There still seems to be a huge barrier to adoption: getting people to sign up for a subscription to Flattr their first site. There are sites worth subscribing to see and there are sites which are not. The sites not worth a subscription have an incentive to freeload on the ecosystem by not working on the pre-sale of the Flattr account and instead just soaking up the one-click transactions. The sites that are worth a subscription will have to heavily presell the subscription, without their best single reason to subscribe (imposing a paywall) and with less efficiency than just setting up a paywall subscription system for themselves. Plus, instead of getting to keep 90% of the $6 a month that they'd get if they sold you on a subscription to their own site, they'll end up giving most of it away to freeloading sites.
See also Contenture, which was essentially identical to this business model.
There are also interesting problems in a world where everyone has a Flattr account, but we're not in that world and won't ever be.
Clearly, getting signups is the biggest challenge.
But there's no way to collect without engaging in some promotion: placing the Flattr button where it's visible and talking it up.
And the first wave of signups won't be sites that have the subscriber-pull to add their own paywalls. It's the (much larger) group whose only current option is advertising. These sites have a more simple calculus: can't possibly hurt, might help, might create some warm fuzzies if they like the concept.
It's after that group signs up -- spreads the knowledge -- that nudges to signup could be deployed. These probably aren't paywalls; they're more likely payspeedbumps.
Contenture had a weak name, weak explanatory copy ("freemium for the masses"?), and weak marketing/PR. Its automatic subscription-divvying process would tend more to reward collecting without promoting. And, they quit fairly early.
The key for any such system to work is awareness, adoption, and critical mass -- so it's not reasonable to take the example of a different, nearly-stillborn alternative and suggest it reflects negatively on another variant that's already acheived more attention.
This still doesn't work. For the flattr buttons to be there, there must be mugs paying for the system. Those mugs are doing it becuase they think they are going to be taking money out - but, like any pyramid scheme, only the people at the top of the pile will make any money. How long do you think those mugs will keep paying in without getting anything out?
I'm willing to go on record with the following predictions:
1. No big site will get enough money to be worth the pixels the button takes up.
2. No small site will get back as much as they put in.
3. The number of people who pay in without expecting to get anything out will be essentially zero.
4. Flattr will shut down entirely within 2 years from today.
Many early adopters will get fuzzies [1] from participating, and paying-in, and delivering shares to their favorite sites, even if they don't get net payments out. Whether that is enough to break-out into a larger audience is the question. But it could be self-sustaining at a small level -- as a mutual appreciation society, with a sort of competition going on among the Flattratti for each others' shares -- even without a breakout.
It's easy to predict something novel will fail; most truly new things do.
I'm really all about Flattr. I wrote a blog post about it when it was announced. Big wins, as far as I'm concerned:
* By being subscription based, it's 'set it and forget it.'
* By introducing an upper limit, I don't have to worry about overspending my budget.
* Flattr's model appeals to me: if I upvote fewer things, they mean more. Sounds about right.
* One click donations are so much easier than trying to find and pull out my credit card.
what's the incentive to set it up in the first place if you're not a content creator?
Non content creators will mentally file it in their 'something virtuous to do when I have enough money' aka never_never.
The content creators who end up being net donors will stop because their motivation was to make money not give it.
This scheme and the optimism surrounding it sounds like a throwback to the internet bubble.
Supporting content authors. No, really, I'm serious.
I made a comment below about this, you're thinking about the wrong metric. It doesn't matter if everyone does this, it matters if enough do to sustain whatever projects are using it. I myself have made money on a project through solely donations. Not a ton, but that project is also on hold for a minute.
I think you're being overly cynical, and you think I'm being overly optimistic. The truth, as always, will lie somewhere in the middle.
The first time I activated my account was to send money to Vimcasts, which I'll probably do monthly now that it's set up. If I find nothing else flattrable (I'm picky with my money), they'll get a decent amount of money out of me, and I'll call it worthwhile.
what's the incentive to set it up in the first place if you're not a content creator?
If/when there's enough uptake among the creators and the especially-charitable, other small nudges can be used to pressure others to sign up.
The obvious one I can think of is a clickthrough interstitial ad that Flattrers auto-skip (even without having tipped a site). Another would be revealing posts X hours/days early to Flattrers -- giving them a jump on trends and cross-linking.
Nothing the skilled couldn't get around with Firebug/etc, sure, but just enough to remind people they get better content faster if they contribute to creators.
