Itch News | Virtual Succubus

Chapter 1: The News

Hey, it appears it’s time for our yearly platform clusterfuck.

Itch has decided they no longer want to handle payments for us, with no clear reason given. This seems to have happened to various other devs as well, and nobody fully knows why.

This is quite ironic as itch was supposed to be our diversification option to avoid risking everything on Patreon. Over the last year we had grown considerably there, with Itch being 30% of our revenue.

This… really sucks. It is a loss cushioned by the fact our price change was received so well, for which we thank you again, but it is a giant loss nonetheless. I think it’s a good showcase of the huge amount of uncertainty NSFW devs face as I’ve talked about in my monetization writeup.

Itch now requires us to handle payments through external payment processors, which is a large sales tax burden and permanently going to be a risk. We’ve also lost the ability to use Paypal due to some US sales tax complications.

They also will not charge location-based sales tax outside of the EU, which means that we’ll have to take the funds out of our itch sales to remit these taxes.

Many of my peers won’t be able to handle this, many will not be able to legally comply with what is expected of them due to this switch.

It’s a tragedy in the NSFW games space to lose one of our few safe havens. I had fairly significant plans for the distant future involving monetizing on Itch, but it seems all platforms run the risk of hypocrisy.

As a result of all this, We’ve had to look into alternatives to continue providing you with an option that does not involve a recurring sub, handles VAT, and supports the necessary payment methods.

This is the easiest solution we were able to find:

Keep using itch with external payment processors for as long as we can, which… could be a short time, could be a long time.
Set up a new Fansly account that provides a download link both for single-purchases and subscriptions.
Offer free switches to Fansly from Patreon/Substar through a discord channel.
Keep using Itch as host for now because our users are used to it.
As of May 20th 2023, we will no longer be able to accept paypal payments through Itch.

Some extra notes:

We can start doing pre-releases through Fansly as well, as it is both a subscription and single-purchase platform at the same time.
The fees on Fansly are comparable to Patreon. We appreciate those of you who are willing to switch to it for diversification purposes. I have made this appeal with Subscribestar before, but their payment methods are more limited.
They are also a distinctly NSFW platform focused around supporting NSFW.
Following us on Fansly is appreciated even if you don’t use it - supporting the legitimacy of that platform will help new users see that it is a valid and supported option to purchase the game.

But… I’ll be totally frank with you; our efforts previously to diversify were mainly furthered by growth, not by platform switches.

We expect this to be a very large loss regardless of what we do, which definitely brings with it some level of anxiety over our future plans, and our return to being heavily reliant on a single platform… that has previously threatened to kick us off.

It sucks.

If you’re curious about how the entire process went down since this information was given to us, below I have a second chapter to this write up where I go into itch’s response.

Chapter 2: What Happened

The current facts:

Itch removed several adult developers from their payouts system. This includes small devs, all the way to platform top sellers. This includes vanilla content to extreme content. There are no patterns found yet besides all games being NSFW, and some speculation it relates to revshare (which was later somewhat indirectly confirmed).
The email sent out indicates: “This decision was made after considering various factors related to your account, including nature of content, risk, disputes, and the resources required by our team to review payments associated with your account.”
The alternative also means that bundles will no longer work for said games.
The phrasing of the email implies we cannot remove content from our games to remedy this, as it would be against TOS to remove something a buyer has paid for.
Absolutely no specifics were given to anyone who received these emails, as far as we can find.
Support does not reply with any specifics besides ‘this decision is final’.

For transparency and since people have attacked my ways in defense of Itch, there are several reasons they could have decided against handling my payments, all of which I personally hope you’ll find unjustified for a *silent* payment ban with no recourse.

