Can Patreon fight fire with social media fire?

24:03So just like having a discussion where we get clear on what are the next steps. Sometimes it seems like half of path A and half of path B, but actually it's a more bespoke solution that is a better solution to a complex problem. Okay, another thing is like really great pre-reads. man you can spend 45 minutes just like context sharing i i feel very strongly about this meetings are not for information transfer they are for debate and discussion um and so if we find ourselves spending 45 minutes in a meeting literally sharing context with each other that's wasted time and and also we're going to make bad decisions if people don't you know if people have you know information asymmetry then no wonder we think you know one person should take bath in or and another person thinks we should take path B.

24:50Like that's because we don't have shared context. So getting everybody to have shared context is huge and pre-reads are a great way to do that. Okay, let me give you a couple more.

25:02Naming that there should be a decision maker. Oh my God, I'm still learning how to be better at this. Sometimes I find myself in a meeting where we're all just arguing with each other and then it's like, hey, who is the decision maker here? Who's actually making this? So having clarity around who the DRI is for that decision, I think, can be really helpful.

25:22Nilay Patel:That's a directly responsible individual. Right, exactly. And then let me give you one more. About halfway through a meeting, I like to tell people, like, if I find myself starting to be swayed in one direction or another, I just name that. And I say, hey, team, like, here's what I'm thinking so far. Here's where I think we should go based on the conversation we've had, based on what I know. like if you think that's wrong tell me why um and what often happens at that moment is someone brings up three or four like really good points for you know risks of taking that path that we hadn't named before and saying we're going to go in this direction is what surfaces those extra risks and that extra click down in like the uh in the debate and the um because it starts to become visceral if people feel like, oh, we are going in that direction.

26:14And so then we can spend the next 30 minutes talking through those items and realizing like, okay, do we want to build mitigation plans for those risks or do we want to, you know, choose path B instead? So just like telling the team where I'm thinking and where I'm leaning in real time, I found has created a little bit of pressure to like get the real conversation out and to identify more problems with the path as we go. I have a bunch of more lessons that I've learned over the years, which I'd be happy to share. But honestly, I keep these lessons at the top of a dock when I'm having a meeting so that I can just remind myself, like, hey, do these things in a meeting to help drive it to conclusion.

26:52And it's been really helpful for me to just do that.

26:54Nilay Patel:This is great. I have a decoder book coming out and we're going to give you a whole chapter. I'll take it. What I like about this, what I'm curious about is there's a lot of Amazon in there, right? Like DRIs are like a very Amazon kind of idea that there needs to be a decision maker and you need to identify them. And then there's what I would describe as you paying attention to the emotional tenor of a meeting and making sure that's driving it forward. Is that just because you're in a band and you understand like the creative process? Because most of the executives I talk to are, they think about this, I would say mechanistically, right?

27:26Nilay Patel:We're going to go from here to here to here, and these are the steps. And you're very much describing how it feels to be in a meeting and controlling that feeling. Yeah, I think there are benefits of that and there are drawbacks. I definitely, yeah, I'm a creator. I'm a YouTuber. I'm not a, you know, my background is not, you know, an engineer. I didn't come from product management. I came from literally making music videos on YouTube. So like, I think it's fair to say that just, you know, my, yeah, I, I, my job for a long time was transferring my emotions to other people. That's how I made my living, right?

28:06That's the job of an artist. Can you make somebody feel something that you've felt? Can you, can you, you know, communicate that feeling to somebody? So yeah, I'm very aware of, of that in a meeting that, and I think that can be really helpful, right? Because it can, you can add a little bit of pressure. You can push a conversation forward. It can also be dangerous because I can over-rotate on feelings sometimes, which, you know, I'm not in the Elon camp that, you know, empathy is the curse of all humanity. I'm very opposed to that philosophy. I do not agree with that, you know, by any stretch of the imagination.

28:38But yeah, I do have to be careful that I'm not over-rotating on feelings. I think the desire to make everybody happy can really drag things down sometimes. And so I have to constantly be aware of that tendency in myself.

28:56Nilay Patel:We need to take a quick break. We'll be right back.

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32:29Nilay Patel:Welcome back. I'm talking with Patreon CEO Jack Conte about some of the changes he's made to Patreon structure. So put this all into practice for me. You described instead of needing path A or path B, we're going to drill down and find just the action items. and actually a decision is already made and we just need to move forward. I'm curious for a real example of that. And then I want the bigger picture of, oh, I need to drastically change what Patreon is. Well, let me answer your second question first. And along the way, I'm sure I'll think of a specific example. For the bigger decision around this adjustment to Patreon strategy, the truth is, there is some element of top-down decision-making associated with a change like that.

