Many small streams will form a larger river
Throughout the past six weeks, we have all heard, read and written about various digital payment systems and the business models they are based on. While all of these seem to be very promising – especially mobile ones for the future – I would like to share Flattr with you.
Probably best described as a mixture of Digg’s digg and Facebook’s like, the model makes money for customers and the company with every flattr.
Founded by Peter Sunde (co-founder of The Pirate Bay) and Linus Olsen in 2010, its mission is to help people around the world to share money. Faced with their own dilemma on how to easily raise funds online, they developed a method that lets you donate by just a simple click – just as a like.
Registering with Flattr, users can set an amount they want to pay in. Next users set the amount they want to use per month. Now giving money to someone is just a button click away for users.
Content providers, such as bloggers, musicians, photographers, … can as easily as including Facebook or Twitter, also include a Flattr button on their sites.
As users set the amount they want to ‘flattr’ at the beginning of the month, clicking once, twice or a hundred times, does not ad to their fee. The amount you share per Flattr at the end of the month is calculated by dividing your set amount between all the ‘flattrs’ you set.
So why should I use it?
Since we are all business students here, I am sure that we have come to appreciate the value of work and even more the value of good quality. I strongly believe that authors, artists, and other content providers should receive some consideration for their work and also help them continue their freedom in providing good quality work. While making larger donations, using traditional payment services such as PayPal has always been an option, Flattr allows us to make smaller donations and easily reward the providers for specific content. Receiving large donations once a year, might help a blogger to run his server and sponsor his research and writing, but has no direct affect on individual postings. Using Flattr, consumers of online content can show their appreciation for specific content, and thus keep providers interested in constantly delivering content of similar quality.
I believe that by using Flattr, resonance marketing is not only a growth opportunity for physical products, but can also be the future for content providers.
How does the Business Model work?
As the focus of Flattr is on making sharing easy, registering an account is for free. While ‘flattering’ is for free, users pay a 10% fee on incoming revenues.
Does it work in practice?
With many of new and innovative start-ups and business models long-term sustainable profits have been an issue. Unfortunately Flattr does not publish any information on user base and revenues, but in an interview in March 2012 Peter Sunde explained they have more than 150,000 current users. While we have only little information on the users and revenues generated, the story of german blogger and podcaster Tim Pritlove should be encouraging enough for future users. Tim has implemented Flattr on his blog two years ago, and has since seen a steady growth in income. Within one year of usage he managed to earn 1.900 EUR (after taxes) per month and another one year later he now earns on average 2.500 EUR (after taxes) per month. Using Flattr as his only source of income he is able to devote all of his time on his blogging and podcasts – the things he likes best.
Finally I believe that Flattr shows us what the future of online payment combined with the value of crowds could look – very promising.