I'll formalize the thoughts a bit later, but I think most important lesson is that most people who make good content for free online don't want to be paid like this. If I were flattr, I'd pick a bigger market to attack to get profitable and then keep this model alive for those who want it.
I know I am oversimplifying this and it could be my inherent cheapness speaking but whenever I hear about a service where I need to pay someone to give other people my money, I back away slowly and then run. So perhaps I'm not targeted user, but I do think that if there are people who would use this, we'd probably seem more thought, time, and effort go into blog posts if people felt that they would receive something more tangible than a nice comment.
AFAIK, this is getting quite huge in Europe. I sure hope that the company itself isn't legally attached to The Pirate Bay, because if that ever goes down (and stays down)…
There is no way to charge for content - you have to rely on the user both having flattr installed and being willing to give you something.
As a content producer you have a direct monetary incentive to not link to or recommand others who also use flattr, as it lowers your cut. The service thus have to work against network effects - the more people who use the service, the worse of I am.
At the same time there is no point in installing it on a website, so it has to fight network effects just to get accepted.
Those are smallish problems. At first, you're only getting signups and payclicks from the very generous and conscientious -- early adopters. But that starts the process of making a larger group aware of the mechanism.
At some point, you throw some switches that give those early adopters some other slight benefits -- single-page articles, skipped interstitials, early-access. That nudges a slightly larger, more self-interested group to signup.
Any ad-supported site already has disincentives to outlink -- the reader leaves! Other sites will get the impressions! But they still do outlink, because ultimately audiences value usefully-outlinked content.
But also, every Flattr site is an advertisement for the network. When 99.99% of your visitors are not yet Flattrers, your top goal is to increase signups, not slice a small pie even more finely. Sending people to other Flattr sites best achieves awareness/subscription growth.
And, if that became a real problem, the Flattr central command could incentivize in-network linking with partial backpropagation of Flattr shares.
I think you missed the point with the first comment. It's a show of appreciation, not a charge for a service.
As for your second comment, I think you're mistaken. With the same reasoning, one might think that developers have no incentive to make it easy for users to stop using their application and migrate their data to a competitor's, but this is actually a good thing to do. Google in particular is known for this. I would personally be more inclined to send cake to a site that links me to other good content.
Flattr shouldn't be evaluated purely based on hard, rational economic principles; it's more of a social effect, so it's more complicated than that.
I think Flattr (or something like it) has the potential to create a competitive economic system for digital goods. Traditionally, if you produce something of value, people will pay for it, and the content creator is rewarded. That model doesn't work well for digital goods, since they're nonrival (if you have an mp3, I can have it as well, with no loss to you) and nonexcludable (you can't stop people having the good, because you can't stop people copying bits).
Right now, digital content producers often have to support themselves with advertising, which is usually problematic or impossible. Advertising is kind of like a shitty version of Flattr where you automatically click the Flattr button by simply loading the page, and the amount each person donates per month is the average amount per capita that companies profit due to online advertising. It's a stupid system for a lot of reasons. The one thing it has going for it is that people take part whether they want to or not, by viewing pages and being affected by advertising.
Flattr might make creating digital goods a profitable activity -- and that's a critical to having an efficient economic system.
"Traditionally, if you produce something of value, people will pay for it" but if there's better value elsewhere that's where they'll go. In this case the best value of all is FREE ie no flattr account.
Hopefully it will reach a critical mass sufficient to allow sites to REQUIRE a flattr account to see their content. Note that this is different from requiring a subscription, since you aren't forced into donating to them. But you are forced into jumping into the 'donation scheme' so if they produce content you like, why not click it?
I'm not sure what kind of critical mass that would require though. I think in some niche areas it would be possible without much effort if there was some sort of banding together among the major content producers for that niche.
I know they say they are but Flattr isn't a micropayment service, it's a microdonation service. It's more like an "upvote" than a paypal payment. It's also about recognizing that most Internet users also are "content creators". One examples that comes to mind is social news sites. While people might like what you're doing, generally you get a lot of traffic that is notoriously hard to convert. If donating were as easy as upvoting maybe things could change.
While signup is a challenge, it will be as hard as getting someone wanting to donate the minimum amount (currently €2 I think) to someone. Also it's still in beta and hasn't been "out" for very long.