33:11And there is some element of emergent strategy that comes from the organization that's, like, I think necessary to embrace and even put some kindling against to get it to be more holistic and full-bodied. You know, it started in 2020, probably with bringing in more of like a consumer product leader who was thinking more about consumer experiences, less of like a kind of a SaaS focused organization, less of the kind of B2B2C go to market motions and more of the like consumer, you know, product motions and talent and, you know, teams. and company structures. And, you know, that was a big shift in and of itself, just like bringing in that leadership and honestly, just a lot of learning for me because, you know, this is my first job.

34:12This is literally, I've never worked at another company before, right? So in some ways, I don't see the water, I don't see the air around me. And so there was a lot of learning for me. It's like, okay, how does this look different? And then as we were doing that, teams are suggesting things that we want to do differently. And a lot of that is coming up, you know, coming bottoms up. Okay, we need to have, you know, before we were against native video. Okay, but if we're going to be, you know, if we're going to have discovery for creators, we need to have free accessible media on the platform. You can't have identity-based discovery.

34:45We've run those tests. They don't work. If you land on a creator's page and there's no free accessible media, you're not going to pay that creator. You have no reason to. You don't know who that person is. You have never fallen in love with their work. You need a way to fall in love with their work, which means you need free accessible media on the platform. That was an emergent piece of the strategy that came from the organization. It wasn't just like, ah, let's turn on discovery and put different creator profiles in front of everybody's page. We tried that. We tested that. It didn't lead to conversion.

35:11The organization learned. We had systems to make sure that bubbles up to, you know, PMs and product leaders and to me and to the executive team. And then you kind of keep chipping away at that flywheel. And over a period of, you know, two years, you start to hone in on precisely what the right strategy is. So, yeah, there's some amount of, like, top-down push that comes, and there's some amount of bottoms-up strategic emergence that comes from the organization.

35:37Nilay Patel:Let me ask you about just building products in that kind of environment, right? Where it's the age of AI, and you sit right in the middle of just a totally polarized debate. On the one hand, every software engineer and product manager I know is either the most excited they've ever been or experiencing a full existential crisis about the ease of developing software, of making new features, of making new products, of token maxing. And then in creator world, the audiences hate it and they don't want the slop and every platform is overrun with slop even though the audiences don't want the slop and something very bad is happening.

36:11Nilay Patel:How are you bridging that divide where it's obvious that the future of software companies looks AI enabled in some way? I'm not sure which way it is, but it's obvious that it's some way. And then it is far from obvious that the future of creator media has any in it at all because the audiences are rejecting it so thoroughly.

36:32This has been really challenging, especially in the sort of modern environment of the Internet. But I'll tell you what I did. What I did was I just said what I really thought. and I spent a long, long time putting together my full thoughts. It took me, the end product is 45 minutes of me talking through these issues and then I posted that. And it is self-conflicting and I'm holding two opposing beliefs at the same time and I'm terrified and I'm excited and I'm really pissed at how all this has been rolled out and how little agency creators have gotten through this process. And also, I find the technology magical.

37:30There's a piece of like for me as a creator, I've always been interested in new technologies that helped me accomplish my goals as an independent creator. I remember when the first DAWs came out, you know, digital audio workstations. in the late 90s and 2000s, you know, tools like Pro Tools. And I learned I could record, I could make a record at my house in my bedroom. You know, and that led to the emergence of Pomplamoose, which was, you know, my band. I was obsessed with that. Now, there are a lot of, you know, analog recording engineers at the time who hated the idea of a DAW. They thought it was like it sounded cold.

38:02It wasn't warm. It wasn't analog gear. You're not respecting the technology of, you know, of recording, you know, the skill set, the craft of recording. The same thing happened with YouTube and distribution systems when, when, you know, we started uploading to the internet, there was this whole backlash around, you know, that not being the real way to do music, the real way to do music is to sign a record deal and, and go on tour. And like Pomplamoose didn't do that. We just distributed our own music through YouTube and sold MP3s on iTunes and made enough money to buy a house literally off of MP3 sales.

38:32And so there's always been this piece of me that embraces new technology. So the truth is like, I am holding all of these ideas in my head at once, and I myself feel very conflicted about it. At the end of the day, though, here's what I think is happening. The algorithms and social media platforms are so good at polarizing humanity, sorting and filtering us into one of two camps on basically every issue, whether it's politics or news or technology or anything. The algorithms just push everybody into one of two camps and they push us so far apart. That is absolutely happening now with AI. And I'm not saying there aren't serious drawbacks and concerns and that I'm not seriously angry about it.

