Siliconcowboy's Blog

Technology, journalism, social media and social responsibility

Will Pinterest Survive its Disclosure Fiasco?

[UPDATE: Danny Sullivan reports today (February 17, 2012) that Pinterest has now dropped its association with SkimLinks and no longer uses the service to monetize its site. I’ll keep this post as is for archival purposes.]

Word is out now as to how Pinterest is making money. Basically, it’s modifying your pins to include affiliate links and then making a little money off of every transaction that takes place when someone makes a purchase through that pin.

The fact of this modification wasn’t made public until yesterday. Pinterest does not have a disclosure statement about this arrangement on its website. Yet.

The technically savvy types in the social media realm were the first to discover this, and of course, being technical, they’re mostly patting the Pinterest team on the back for a clever use of an existing technology … a bot that hunts down links and affiliates them if the pinner hasn’t done so already.

But this practice makes a small amount of money out of each pin, and the site is growing fast, so it’s probably fair to say that uninitiated users could rightly get a little resentful.  Even more troubling is the fact that the site sets itself up to become party to a future transaction without that user’s knowledge.

Together, this adds up to a potential firestorm of criticism. Can Pinterest survive?

If they’re savvy, the Pinterest management team will pull together a quick disclosure clause and throw it up on their site so users realize what is happening. (In fact, there are competitors to Pinterest and for the most part, they do disclose what they are doing.) But will that be enough?

The rising star known as Path had a similar fiasco earlier this week, when it was discovered that the site grabs users phone lists and cross-references them against others to find common friends – without disclosing this activity to users first.

Path was able to fix a potential PR disaster with an apology and a disclosure statement, but they went two steps beyond that, too.  The company erased its existing phone list database and offered a new version of its software that allowed users to opt in to its phone list database capability – all in a span of about 48 hours.

Pinterest could do this as well, but I think it has a deeper problem.

Now that the secret is out – pinning makes money for a few technically savvy people – customers are going to resent being used this way.  It’s not just a PR problem, it’s a business model that makes unpaid employees out of its customers, and that’s not an easy characterization to overcome. In an up economy, I’m sure few people would think twice about helping somebody else make a buck.  Certainly, any customer of Pinterest should be compensating the site for its service, somehow.  But the concept of working without compensation rubs people the wrong way, especially when legitimate employment is so hard to find.

From my perspective, this smacks too much of affiliate marketing, which in most cases ends up running afoul of the search engines.

True, all of this pinning will provide a whole lot more social data about a large number of places and things, and that could cause the search engine companies to look aside, buI kind of doubt it.

Only time will tell how much ongoing interest there is in Pinterest.

2 comments on “Will Pinterest Survive its Disclosure Fiasco?

  1. Awasht
    March 4, 2012

    Wow, I didn’t realise Pinterest was making money this way. But then again, if you’re not paying for the product, you are the product.

    I guess I should have realised it.

    • siliconcowboy
      March 5, 2012

      As the editor’s note suggests, Pinterest has said it is changing its business model, it is no longer tagging pins in this manner. I’m sure we will hear more details soon.

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This entry was posted on February 9, 2012 by in Tech Trends.
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