Flattr Finally Lands Big Dailymotion Deal, But Its Business Model Still Sucks

Flattr, a social micro-payments platform which we’ve likened to a “Like button with cash” is to partner with the second biggest video site on the Web, Dailymotion. The distribution deal is targeted at Dailymotion’s key content creators in its Motionmakers category. A cynic might call this a mere test of the platform to see if it can be rolled out across the site more widely. But both parties insist this is a card-carrying ‘deal’. Suffice it to say Flattr has been crying out for a big distribution partner and yearned after one for the last two years. But TechCrunch remains skeptical that even this deal will lift the startup out of the early adopter crowd into the mainstream as there remain significant issues with its business model. Then again, at least they now get a real stress test.

Luckily Dailymotion is one of the top sites on the Web. It has 100 million unique visitors every month and users create over 1.5 billion video views monthly, with over 20,000 new video uploads per day, according to comScore.

Users will now be able to “flatter” (get it?!) those content creators with cash, where 90% of the revenues go to the creators, 5% to Flattr and 5% to Dailymotion in a break-from-the-norm 50/50 deal. Flattr plans to roll out this 50/50 arrangement with other large content sites, assuming it gets any more.

How Flattr works is that users pick a monthly ‘donation ceiling’ ranging from a few dollars to several hundred then click to donate funds directly to the content creator. Each month, the number of total donations from each Flattr user is calculated and payment is divided evenly among all recipients the user has chosen. Recipients also register for Flattr accounts to receive funds, which they can in turn donate to others as they see fit or withdraw to a bank account.

Ironically, Flattr was created by founder Peter Sunde in part as a response to the problems experienced by The Pirate Bay, where he was a co-founder and (now) ex-spokesperson.

There’s a little friction to this deal though. Content creators have to take part in Dailymotion’s ‘Motionmakers‘ program, although it’s free to do so.

Before they can add the Flattr button to their videos. Motionmakers can upload HD content, such as the Ithaca Audio music composition sound design studio and NYC filmmaker Casey Neistat.

But we remain skeptical this is going to get the lift Flattr needs. Fifty thousand content creators is a drop in the ocean on Dailymotion and Flattr’s business model remains the same monthly debit amount. We think it will only take off when it become a pay-as-you-go platform where people can flatter content at will. True that may lead to ‘Flattr bill shock’ but there are simple mechanics that could be used to get around this, such as a ticker or chrome plug-in. In addition we think users should be able to set their own levels, such as giving more cash to sites they choose to do so, perhaps in a Flattr ‘currency’.

There are currently 50,000 Motionmakers, representing about 5% of all traffic on Dailymotion (10-15 million visitors per month in reach).

Flattr works on browsers, tablets, while Dailymotion’s iOS, Android and Xbox LIVE apps will be added ‘later this year.’