Swedish micropayments provider Flattr’s mission is to
support free web content by allowing readers and viewers to make
online “tips” to bloggers and other online creators. It recently
linked up with video-sharing website Dailymotion, and is setting
its sights high. Carlos Martin Tornero finds out more
Go deeper with GlobalData
Flattr, a Swedish social micropayments
start-up, came under the spotlight this year when it inked a SEK14m
(USD 2 million) with angel investor Federico Pirzio-Biroli and
investment agency Passion Capital, a deal that valued, Flattr was
valued at about USD13 million.
Flattr enables online users to make monetary
donations on blogs and websites. By clicking a button, content
users can support a website or blog financially, potentially
offering an alternative to subscription models and pay walls.
“Our service is built on the idea of people
being nice to others by giving them money” says Flattr CEO, Linus
Olsson. “We wanted investors that have the same love for the
internet and what people create. Something that is very hard to
find in the venture capital world, to be honest. But we did,” he
says in relation with the USD 2m landmark investment.
“Flattr is a combination of Flatter and
flat-rate. You spend a flat fee to ‘flatter’ people. The ethos of
Flattr is to enable sustainable support for creative work through
voluntary payments,” says Olsson.
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By GlobalData
Pirates at heart
One of the Flattr’s founders is Peter
Sunde, who has grabbed headlines in the past as one of the
co-founders of The Pirate Bay – the filesharing website taken to
court for enabling copyright offences.
Sunde is not longer involved with The Pirate
Bay and its role in Flattr is more representative than
executive. Nonetheless he is “the father of the company’s
philosophy” says Flattr’s community manager Siim Teller..
According to Teller Flattr undoubtedly complies
with the law, but it shares with Sunde’s former venture “values
like freedom of information and free sharing of knowledge that
makes content easily available for everyone”.
In that spirit, Flattr continued processing
donations to Wikileaks when the whistleblower site published the
controversial US Diplomatic Cables in late 2010 and major payment
networks blocked transactions to the organisation.
Every cent counts
Flatter has around 200.000 users who
have made almost one million of micropayments so far.
In the last quarter the average value of
Flattr’s tip was around EUR0.60 per click. In the year to April the
company has reported a 15% growth of the flow in
microdonations.
Eileen Burbidge, partner at Passion Capital
tells EPI that Flattr has “a pretty strong business model” saying
the company is in constant evolution. Flattr is working on plug-ins
to allow people to donate for tweets on Twitter and for audio
created on social music-sharing platform Soundcloud.
Flattr is a small start-up with big ambitions –
planning to challenge more established propositions like Google
Wallet.
“If we actually get mass market adoption this
will become an online currency,” says Burbidge. “If you have
100,000 users with a Flattr wallet you can start sending Flattr
payments.”
Flattr can process micro donations of cents or
even fractions of cents. This payment process is aggregated
on a monthly basis after counting the total amount of clicks in the
Flattr buttons on the websites.
Content creators can withdraw their donations,
once €10 has accrued in their account.
Apple discord
In May Flattr extended its micro
donations network to film-makers through a partnership with video
hosting site Dailymotion. The Paris-based firm attracts over 135
million unique monthly visitors and 1.8 billion videos views
worldwide.
Flattr had previously partnered with Instacast,
an online directory that gathers over 30.000 podcasts worldwide.
But Apple has recently decided that it is going to deny Instacast a
pitch in its App Store.
According to George Kelley of Mobile Strategy
Partners, Flattr and Instacast might channel away Apple’s 30% cut
of the revenue made via its in-app payment solution.
“Apple doesn’t want to allow in-app purchases
by third party applications because they want to make sure that all
the money flows to them so they can take their piece,” he
says..
“The transaction needs to be settled through
Apple. Say it’s a USD1 donation. Apple would take the 30% and turn
around 70 cents to Flattr which makes 60 cents for the final
recipient”, Kelley commented.
The Achilles heel
For Dave Birch, director of Consult
Hyperion, people are very warm towards Flattr’s proposition but the
whole concept is lacking some kind of “killer to get started”.
Birch put the example of the music industry
where fans pay for music not because they have to but because they
want to. “People don’t buy things in iTunes instead of the Pirate
Bay because they want to reward the record company. People want to
reward the artist because they feel a connection”.
Birch points to a kick-start action as key
factor for Flattr’s success. “People need some reason to start
doing it, whether that would come through some sort of cross
promotion, integration into existing payment mechanisms, or a big
personality signing up to have recognition,” he says.
