Platform-Centred Business Models for Cultural Production

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Felix Stalder:

"Platform-centred models create new platforms that aggregate users in ways that can generate revenue for the cultural producers who use them, either through advertisements or by collecting small donations. The paradigmatic model of the former is YouTube, the most advanced of the latter is Flattr. Similar to the old copyright-based business model, income is generated only after the content is produced, but contrary to the traditional model, access to the material is free and unrestricted.

In December 2007, YouTube introduced its "Partner Program" which enabled its most prolific and popular contributors to earn a share of the revenue generated by advertisements placed next to their videos. This program was created alongside the deals negotiated with the major commercial content producers for revenue sharing. Initially, this was a semi-closed program only for select independent producers. In August 2009, a somewhat more limited "Revenue Sharing" program was opened to all. The two programs have some differences, but like all advertisement-based models, the basic requirement for it to work is popularity. Unless a video is popular, meaning several 100 000 views, there is no revenue to be shared either way. There are, of course, a few starlets that make significant amounts of money this way, but given the size of YouTube's user-base, the odds are low and content needs to follow a specific format to even have a chance of becoming popular. This format is not, of course, for everyone.

Yet significant revenue is probably the wrong target to begin with. Given that most independent videos on YouTube would have received no revenue at all under the old copyright regime, the important thing to recognise is that it is possible to gain some revenue by providing free access to one's material. A such, it represents a functioning, if limited, commercial opportunity enabled by a weak copyright environment.

A different approach is taken by, which described itself as "social micropayment". It is the brain child of Peter Sunde, one of the four public figures behind the controversial file sharing site Flattr (the name plays on "flat rate" and "flatter") was launched in 2010 and enables producers and users to receive and distribute money. It works as follows: users sign up and load a certain amount of money into their account for distribution – currently the range is between $2 and $100 a month. If they produce content, they can place a Flattr button on their content. A user can click on any Flattr button she sees online and at the end of the month the money she put into her account is divided by the number of clicks she made, with the resulting fraction donated to each site she clicked on. So, if she decided to donate $5 and clicked on 10 buttons that month, then each click was worth 50 cents; if she clicked on 100 buttons, then each click was worth 5 cents. At the end of the month, the producers receive the aggregate sum of all the clicks made by the users.

Flattr is the first micro-payment system that might work, since it does not force the user to make ridiculous calculations (is content X worth 5 cents or 15?).\ It also reduces the processing overheads by aggregating the sums internally before making any payments. Though "payment" might be the wrong term, since no prices exist. More accurate would be to call it a micro-donation system: all content is made available freely and Flattr allows users to express their appreciation of that content in a way that generates income for the producers (unlike the like button in Facebook, where potential profits flow to owners of Facebook). So far, Flattr has been popular in the German blogosphere, but is rapidly expanded to other circles. By the beginning of 2011, Flattr had attracted more then 70 000 registered users, of which 70 per cent only donate. This indicated that people are willing to give money to cultural producers whose works they like: perhaps a strange notion in a fully capitalist word, where we are told that people behave rationally by trying to get as much as they can for as little as possible. At least in some areas of culture, this appears not to be the case, tellingly among users more than producers. Flattr has reacted to this by introducing an option to Flattr content whose owners are not yet accepting donations.

First and foremost, Flattr is a way to express an emotional connection between the producer of content and the user who appreciates its value. Most cultural goods are what economist call "experience goods", that is, we know their value only after we experience them. Flattr is able to give that experience a financial dimension without killing it by forcing it into a financial calculation. But there is more to it than that. The experience lies not just in the good itself but in the connection it creates between producer and user. This connection tends to be very weak in traditional cultural markets, since the product is standardized and mediated by impersonal money. Online, with all the social networking and immediate, two-way communication, there are many more ways to establish a real connection between the two sides, a connection that has value to each side. With the help of Flattr, some of this value can be expressed financially.

Again, this is not a model for everyone or all types of content. Even for those who use it well, it does not generate large amounts of money (though remember, neither would copyright-based models in these cases). Still, it is a model for a growing number of cultural producers and one that works only in an environment of free access to cultural works." (

More Information

  1. Cultural Flat Rate
  2. Project-Based Business Models for Cultural Production