39:16I am. But I think it is such an important time for artists to have an open conversation around these technologies right now. Like everything is changing for people. And this is going to be a transformative shift for artists, for employees, for humans. And I think we're at this place where boycotting AI, that's like boycotting the internet. That's not a good strategy. I don't like what Instagram has done. I disagree with a lot of their decisions. I still have an Instagram page. I still post and reach my community. I don't like what Apple has done, especially to Patreon creators over the last year.

40:04I really disagree with those decisions. I don't think they're fair for creative people. I think they're hurtful for creative people. And here I am on my iPhone. I don't like what my federal government is doing right now. on so many dimensions. And I still pay my taxes and I still live in the United States.

40:21Nilay Patel:Sure. I get it. I mean, I understand the sort of yet you live in society argument and I find it very frustrating too. You know, I used to read Guitar World when I was a kid and I'd read the angry screeds from analog recording engineers about logic being cold and fine. But I had a cassette four track at that time and I was like, this thing sucks. I would much rather use my computer to record my music. It was just very obvious. But that didn't have, like logic hadn't stolen all of the music in the world to make logic and in fact it was very obvious the people behind pro tools and logic and whatever else had a deep and meaningful appreciation for the music industry and they were trying to make tools for musicians the internet and social media huge stacks of problems and maybe they needed to be addressed in different ways but the value exchange of instagram i think is reasonably clear to people right you run a lawn mowing business you can go find some customers on Instagram and you're good to go.

41:14Nilay Patel:If you just want to post dance videos on TikTok and reach an audience, maybe that's the easiest thing that's ever been in world history to do. The value exchange for AI, I think, is so much more diffuse that people hate it. But you're a musician. I know tons of musicians who are like, look, AI is everywhere. Suno is everywhere in the music industry. We just had Harvey Mason Jr. on the show. He runs Recording Academy. He's like, it's everywhere. And our line to give you a Grammy award is you You have to be mostly human. And that is as fuzzy of a line as can possibly exist. So you're saying you're sitting in it.

41:45Nilay Patel:And I think I have the exact same kind of conundrum as you do. I love new technology. We have an audience of people who love new technology. We're going to post this clip on the internet, and people are going to tell you, of course, it's clear that you should hate it. And that makes no sense to me because those same people are probably using it in some way. But you're sitting in it, and you run a software company that services the needs of creatives who hate it. But there's no doubt in my mind that the software company side should be in full embrace of AI. And maybe the creative services part of the company, which is what the software makes, should not.

42:17Nilay Patel:And can you smash those together? Are you just trying to keep those far apart? No, no, no. You nailed it. And this is the core of our approach. Before I even get into that, let me just say, what ultimately is happening to creative people right now is disgusting. It happens every 10 years. There's this techno-legal cycle where tech companies build some type of new technology and it breaks the current systems. It usually uses creator work without consent, compensation, or credit. And then the tech companies claim that, well, it's this new technology and it's either fair use or copyright doesn't apply because it's transformative in some capacity.

43:02You know, this was the Google Books case. This was the YouTube case, you know, when Viacom sued YouTube for a billion dollars. And then, you know, there's sort of like industry mayhem around that. And that's where we are now. We're in the industry mayhem part of this cycle. We should be there. There should be a lot of lawsuits. And in my opinion, there should be regulation to prevent this type of thing from happening with regard to AI. Because what's essentially happened is these models have borged the entirety of the free creative web from all these creative people without paying them, without letting them opt out, and without even giving them credit.

43:46That is bad, not only for those creators, but it's bad for society. Like the reason copyright exists, the reason IP law exists is to create a societal level incentive around novelty creation. Like that is the purpose of those laws. Like that comes from the Constitution. Like Congress was given the power to promote the sciences and the arts. Yeah, the arts too. Like they wrote in the arts because it's important to promote and to protect people who invent within the arts. It's important for those rights holders to have rights. That's why they're called rights holders. So it's fucking crazy to me that these models are allowed to just use all the work and then claim transformation and then have a fair use case and get around it.

44:34So all that is terrible. Okay, so I think your question is like, Jack, how do you reconcile that with being a software CEO? So I'll tell you, it's like a very practical approach, which is if Patreon does not fully embrace these tools as a product and engineering company, we are ultimately a product and engineering company. If we do not fully embrace these tools and use them to give the power back to creators, we as a company will be dead in three years. Look at what happened with the mobile shift, right? These platform shifts are material. They have a massive impact on the people who are playing in these ecosystems.

45:06And if the companies don't keep up with these new technologies, they will die. Patreon is much more useful to creators if we are alive, if we are shipping more valuable products at a faster clip that are higher quality. And so we 100 % are embracing these tools internally. And I've told our creators, we are embracing these tools internally. We are using LLMs to write more features. Our engineers are using LLMs when they code. We're using LLMs to organize the team. We're using Notion agents to crawl through pages, you know, our own internal documents and create summaries and help teammates understand who to talk to for which sorts of problems.

