Patreon wants a bigger slice of the subscription and membership business: The San Francisco-based startup announced the acquisition of Memberful Wednesday to expand into the realm of white-labeled membership services. Memberful’s entire staff of 7, including its founder Drew Strojny, are joining Patreon as part of the deal. Financial details of the transaction weren’t disclosed.
Here’s a bit from Strojny’s email to customers:
As a Memberful customer, you might be surprised by this news. You might also be concerned about the future of Memberful. Are we giving up? Are we shutting down? Quite the opposite. Memberful has been growing fast, and our growth has even accelerated in 2018. We’re partnering with Patreon to take this to the next level. Patreon brings capital, expertise, and resources that will help us make Memberful even better for you.
This is backed up in Patreon’s announcement:
The Memberful platform and brand will remain independent, the current product roadmap will continue at a faster pace, and existing creators using Memberful will not experience any immediate changes to the service. The Memberful team will continue supporting independent creators and building the Memberful service as part of Patreon. As it will operate as a wholly-owned subsidiary of Patreon, Memberful currently has a different pricing model than Patreon that is built around three tiers which will remain unchanged for existing customers.
It seems that Patreon believes Memberful can help them reach creators that couldn’t otherwise, and are going to keep Memberful alive and well. This is expanded upon in an interview by Ben Thompson with Strojny and Jack Conte, the CEO of Patreon. Here’s Conte:
…there’s a whole segment of the market that doesn’t want to build a membership business on someone else’s platform, they want full control of the branding, they want full control of the experience. Right now Patreon is unable to serve that market, if we were to build that, it would be a completely separate thing. Working with the Memberful team accelerates us into that market segment, so it gives us a very big head start. I would say mostly that’s where the value is.
There’s also the idea of focus and learning. This is a way for us to start learning about that segment right out of the gate, and not only that, but also acquire a team that has so much organizational knowledge and understanding of that segment and what they need and what they want.
The biggest thing is pretty simple: there’s a market segment that we are unable to serve right now, and Patreon’s mission is to fund the creative class. That’s not a small thing: we want to serve all creators, all creative people who are putting things either online or even in person, and this is a way to accelerate our progress to our mission.
I wasn’t shocked by the news. Memberful is a great product, but isn’t a huge company. In fact, according to TechCrunch, it has only about 500 paying users. As you may know, I use Memberful here at 512 Pixels, and it’s what powers the Relay FM membership as well. As such, I approach this news with two thoughts.
First, if this lets Memberful continue to grow and expand, that’s good for everyone who uses it. The acquisition does come with a price increase for new customers, and I hope that doesn’t slow growth. A healthy Memberful means it is more likely to stick around and not be absorbed into Patreon.
That brings me to my second thought. I would consider moving to Patreon if I had to, but the company has no shortage of mistakes across its history, including payment processing issues and walked-back fee changes. I want to believe that Memberful won’t inherit these types of issues, but it’s something worth watching.
I’ve had several conversations with Strojny and his team over the years, and I’ve always been impressed with how they ran their business. It’s why I do business with them, and it’s why I am willing to see how this goes.