Last. While I think this "thread" is somewhat decent, could people please minimize the negativity. When it comes to entrepreneurship it's very easy to be right, as most things fail. This describes what I mean better than I can: http://sethgodin.typepad.com/seths_blog/2009/09/the-problem-...
I can't see the sense in it.
It's analogous to a situation where a newspaper's only paying customers would be other newspapers.
The content creators send each other money and the only net beneficiaries are Flattr and the vast mass of interenet users who continue to view for free
Because the vast majority of people will not be accepting donations because they aren't content creators. If a content creator puts $10 in per month, he could quickly get much more back if a hundred non-content creators each give $1.
You're dreaming. There is no pool of millions of non-creators willing to jump through hoops and sign up for a recurring monthly for your article. And there never will be an article worth doing that for, and they will never join. The only people who will ever join are the pie-in-the-sky dreamers who desperately want this to work on their blog. It's just a giant pyramid scheme. The suckers are the blog owners, and the lies to make them join are the millions on non-creators who will never exist.
Donate buttons are complicated and require you to make all those decisions. With Flattr you have to decide once how much you would like to give per month and that’s that. One decisions and you can click away. It’s hassle free.
I don’t think we know why people don’t like donate buttons and your hypothesis (“People don't like paying for stuff they can have for free.”) might be wrong. Maybe all that’s needed is making donating easier. Maybe not.
I agree. Existing donate buttons are cumbersome and discourage the shift in perception that's needed. I think Flattr's on the right track but the subscription model at its base is still overly cumbersome and inflexible. They've indicated they have more flexible and radical models in mind. Hope they pursue them.
I hope they don't. If it gets more flexible, I won't use it. When this was brought up on Reddit months ago, everyone wanted to see sliders that controlled the percentage of amount that went to different people... it's the definition of a useless power feature.
The simplicity is the entire point. "More flexible" == more complicated, and then I won't want to use it anymore.
I agree sliders would be overdoing it. But what about penny, nickel, dime, quarter options. Of course, they'd have to be abstracted for an international audience, but make it analogous to coinage, spare change, something tangible that people intuitively relate to. I agree that you don't want too many options. You want just enough flexibility.
I think a really innovative approach would be a pledge/rescind model. Let people freely pledge up front up to a certain liberal limit then present them with the registration, payment, tedious paperwork all at once after the fact. Let them welsh out on as many pledges as they want. What is a pledge that is later rescinded worth? Less than a penny obviously but more than nothing at all. I think most people would willingly agree to follow through on their donations even with given the opportunity to back out, if the details weren't too burdensome at the outset.
The problem with every microcurrency scheme I've come across is that it enforces the kind of rigid transactional exchanges that fit traditional commerce models when, with a little imagination, they could do very interesting things with the networking and computational possibilities available through the internet.
It depends on how you define 'successful.' Most people have the metric wrong, which would be conversions. The correct metric is, "Do I make enough to pay for the effort and time doing this?"
replying to ugh and steveklabnik:
I guess I'm a cynic but I can't see people just sticking a meaningful amount of dosh in this every month for no marginal gain.
Museums have tried similar methods with voluntary contributions instead of entrance fees it doesn't work.
Now if they were to get a mention as a valued internet patron
on flattr or on the sites they give to then maybe
I too had an early invite, and was all excited to click to register. Once I saw there had to be a minimum monthly payment, I was extremely disappointed and didn't sign up.
Supposing the current implementation is extremely successful, it would be the equivalent to signing up for a monthly service with Disney (or Sony Entertainment, or <insert your favorite content megacorporation name here>) : you pay the middleman, who redistributes appropriately to the content creators.
What's the problem here? This month if I want to buy 1 or 20 CD/DVD, I choose how much money I give. With the monthly service model, my entertainment disposable revenue gets converted to monthly preauthorized payments - along with all my utility bills. Not good.
Flattr would have to be built in as an option to the existing blogging platforms first to get anywhere: WordPress, Blogger (good luck with that one!), Tumblr, Posterous, etc. Until all those happen, this won't go anywhere.
Not knowing the exact amounts involved isn't a bug -- it's a feature. One major credible theory as to why previous micropayments systems failed is that even thinking about amounts added too much friction. A little like converting a previous voluntary activity to a paid activity, assigning any exact value to it causes a different decisionmaking-scheme to be applied -- which can then kill conversion.
