Last week, we wrote about The NY Times threatening Kachingle, over a silly publicity stunt that Kachingle pulled. As we explained, Kachingle, which is a voluntary micropayment-type solution (somewhat similar to Flattr), for blog and journalism content, had put up a site where it encouraged the NY Times not to set up the paywall it's planning. To "convince" the NY Times not to bother, it wanted people to contribute to the various NY Times' bloggers via Kachingle, and Kachingle would use the amount raised to try to let the NY Times know there were alternatives. Of course, no one really believed that the NY Times would stop its paywall because of this. It's just a silly publicity stunt.
As we noted, it seemed clear the NY Times was overreacting, and only drawing more attention to the effort. My only question was where the actual money was going, and someone from Kachingle explained that the money would be sent to the email addresses associated with each blog. I'll admit, that seemed questionable to me, as I would bet that the NY Times most certainly does not allow any of its bloggers to accept money from outside sources for its blogging.
That said, it still seems positively ridiculous to now find out that the NY Times has taken it to the next step and filed a lawsuit against Kachingle claiming that the whole effort is a trademark violation. You can see the full lawsuit below:
While the Times does mention copyright questions, it did not include copyright in the lawsuit -- though Kachingle says the NY Times has told it that it has filed a DMCA takedown to Kachingle's ISP. The lawsuit looks exceptionally weak. It seems to focus on the fact that Kachingle uses the little icons associated with each blog to highlight each blog in its leaderboard. The thing is, though, no one reading the Kachingle site is likely to be confused about whether or not the Times has a relationship with Kachingle. It's abundantly clear they do not. The copyright claim (not in the lawsuit, but apparently in the DMCA takedown) also looks weak. Kachingle appears to use a tiny fragment of content.
Either way, I can't figure out why the Times is doing this. It seems to just be pure whining by the Times' lawyers, because they don't like the fact that the paywall is being mocked. There is no likelihood of confusion here. Yes, the Kachingle publicity stunt is childish, but it's the sort of thing that the Times would have been much better off just ignoring (or mocking back), rather than going to court. These days, it really seems that the NY Times has such an inferiority complex about the internet, and it doesn't make the company or the publication look good.
Back in August, we wrote about two companies Flattr and Kachingle that were trying to create a very easy to use form of micropayments, that do away with the mental transaction costs, as a method of getting people to voluntarily support content they enjoy monetarily. Since then we've been experimenting with Flattr (you can see the widget to the left) and it's been quite interesting, especially since Flattr finally opened its doors to anyone, rather than being invite only, as it was when we first started. We'll have a more complete report about our Flattr experiment sometime soon...
It's a pure publicity stunt, and when I saw it announced I wasn't going to write about it. Except... the NY Times and its lawyers have now changed that. While Kachingle leaves out some of the important details, apparently, three people from the NY Times, including the VP of Digital, a lawyer and someone working on the NYT's paywall, called Kachingle, demanding they take down the promotion, saying that it was "annoying" and that it would not stop the paywall. After Kachingle refused, they said they were sending a cease-and-desist letter (which, as of this posting, apparently has not arrived at the Kachingle offices).
In other words, the NY Times just made sure that Kachingle gets a ton more attention for its publicity stunt, and looks like they're simply not open to any alternative business models. I am curious as to the legal reasoning behind the cease-and-desist. I will say that, from the information posted, it is not clearly stated where the money designated for the NY Times' bloggers is actually going, which I would guess may be the legal concern. I guess I could see a trademark claim, in that the NY Times could say that this implies that the NY Times has a business relationship with Kachingle when it does not -- but I think that anyone reading the actual site would immediately recognize that there's clearly no endorsement or relationship with the NY Times. In fact, that's why Kachingle set up the page...
Anyway, if Kachingle ever gets and posts the C&D, we'll be sure to update the post... But, really, what benefit is there to the NY Times in doing this? Threatening Kachingle with legal action seems downright petty and closed minded. Why not let the company run its promotional campaign, see if you learn anything from it, and move on?
