Flattr: Is This a Valid Business Model for Musicians, a Vanity Project, or a Scam?

In 2010 Peter Sunde, one of the men behind The Pirate Bay, launched a micro-payment venture called Flattr. While people could illegally download music and movies for free on his other venture, Sunde said Flattr would give them an option to voluntarily make micro-donations for any material they liked.

The way it would work is that the user sets up a Flattr account to which he/she pays a monthly fee of their choice, at a minimum of $2.  They then could click the Flattr button, anywhere it exists, next to the content to reward the person who created it.

Having now connected with Twitter, SoundCloud, Instagram, Flickr, Github, Vimeo, 500px and App.net, Flattr will divide the user’s monthly budget into equal parts based on the number of clicks (likes, favourites and stars) the user made throughout the month.

The founders say they will send the creators of the content 90% of the revenue their content accumulates, the following month. But if the artists haven’t signed up to Flattr, the company will hold on to the money until they do.

As you can see, just like with The Pirate Bay, the artist’s choice is yet again taken away from them – their creations are entered into the moneymaking scheme whether they agree to it or not.

It’s also unclear how those that sign up will prove that they are, indeed, the owner of the content. Do the people behind Flattr understand the complexity of ownership of much creative work? Consider that 95% of the UK top 100 singles last year were not written solely by the performer. And what about the producer of the record?

Co-founder Martin Thörnkvist compares Flattr to Kickstarter.  “Just as Kickstarter revolutionized the way we pay creators before something is created, we’ve now made it easy and natural to support and back someone after and because of what they’ve already created – right when it’s being consumed,” Thörnkvist told Hypebot.

But while Kickstarter connects the creators with their fans, enabling them to be part of the process, Flattr does nothing of the sort. To that extent, it’s perhaps fairer to compare it to PayPal – a way of transferring money.  And looking at it from that perspective, taking 10% is quite steep.

And here is also where we come across the most worrying aspect of the business model: with Flattr, unlike PayPal, transparency is almost completely impossible.

On its website we can see the top unclaimed Flattrs. But the How Flattr Works page, as well as the FAQ page, seems largely focused on bringing in donors and not receivers of the donations (perhaps a reason why there are quite a few unclaimed donations).

The FAQ page says that Flattr will send a report “together with your money” once a month (but only once the revenue balance reaches €10) via PayPal or Skrill (Moneybookers).  But will this report detail what the payment is based on?  After all, each micro-donation is based on how much money each donor put into his/her account that month and how many Flattrs they made that month.

Even Spotify can’t do such specific accounting – and it doesn’t have to, as it has a set amount of users paying a set amount of money for subscriptions each month (or a set amount of advertising revenue that has to be divided by the total amount of streams on the free service).

I’m not saying Flattr is intent on cheating, but if you wanted to cheat I couldn’t think of a better scheme to do it through.

73 Responses

  1. Visitor

    “just like with The Pirate Bay, the artist’s choice is yet again taken away from them”
    Indeed — thanks for bringing this.

    • Visitor

      This story is one of Google’s top results for Flattr now!
      Let’s hope that everybody will read it and boycott the ‘service’.

    • Visitor

      Helienne, also thanks for your Pirate Bay-Flattr logo!
      Many users were probably unaware of Flattr’s direct connection to one of the world’s most harmful and criminal organizations.

      • FarePlay

        Thanks for the “criminal organizations” reference. Where the pirate party and their advocates totally lose their “free speech” argument is the simple fact that these are, after all, for profit operations, where they profit at someone else’s expense.
        Pirate Bay without premium content is a ghost ship.
        Flattr by direct association is a non-starter, unless you are a supporter of online piracy. As referenced in these comments is copper and then there is my good friend Frank at streetjelly.com, a true advocate of artists.
        Hey Paul, it would be great to see a story on streetjelly, and no, FarePlay doesn’t have an equity share In Frank’s company. : ))

        • Evan Schoepke

          “Where the pirate party and their advocates totally lose their “free speech” argument is the simple fact that these are, after all, for profit operations, where they profit at someone else’s expense.”
          And the profits are huge:
          The annual revenue of KickassTorrents are for instance estimated to be $12-22 million.
          Source: http://www.bailii.org/ew/cases/EWHC/Ch/2013/379.html#para58
          And the people behind the pirate ‘parties’ not only support and defend organized copyright crime but also violence against children:

  2. Evan Schoepke

    Hi I’m Evan, global biz dev with Flattr. I wanted to address some misconceptions about our service. First off, the criticisms around our 10% fee. The reason Flattr is already a success (albeit one not so well known in the US) is because we can pay our devs well enough to build awesome stuff, and because we help support creators of all types. In the near future as our userbase continues to rapidly expand in new countries we would like to lower our fee. We are also at this moment considering other options to lower fees further such as accepting and paying out in Bitcoin. Other misconceptions that arise often have to do with pending payments. Trust me when I say Flattr will never force you to make money you don’t want. Our pending Flattr system is not like previous attempts at rewarding creators (think Readability) no money changes hands unless the artist decides to sign up and claim their funds. It’s in Flattr’s best interest to get as much money to artist as possible and we are currently putting new systems in place to alert them when they have pending payments availabe. Amanda Palmer’s Ted Talk “the Art of Asking” describes very closely why artists need a service like Flattr. I’m always happy to correspond and any questions.
    Thanks all,
    evan (at) flattr.com

    • Evan Schoepke

      Hey just wanted to elaborate on what I meant when I said “money doesn’t change hands”.
      Q: I know that money is not distributed to an account until an unclaimed thing is claimed. But is it held? I was working under the assumption that… if a user flattrs 5 things in a month and 1 of those 5 things is an unclaimed thing that the money would be divided up by 4 that month and distributed to the accounts that have been claimed. If, in the next month, the same user again flattrs 5 (claimed) things and the thing that was unclaimed a month ago is now claimed then the money would be divided up by 6 resulting in no “held” money
      A: You are spot on!

      • AnAmusedGeek

        This sounds like a lot of work? How long do you ‘save’ unclaimed flattrs? (I can imagine huge numbers of records piling up in the DB for unclaimed flattrs?). Whats the point of allowing flattrs for people that haven’t signed up?

    • Jordan Owens

      “Hi I’m Evan, global biz dev with Flattr. I wanted to address some misconceptions about our service”
      Evan, here’s everything we need to know about your ‘service’:
      1) Flattr was founded by a convicted criminal.
      2) This particular criminal has hurt musicians, actors, directors, inventors, artists, software developers, songwriters and authors more than any other individual — with the possible exception of the other criminals behind the Pirate Bay and PRQ (a business that makes money from child porn and other illegal material).
      3) Flattr should be avoided like the plague.

    • Jordan Owens

      Hey mate, glad you joined in on the conversation here willingly to help spell out some of the doubt.

      I’m not going to swing one way or the other yet until I’ve given Flattr it’s fair chance with me.

      However, my question, is if you all pay directly to labels who distribute their profits to artists? That way they don’t even have to bother with the service themselves. I think this is something artists shouldn’t have to bother with so they focus on their music and the people who represent them focus on getting them their due funds.


      Jordan Owens
      President / Head Operator
      Sour Mash Recording Industries


      • Visitor

        “my question, is if you all pay directly to labels who distribute their profits to artists?”
        It’s important to understand that Flattr’s founder Peter Sunde owes more than a million dollars in damages after the Pirate Bay verdict, so don’t expect him to pay any business partners a single cent.

      • Hello

        There is nothing preventing a label, manager, etc. handling an artist’s Flattr account if the artist so desires. For many artists, it’s understandable that this would be preferred.

  3. Mark the DonationDude

    Why hasn’t the music bizz created a simple way to give back for fun, emotion, enjoyment.
    The Artists and Labels are still thinking in terms of the old paradigm: I sell my music > you consume & listen.
    We should go back to the time of the minstel : the artist created and performed, the public gave back for the performance with food, money, housing, stipends, love…
    Please dont blame Flattr for taking care of our need to give back.
    PS have you ever seen a donate button on an artists page?

    • Visitor

      Over 250,000 artist pages on grooveshark are currently Flattrable. You can learn more about how it all works here:

      Evan @gaiapunk

      • Visitor

        Let’s not forget the only important aspect here:
        Flatt’rs close ties to organized crime!
        Nothing else matters.