45:46Like, we must embrace those tools. That is not a choice that we have because I want us to be a powerful product company that fights on behalf of creative people. So, what we have done with our product strategy, and here's how we've, I don't know if you want to say resolved the tension, but this is how we thought of it, is, you know, there's a lot of companies that are sort of going to market loud and proud with, now we're an AI company. Creators don't want us to be an AI company and they don't need us to be an AI company. We don't need to build a whole bunch of forward-facing features for creators.

46:15If you look at what a feed on Instagram looks like now versus two years ago, it looks pretty much the same. There's not a whole bunch of changes because of AI. There's a consumption experience. There's a community experience. In many ways, Patreon is similar. There are some experiences that are different. And the way we think about where to use AI is if you imagine a bullseye diagram, at the center of the bullseye is creators making their creative work. And what creators have told us is, Patreon, get the fuck out of the way. Let me make my work. Don't give me script ideas. Don't build me an agent that helps me come up with a video thing.

46:47Don't title my post for me. Let me do the making. Get out of my way. So we get out of their way on like creators making things. And then one rung out from that bullseye is the packaging of that material. Now, creators to us have been a bit more open to using AI to package their works. And so what does that mean? Like automated chapter markers and things like that. Cutting long form podcast episodes into clips. One rung out from that is like marketing. So helping a creator, you know, like with automated, you know, email flows and things like that. And then one rung out from that is managing my business.

47:22And creators have even more openness to using AI tools to help them manage their business. And so the best quote we heard from our user research interviews was, hey, I have a million ideas for new videos. I don't need AI to help me make more videos. I need AI to help me do my taxes and clean my toilet. And that is our product strategy. Our product strategy is help creators do their taxes and clean their toilet using AI. And like, but we're not like going out and saying we're patreon.ai now and everything is gonna be an AI feature. So I've explained all this to our creators in this very long 45 minute video.

47:56And I think for the most part, creators understand that Patreon has to keep up and use these tools internally. And also, it's important for us to be an advocate right now for creative people and fight on their behalf so that they're not forgotten about through this new techno-legal cycle that we're going through.

48:13Nilay Patel:You published that video, it was a little bit ago, not so long ago, but a little bit ago. You've sat with some feedback. Did you change anything about your strategy? Did anything about the feedback to that video shift your thinking? Yes. One of the things that came up in that process and a lot of the comments were around, okay, but Patreon, how are you going to prevent the platform from being overrun with slop? What are you doing from a policy and trust and safety standpoint to make sure that Patreon just doesn't get clogged up like other platforms are getting clogged up? And that was amazing feedback.

48:45We had already started thinking about that, but we accelerated those work streams. Actually, I have a meeting next week with a team that has a draft proposal for that. And that's a really hard problem, right? Actually, YouTube made an announcement about that this week. But the problem there is like, how do you, what do you label? Or do you label? Yeah. And how do you even detect it? And how do you detect it? And like, and if you can detect it now, what makes you think you can detect it a year from now, right? There's no canonical system that, there's no API you can call and say with certainty whether something is AI generated or not, right?

49:15Like that's not, that doesn't exist. And even if it does, somebody's going to build a tool that breaks that.

49:22Nilay Patel:Our poor reporter, Jess Weatherbed, her beat is AI labeling systems. And she's like, what are we doing? She's been on the show and she's like, we keep pretending that these are going to work because we have to. But there's no evidence that they ever will. And so then there's the reverse, right? Which is, OK, maybe you label human-generated work. I remember growing up in the 80s and 90s when manufacturing shifted to Asia. And there were all these made in the USA stickers, you know, and that became sort of like a hallmark of like, hey, this is like, you should buy this thing loud and proud, you know, you're voting with your dollars here.

49:59And so I can imagine some type of future where something is labeled as human generated. And that's like a loud and proud moment for people. So that's another way to solve the problem. Actually, Howtown, you know, Joss Fong, who used to be at, you know, Vox, made an amazing video about this, just like flipping the labeling game on its head by labeling human-made work. There's a bunch of different ways to solve it. Anyway, we're thinking through all those problems. That was like a result of feedback that we got from the community as we rolled out some of this thinking.

50:27Nilay Patel:You have platform competitors who are a little more wide open, lots of similar features. I'm in particular thinking of Substack, right, whose approach to moderation is famously laid out in the show is, screw it. Do Nazis on Substack. That's just their vibe. I assume they're going to allow tons of slop. There's already a ton of slop on Substack. They have the same core set of features. And I realize you don't want to be called social media, but the feature, if you just list them in a bullet point chart, they're all the same, right? You have a Twitter-like function. You've got podcasts. They're pushing into videos.

