Pinterest is quietly generating revenue by modifying user submitted pins.
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 …
Context & Ripple Effects
Pinterest enters February 2012 as Silicon Valley's fastest-rising consumer site — comScore credited it with reaching 10 million U.S. monthly uniques faster than any standalone site ever, and analysts had already flagged social curation as the web's next big shift for 2012, with copycats following its lead. What was unknown until now is how it pays for itself: the company rewrites pins that point to ecommerce sites with affiliate programs, inserting its own tracking code so any resulting purchase pays Pinterest a commission.
The disclosure matters because the revenue stream runs through user-submitted content without announcement — pinners and merchants alike had no way to know the outbound links were modified. That the story was picked up within a day by TechCrunch, The Verge, VentureBeat, Fast Company, Business Insider, Bits, Pulse2 and The Next Web signals how sensitive the transparency question is for a platform whose growth rests entirely on unpaid user labor.
First-order effects
- Merchants running affiliate programs now find Pinterest competing inside their own referral funnels: a pin's click-through can earn Pinterest the commission that would otherwise have gone to an outside affiliate or the site's own program economics.
Second-order effects
- Other fast-growing curation platforms watching Pinterest's playbook have a proven, ad-free monetization route — monetizing user-generated outbound commerce traffic — which lowers the barrier for the wave of Pinterest imitators already forecast for 2012.
Third-order effects
- If undisclosed modification of user links becomes standard practice, platforms that aggregate user submissions will be pushed toward explicit monetization policies and disclosure norms, since trust between pinners and the platform is the asset being spent.
The trend: Consumer platforms are discovering they can monetize user-submitted content directly through embedded commercial rails like affiliate codes, before ever building an advertising business.