        • Visitor

          I’d say “unbelievable”, but the comments section of DMN is just as bad as the stick-in-the-ass attitude from the DMN writers. On every article. Holy hell, Paul and Helienne. You somehow managed to write an article claiming to examine the potential worries with what might be an amazing artist service when in fact this whole piece contains such an already negative attitude about the service that I can’t figure out what it is you want for this industry.

          I do not like myself for sometimes coming to DMN. It makes me feel dirty..

          • Visitor

            “I do not like myself for sometimes coming to DMN. It makes me feel dirty..”
            You’ll feel so much better over at torrentfreak.com.
            (More welcome, too.)

          • FarePlay

            These are 2 different groups of individuals who have very different perspectives.
            Unlike companies that profit at the expense of artists, you and your co-horts at Torrent Freak are not necessarily dirty. And, yes I read Torrent Freak everday as well and find it fascinating.

          • Visitor

            Dear FarePlay,
            Easy now, I’m on your side. 🙂
            I recommended torrentfreak.com to the other ‘Visitor’ because it’s a great site for people who hate music and musicians.
            I do agree that TF can be helpful for content providers as well, though: Keep your friends close, but your enemies closer… 🙂

      • Davidclowery

        Exactly heliennes point. Flattr is a fig leaf for illegal exploitation of artists.
        Flattr functions as the publicity arm of the pirate bay.

    • Davidclowery

      Okay we musicians will go back to the 1700s if you give up modern dentistry.
      Who are thebluddites here?

    • Unflattered

      If anything should be free for everybody it would be food, water, and shelter. Until those basic human needs are available for everyone, monetary compensation for a persons choice of work should be expected/ respected. Let it be up to the individual to figure out how much they want to charge for their services. If it is too expensive, don’t buy it/ use it/ support it. I don’t know of any other business where the general public can steal your product if they don’t “feel” like paying for it. If pirating websites want to give the general public free stuff, they could use the money they receive in advertising to pay for the content they want to give away. Let them lose money if they want to, don’t force it on everyone else.

  4. AnAmusedGeek

    I’m sort of puzzled why the existing ‘performance rights’ organizations don’t offer/partner with someone to form a tipping service? Aren’t these the guys that pay musicians to begin with?

    We’ve also seen a couple of ‘tipping’ services on DMN lately (Coppr and Flattr). And Paypal has offered donation/tipping options for ages. Yet none of these options seem to resonate with musicians.

    What would musicians want in a tipping service? what features would they want for musicians? what features would they want for consumers? How would they want payouts handled ?

    • Mark the DonationDude

      Your question how do artists want their payouts handeled?
      Up to now they settled for pennies on the Dollar, hanging on to huge overhead building institutions living in the past.
      Seems that even Apple has done the same trick with Itunes.
      It is time for a new paradigm: recording = cheap, distribution is free, audience bigger than ever but no modern way to monetize.
      I want to change this with YourDonation, thats my next goal.

  5. hamburger

    ~ are the payments (unclaimed) segregated from flattr’s normal/other business operations ie they cannot be used to reinvest/pay staff or for whatever reason the directors feel they might want to use them for?
    ~ to repeat someone elses question above which appeared to be ignored…..what about the complexities of the copywright for some material in music/films etc……how do you split royalties up to the relevant parties involved – to the cover artist, the writer, the session musician etc etc

    • Visitor

      “what about the complexities of the copywright for some material in music/films etc.”
      Wow! You almost seem to take this scam seriously…
      But then again, you could probably spell copyright if you were for real.

    • AnAmusedGeek

      To be fair,

      The gentleman claiming to be from flattr (and the flattr website) already state that NO MONEY IS ALLOCATED TO ‘UNCLAIMED’ flattrs.

      Instead, they just keep a count of how many flattrs you have, and pay them out when you sign up.

      TBH, this seems like an incredible amount of work. Personally, I would have just ‘thrown out’ flattrs for unregistered artists. Trying to pay people ‘retro-actively’ when they sign up is probably more trouble then its worth.

      Also, if I give 10 flattrs to an ‘unregistered’ artist, and then they register, it will lower payments to everyone I flattr for that month.

      • Hello

        One way to look at unclaimed flattrs is that they expose insights and provide signals to creators. Before any money “changes hands,” a creator can see that there are fans willing and wanting to donate to him/her, which things are more popular than others, etc. Unclaimed flattrs still have value even before they act as a source of income for the creator.

