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Impact - A Blog by INM

Flattr: Finally a Novel Micropayment System

February 1, 2011 by Vahe Kassardjian
Flattr logo

Over the past few months, a marginal European social “micro-donation” site called Flattr has become so popular that it may very well determine the future of e-Commerce.

The idea for Flattr was initiated in 2007, with the first release in August 2010. The initial idea was to provide people with a new way to donate funds to content publishers. Prior to Flattr, Paypal was the defacto standard but it really didn’t work well for small donations. With Flattr, you open an account and determine the amount you are willing to give away each month - usually a few Euros (there is a minimum of 2€). Then, as you visit websites and blogs that display a Flattr button, you click to “flatter” the author which gives them a “tip”. At the end of each month, your budget is spread across the websites on which you clicked the Flattr buttons.  For instance, if you happen to allocate 2€/month and only click on one Flattr button once, that site gets the full 2€. However, if you clicked on a 100 Flattr buttons during the month, each site gets 0.02€ no matter whether it was Financial Times or your neighbor’s weekend blog.

This model may seem unjust as the Financial Times’ expenses are much higher than your neighbor’s, who most probably runs a free blog on open-source software. One may argue that serious publishers deserve the higher premium so they can pay for their infrastructure, and hire and train professionals who will undertake serious and costly projects to ensure quality content. But if quality content is the ultimate goal, this is precisely what Flattr values and leaves to the readers to judge.

There certainly are potentially abusive outcomes in letting the laymen have so much control, but Flattr’s success is revealing of the fact that the traditional value chains in publishing and banking are seriously in question. Once again, we realize that it’s all about the user’s experience, not pre-existing silos and infrastructures of past centuries.

The Flattr phenomenon also highlights a deep link between democracy and capitalism. Clicking a Flattr button is no different than casting a vote in favor of your choice. Only the vote results, in this case, are dollars and cents. Flattr’s rapid growth also proves that consumers will pay for online content if there is a low-cost and simple process in place to do so.