Flattr (and why paying for free content is stupid)

Every year at SXSW Interactive, a handful of new social media sites formally announce their presence to the world. They usually have cute, tongue-in-cheek names and come in clusters around a theme. Last year, it was about location-based apps like Foursquare and Gowalla.

This year, one of the first new social media apps to come out of SXSW was Flattr - a micropayment site with a vowel predictably missing from its name.

Here’s how it works: I as a blogger can put a Flattr button on each of my posts. You as a reader can sign-up for a Flattr account and dedicate a fixed amount of money each month to “Flattr” with. If you like what you read, you click the Flattr button. At the end of the month, your fixed donation gets split among all the people you’ve “Flattred” that month.

So this is cool in concept, but I’m not sure this will be very successful. Why not, you ask?

My first instinct isn’t actually that if people can get it for free, why would they pay. I think there’s a lot of evidence that humans are irrational, and also that we support things we like.

More important, I think, is that it ignores the real dynamics of how to make a living by giving stuff away. Flattr would turn your content into panhandling - equivalent to what the dude with a guitar and a bucket does on the streets of NYC.

But when you look at people who really have success making money from giving their best work away online, that’s not what happens.

I think musicians are probably the best case study. Independent artists give tons of stuff away online. Their songs are free, and if they’re good, they spread really fast. No cost means no friction to slow them down. More listens equals more fans equals more people who pay to see you perform live and buy t-shirts and stickers at concerts. Sometimes (like with Toronto-based rapper Drake) it even lands you a record deal.

And that’s how musicians make more money by giving stuff away.

So if you’re a blogger looking to make money from the web, you could panhandle. Or you could write really awesome stuff, and then take advantage of the amazing connections and opportunities that will result.

The content isn’t the product… it’s free marketing.