Adblock Plus Announces Increased Fees for Micropayment Platform Flattr
Relaunch of Flattr is coming later this month.
Last week Adblock Plus announced higher fees and a new fee structure for micropayment platform Flattr. Both are owned by parent company Eyeo. Eyeo acquired Flattr in April. The fee will now be broken down into two parts. Content creators and publishers, who receive micropayments from readers via Flattr, will be charged a monthly fee of 7.5 percent to cover Flattr’s operating costs. Also, when they first sign up, content creators and publishers will be charged a fee of 9 percent to cover payment processing.
Adblock Plus explained the reason for the fee increase in an October 6 blog post.
‘Historically, we never communicated what payment processing fees we had to pay as they were a part of the general 10 percent we took, but as we have changed currency and implemented credit card subscriptions, the payment processing fees are now substantially higher. We didn’t just want to increase the general fee but rather handle them separately to add transparency,’ said Laura Dornheim.
Adblock Plus said that non-credit card payments like EU IBAN bank transfers, which aren’t used in the U.S., are less expensive than credit card payments. Also, European card transfers have lower fees that other countries around the world.
‘The biggest factor, however, is that small credit card transactions are expensive,’ Dornheim said. ‘That said, fees go down with payment volumes, and if we can get users to increase their subscription amount, the relative fee will also drop. Once it’s less than 9 percent, this will, of course, be reflected in our Flattr fees.’
Adblock Plus is trying to generate revenue for creators (e.g., publishers), but it also wants to simplify things. The company believes these changes make Flattr more user-friendly and will encourage more people to try the micropayment platform.
‘Getting more people in easily outweighs the minor increase in costs, even though it instinctively might feel counterproductive,’ added Dornheim. ‘Finally, Flattr is a commercial product and has always been. We cannot guarantee the system or the safety of our contributors’ and our creators’ money if we do not make money ourselves. We hope you agree with this and understand that our vision is to create a better internet for creators and the people enjoying their content.’
Flattr is a micropayment service where users (readers) previously set a monthly budget to spend on digital content. Based on the websites they engage with most often, through an add-on to Adblock Plus, Flattr distributes payments to content creators and publishers. Note: The only sites that receive revenue are those on a list created by Flattr and and websites Flattr thinks ‘most users want to Flattr based on attention and engagement.’
‘Our idea is to link consumption with payment. We want pages to be flattred when you read, watch or listen, but only if you have done enough of it. We don’t want you to flattr the things you don’t think are valuable,’ Flattr explains in their FAQs. ‘Flattr uses an algorithm in your browser to determine when this is happening based on your engagement and attention with the content. Once enough has been collected, it flattrs the content.’
In related news, the relaunch of Flattr is scheduled for October 24. In the past, Flattr was a button on a user’s toolbar. Now Flattring content is done automatically. When the new version rolls out, monthly budgets will be a thing of the past. Instead, Flattr is implementing credit card subscription payments, a primary reason for changing the fee structure. Subscriptions run for 30 days, not monthly. Adblock Plus said the new system does not require content creators or publishers to join Flattr, though it sounds like they cannot receive money unless they do sign up.
Another oddity about the new version of Flattr is that, while content creators and publishers don’t have to sign up to be ‘flattrd’ by readers, they don’t share in the proceeds of credit card subscriptions unless they do. Instead, all the money collected goes into a pool to be divided among content creators and publishers who are signed up.
Here’s how I think it works. I sign up for a $20 credit card subscription every 30 days. I engage with 10 sites within this 30-day window, only three of which are signed up with Flattr. The seven who haven’t joined Flattr get nothing. The other three get all the revenue, and the other seven get ‘proof’ that the system works, according to Flattr.
I like the idea behind what Flattr is trying to do, but I am not yet convinced that it is a viable business model.