I run my itch as a pay-per-update model as an alternative to Patreon/SubStar, which is very clearly indicated on every page. This was not against TOS, and yet we clearly learned that Itch silently does not like this.
I have produced a side project that involved IRL NSFW photography. Nothing extreme, to be clear, and this was not indicated as against TOS. This was later changed in their guidelines during the week this happened, which makes me suspect I was part of that.
I have used itch in odd ways, such as unenforced donation-style MTX.
I am publicly shamelessly “greedy”, which likely goes against their own “pay what you want” sentiment. (But simultaneously, I also give out my game for free to whoever asks.)
The most justified problem: I was not giving Itch money. When I started my push to grow my itch after the Patreon platform scare of May 2021, it was turned down to 0%. I felt I lived in severe uncertainty on platforms that do not like our business, and I refused to optionally give a non-enforced amount of money to a platform when I could instead be furthering our business and those around me.

Call it selfish if you wish, but I believe business to business terms should not involve ''pay us what you think is good enough''.

I of course immediately offered to remedy this - alongside every other dev affected, even those who were on the platform default revshare. We all understand that adult payments are high-risk, and all platforms need to charge accordingly. As the top seller platform wide when this happened, I understood that they would need to eventually charge platform fees for their service - especially considering the tax considerations we discovered later (see point 7 at the end of this post). I simply expected them to let me know if we ever became enough of a burden to enforce a fee, as would be reasonable of any business and as other business to business interactions have gone before.

These are the steps I’ve personally taken:

I have personally attempted to discuss professionally with support, which went nowhere.

Alongside a personal appeal to Leafo himself.

Neither of which provided results, which led to a public discussion in the Itch.io discord.

On itch’s response:

First, Leafo’s response in the itch discord.

When you opt your account into our payouts system, you are asking us to take on the liability of selling your work on all of our merchant accounts, payment processing services, etc. As described in the email, there are many factors that contribute to the risk associated with running an account for someone. Our goal is to enable the most creators to use our service as possible. However, when a seller knowingly shares content that may pose potential issues, it becomes unfair to the rest of the creators we serve.

I try to avoid mentioning revenue share in these types of discussions, as we aren't asking people to set their rev share to anything specific to get access. But, the arrangement I described above can be especially disheartening when many of these sellers also set their rev share to 0. I'm fairly sure the devs are very much aware of the risks and are purely taking advantage of the situation. It's a lose-lose situation for itch.io. Unfortunately that leaves us in a tricky position and we sometimes need to make the difficult decision about what accounts are eligible for certain features.

Hope that gives you some clarity about our process.

I’d like to break down several points of this initial response:

However, when a seller knowingly shares content that may pose potential issues

This is impossible to know, as itch effectively has extremely minor content guidelines and is considered the wild west of game hosting. In fact, it’s an insulting implication coming from a platform that flaunts how open it is to content of that nature.

especially disheartening when many of these sellers also set their rev share to 0

This is the first mention of revshare, and many devs have noticed a pattern between lower rev share and being payment banned. If their motto of ‘’pay what you want’’ is honest, this is hypocrisy.

I'm fairly sure the devs are very much aware of the risks and are purely taking advantage of the situation.

This is again, oddly insulting. Any dev has a responsibility to themselves to prioritise both themselves and those they pay. This implies that doing so is taking advantage of the situation, when itch itself is the one who provides the option to manually choose revshare.

Unfortunately that leaves us in a tricky position and we sometimes need to make the difficult decision

At no point before this response was revshare brought up. This is the first direct implication that revshare is indeed involved in the decision-making process. Considering the fact it follows ‘’I’m sure devs are aware’’ and ‘’it can be especially disheartening’’, I would say that it implies these decisions aren’t made entirely from a business perspective.

Following this, Leafo spent the next while telling us that we should re-read his message, that “they were not asking accounts to set any minimum revshare to access features” (many seemed to misunderstand this as “revshare was not involved” when the phrasing is clearly purposeful, and this would be proven soon enough)

The next day, a response was posted on itch itself.

We haven’t made any global policy changes, but we have notified some developers individually through our support system that they are no longer eligible for our Payouts system, and that in order to continue accepting payments they will have to switch to “Direct to you”.

We may continue to issue account updates as time goes on. The criteria for the account limitation are directly stated in the notice. I’m sharing a copy of that message here so you don’t have to depend other people’s posts to see what it says:

https://itch.io/static/payouts_unavailable.html

When a seller uses our Payouts system, we take on the responsibility and the associated risk for the content they distribute. We strive to offer our platform to as many independent creators as possible, but, since itch.io utilizes multiple third-party services to facilitate its payment services, we have to be careful about the risk we take on.