50:58Nilay Patel:You've got follow features. Substack's promise to everyone is we'll take 10 % of your revenue, but we will deliver you the next new follower. And they do it in all kinds of ways. I would even describe a lot of ways to do is just straight up dark patterns. You subscribe to one newsletter, oops, you're subscribed to nine more, right? And some creators have gotten pretty antsy about this and a bunch of big publications have left, like the Ankler just left and now they're on Ben Thompson's platform, which I believe is called Passport. You're sitting in that same zone, right? Is your promise we will help you get the next new subscriber in the same way as Substack or is it people are going to download this app and we will just surface stuff until they show up?

51:37Nilay Patel:Like Like Substack very clearly makes the promise that they will deliver the next new subscriber to you. Are you making the same promise? We don't frame it quite like that, but we absolutely are going out and telling creators now, hey, we're helping you get discovered. We are helping you find and grow your community. That is a big piece of our value proposition now. And we're talking about it loud and proud. I mean, you know, we are sending now one and a half million new followers to creators on Patreon per month from our own systems. And 750 ,000 free followers are becoming paid followers per month on those systems.

52:21One of the big differences between us when we last talked and us now is audience growth was not in our set of value propositions that we talked about. but it must be now unless like this is the whole point around, you know, being your own top of funnel for your own creators. If you rely on Google to do that, if you rely on YouTube for the audience growth and you provide no audience growth, you are a bottom of funnel company that will be Google zeroed. You just are. Lesson learned the hard way. So we don't want to wait for that. Okay. Now that said, I think there are good ways to do that. And I think there are bad of ways to do that.

52:59And, you know, I think your, I'll go back to Elon's, you know, takeover of Twitter. You wrote that amazing article on how, you know, with social media platforms, you know, the product is the policy, right? The product is trust and safety. It is content policy, which I think Elon learned the hard way. Now we see it, you know, SpaceX filed their S1 and we got to see their revenue cut in half since, you know, the purchase. I think he learned very clearly that like content policy, trust and safety is the product. And so I think that's a big piece of what we do. And that is a big differentiator for us versus Substack.

53:35We don't allow Nazis. You know, we don't allow that. We have much more, I think, thoughtful moderation. You know, there's some people who think that your content policy should be the First Amendment. That's not how we think about it. You know, there are things on Patreon that we think are good for the mission. there are things on Patreon that are not good for the mission. And so, you know, we've been, I'm like very proud of our content policy. I wrote the first version of it in 2013. It was 40 pages with, you know, with the help of an outside consultant. And we've iterated on that policy over the years, and I think done a really good job of enforcing it.

54:12So like, yeah, I'd say one of the biggest differences between Substack and Patreon is our content policy, which is not a by the way, that's like a main feature for us. And a lot of creators have left Substack and come to Patreon because of our content policy.

54:27Nilay Patel:We need to take him a quick break. We'll be back in just a minute.

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58:09Nilay Patel:We're back with Patreon CEO Jack Conte. Before the break, we dove deep into Jack's complex thoughts about AI. Now I want to switch to another really thorny topic for a platform like Patreon, its relationship to payment processors and the pressures to moderate content like a social network. It's time now to talk about the sexiest topic of all, which is your relationship to payment processors. This is what all the kids have been waiting for. As you go up to the top of the funnel, right, you have a more direct relationship with consumers. the pressure to moderate more increases, and it increases from a number of different directions.

58:42Nilay Patel:I think when you were just the payment processor for a bunch of creators, you could get away with a lot more. In particular, you could get away with adult content. You could get away with people selling nudes. Patreon has a long history here. Now you're it. You're at ByCon on people's home screens, direct relationship with consumers that you're trying to pass on to creators, and payment processors like Stripe, Visa, MasterCard, they can look right at you and say, don't do this. And you've had to comply. Talk me through that. This is pretty controversial. Like a lot of adult creators make their living on Patreon or did make their living on Patreon.

59:15Nilay Patel:And it seemed like you had no choice but to agree. I'm curious if you thought there was an ability to push back or if there's another way forward. There was not a way to push back in the early days. And, you know, I think we're far enough down the road now. I sent many 3 a.m. emails to CEOs begging for them to reconsider. And that's like the CEOs of Stripe? of payment partners and processors. Actually, never Stripe, but other payment processors. That was a real challenge for us, Neelai. It's a challenge because if they're threatening to not be a partner to us anymore, it's not just that one creator's income that's at stake.