Who cares if every Flattr-click is valued differently, as long as overall, the right people are net-payers, the right people are net-receivers, and the magnitudes generally reward quality? While some activities (banking) require precise accounting, many other socially-valuable activities benefit most from loose accounting.
This criticism ultimately fails because the author himself concludes:
Will I put a Flattr icon on the site? Probably. There's no good reason not to.
It's not that thinking about amounts adds friction, it's that it changes the psychology.
Your doctor friend might give you health advice for free, but wouldn't give it for $1.
Although there is still money involved, it's not at the forefront, so I think people's psychological motivations are different when they click that button.
The challenge will be convincing people to sign up in the first place.
The monetary amounts move the decision psychologically to a new category. This new category typically triggers economic weighing of costs and benefits. Such weighing takes more mental effort than the kind of hair-trigger evaluation a marginally-costless action (like a comment upvote or Flattr-click) does. That mental effort is transactional friction, a tax on seriously considering the transaction. At the margin, some people move on to the next shiny link instead of engaging in the weighing effort.
The motivation-crowd-out effect is related, as is the "don't insult me by putting a measly price on this" sentiment (which I think dominates your doctor example) -- but the theory about previous micropayments that I believe true is in fact talking about a decisionmaking friction.
Well, there's a new friction point added -- each click slightly devalues all previous clicks that month. So now you're thinking "is this comic strip really as good as that recipe for strawberry pie I read last night?"
I think Flattr might be on to something, but the friction isn't gone.
That article is wrong. 25 cent micro transactions? Right. The reason MP's failed is not because MP are a bad idea, but because the implementation wasn't realistic. Flattr solves several problems, and does it realistically, and elegantly.
Flattr creates a system where neither the giver nor the receiver knows how large a donation is until next month. That's not really a solution and it certainly isn't elegant.
Why is that a problem? Isn't the perception of a micropayment, such that it's an insignificant trifle? Why does the particular size of a trifle matter to the giver?
Also, why is a month's delay universally bad? I can see that it would be bad to some people, but there are certainly a lot of other content-creators for whom this wouldn't be a significant problem at all. Actually, I would think that a month's delay would tend to encourage content with at least some staying power.
It's not a solution for micropayments, in the vein that Radiohead's pay-what-you-want model isn't a solution for the music industry selling CDs.
But for casual content creators, the ability to buy a beer for a particularly well-written article or comic, this is excellent. It's a middle ground between ads and micropayments--better than ads, because you know people are rewarding you directly for enjoying your content, and you're not forcing advertising on them.
Plus, I think it can be argued that the better your output--the more it's linked to--the more you'll get paid. At least that much is predictable.
If you depend on it to pay your rent, you're going to need lots of people to click those buttons - and when lots of people do it you care less about how much each one gives and more about the averages. Flattr should publish "average pay per click" statistics, I suppose.
And I do think that it's an elegant solution that reduces the number of actions required to contribute to things you enjoy to a single click.
[edited to add]
Another way to think about it is that the variable is not the percentage of visitors that are willing to pay X dollars for your content, instead it's the average payment of the visitors that are willing to pay anything for you content.
I agree with you that these aren't micropayments in the strictest sense. But your argument seems to be along the lines that apples are a poor dietary choice because they're not oranges. A content creator gets paid something (likely in variable quantity comparable to a micropayment) with very little thought required on the part of the payor: What's not to like here?
There's a good point made in the comments in that article (MRL) - how do we know how much flattr take as their cut?
The answer is made in their terms:
"Revenue to Site Owners: Site Owners receive 90% of the contributed revenue (monies contributed by Flattr Users and distributed to the Flattr accounts of Site Owners). Flattr retains the remaining 10% as its fee. "
I think that's just about reasonable. Certainly any more than that and I'd feel it was a little unjust.
I think it's being a bit pedantic to say that flattr is not doing micropayments because the author is not defining a flat fee that people must pay.
I think any system that allows small amounts of money to flow to content creators can both be considered a win and be referred to as a micropayment as well.
It appears to be fixed now and I'm starting to wonder if I hallucinated the whole thing, but yesterday I was definitely logged in as you, to the point where I opened up the control panel and could see and edit the e-mail addresses you'd registered with.
If it happens again I'll be sure to screenshot and document it properly.
See also Contenture, which was essentially identical to this business model.
There are also interesting problems in a world where everyone has a Flattr account, but we're not in that world and won't ever be.