    • Hello

      Flattrs are donations not royalties, so they don’t necessarily have to follow the complexities of the royalty system. Of course, donations can still follow the same paths as royalties. It is up to the controlling entity of the Flattr account.

  6. Tunaman

    I’m not so sure, actually. I think one of the things Twitter has done well is create a platform and allow others to innovate and add services on top of it — although there has been some tension over things like Twitter buying and/or shutting down clients, etc. that makes that a problematic approach sometimes. A Cover.

  7. A music listener looking for a T

    I found this article coming a bit late (Flattr is now here for years) but still, interesting, even though very directed at criticising.
    There are indeed some things people should be conscious of when using this service, I am personnally mostly worried about unclaimed donations, money that could easily be used for other (not so nice) purposes.
    But, still, most of the charges stun me. “the artist’s choice is yet again taken away from them”. I have NEVER heard the artist may have ANY choice in the “moneymaking scheme”, at least not in the last 15 years. The editor seems to make way more choices, about who can sell the artist work, how much the artist can get,…

    I could continue for almost all sentences of this article, but I prefer to make some points clear:

    – For the last decade at least, this business did not understand that unlike many other domains, technology is available to make any possible thing. The legal aspect is blocking everything. The only reason I don’t buy ebooks, music online, or movies, or even video games, is because it is not available in the format I want, either because my device can’t read it (because of DRMs), because the language/quality is not satisfying, or simple because it is not available in my country.
    – In terms of transparency, I do not know any worse than the rights distribution. Show me a source where it is clearly indicated what a music listener pays for when he buys a CD, buys a song on iTunes/Amazon, streams from Spotify/Deezer. Existing statistics are very vague, never from an official source. I can more easily know what my money is used for when I pay tax than when I pay for music. If I can’t know if my money goes to an artist, why would I give money to Apple/Amazon/…? They seem big enough companies.
    – Noone hindered anyone from building a better service than Flattr. For example, building a Flattr-like interface for the rights distribution business, because what these GEMA/SACEM/… organisations do is exactly what Flattr does : collecting money for the artists.

    • Visitor

      “what these GEMA/SACEM/… organisations do is exactly what Flattr does : collecting money for the artists.”
      GEMA and SACEM are not associated with organized crime.
      Makes quite a difference, don’t you think…

      • Visitor 2

        It’s quite amusing how this “guilt by association” approach is constantly thrown at flattr. It is true as stated in the article that flattr was founded by Peter Sunde, one of the men behind The Pirate Bay. However, Sunde left flatter in 2010 and sold his share of the company. Today flattr is owned by the employees, a non-profit foundation, and some Brittish venture capitalist firms.
        Did you know that the founder of Skype, Niklas Zennstrom, also founded the classic peer-to-peer file sharing application Kazaa popular in the early 2000s? Would you thus argue that Skype (and its contemporary owner Microsoft Corporation) is consequently associated with organized crime? I would guess not.
        I do not, by this, say that flatter is necessarily a bonafide outfit, but a somewhat more intellectual discussion on the topic would be much appreciated.

    • Hello

      A music listener,
      As Evan pointed out in the comments, Flattr does not hold on to “unclaimed donations.” The unclaimed system was designed to avoid this case.

  8. Visitor

    I don’t see why you are dismissive of Flattr when a couple of weeks ago you ran what was basically a full page advert for Coppr, which is for all intents and purposes the same service.

    I think the idea behind this kind of service is sound but there are going to be huge difficulties in making the transaction process run smoothly. You have to look at Sound Exchange to see how hard it can be paying out this money…

    • Visitor

      “I don’t see why you are dismissive of Flattr when a couple of weeks ago you ran what was basically a full page advert for Coppr, which is for all intents and purposes the same service.”
      Again, Coppr is not associated with organized crime.
      Flattr is.
      And that fact makes all the difference.
      You don’t seriously expect musicians to support the thieves who steal their money, do you…

    • Evan Schoepke

      This is a very great point,
      The truth is that Flattr’s model is already successful (mostly in Europe) and the fact that American clones have emerged (centup, copper.is) only underscores this point. Any group open to innovaton while helping to support creators large and small is awesome in our book.