1:00:02It's the$10 billion that we've processed on behalf of creators since the company was founded. We're processing over$2 billion a year now. That's a lot of income that we need to be a rock for those creators and make sure that that income is protected for them. And so these issues are really serious. So we did a couple things. One, over the years, we worked very closely with payment processors to understand their content policies and their constraints and make sure that our content policy was acceptable to them. And we co-iterated on those policies together, and we also continue to co-iterate on them because culture changes, right?

1:00:44Content policy is a living, breathing thing. It has to change as culture changes. It has to change as the internet changes. You know, now there's, you know, non-consensual AI-generated nudity. That was not a thing that platforms and payment processors had to worry about, you know, four years ago. Now you have to worry about it, and you need clear policy around it. So one is we like worked with those partners to make sure that we had like parallel content policies. The second thing that we did is we built hot swappable payments architecture so that as the company got bigger, we could just unplug one processor and plug in a different one.

1:01:23And what that did is it gave Patreon a little bit of leverage, not a little bit, a lot of leverage in those conversations. Because we're processing billions of dollars annually, you know, those processors want that volume. And if we can hold back volume from them because we're not happy with their content policy decisions, that helps us. That helps us fight on behalf of our creators and have the right content policy that we want for us. So it gives us some negotiating leverage in those conversations. Now, sometimes it's not even the processors themselves. It's the banks behind those processors or the acquiring banks behind them.

1:01:56This stuff goes like all the way up the chain. I wish it didn't work this way, but this is how it works. And so, you know, we've had to both be more collaborative and also build some systems that give us more agency like this swappable payments architecture to kind of solve that problem over time. Now we're at the point, you know, over the last few years, we haven't had any P0 payments processing issues because we've done so much work on that. We learned the hard way over the first chapter of the business. But that was a big problem, like in the early years.

1:02:26Nilay Patel:Do you have adult content on Patreon right now? Yeah, we do. We have an 18 plus category. We don't have porn and our content policy does not allow porn. There are people who say you can't define porn. That's not true. You can define it. And we have. And we've done that in a lot more. What's your definition of porn? Well, it's way more detail than I'm going to elaborate on live on a podcast. Fair enough. But we have detailed that. Oh, like pedantically, like in legalese. because the point of content policy, you want 10 humans to be able to look at a policy and look at a piece of media and then have nine of them make the same decision, right?

1:03:02Like that's how we try to write our policies in terms of level of detail. And so we do have that level of detail baked in and we know like this is pornography, this is not pornography. And so one of the things we want to allow for is like we're an arts platform. Like we have to have free like human expression in some capacity. And so we allow nudity, we allow, you know, there's like marijuana creators and there's people who talk about whiskey and there's like people, you know, there's all kinds of stuff. I want that stuff on Patreon. I want, I want artists on Patreon. I want people who push the edge.

1:03:33I want people who expand the Overton window. I want people who are out there. You know, I don't want people who are just in the center of the bell curve. I want the people who are on the edges. Like this is, those are the people who push society forward. And so we have like, in some, in some ways we have like a liberal content policy and that's important to me on some dimensions. So yeah, I want all those things. We've built policies to allow for those things, and now we have the payments architecture to support it as well.

1:03:56Nilay Patel:I'm just like personally required. I feel like I have to say this every time. Justice Potter Stewart, who came up with I Know It When I See It, regretted it for the rest of his life. And even at the end was like, I really wish I hadn't said that. Because it is possible. You don't have to be that subjective. Let me ask you about the other payment processor conflict that seems omnipresent in the history of Patreon. You mentioned it already, which is Apple. We live in a world where Apple is constantly in some sort of legal fight that's on or off with Epic or the European Union or whoever else it is about the 30 % fee.

1:04:28They've pushed you into forcing creators to be on monthly subscriptions as opposed to some of the other plans you've had.

1:04:34Nilay Patel:You've changed some of your payment terms. I think everyone's flat fee 10 % now as opposed to 8 or 12, which you had before. This all seems like just a big swirl to me of kind of the same problems with Apple. Describe your current relationship with Apple and if you think anything else is about to change. I don't think anything else is about to change. I hope not. Are creators still paying the Apple tax? Yes. I disagree with that decision. I think that's bad for creative small businesses. I don't think it's creator first. I told, you know, App Store employees at Apple that to their faces. You know, I tried to be polite, but also tried to advocate as best I could on behalf of creators.

1:05:19We have been advocating for that for years and years and years. Apple was like very, very clear with us that, you know, IAP was non-negotiable for them. The in-app payments system that they built was non-negotiable. We had these legacy billing models that the billing structures did not work with IAP and Apple was not going to support – they were not going to build new features into IAP that would make those legacy billing structures work. And as a result of like having to adopt that, we have to basically deprecate those legacy billing structures. That's very painful for our creators. So not – like there are two problems here.

