Some thoughts on Flattr and other social payment services

flattr - A social payment service

Welcome to my blog! If you like it or me, give money to me by pressing the nice flattr button at the side bar.

Hello?! … are you still there??

Great! Some months ago I read some news about these Piratebay guys that ruined with their BitTorrent tracker the whole movie and record industries. This time these news have not been about the next industry they are about to take down, but about that they seriously thought on how money could be transferred from the consumers to the producers in this cursed “all-for-free”-Internet. The result was a new service that is called Flattr and currently still is in beta phase. Kachingle is by the way another service of this kind, based in the United States while Flattr is – as Piratebay – of Swedish origin.

So what actually is this type of service all about?

Let’s start with a disambiguation: The terms “micro payment”, “social payment” and “crowd funding” are used in this context more or less synonymously. “Micro payment” denotes the transfer of very little amounts of money, independent of how many people are involved in this process. In contrast “crowd funding” is a joined effort of many people to create an aggregated amount of money. In this case the amount of money that each individual contributes is non-relevant.

“Social payment” is the favourite term used by Flattr and Kachingle themselves. The type of service they are offering is a combination of “micro payment” and “crowd funding” and sounds of course much more social better if named “social payment”. So beside transferring small amounts of money out of the crowd to the creator, each participant can express her/his appreciation by hitting the Flattr/Kachingle button on the creators Web site. Quite similar to this meanwhile omnipresent “Like – Thumbs up” button of Facebook.

In general it works like this: First of all you have to become a member of the social payment service. You then define a fixed monthly amount of money that will be shared to all the things you show appreciation to. Each time you press the button on a Web site, blog, etc. – that needs by the way to be also a member of the same service – the click is logged. At the end of the month, your amount of money is divided by all registered clicks (Flattr) or all registered visits at clicked URLs (Kachingle) that you performed during this periode. The resulting per click/visit amount is then transferred to the originator of the Web content at which you clicked the button. As soon as you are a member of the service, you can also place such button(s) on your own Web site and thereby receive appreciation in form of money from visitors.

The resources to which such a button can be attached are not limited. So in lack of a well-fitting name, these things are just called “a thing”. They could be a Web site, a blog post, a podcast, a video, a movie, a comment, etc. The only thing they have in common are that they are on the Internet.

Flattr and Kachingle also offer similar functionality like social bookmarking and micro blogging sites, just think of Identica, Twitter, Digg it, Stumble upon, Facebook and so on. You can see what others liked/forwarded and so as a consumer may discover new, specific or trending topics or as a creator get your stuff out to the public.

Official video – “This is flattr”

Kachingle vs. Flattr

The major difference between the Kachingle and the Flattr network seems to be in privacy. Like said in the previous paragraph, you can go to the homepage of the service and discover what others liked, what are the most favourite and upcoming things. Flattr just shows how many people pressed the button for a specific thing. It is not possible to see who did so and also not what else was supported by her/his click. Kachingle in constrast shows everything to everyone. You can see how much a specific site earned by the Kachinglers, who donated this money and how often these persons have visited the site. Moreover you can see on a per user (Kachingler) base, which Web sites have been visited, the number of visits and the number and amount of payments that have been transferred.

Beside the differences within the services, is there anything else one should consider before signing up?

At least there are some things about which you should make up your mind when starting to use such kind of services. Most of them are taken out of the German speaking blogosphere that seems to be at the moment the vast majority of all Flattr and Kachingle users.

Money

Let’s first come straight to the point: How much money could you earn out of the usage of Flattr and Kachingle? For Kachingle it is not that hard to get the data. Just go there and check it out. As example let’s take the most popular one Carta, a German blog about politics, economics and the digital Public. They are a member of the Kachingle network since 17. Dec 2009 and have received so far $ 347.50 from 86 Kachinglers.

For Flattr it is not that easy. A single click seems to be worth on average between 11 Cents [1] (data for TAZ, May) and 29 Cents [2] (data for tim.geekheim.de, June). The actual value of a single click seems to vary according to Tim Pritlove [2] between € 0.01 and € 1.64.