    • Paul Resnikoff

      That’s a point worth noting, though I hope we’re not lumping them into one. I wrote the piece on Copper, Helienne wrote the piece on Flattr, so there are going to be different perspectives throughout (we agree on some things, disagree on other things, I think that makes for better coverage and dialogue).
      That said, I’d agree that there’s always a hazard when a third-party intermediary is handling money between the fan and artists. That’s true for SoundExchange, which is sitting on (last time I checked) multi-hundreds of millions in unpaid amounts, or Copper, which is just starting out (or, Flattr, as we’re debating right now). In each case, any money sitting between them and the artist should be treated and viewed with caution imho.

      • Visitor

        “I’d agree that there’s always a hazard when a third-party intermediary is handling money between the fan and artists.”
        Especially if that intermediary is a convicted criminal like Peter Sunde.

      • Evan Schoepke

        Like I tried to explain previously we do not hold onto money for artist. That money remains associated with the account of the donating user until the creator decides to sign up. We don’t touch it and never have any final say where it goes unlike what happened with Readability. Finally, I just want to add and I know this may sound funny but if Flattr was a scam we would not be in business for this long and not have as many happy users as we do.
        Evan at flattr.com

        • Visitor

          You’re boring.
          Please tell us a bit about your connections to organized crime instead.
          How much stolen money has Peter Sunde channelled from Pirate Bay to Flattr?

        • steveh

          Hey Evan!!
          Listen carefully – you are not getting the memo:-
          The name of Peter Sunde is BLACK amongst music creators. Any services associated with this creature simply cannot be trusted.
          We will not touch flattr with a bargepole.
          You are doomed, dude. Better start looking for another job… Unless of course flattr is just a false front for heinous money laundering scam, in which case your employment as a fig leaf might be a tad more secure.

  9. djpulser

    If they were more transparent it could work but…
    #1 It’s a trust issue
    #2 it’s connected to Pirate Bay

  10. Visitor

    I know all I need to about Flattr and Sunde.. After Sunde was convicted in the criminal copyright case for assisting in the theft from artists of millions of dollars, Sunde, and his co-conspirators, were fined approx $3.6 million. In response, to the conviction, Sunde held up a handwritten IOU statement claiming “that is all the damages I will pay,” adding “even if I had any money I would rather burn everything I own and not even give them the ashes. They could have the job of picking them up.”
    Flatrr is a scam, scam, scam. Artists stay away – if anything, use a legitimate “competitive” service.

    • Visitor

      Thanks for bringing some common sense to the table!

    • Pirate and proud

      I’m sorry but you do not understand Peter Sunde, his politics or what he is trying to build for the world. The Pirate Bay is currently the world’s largest libray, the EU just released a study that states that piracy doesn’t affect sales and in many cases improves them, in many countries people can’t afford media, education or are restricted from both. I don’t want to argue here but I will tell you Peter is trying support creators and a open internet at the same time, thats all, and that makes a lot sense. Spotify was started by one of the co-founders of Napster and yet because Sean Parker has so much money and influence his company is a media darling. Flattr is likely to pay artists better even someday soon and will take less of a cut than itunes and spotify.

      Twenty years from now people will not remember the music streamin services of this decade but they will remember Peter Sunde as a hero just like Aaron Swartz.

      • Visitor

        Wow, you seriously need to wake up!
        This is not the 90’s or 00’s! People don’t like pirates anymore.
        A clear majority even want to punish illegal downloaders:
        Perhaps you haven’t noticed, but there’s a global economic crisis going on out there and the world can no longer afford parasites like you.
        And here are the facts:
        The price of piracy
        10 billion Euros and 185,000 European jobs in 2008.

        58 billion dollars and 373,000 American jobs in 2007.
        Siwek, Stephen E.,The True Cost of Piracy to the U.S. Economy, report for the Institute for Policy Innovation, Oct. 2007.

      • Helienne

        Sean Parker was not the founder of Spotify. He’s an investor that came on board later. None of the ventures Peter Sunde are “trying to build for the world” involve getting the consent of the creators whose work they’re based on. This is not forward thinking – it’s a return to the feudalism that existed in medieval Europe.

        • Hello

          Any chance you’ll be updating and correcting this article since the claim about the company holding on to the money turned out to be incorrect?

          • Visitor

            You seem very interested in this topic.
            Are you Peter Sunde? Or one of the other criminals?
            In that case, could you please stop whining and provide some relevant information about the cash flow from Pirate Bay to Flattr instead?