1:06:00One is creators have to pay the 30 % tax for memberships that come in through the iOS app natively. Are you allowed to kick people to the web now? Is that one of the outcomes of the Epic litigation that you can just tell people it's cheaper on the web? Uh-huh. And so we did that and we built that. And actually, within, I think, after that Epic ruling, you know, within, I think, within like 48 hours, we had a new build submitted to the App Store. And where we built that flow. Apple at first was okay with it. And we had sort of pushed back this initial deadline that we had around our legacy billing model deprecation.

1:06:41that, yeah, it didn't hold. They got in touch with us later and were very clear again. And that's when, you know, I've had a tumultuous relationship with them over the years. Like, when things come to a head, you know, I'm personally in the room with them talking about these issues with them. You know, they did extend the deadline for us. They gave us, I think, you know, to the end of this year, as opposed to, you know, a shorter time period, which I thought would be really catastrophic for creators because they have all these workflows and business models that they need to uphold. Oh, God, look, even as I'm talking about this, like I just I am so upset.

1:07:27Honestly, I'm just so upset at this. I, I, I, they have such a stronghold on the system and they're, they're able to throw their weight around. And now here I am talking shit about Apple live on a podcast and maybe that's going to bite us. But, um, man, it was hard working with them. And I, at the end of the day, I disagree with their decisions and I wish they had given creators more leeway.

1:07:47Nilay Patel:Can you kick people to the web still? Do they, do they hold that update when you shipped it? Were they weird about it? I've heard that they did not like it when other platforms shipped those. Yeah, they didn't. And that's what I just talked through. I mean, they wrote us back and sort of, you know, that's when we had to change the deadline for the – or reinstate the deadline for the deprecation. But the kick to the web is still there and that flow still works. And so what we did is we gave our creators a way to up the price for – because we wanted our creators to have income continuity, right?

1:08:25It's like a 30 % hit on your revenue is unacceptable. So we built a system that allows creators to, for memberships on the iOS, charge an increased amount for those memberships such that the net impact to them is flat. Now, what that ultimately does is it passes the extra fee on to the fan, which is also a bad experience. But, you know, we pride ourselves on being a creator-first company. And so we told our creators, like, hey, we're building the system. You can pass the fee onto your fans. And a lot of them are doing that now. And then they just tell their fans, like, hey, if you want this for, you know, without the extra fee, you can go become a member on web.

1:09:12That basically allowed creators to preserve their income. But it's still a drag. It still passes the end fee onto the consumer, and then the fan ends up paying more. And there's problems associated with that. It was not a good experience.

1:09:29Nilay Patel:I want to end by talking about how you might push back against the platforms. We've talked a lot about different kinds of platforms and the different kinds of pressures they can impose on a creator and things you're building to let creators take some control back. The last piece of that you mentioned at the very top of the show is maybe there are new kinds of networks to be built where creators own their audiences, they own their follow graphs, where users feel more in control, where you can pick your own algorithm, right? Blue Sky is run by very idealistic people who seem to think that picking your own algorithm will solve the whole problem in the end.

1:10:00Nilay Patel:And maybe to the detriment of all other product improvements, they're laser focused on that. Threads exists. It runs an activity pub, right? No one has yet interoperated with ActivityPub such that that makes any sense for threads, but they keep doing it. Mike McHugh built Surf. You can browse Blue Sky and threads and masks on all the open social networks. You have Quips, which is a social-ish product. They make social-ish objects on the Patreon. You said you're not federating it, but you could. What do you see as the benefit of going to interoperate with those networks? Is there a bigger distribution?

1:10:29Nilay Patel:Is it bringing more content onto the Patreon platform? How should this work? It's creators owning their audiences. um that's that's the benefit um when we launched in 2013 we gave we're i think we're the first platform that gave creators the email addresses of their fans when they signed up um and we did that despite advice that we got when we were raising money you know people were saying like hey this this um this sort of reduces switching costs um like why would you let creators be able like why would you give them emails because then they can just like email their fans and tell them to go to some other platform.

1:11:05And our whole point was like, yeah, that's exactly why you should do it. Because that lights a fire under our ass to build a product that's valuable enough to keep creators and to keep their trust.

