Josh Davis, a blogger on LLSocial.com is calling out Pinterest. Davis has discovered that unbeknownst to Pinterest’s users, the bulletin board site has found a way to profit on pins featuring retail items. In a nutshell, Pinterest skims pins for items that are linked to affiliate ecommerce retailers. The company then adds the retailer’s link and an affiliate code. If a Pinterest user visits the retailer via the Pinterest link and then makes a purchase, cha-ching! Pinterest gets a cut.
Davis says this profit-making scheme is notable for two reasons. First: it is unprecedented for sites this young to be working for a dollar this early in development. Davis writes on LLSocial.com, “Historically large social networks have focused on user growth with little regard to making money. Twitter and Facebook went years before doing any advertising, and more recently, popular services like Instagram and to a lesser extend Path are almost dismissive of how they are going to make money. The idea of growing big and figuring out the business later is dangerous for small businesses, but in the world of venture capital, it is absolutely the norm for rapidly growing web sites and services aimed at consumers.”
Second: Pinterest’s money-making method is newsworthy because they didn’t tell anyone about it. Davis asserts Pinterest may deem this acceptable because their users are actually the ones doing the pinning — so its not as if Pinterest itself is promoting the products. The software Pinterest uses to scan and tag links, skimlinks, actually states it recommends disclosure in its FAQ section on its site.
Davis quotes the section that reads, “We encourage our publishers to disclose to their users and comply with the FTC regulations which state… “When there exists a connection between the endorser and the seller of the advertised product which might materially affect the weight or credibility of the endorsement, such connection must be fully disclosed.” I don’t take issue with Pinterest profiting off of their content, but I agree with Davis who says, “Pinterest likely should disclose this practice to users even if they aren’t required to do so by law, if only to maintain trust with their users.”
What do you think about Pinterest’s plans to make money? Let us know.