Pinterest is quietly generating revenue by modifying user submitted pins.
By Josh Davis On February 7, 2012 · 71 Comments
Update: Based on the considerable converge that this blog post received, I have published a new post that shares what I learned.
I swore I wasn’t going to write about Pinterest again for a while after finishing a six part series of blog posts, but major developments keeping coming and no major news organizations seems to be covering them.
If you post a pin to Pinterest, and it links to an ecommerce site that happens to have an affiliate program, Pinterest modifies the link to add their own affiliate tracking code. If someone clicks through the picture from Pinterest and makes a purchase, Pinterest gets paid. They don’t have any disclosure of this link modification on their site, and so far, while it has been written about, no major news outlet has picked up on the practice or its implications.
Pinterest doing this is big news in my opinion for two reasons:
- Pinterest is monetizing their site while in the early beta stage, which is almost unheard of for a newish social network.
- Pinterest has taken this action in a quiet, non-disclosing way.
How long this has been going on isn’t clear, but it has been at least a month as Lindsey Mark wrote a blog post that mentioned it on January 5th. In my case, I saw a tweet from from fellow Lawrence social media user Debbi Johanning that linked to an article Why I Don’t Mind Pinterest Hijacking My Links. That blog post was based on a post by Joel Garcia on an affiliate marketing blog which pointed out the practice, but also explained that if an affiliate link was in the original pin, Pinterest wouldn’t modify it.
How Pinterest modifies its users’ links.
An example of Pinterest adding an affiliate link to one of @free's pins.
Pinterest is able to do this across their site by using the service skimlinks. This service is rather innovative in that they automatically go through a site and add affiliate links wherever there is a link to a product that has an affiliate program associated with it. While many forums, smaller web sites and even Metafilter have taken advantage of the service, I have to think that the volume of links skimlinks is modifying for Pinterest, has to make Pinterest their biggest client and perhaps the majority of their business. skimlinks makes money by taking 25% of any affiliate revenue generated.
Pinterest is taking the unique path of generating revenue early.
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.
That Pinterest is breaking from this mold, and getting revenue while it is still technically in beta is news on its own. I wrote previously on how Pinterest could be the most valuable social network for retails sales, and in Pinterest’s case, they have found a relatively easy solution to start capturing the value of the network before they even leave their beta phase.
How they are doing it with no disclosure to users feels weird.
As most bloggers are aware, when you use an affiliate link in your post, you need to provide some type of disclosure either by it clearly being an ad, mentioning it is an affiliate link or at a minimum providing some type of prominent disclosure that your site features affiliate links. This is done, because you have a financial interest is promoting the product.
In Pinterest’s case, since they are not creating the content and are inserting the links automatically, they might feel that they are not promoting affiliate linked pins any more than other pins, and thus they don’t need to disclose as the placement is not affected based on the financial gain.
skimlinks own site has a FAQ section about disclosure, and it would seem their own recommendation would be that Pinterest make a disclosure.
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”.
When using our URL Shortener to include product recommendations on Twitter, we have provided some disclosure guidelines here.
You could also add disclosure to your site by joining our Referral Program and using one of our disclosure badges.
One specific, problematic issue is that when individual online stores pin their own content, it is unlikely they would insert an affiliate code. But if the store has an affiliate program, it is highly likely that those links now will have an affiliate code in them that gives Pinterest a percentage of any sales. Not disclosing this modification is putting individual stores at a disadvantage when they and their customers are putting in the work of adding pins.
I, like many people, don’t have a problem with Pinterest making money off of user content. The links are modified seamlessly so it doesn’t affect the experience. 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.
Do you care that Pinterest is modifying your pins? Do you think they should disclose it to users? I would love to hear your thoughts.
Related post(s):
- Pinterest for Businesses and Brands
- Pinterest explained, and how to use it.
Tagged with: affliate links • disclosure • pins • pinterest
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71 Responses to Pinterest is quietly generating revenue by modifying user submitted pins.
In my experience, they do in fact change the url of affiliate links, as written about here: gtomanagement.com/what-affiliates-and-merchants-should-know-about-pinterest-links/. They do however let you change it back to your affiliate URL. It’s an extra step and the skimlink persist if you get re-pinned before updating the new link.
While as a user I don’t mind Pinterest making affiliate money, I do wish they mentioned it in the FAQ’s. I’d also kill for an API, but given the current model/strategy it’s likely they’ll continue the path of the walled garden rather than deal with 3rd party applications. Given the current momentum they have I don’t really blame them.