1:11:18And so we, you know, that was part of the V1 of Patreon. It's been in the product since. So sometimes I like to say we were, Patreon was the original Web3 before Web3. Like we were trying to do things. we had the spirit of building things, you know, in a decentralized way using protocols. You got to be careful of that because that definitely sounds like you were doing crypto

1:11:41Nilay Patel:scams. No, no, no. I was robbing you blind before any of these NFTs ever showed up. No, but seriously, like the spirit of it was like emails based on a protocol. And there's something really beautiful about that. And so we want to make sure that we can pull that into Patreon as much as possible. And so, yeah, what is the benefit? The benefit is creators having confidence that the platform isn't going to fuck them. Even if the platform changes or shitifies or does something that is abusive to their users, they can then take their audience elsewhere and use some different front end to interact with their network.

1:12:20That is ultimately the benefit. But that's like a pretty – that's a signal that the company believes that power is shifting away from institutions and towards individuals, which I believe. And I believe that companies that embrace that over the long run are going to be the companies that like empower that movement and are chosen by people and used by people. And the companies that fight that ultimately I think will lose. And so I think it sends a very powerful signal to the market that like we want to treat people well and that we want you to own your data. We want you to own your social graph.

1:12:57We want you to own your relationships, not us. And you can hold us accountable for building a great experience because if we don't, you can just choose somebody else.

1:13:06Nilay Patel:I feel like I could do a full hour on that with you because I'm very curious if there are products to be built with these technologies that aren't just signaling and there have yet to really be any. Like the existing platforms built on these technologies are actually – they still appear to be closed, right? Like Threads is maybe the most algorithmic of them all, even though it's built on an open technology. And I'm very curious if it is all just signaling or if the actual accountability mechanism of you can leave exists. I think it's really early right now for that technology, right? Like it's not in mainstream consumer consciousness yet.

1:13:46Like the only way, and Mike talks about this, but the only way that we sort of think about it is the fact that we own our phone numbers, right? You can change providers and keep your phone number. And so in that sense, like you own this unique identifier that you can carry across different networks. But that's not, people don't think of the internet like that yet. I think eventually people will think of the internet like that. Again, this isn't on our roadmap. Like I'm not saying this is something we're going to go do next quarter. But it is something I think about because I would say it's like one of three things that ultimately is what humanity needs to do differently for like the next two decades of networks.

1:14:27It's three things. I think the first is like the business model and the optimization functions of the platforms. Like are you optimizing for watch time? Are you optimizing for things that are actually in concert with human flourishing? The second thing is does the platform own the network effect or do the people own the network? Do you own your own data? Do you have access to that data? Or are you blocked into a walled garden? And then the third thing is governance. Governance that keeps platforms focused on the mission and the customer in a way that I think they're not right now. Case in point is Twitter.

1:15:04There needs to be more structural integrity around governance systems for companies over the next phase that pushes them to do right by users and the people that make the product what it is. And there's a guy named Eric Ries who wrote this book, Incorruptible, who's talking a lot about these new types of governance systems. And the book is amazing. I think his thinking is amazing. I think it's actually a very big idea. I think it's like one of the most economic, it's like one of the best ideas in the field of economics that I've heard in like the last, well, certainly since I've been alive. And I think it could potentially change the way companies are organized and structured.

1:15:43So that's kind of like the third leg of the stool is like governance that is robust and allows a company to be true over a long period of time. If you do those three things, like different business model and different optimization functions, the people own the network instead of the platforms and then the right governance to keep the platform true to its mission and customers over the long run. That, I think, is a pretty good bet for the next two decades of networks. I think that will do a better job than the last two.

1:16:08Nilay Patel:Well, Jack, I can't think of a better place to end it. It also sounds like we've got to go talk to Eric Ries for the next episode of Decoder. Oh, my God. You've got to get him on. Seriously, this book is – I think it's world-changing. I really do. Jack, we got to leave it. You got to come back sooner than five years because it feels like a lot of things are coming to an end and the new internet is being born. I want to catch up with you on it. Thank you so much for being on Decoder. Thanks, Neelah. I appreciate it.

1:16:32Nilay Patel:I'd like to thank Jack Conti for taking the time to join Decoder and thank you for listening. I hope you enjoyed it. If you'd like to let us know what you thought about this episode or really anything else at all, drop us a line. You can email us at decoderatheverge.com. We really do read all the emails. You can also hit me up directly on Threads or Blue Sky. We're also on YouTube. You can watch full episodes at DecoderPod. We also have a TikTok and an Instagram. They're also at DecoderPod, and they're a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get your podcasts.

1:16:57Nilay Patel:If you really like the show, hit us with a five-star review. Decoder is a production of The Verge and part of the Vox Media Podcast Network. The show is produced by Kate Cox and Nick Stat. This episode was edited by Xander Adams. Our editorial director is Kevin McShane. The Decoder Music is by Breakmaster Cylinder. We'll see you next time.

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