IMHO their main problems were: they delivered too early, and failed in what they offered. When they started, there was no donation-economy like we have today on Twitch, Ko-fi, and others, nor was there an established support-hivemind like we have with Patreon, Github and others. So people did not know what they should do with it. And on the other side was Flattr a bit annoying to use in the beginning, and had percentage-based donations, instead of fixed values IIRC. People are selfish, but also willing to share, if you give them enough reason.
But thinking about, maybe the lack of a social component and some virtual rewards would have been beneficial. But I guess, after the first fail, nobody cared anymore for it, and they somehow failed to find their market.
But thinking about, maybe the lack of a social component and some virtual rewards would have been beneficial. But I guess, after the first fail, nobody cared anymore for it, and they somehow failed to find their market.