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Pinterest Is Making Money In A Slightly Shady Way

The Soapbox
Pinterest is more than "Tumblr for ladiez." Read More »

I’ve recently developed a fairly severe addiction to Pinterest, as has pretty much everyone else I know (related: do you follow The Frisky’s boards? You totally should!). Pinterest allows users to “pin” pictures of things they find on the internet to themed boards and share with friends: in effect it gives people a way to organize all the fun stuff they find online, and it’s a pretty amazing resource for style inspiration, home design, recipes, and random memes. It’s easy to see why Pinterest recently became the fastest growing site ever, surpassing 10 million visitors in the last month alone, and did we mention it’s only existed since May 2011? And it’s actually still in beta? Yeah. Pinterest is obviously a force to be reckoned with.

But now some interesting questions are surfacing about the way Pinterest has been making money…

Apparently Pinterest has been replacing certain links with affiliate links in order to monetize people’s pins. If you’re not familiar with affiliate links, here’s how they work: many blogs or websites belong to affiliate programs which give them a kickback when they drive traffic to an online retailer. For example, if a fashion blog placed an affiliate link for a J.Crew dress in a post, and you clicked on it and bought the dress, the blogger would receive a small stipend — usually a certain percentage of the sale. Pinterest has been using a service called “Skimlinks,” which automatically skims a site for relevant links and replaces them with an affiliate link. Voila! Instant integrated advertising!

Obviously Pinterest represents a huge opportunity for this kind of monetization, because of its popularity and its focus on a social shopping experience. It’s also a boon for a company like Skimlinks, which takes 25% of all affiliate revenue. So what’s the problem here? Well, Pinterest hasn’t been disclosing to users when and how it is making money from their posts. If I pin a link to a cute pair of shoes on my fashion inspiration board, and Pinterest modifies the link in order to make money, do I deserve to know? Do I deserve the chance to opt out if I don’t want to generate revenue for a third party?

Personally I think the real issue here is one of disclosure. If someone is directly profiting from my activities online, I’d like to know who and how. I wouldn’t necessarily change my habits because of it, but having the information is important, so in that sense, Pinterest’s actions do seem a bit shady. In addition, the FTC enacted strict regulations in 2009 which required bloggers to disclose company freebies, sponsored content, and revenue-generating links. If fashion blogs and other websites are required to be transparent about their money-making tactics, I would think Pinterest would too.

So what do you guys think? Do you use Pinterest? Does this new revelation bother you?

[LL Social]

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