Is Flattr the new Facebook Like, but this time with real money?

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Flattr is a new startup with an inovative business model, coming out of Sweden. In fact it’s the brainchild of a group of people formerly associated with The [infamous] Pirate Bay, including Peter Sunde Kolmisoppi. It’s highly ironic that Flattr has sprung from a similar group that refused to pay for content, like movies. But Flattr just might work because there are already signs that the micropayments startup is getting grass-roots traction – and it’s still only in closed beta. Flattr is reminiscent of Digg or perhaps Facebook Like buttons – but this time with real money. That could make things very interesting.

According to one blogger he has had €875.89 for the month of June from Flattr and the amount has increased steadily upwards. Plus Flattr (as in flattering someone and a flat-rate payment model) is already in use by two major German newspapers, completely unprompted: taz.de and Freitag.de

There are also lists appearing of people appearing who are starting to make actual money. Admittedly these are small amounts, but that fact it’s even happening is interesting. Flattr has competition in the form of Kachingle but it’s fair to say the latter is not getting quite the same amount of buzz.

So how does it work?

The trouble with micropayments to date, say via Paypal, is that the threshold for donating to a site is high, and sending just a small sum like €0.01 is tedious. So 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. When the user finds something 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 €2) is split equally among the holders of the content that they “flattered”. Remember, 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 (the service is currently in beta and an invite is required to set up an account).

Flattr’s system encourages participation, since in order to get money you also need to offer it as a button. Plus, before you can get flattred you need to funds to your account – so you have to pay into the system to get something out. If you empty your account the flattr payments stop happening. And if you do flattr nothing in a month your budget goes to charity.

Flattr can be used as a compliment to donations or advertising or even for getting small donations for open source software. Third-party applications are now starting to spring up around Flattr including ImFlattrd (social network) and a Firefox add-on (to flattr any content).

Imagine a world where journalists are paid according to how many flattrs they attract? It may still happen…

UPDATE: We have beta invites for 50 random commenters on this post.

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