Thanks for the pingback!
Hi Lindsey.
Thanks for commenting. Your blog post seemed to have started all of the coverage.
I did one test with an Amazon affiliate link on Pinterest (it was to a free book, so no revenue would be generated) and it got several repins. Even after all of that, the original affiliate link was still there. I haven’t tried with any other affiliate programs, so this may be unique just to them?
If it is as you stated in all other case, I think that is particularly poor. Essentially then, a merchant can’t pin anything without Pinterest modifying the link.
I agree that an API is unlikely. Given how a bot followed over 1 million users in a day, llsocial.com/2012/01/guy-who-follow-1-millon-on-pinterst-24-hours/ I don’t think they are ready for that.
[...] already have stumbled on one way to bring in some revenue, albeit a somewhat sneaky one.Josh Davis, in a blog post Tuesday on a site called LLSocial, says that Pinterest has been modifying some “pins,” or links to the items that users [...]
Well, Duh.
If you Share a pin from a Commerce site like Amazon you cannot blame them for trying to monetize a bit.
As I state in the post, I don’t think there is anything wrong with monetizing. Most of the discussion I have had on Twitter indicates most people actually prefer this type of business model versus ads.
I think the interest in the story comes from the lack of disclosure to users as well as the fact that it is interesting to see how a popular site like this is monetizing this early in the process.
The only interest in this story is from your link-baiting title. Following yesterdays @Path kerfuffle, this is the latest round of bloggers stringing together conspiracy theories, searching for any crumb of perceived skeeziness.
It’s this kind of speculation that is so attractive to the internet’s mob mentality and so damaging to budding tech startups and mobile platforms. Startups like Pinterest, Instagram and Path, with their new fragile platforms and growing teams cannot prosper if every move they make has their feet held to the fire like Facebook obviously should.
If you don’t think there is anything wrong with monetizing links on a platform you yourself built, then why headline this article with ‘quietly generating revenue’? What business isn’t quietly generating revenue?
Go build something.
Hi Wayne.
I think my title was pretty accurate. If I was using a link-baiting title, I could have certainly used “secretly” vs “quietly”. Based on the reaction to the post and coverage by at least 50% of the bigger tech/social blogs, I think the story is of interest.
You make a valid point about start-ups needing to be able to grow and make mistakes. I don’t imagine that this story is going to hurt Pinterest at all. If they feel they need to make a disclosure they can. I do feel that whether the disclosure is a valid issue or not, the process of how one of the fastest growing social networks is monetizing is worthy of coverage.
As for building something, I have content start-up that I spend 40 plus hours a week on in addition to my client and agency work. FriendsOfFree.com
Thanks for providing a unique perspective with some valid issues to consider.
Josh and Wayne I believe you both have good points. Thanks for sharing.
Wayne, I agree with you completely. I think the Pinterest team have been quite innovative, generating revenue in beta. As long as no one else’s revenue is hurt, and no confidential info is leaked, who cares what goes on behind the curtain? “A girl’s gotta eat, right?”
Wayne I think your criticism is unwarranted, the article was only mildly critical of Pinterest, and was more just a very valid analysis of a monetization strategy.
I’d also point out it’s not “speculation” at all; it’s a fact that they are monetizing their links. All companies, whether startups or established; deserve careful scrutiny by users who turn over their data to them. I found this post to be very fair.
Wonder if the guys over at Gentlemint have looked into this business model
Obviously a whole different demographic but could create some revenue without hurting the user experience.
I don’t see a problem with what they are doing, including the fact that it hasn’t been officially and clearly disclosed. As noted, this is still in a beta testing phase, and so they are still working through a great many things. I am certain that if the ToS does not indicate that they can alter the content posted, then it will very soon.
I’ve been reading up on this, and it seems that there are people who are level headed, such as yourself, and feel that they should disclose this practice, in a FAQ, or some other method, but I’ve read come commenters that really seem to think this is a terrible sin or something.
I find that problematic. We, as digital consumers, have a mentality that everything should be perfect 100% of the time and also be free. That is just not reality. Wikipedia, for example, is quite expensive to maintain, but doesn’t setup ad revenue and such. They rely on getting donations. The problem is, millions of users give absolutely nothing, assuming everyone else is giving, or that the cost of the service couldn’t possibly be as much as the people running it claim it is.
We need better education about the real costs of the digital age. Servers aren’t free, people writing this code don’t do it for free.
