Flattr, Social Media That Comes With A Pricetag

If imitation is the sincerest form of flattery, how come a new startup that goes by the name "Flattr" seems to have a business model like no other. While it's somewhat reminiscent of Digg's and Facebook's 'digg' and 'like' icons - this ecosystem is all about making real money every time someone clicks on a 'Flattr' button. Based on the Swedish proverb: "Many small streams will form a larger river," content in the future might come with a pricetag, if Flattr-y catches on!

In fact, differing from all the other major social networks that offered a 'freemium' Peter SundePeter Sundeservice first to attract and scale its user-base before monetizing a few years later, Flattr's actually going for the juggler upfront by asking for payments (or what founder Peter Sunde calls "nano-payments"). If the name hasn't hit you over the head yet, Flattr is a combination of two words: "Flatter" and "Flat Rate."

Ironcially, up until this venture, Sunde was one of the founders of Pirate Bay, the 'unauthorized' music and movie downloading site that refused to pay for any content and is still appealing a subsequent legal case that if convicted could land him in jail. Yet hop-scotching paradigms that appear at opposite ends of the spectrum, these two diametrically opposed business models don't seem to give investors pause. To date, Sunde has been able to line up angel backing from Stefan Glaenzer from Last.fm and Eileen Burbridge, formerly of Skype.

So how does one pay for content via Flattr?

Every user that sets up a Flattr account pays a monthly fee — a minimum €2— that they are willing to contribute for any kind of online content (apparently the beta is on an invite-only basis in Europe). When users find content they like that has a Flattr button, they can click the button to “reward” the content provider.

At the end of the month, the user’s monthly fee (remember this could be as low as a minimum amount of €2) is split equally among the holders of the content that they “flattered”.  Clicking one more button doesn’t add to your monthly Flattr fee, it just divides the fee up equally. Of course, there needs to be enough content creators willing to include Flattr buttons on their sites and enough Flattr users for the system to operate at efficiency.

Already in use by two German newspapers, taz.de and Freitag.de, according to one blogger, he has been able to earn as much as €875.89 in one month.

While it seems counterintuitive that anyone would pay for content that up till now they been getting free, third-party applications are now starting to spring up around Flattr, including ImFlattrd (social network) and a Firefox add-on (to Flattr any content).

Sunde and his team also insist the opposite is true: that there is an untapped demand from people wanting to pay for things online, but who are unable to do so because the mechanism isn’t there. In essence, they feel strongly that content providers who are not paid 'all that well' will continue to keep providing 'quality' content if they are being rewarded 'extra' for their efforts.

It would be a great world for all us bloggers and journalists if we could reap the benefit of this type of monetization model. I know I would work a little harder to produce more and more content based on the number of Flattrs I attracted. 

As the old saying goes, "Flattery will get you everywhere!"