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.
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.
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.
It's easy to predict something novel will fail; most truly new things do.
* 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.
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.
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.
Just because it's a hidden cost that the merchant rolls into the price doesn't mean it isn't true.
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.
I doubt this will be around for long.
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.
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.
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.
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.
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-...
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.
The simplicity is the entire point. "More flexible" == more complicated, and then I won't want to use it anymore.
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.
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.
• Before I can put button on my website, I have to add funds to my Flattr account.
• I have not seen Flattr buttons on other websites, and I don't want to send whole "pie" to one or two websites I may find in months.
[I wrote about the idea a while back: http://chanux.wordpress.com/2010/03/08/donation-networks-to-...]
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.
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 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.
I think Flattr might be on to something, but the friction isn't gone.
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.
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.
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.
How is Flattr not a solution? Why is it important to know how much you are giving someone? As a receiver, how is this at all important?
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 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.
If it happens again I'll be sure to screenshot and document it properly.