Much of the press coverage around Flattr, the "social payments" startup, focuses on the fact that it was founded by Peter Sunde, who is perhaps better known for being the (former) spokesperson for The Pirate Bay. I have no doubt that this is a big reason why the company got a lot of its initial attention, but I think what's a lot more interesting is that this is one of the first "micropayment" platforms that actually tries to get around the historical problems of micropayments for content. There have been lots of micropayment companies out there, and almost all of them failed -- and it wasn't difficult to see why. First, they underestimated the "mental transaction costs" that micropayments entail. Just making the decision if something is worth paying for is a huge "cost" for users. Second, they heavily underestimated the "penny gap," which is the effort that it takes to get someone to go from "free" to paying even a penny. Next, it's an attempt to fight the basic economics of what supply and demand is pushing for the content be priced at. And, finally, required micropayments make it very hard to promote that content via word of mouth or sharing.
Many have tried to tackle the problem of micropayments by assuming that the only real problem is the lack of a clean and easy design. Undoubtedly, a clean and easy design makes it easier to use micropayments, but doesn't tackle all of the other issues. And it's that part that makes Flattr interesting to me, in that it actually tries to get past some of those issues. MediaEvolution recently did a short video interview with Peter about Flattr, where he explains the basic concept:
As he notes, Flattr is actually somewhere between a payment platform and a donation system. But what's most interesting is the way it gets past the mental transaction costs/penny gap issue. It does that by getting people to only make the decision once. You agree to "fund" your Flattr account each month with a set amount, and then when you click on "Flattr" buttons on various content, you're not increasing how much you pay -- you're just subdividing your amount by one more part.
In other words, if you agree to put in $10/month, you'll always spend $10/month no matter how many things you "Flattr." It's just that the amount each thing you Flattr depends on how many you click. So if you click on 10 things, each will get a dollar. If you click on one hundred, each will get ten cents. So, there's no more mental transaction costs or penny gap, once someone has been convinced to sign up for Flattr (which is, yes, still an issue to consider).
The other neat thing that Flattr has done is to effectively set its own site up as something like a "Digg with money." Just to see what happens as an experiment, we've set up Flattr here on Techdirt. You should see the Flattr button to the left of each blog post for now. It looks kind of like a Digg This button, that shows a counter of how many people have "Flattr'd" that story. I don't expect a huge number of folks to Flattr any particular story -- especially since the service is still in private beta, but there is some interesting potential here. One of the complaints people had about Digg was how it got gamed. If Flattr could get widespread usage, it could potentially become a more useful sort of "Digg" because people actually have money riding on who they vote for. I think this aspect of the site is still a bit underdeveloped, but it has some potential.
Since Flattr is still in private beta, we do have a bunch of invites to hand out to folks, if you want them. If you're interested in getting an invite, please use our contact form with the subject "Flattr Invite." We don't have unlimited invites, of course, so first dibs will go to folks who are already Techdirt Insiders (so make sure to mention that in your email request). After that, it'll be first come, first served.
There are some others in this space as well. In the US, there's a company that's been around a bit longer called Kachingle, which Mark Glaser from PBS just wrote about, including an interview with Kachingle's CEO. Conceptually, the two are very similar. Kachingle seems to focus more narrowly on journalism/blog sites, whereas Flattr is for all sorts of content. Kachingle also has a set price: everyone has to pay $5/month, unlike Flattr which lets you choose how much you want to spend per month (in euros, for now). Also, Kachingle doesn't seem to be doing anything Digg-like (yet).
It's also interesting to note that both are big in Europe. With Flattr, this isn't as surprising, seeing as the company is in Sweden, but apparently Kachingle is big in Germany, despite being a US company. As always, I'm still not convinced that "donation" models are really that sustainable, and I've always been skeptical of "micropayments" in general. However, I find both of these attempts to be at least worth watching, as they seem to try to get around the usual hurdles associated with these models.