          • Hello

            I’m not sure if this was a serious question, but I’ll answer anyway. No, I’m not Peter Sunde nor do I work for Flattr. I’ve actually never even used The Pirate Bay. But I do have an understanding of Flattr’s service, and there are readers here that have legitimate questions and concerns that I believe should be addressed.

          • Visitor

            “I’m not sure if this was a serious question”
            Yes, it was a serious question.
            It’s very important to clarify the connections between Pirate Bay and Flattr — including the money flow between Peter Sunde’s two companies.
            You have to understand that Mr. Sunde is a convicted criminal who owes millions of dollars to musicians, writers, designers, inventors and other right holders all over the world.

          • Hello

            Thank you for the reminder, but I’d like to continue to help those with questions.
            And I think it’s reasonable to ask the author to correct the article especially since the notion of a “scam” is largely based upon a mistake.

          • Visitor

            “the notion of a “scam” is largely based upon a mistake”

          • Helienne

            I’m not making a judgment if it’s a scam or not, as you can see by the last sentence. Regarding what Flattr does with the unclaimed money, I was simply relaying what its website says.

          • Visitor

            Correct an article? Pah! At some point, journalists will just make pull out facts from their ass entirely. Oh wait. That’s pretty much how it is today.

        • Hello

          Can you provide a URL and quote from the website that says that funds are taken from a user’s account and held on to by the company so that Flattr can revise this copy?

          • Helienne

            I got the information from Flattr’s own FAQ page, but I now notice that they’ve changed it since I wrote this article. So, for whatever it’s worth, maybe something good came out of it. Still doesn’t solve the issues with specific accounting and distribution to multiple owners of content though…

          • Hello

            Thank you for looking back into this. As I’ve stated before, donations are not royalties and do not necessarily have to follow the same complexities of the royalty system (accounting, distribution). But if the controlling entity of a Flattr account wishes to reallocate or create contracts about the funds from an account (i.e. if the multiple parties involved wanted to use their own, particular rules concerning these funds), there is nothing preventing them from doing so.

  11. Chris

    Wow what an amazing service. You made mugging someone legitimate.Hey you stole my wallet, my watch and my wedding ring but that’s ok because you left me a small tip from the money you stole from me.Gee thanks!

  12. Visitor

    I would love to know how Grooveshark qualifies as a “creator:”

    • Pirate and Proud

      They created a very popular streaming site (still more popular than Spotify) that has roughly the same business model as youtube.

  13. Pirate and proud

    Is there any hater of Flattr on this site younger than 30?
    I would love to know.
    I think this article is completely biased it is perfectly okay to criticise a service for being a shity service but not if you don’t even understand how it works first.

      • Pirate and Proud

        Sorry but you’re a dinosaur and you know what they say about dinosaurs…

    • Stoopid

      I’m over thirty but I know how to spell “shitty”
      love comments like these. Shows how ignorant and stupid pirates are.
      Love they can only resort to calling people dinosaurs.

  14. ya

    so nice of them to take away the artists’ control of their material, destroy the ability to have a price point for their works, and then pocket a minimum of 10% of whatever meager scraps are donated at the end of the line! this world wants and loves stupid youtube vids, that’s what they’ll get en masse under the global system we have now for as long as it persists.

    • Pirate and Proud

      Your right it is wrong to call people dinosaurs but seriously there is a serious generational gap at play here. Flattr is doing it’s best to help artists, Bit Torrent is doing it’s best to help artists and yet these two transformational technologies get lumped together as part of some nefarious pirate plot. I’m sorry but the pirates did not break the internet. Before Steve jobs built up Apple he pirated phone lines, before Bill Gates built up Microsoft he pirated code, before Sean Parker helped build Facebook and Spotify he built Napster. There are new business models that artists should take advantage of rather than fight. People called Edison a pirate for inventing the phonograph imagine so one had come to his house and threw him in jail!!! What kind of music industry would we have now?

  15. David Stark, SongLink

    A complete scam. These people have no intention of paying the rightful copyright owners of the music they are using, ie. all the many professional songwriters & producers worldwide who collobarate with the artists to make the damn records in the first place. That’s why Performing Right Societies & other copyright organisations exist, to ensure fair payment to the music creators.