Flattr Moves Micropayment Concept Forward – but History Bodes Poorly

We have to admit – European startup Flattr appears to have its act together. The site is smooth, has an active group of beta testers, received positive press and boasts a famous name – Peter Sunde, one of the founders of Pirate Bay.

But Flattr is diving after a particularly elusive pearl. So far no one has discovered a sustainable system for collecting micropayments from Web users to support those who make the articles, videos, websites, infographics and other diversions we all love. And many have died trying.

So why does Flattr think it will do any better?

Flattr is basically a “Like” button backed by money. And money talks. Flattr has taken to heart the lessons of its micropayment predecessors, providing a seamless way to pay and being careful not to ask users for too much. But its creators have also been influenced by social bookmarking sites like Digg, Facebook, StumbleUpon, which have been infinitely more successful getting people to use them.

Users sign up for a Flattr account and deposit a certain amount each month. As they browse the Web, they will see “Flattr” buttons next to all kinds of content. The company says you can Flattr any “thing” – blog post, blog, video, photo, etc. If a Flattr user likes a thing and the creator of that thing has a Flattr account, the user can click the Flattr button to donate money to the content creator.

The number of Flattrs is calculated and displayed, just like Diggs, Tweets and Likes, so Flattr also becomes a measure of how popular a piece of content is. Flattr displays the most popular things on its website. You can donate whatever you want and the money is distributed evenly among all the things you click in a month and Flattr, which gets 10%.

Discouragingly, Flattr’s concept is similar to at least two recently folded startups. Contenture (July 2009-January 2010), from the makers of Clicky Analytics, divided user donations across all the sites in its network, on which users could browse ad-free and have access to other premium features. TipJoy (November 2008 – August 2009), a Y Combinator startup, let users decide how much to donate by entering an email address and a “tip,” which was a pledge to pay up once TipJoy tallied their tips into a lump sum.

Flattr faces two problems. First, the site will depend on users to submit their own content – not taking credit (and profit) for the content of others. It’s easy to imagine the creator of a song or video having no idea that his or her creation is being monetized via Flattr. Second, users must be ready to voluntarily pay for content they can still get for free.

Flattr is in private beta, but the tech news site TechDirt has already signed up to be a guinea pig. This article already has 15 Flattrs.

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