We understand this is difficult for some account owners, but as stated in the notice above, sometimes we need to balance the needs of our community at large over individual sellers to ensure we can continue to operate smoothly indefinitely.

Lastly, I wanted to address one thing specifically since it appears some people are confused:

Changing your revenue share setting will not affect the decision on your account

At no time have we ever asked an account to set their revenue share to something specific. If other people are suggesting that then they concluded that on their own. When we evaluated our approach, revenue share was definitely something we considered in aggregate, but there is no minimum revenue share requirement for accounts to have access to our Payouts system. itch.io, just like your games, is “pay what you want.”

Since the day we launched Open Revenue Sharing, we have encouraged developers to consider the value we provide to them when setting up their account. If there was a scenario in which we needed to enforce a minimum revenue share, we could do that, but that is not what we are doing here.

All in all, the changes from the previous day’s stances are:

Specific mention that ‘’When we evaluated our approach, revenue share was definitely something we considered in aggregate’’

A mention that “itch.io, just like your games, is “pay what you want.””

I would say this does confirm revshare was considered in their decisions.

It means that even though revshare was considered, this cannot be remedied.

It does clarify a point of confusion, but not the one intended - the wording used now very specifically mentions that revshare *was a factor*.

The wording ‘’just like your games’’ is also fairly ironic, as I would say that the vast majority of developers making significant money on Itch are not leaving it entirely up to the customers to choose what to pay.

Overall, this situation is odd for a number of reasons.

If it’s a matter of financial and support risks due to chargebacks, fraud, etc - you would expect revshare to remedy it. If developers can become too expensive for itch, without being told as such until they can’t remedy it, everyone has to guess and live in fear of this email eventually reaching them.
If it’s a matter of content & payment processors having issues with this - you would expect guidelines to remedy it, as it does for any platform supporting NSFW at all. You would especially expect this option to be chosen to protect the rest of the developers on the platform.
The wording used specifically refers to them not wanting to ask for a greater revshare because that’s not what itch does. It begs the question: Is this a matter of principle? Would itch rather leave adult games in fear of being removed so they can remain the wild west, hosting everything extreme to frequently copyright infringing? So they can remain the platform where people ‘’choose to pay what they want’’, even if that’s not reality?
The wording of the email implies we cannot remove content to fit their demands, as removing content customers have paid for is against seller policy. This is extremely confusing when it comes to how updates that remove content would normally be handled, but this may be the reason they don’t want to give us guidelines - because we would adjust our games to that, and they would be flooded with refund requests and chargebacks.
Later discussions have led me to believe the payment model had something to do with it, to the point of Leafo outright misrepresenting what some of us do on the platform when asked about it.
The TOS was updated during the week of the discussions (based on WaybackMachine) to prevent adult IRL content, which makes me think it was targeted at me based on the first email engagement I had with them.
Itch does not provide proper tools or guidelines for its creators to charge US sales tax. When using the payouts system, the revenue is apparently deemed as ''royalties'', which by their word removes the need for it. When questioned on how I am supposed to charge US sales tax without collecting state data on Itch, they let me know they don't support location-based tax charging and that I had to use the payment processor tools. Paypal Itch payments, as far as I can see, do not have state data.
If anyone has the knowledge to clarify this, I would appreciate it as nobody I've talked to seems to have any idea - including my accountants specializing in the industry.
(Note that this is entirely my observations from talking with both accountants and other top selling developers)
While US sales tax is supposedly not the responsibility of creators on the payouts system, Itch also does not charge it.
This would mean that if Itch is correctly remitting, they are taking all of the US sales tax from their own revenue - their own revenue being an entirely optional pay what you want model.
Effectively, this would mean they've taken the sales tax loss on all my sales, I was costing them money... and they decided to never let me (or anyone else on 0-10% revshare) know this. I am surprised nobody else has investigated this so far, so if I am somehow incorrect, I am open to clarification.