much VC capital. The lower fee can also be a downside and a source of platform risk if business depends on a platform making a 2% gross margin.

Two reasons jump out to me for why Facebook deserves the higher margin:

Eyeballs: Facebook has users who want to read stuff. Creators need to reach people in order to get new subscribers. It’s simple math. Distribution is the hardest part of running pretty much any business; the whole point of advertising (where there happens to be a lot of money) is distribution of a brand to consumers. The really valuable part here is not just the eyeballs, but Facebook’s ML and ability to show users creators who they may like to subscribe to.

Retention is easier: for a lot of people, Facebook is the web. One reason why podcasts and email newsletters have worked well within the subscription model is because the subscription content is pushed directly to an app people already use. Starting off as an independent content distributor is hard, especially if you have a mix of content which doesn’t fit well into peoples’ existing routines. Take, for instance, subscription newspapers like The Information or The Athletic. Both of these have a mix of content (video, articles, newsletters, audio) and don’t fit all of their content neatly into a single distribution channel. These newspapers survive on people coming to their site, and Facebook offers a built in medium for readers to consume their content.

Cons

It’s really just one thing.

Where’s the trust?: Facebook doesn’t exactly have creator trust here, from reducing non-paid distribution of content from pages to weak payouts in instant articles. None of the terms in their leaked policy doc actually concern me as much as the rest of the company’s brand and decisions, from a creator’s perspective.

I also am skeptical on the user side about the experience. Facebook’s strength has been its personalization, and particularly with respect to advertising. It’s very likely that they will create a “sponsored creator” ad unit, and their commentary around free trials and discounted subscriptions speaks to the same. How will creators react if Facebook targets discounted subscriptions to similar creators based on the fact that they’re subscribed to a creator? Or if they start receiving targeted ads based on the fact that they subscribe to a creator?

Final thoughts

An important piece of this puzzle is that Facebook gets to act as an aggregator for (probably higher quality) user-generated content with a subscription model. That’s the bread and butter for Facebook, but it also stands in contrast to its major investments for original content in Watch. In general, original content investments have higher capitalization requirements and are higher risk (as evidenced by how many of the Watch shows were canceled). Why take on those burdens if you can get others to take on the risk?