Some concerns about Pinterest

Pinterest is currently one of the fastest growing online websites. Launched in May 2011, Pinterest now ranks slightly behind Twitter (3.6 percent vs. 3.61 percent) in referral traffic and far ahead of YouTube, Reddit, Google+, LinkedIn and MySpace according to a recent Shareaholic study.

Essentially, Pinterest is an online bulletin board in which users can share images, discussions and links. Each item becomes a pin, which in turn can be grouped into customized (pin)boards that every user creates for themselves. Pinboards can also be grouped as topics. For example, if I like a recipe, I can share it. It now becomes a pin that other users (assuming they like it) can now repin elsewhere.

One key (and neat) aspect of Pinterest is its ability to add a “Pin It” button to the bookmarks bar in a browser. Once installed, “the Pin It button lets you grab an image from any website and add it to one of your pinboards,” as its site explains. Being able to “pin” and share whatever you find interesting at the touch of a button is truly a very neat idea.

This is particularly useful for shopping. According to Monetate Platform-wide Analytics, “same-store referral traffic from Pinterest to five specialty apparel retailers rose 389 percent (to 3.83%) from July to December 2011.”

Users can also follow other users and rapidly increase their numbers of followers.

Although this design has tremendous potential in many areas, most pinboards are focused on food, crafts and fashion. Compete.com reported the number of unique visitors to Pinterest has increased enormously from 1.68 million visitors in September of 2011 to 11.7 million visitors in January of 2012. Fifty-eight percent of the Pinterest users are female.

One aspect of Pinterest that is causing increasing concern is the illegal use of copyrighted images and content throughout the site. This is compounded by the ability of users to capture and re-pin content almost anywhere.  In theory this content will be removed upon request by the owner of the content. In actuality, this is rapidly becoming a problem. Some critics have compared Pinterest to Napster since 99 percent of the pins are images illegally taken from websites ”“ which violates Pinterest”™s Terms of Service.  Since this is the basis for their offering, if aggressively pursued it would result in Pinterest”™s demise. However, given the incredible growth and use of this copyrighted material without profitable intent, I believe that some solution will be reached.

More alarming however, is how Pinterest is generating money. Many startups ”“ particularly well-funded ones like Pinterest (which just received $26 million in additional funding) ”“ will lose money for their first few years while anticipating profitability at some future date. As they continue to grow, they look at different ways of generating revenue.

In its attempt to test monetization schemes, Pinterest selected an approach involving highly questionable ethics. Although this well-funded company presently and amazingly only has 16 employees ”“most of whom are involved with development, it nonetheless decided to use Skimlinks as a means of generating revenue. Skimlinks automatically replaces links to a website with an affiliate link to that website, assuming that website has an affiliate program. For example, let”™s say I provide a link to Amazon.com on Pinterest. Since Amazon has an affiliate program, unbeknownst to me, Pinterest will replace my link with an affiliate link that will generate money for them any time someone follows “my” link to Amazon and makes a purchase. Due to several announcements and increasingly adverse publicity, as of the date of this article, Pinterest has amended its website to include a disclosure but has not stopped this practice.

I find it incredible that a well-funded site that some people are touting as “the next social commerce game changer” would resort to these tactics. They are not necessary and detract from its intent. Though in its infancy, this new social approach has enormous appeal and potential. In the next few months I expect many of the major platforms to attempt to buy or copy this model. More noticeably will be how business starts to use Pinterest and how it in turn starts to effectively and more honorably begin to generate revenue.

Bruce Newman is the vice president at The Productivity Institute L.L.C. in Carmel. He is also a social media strategist and the designer of a new service, wwWebevents.com. Follow him on LinkedIn, Twitter, Facebook and the Productivity Institute blog. He can be reached at bnewman@prodinst.com.