When it comes right down to it, if someone can come up with a way to give me a great service and not charge me directly, more power to them. That is normal practice in capitalism. If the service fails, then it doesn’t matter. If it takes off then getting to the point that they are off setting their costs early is only bound to make it even better.
Disclosing how they are making money isn’t going to change the service and I’d rather see them focus on the things that affect the service first.
Well put Nick.
Aside from disclosing it in the FAQ or at least the terms of service, which isn’t a big time commitment, I am pretty excited about this means of monetization.
Pretty much sums up my thoughts exactly. Nothing is free…someone is paying for it, why not the end user? I love Pinterest for it’s practical applications for me to save things I love in a visual medium and I really love Pinterest because they are currently my biggest traffic generator. That they want to make some money while providing that for me? I say go for it.
It’s clearly stated in Pinterests TOU:
By making available any Member Content through the Site, Application or Services, you hereby grant to Cold Brew Labs a worldwide, irrevocable, perpetual, non-exclusive, transferable, royalty-free license, with the right to sublicense, to use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content only on, through or by means of the Site, Application or Services.
It can be found here: pinterest.com/about/terms/
It is a pretty standard TOU across the web. And Skimlinks is used by many thousands of sites and bloggers:
blog.skimlinks.com/2012/02/08/it%E2%80%99s-not-a-secret/
I’ve even heard the founders talk about their business model openly.
++ to Nick The Geek for this:
“I find that problematic. We, as digital consumers, have a mentality that everything should be perfect 100% of the time and also be free. That is just not reality.”
It’s ridiculous. None of our favorite online tools (that still cost hundreds of thousands to millions of dollars to make believe it or not, let alone host all of those photos) would exist if they couldn’t implement a business model.
You’d rather have ads or promoted brands? I think that would be more invasive.
I should also mention that only a small percentage of pins are able to be converted to affiliate. Only pins directly linking to retailers will have the code embedded. Skimlinks does NOT provide the service of going into images and finding the product and changing the entire URL. Most pins are from blogs, Tumblr, etc. Those fluffy kitty or cute manicure pins? They aren’t monetizable.
Pinterest owes us nothing.
I think this is awesome, finally a high growth startup focusing on making some cash!
I think this is genius and other companies should be doing the same. In fact I argued years ago that Twitter should have done this to monetize their traffic beyond the site and into third party apps.
Also something that others haven’t mentioned yet is if you add an affiliate link yourself, it stays in-tack. You can see this in action at a board I created here: pinterest.com/joehall/spy-stuff/ So, I say instead of harping on this as evil, join them and make some $$ along the way!
I personally would prefer this model to one whereby I am bombarded with ads. One thing I am beginning to find annoying on Pinterest are those pins which are clearly pinned by the seller in hopes of gaining more revenue. I use Pinterest as a visual corkboard for ideas to use in teaching. When I click on a pin which sends me to a seller’s page I resent the time wasted to get there.
I have no issue with the company trying to make money, I have a huge issue with their lack of transparency.
While they have a large and growing base of fans (mostly women) who Love love love what they are doing, my advice is to get out way ahead on this and let their users know what they are doing.
Now.
Shaun Dakin
Founder – Privacy Camp
Founder – #PrivChat the Twitter Privacy Chat
First off thanks for the link to our post Josh. Secondly I admire Pinterest and what they have accomplished as much as anyone, but disclosing affiliate links is a 101 thing.
The fact that they are earning revenue and thought about this early on is a huge credit to them.
Everyone makes mistakes and failing to disclose this is the first big mistake I am aware of Pinterest making. They should change their disclosure policy and continue building out their addictive empire.
As far as Pinterest mistakes go, here is one that doesn’t sit well with me.
ellemennop.wordpress.com/2012/02/07/annoyed/
In short, Pinterest asked my friend, Elle, to hand over her username (which she’d been using since 2010) to Elle, the magazine – which coincidentally is @ellemagazine on twitter.
I like Pinterest very much but feel this behaviour is despicable…and another big mistake of theirs. It’s just wrong on so many levels.
Some good discussion at Hacker News on this topic including from user tpiddy, who points out that an almost identical link modifying system was implemented by Posterous two years ago. They too didn’t disclose, but apologized once it was made public: news.ycombinator.com/item?id=3564977
Thats some great follow up Josh!
Pinterest users should be happy that the site can support itself without showing ads. Stores have gained an effective discovery platform. This is not duplicitous, and it hurts no one. So who cares if they disclose or not? No, seriously, who cares, other than tech bloggers?
It says something about the tech world that the collection of money is now seen as more suspicious than the collection of personal data.