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Wolfick You should speak with your lawyer friend again and ask him to look into closer detail on whether it is protected under fair use or not

It is not, unfortunately. You could try to argue otherwise, but fair use only applies when a work is nonprofit and the fanfiction is free. He explained to me that if you're locking fanfiction chapters behind a paywall, there is no wriggle room for you to claim "fair use." You could try to argue that it doesn't take away any income that would otherwise go to the original author, but the fact that you're still using characters or parts of a story whose copyright you do not own for commercial purposes takes away any fair use claim you might have. Clearly, fanfiction is not educational, and the fact that you lock chapters behind "donations" already render that claim unviable in any case. He said that the only argument you can make is that the paywall is for "writing services", which he has already debunked because your provision of fanfiction chapters are based on the intellectual property owned by others.

Keep in mind, we are talking about GhostyZ's specific case here, not yours. Your service might probably be considered fair use because I don't think you're actually offering fanfiction for money, and therefore it's not commercial or profit. And I'm not about to text my friend at 6am to ask him about your specific case. Also, GhostyZ writes R18 fanfiction, which is most certainly not educational, and he writes fanfiction on My Hero Academia, Attack on Titan, and I think Is it Wrong to pick up girls in a Dungeon? None of which are available on the public domain, and all of which you need to actually purchase to read. And I don't know how the copyright owners will react to R18 fanfiction being written about their work. They might laugh it off (since Doujins are a thing and these companies don't care about what's being sold in Comiket), or they might issue a cease and desist. But the American companies might not be as sanguine, especially when they learn he earns close to $1,000 a month. Better yet, I think income earned through Patreon is not taxable, so GhostyZ doesn't have to pay tax. So if light comes on how you have a bunch of full-time writers (GhostyZ actually declares that he wants to become a full-time writer this way, and with the amount of money he gets per month, it's not difficult for him to) making a living off non-taxable income on Patreon, I think the government might even step in eventually. Not that I intend to snitch on him...

Also, fair use comes to play if I release my fanfiction for free on my Patreon page, I don't lock them behind paywalls. But if people wish to donate to me, that's considered a gift, and therefore I am protected because my fanfiction is not commercial. It is nonprofit. In that specific case, I am protected. But the caveat is that I should never ask for "donations" in exchange for releasing fanfiction chapters or making available fanfiction chapters. Donors have to give them to me willingly on their own accord without me asking them for it directly. Unfortunately, my friend explains that the moment I start locking chapters behind a paywall or making these chapters available only to subscribers, I am essentially telling the readers that, yes, I am demanding payment for a chapter of an IP that I do not own, and that's a breach in legality.

Tomoyuki What he has explained is not "debunking" the argument. He is stating that is basically the main argument you could, and would, make. Also, it is not a very strong argument in this instance, particularly due to the nature of the case.

I agree with him on this, which is why I stated I believe a judicial decision on the matter would most likely not end in his(GhostyZ's) favor. My previous statements are on fanfiction as a whole, and the general method of patreon usage, which is just to read ahead of whatever the author is writing; early access. It's enough in the grey area I don't believe it is in violation of fair use. (A court could still rule against that, but it is yet to be seen afaik)

You are also right in that by using it for "commercial purposes", it is no longer fair use.

What I am saying is that the chapters themselves have not explicitly been exchanged in the transaction, so he hasn't actually crossed that sharp line where it is automatically deemed to no longer be under fair use (and it is indeed not educational in any way)

Because of this, it is not up to us to determine whether the product, his fanfiction, is being used commercially.

I am not even in disagreement with your viewpoint on his work and the nature pertaining to it, I just consider it from the perspective that we are not the jury to determine it as not under fair use. And that until a proper claim is made against it or the platform it is hosted on acts upon it, whilst it probably isn't under fair use, it is essentially treated as it is. This is just GhostyZ's work, not all fanfiction. Just to be clear. (You can definitely report it to patreon that you believe this content is not under the guidelines which constitute fair use due to how he is leveraging it, but they still need to decide and act on it at the very least)

As for taxable income. Ngl, I don't know a lot about taxation.

Technically, a "donation" by nature is non taxable. It also means people "donating" to authors can also claim it off their tax... Well, I don't believe the tax agency are going to chase down all these people earning money off Patreon, nor anybody claiming a $50 deduction from their tax.

How they proceed would be entirely up to their discretion, and rather than chasing all the ants around for potential tax evasion, they would go after the motherload, which would be Patreon itself. Of course, that would be an entirely different conversation by people more knowledgable on taxation. I don't believe Patreon's lawyers would leave them vulnerable to liability in such a blatant way though.

Tomoyuki But the caveat is that I should never ask for "donations" in exchange for releasing fanfiction chapters or making available fanfiction chapters

You're more than free to ask for donations, you just can't leverage of your fair use material in order to acquire them. Well, you can, but if the IP holder starts throwing salt rocks at you, you will most likely be in trouble haha.

As for author's being offended by R18 fanfiction. As you said, there are countless doujinshi out there. Many of these authors are degenerates themselves. I highly doubt the vast majority of them care. Actually, when the hololive girls got doujins made of them, they were excited. One of them even did reviews of material on herself

XDDDDD

Dear god that still makes me laugh.

Wolfick yeah, definitely. I was talking about GhostyZ in particular, not fanfiction in general.

Also, unless a significant portion of the population earn substantial income from Patreon, the government is unlikely to do anything about it because...quite frankly, it's time-consuming and just not worth it. So Patreon is definitely safe. If anything does happen, it'll be more of reformative measures, not a "take down patreon" or "sue Patreon content makers" thing, like changes in policies. Sort of like Facebook and info-gathering policies, I think. You don't sue the site, you implement changes. Right now, I don't think it's substantial enough, but if it does become a big enough thing, governments will start looking at it. Or maybe they won't, but given how major websites or social media such as Facebook, Youtube, etc. have become the subject of policy changes, I won't be surprised if they do.

How do I put it...if it becomes an issue, they'll just release an announcement telling everyone there will be policy changes and give the content creators time to change their content to suit the new policies. Not immediately suing people and banning them from posting content. I don't mean people will get into trouble, I just meant they will pressure Patreon to make policy changes.

Wolfick You're more than free to ask for donations, you just can't leverage of your fair use material in order to acquire them. Well, you can, but if the IP holder starts throwing salt rocks at you, you will most likely be in trouble haha.

That's what I meant, I mean, I can't tell my readers, "if you want to read the next chapter, you must subscribe to my Patreon for $5 a month." However, I can ask for donations on my Patreon page. You're right about that. Sorry for not being clear.

Tomoyuki

I was actually mistaken in that donation I mentioned. I was thinking of donation to charity, which can be a deduction. As for standard donation, from what I remember, by donating money, you are paying tax on that amount on your income, therefore the person you are sending it to does not have to pay tax on it (this avoids people paying tax twice on the same amount of money aka "this is money in which tax has already been paid on")

I remember this because I used to pay editors via donation, and I paid tax on that money so they didn't need to.

There may be other provisions on it and tax loopholes etc... but yeah, get a tax consultant friend for that haha