Certain blogs and Web sites have not made a secret of their revenue and their reported incomes for May and June are:

Blog / Site May June Source
apfelkraut.org € 0
Carta € 122.56 € 201.22 1,2
Chaos Radio Express / Not Safe For Work € 208.54 € 875.89 1
law blog € 33.06 € 247.68 1,2
netzpolitik.org € 39 € 576.53 1,2
Spreeblick € 110.94 € 340 1,2
Stefan Niggemeier / Oslog.tv € 352.89 1
taz € 143.55 € 988.50 1

So at least if you are a bit of a major blogger or other professional Web content provider you can earn quite a considerably amount of money out of social payment services.

New source of income

As you may have noticed there is also a – so to speak – classic newspaper on the list. According to what they have earned so far and what they wrote [3], flattr means for them a promising new source of income in times of constant decrease of the circulation numbers of paper edition newspapers. While the taz already makes use of it, others still keep just writing [4] about this new phenomenon.

More straight expression of opinion

The usage of social payment services could enable a more straight and serious expression of opinion. Tim Pritlove writes [5] that the click on a social payment button is always paired with liability. So as also money is involved, you may not be as fast as when pressing the “I like” button of Facebook. In other words you have to think if the work you want to value is really worth the money you are providing by the click. Still as the total amount of money you are spending does not increase by each click, you may not take it too serious.
 
Misleading
 
Let’s assume I have found a nice YouTube video and want to share it. I embed it on my blog together with a hint similar to “… watch this, so funny!”. Accidentally or on purpose the flattr button is also placed on this post, as it is on every other post on my blog. Now some of my visitors want to honour this video via social payment services with the intention to support the actual producers. If these visitors are Web veterans – no problem – they will well now that they need to follow the link to YouTube to get through to the originator. In case they are non-experts – normal Web users – the flattr button located on this post will most probably suggested that they can directly value the work of the original author by using it. So in this case I can and will receive money that is originally not meant for me.

Non commercial

Many blogs like also this one use the Creative Common Attribution-NonCommercial-ShareAlike license (CC-BY-NC-SA) to publish their content. In the Internet and especially the blogosphere a basic principle and common habit is to reproduce extracts and sometimes even full content of others work. Beside pure text content also photos, music or videos are taken from the original blog or Web site and posted somewhere else. So what happens if you do so as a flattr participant and the content is licensed under a CC-BY-NC-SA license?

Is to offer a flattr button already a commercial intention and thereby a violation of the license? Or does it depend on the amount of revenue you are creating with it? [6]

Liability

The answer to this question may also have much wider implications. If your offered service (blog, Web site) is considered to be of commercial nature because of the flattr button, additional regulations – mainly defined by the German Teleservices Act (or the corresponding law in your country), the competition law and trademark rights may apply to you and things will get much more complicated. So you will not only have to provide a much more detailed imprint. [7]

Subject to taxation

Let us assume that you are a student or employee with nothing special that needs to be declared to the public authorities when it comes to taxation. For fun your are running a blog and recently integrated the flattr button. Suddenly your last posts become very popular and people keep hitting the flattr button like hell. At the end you have received by this a significant amount of money.

Now is this something you need to declare to the authorities? Will this even affect your tax rate or social status? If due to this your status will change from that of a poor student to the one of a small entrepreneur, what will your health and social insurances charge for your next membership fee?

Share of the cake

As always everyone wants to get her/his slice of the cake in such a system. So when you flattr something, your money is not entirely transferred to the thing you are flattring. The social payment service itself is already siphoning off money. In case of flattr it is 10% of your monthly revenue. To get the money to or from your social payment service of choice, you need to utilise a money transferral service like PayPal or Moneybooker that also withhold a little service fee. So in the end it is not such a direct and clean money transfer as it is mostly proclaimed.

And now what?

There exist many – sometimes contradictory – opinions about how to approach the listed issues best. As flattr and Kachingle have not yet become that popular on the Internet and seem to be firmly established in only a few sub-communities like the German speaking blogosphere, it still keeps to be thrilling where this experiment will lead us to. As already stated in the introduction, social payment services are serious candidates for addressing the yet not solved endeavour to preserve free access to (most) resources on the Internet while assuring at the same time that its creators get paid for their valuable work.

I already started using it, as I like the idea behind flattr. For now I will only offer a single button at the side bar of apfelkraut.org and medfloss.org.

I am looking forward to the next iteration of social payment services, when I can myself flattr a thing and thereby value the work of a Kachingle user! And the best is that there is already an open alternative approaching in form of Openflattr.

For more information … sorry, all in German:

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