How traffic pirates skim revenue from your Etsy shop

You may have heard all the ruckus about Pinterest of late and wondered, why is this such a big deal? It looks like this is just a successful social networking site that is driving lots of traffic to my Etsy shop.  Well…not exactly.   Read on and I’ll explain how sites like Pinterest really make money.  Note: I am using Pinterest as just one example of a type of website/business model that is growing rapidly.

 

Pinterest makes money by directing traffic to websites who agree to pay it commissions on clicks. These sites are called “affiliates” and the business model is called “affiliate marketing”. I give you this information so you can do your own research on this should you be so inclined.

 

So there you are, working away at growing your Etsy shop and you get an email from an online store with what sounds like an offer you can’t refuse. The online store will guarantee you tons of traffic to your Etsy listings. The best part, there are no fees, they do all the work and you only pay a 5% commission when something is sold.  How can you loose, right?

 

Here’s how.

 

When you agree to all this free traffic, you also agree to let the online store import all your Etsy listings. This will be easy as clicking the ‘agree” button. They do all the work, and there is no cost to you unless they actually sell something.

 

They import your Etsy links and mount them on their site. Then they have computer programs post those listings like crazy on sites like Pinterest. Pinterest (and LOTS of other sites like it) is based on code (example: http://www.skimlinks.com ) that works in the background to secretly redirect clicks to affiliate sites where they make a commission.  In fact, the system is engineered to seek out the affiliate site that pays the highest commissions. Remember that commission you agreed to ONLY if something sold.

You might think that lots of people are going to click directly to your Etsy shop too, but the system is expressly engineered to make sure that does not happen. It’s designed to redirect ALL interest in your work through the affiliate that pays the highest commission and you end up paying fees to the affiliate AND Etsy. But its much worse than that. You also cede copyright control over images of your work when you fall into these schemes.

 

A lot of artists are being lured into this right now because they think sites like Pinterest drive free traffic to their sites.  Pinterest did not invest millions of dollars developing their system to give you free traffic.  The other shoe is dropping. Heads up.

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Tags: 2Roses, affiliate, berman, estel, etsy, harriete, is, links, marketing, mine, More…pinterest, predatory, skim, technology, what's, your's

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Comment by Jim Binnion on March 24, 2012 at 8:02pm

Agreed

Comment by 2Roses on March 24, 2012 at 6:28pm

The healing power of sunlight! We are cautiously optimistic.

Comment by Jim Binnion on March 24, 2012 at 11:51am

FWIW you might want to go look at the new Pinterest TOS . At least according to the email I received from them their original TOS was a piece of boiler plate and according to the email:

"Our original Terms stated that by posting content to Pinterest you grant Pinterest the right for to sell your content. Selling content was never our intention and we removed this from our updated Terms."

So that certainly addresses one of my major concerns about Pinterest but as I said earlier I seriously doubt that bit of language would have stood up in court.

Comment by Jim Binnion on March 22, 2012 at 10:18pm

John, I think we agree on a lot of this and I think it is critical for people doing business on the net to get educated about things like affiliate marketing but using words like "Pirates" in the headline and ending your post with a paragraph that begins with "A lot of artists are being lured into this right now because they think sites like Pinterest drive free traffic to their sites"  is painting the service in a pretty  dark light.   As long as you are not using an affiliate marketing scheme Pinterest at least for the moment is driving free traffic to your site. As for evangelizing for them I am still undecided what I think of them but I see way too much speculation of their supposedly nefarious ways that are not at least at this time supported by facts. The site is still in beta and is growing rapidly, only time will tell what kind of netizen they will be but one thing is certain none of us know for sure at the moment how they are going to monetize their site. While the affiliate traffic is bringing in some money they have tens of  millions in venture (vulture?) capitol to pay back and are going to need more than affiliate traffic to service that demand.

Comment by 2Roses on March 22, 2012 at 9:44pm

Jim, your background and length of experience with the Internet is about the same as mine. Good for both you and me. You know I'm not demonizing Pinterest any more than you are evangelizing for them. We both keep pointing out how they are doing what many others are doing. This isn't really about Etsy, Artfire or Pinterest.  We're trying to inform our peers about some of the technology that someone with your experience may take for granted, but they are completely unaware, and thus vulnerable to.

Comment by Jim Binnion on March 22, 2012 at 8:57pm

John, I have been involved with the internet since before there was a world wide web. I was an engineer at SRI International from 1985 to 1998 . SRI  was one of the three nodes that made up the original ARPANET which eventually became the internet, we ran the  Network Information Center which assigns all domain names and IP addresses until the mid 90's. My work was in routing network traffic over various communication backbones. My first website for my jewelry work went up in 1996.  I am not ignorant on how the Internet works and I watched the affiliate marketing networks from their beginnings and I am familiar with how some of these schemes work.  If you want to inform folks about affiliate marketing, its positive and negative sides great, but I think that can be done without demonizing Pinterest. It is doing exactly the same thing that any other participant in affiliate marketing does, they are looking for the highest revenue network to pass affiliate traffic through. There is nothing inherently wrong with this, it is standard practice in the use of affiliate marketing networks. A major portion of the commerce on the internet is based on pay for click whether via Google Adwords  or other Pay for Click links or an affiliate marketing network most links one sees that are related to ecommerce of any sort are charging the website that receives the incoming link for the click.

Now it has always been my opinion that marketplaces like Etsy and Artfire  are bad places to set up shop but then I don't like someone else mucking about with my brand image,  SEO and marketing and then charging me money for little or no effort on their part. But I know how to build websites and do SEO. Those that don't may derive some significant benefit from these marketplaces but if you do not bother to read the TOS  or understand how they make their money then it is shame on you if you don't like the way they are dipping their hands into your pocket.

Comment by 2Roses on March 22, 2012 at 7:20pm

Jim, I wish it were that simple. Unfortunately, the Internet is a big place with lots of really smart people working angles you and I can't imagine. Affiliate marketing is a long established methodology that predates the internet by several centuries. The internet added several new twists to the equation in terms of how Affiliate networks could be organized and managed. Today, new models of affiliation are evolving that leverage recent advances in data analysis software.  Here's an extremely simple scenario to illustrate how this works:

An artist has a shop on  Etsy shop and also on Artfire. Etsy charges the artist 3% commission on all sales. Artfire charges the artist 7%. Etsy does not have an affiliate relationship with Pinterest, but Artfire does. Artfire pays Pinterest 1% on all sales made to traffic delivered through Pinterest. At this point Artfire, the Artist or anyone pins the Artist's work to Pinterest.  Pinterest is programmed to send all clicks on the image to the affiliate that pays the highest commission regardless of where the image originally linked from. The artist sells work due to the increase in traffic, but at a higher commission rate.

Now, there is nothing wrong with this, and the message is: be aware of how these things work so you can manage your business. But also be aware that this is just one VERY simple scenario as to how this all works.

There is plenty of opportunity for things to go badly. You ponder why anyone would get involved with a link scam. Well...precisely because they don't realize that it is a link scam. The scammers are often very clever people who are good at what they do. More likely, it won't be a "scam" at all, but a legitimate on-line retailer who's model is based on affiliate commissions.  This is just fine, unless you are the artist who is unaware of how buyers for your work can be diverted to your highest cost per sale outlet, and that those commissions are ultimately coming out of your margins.

In reality the folks engineering all this don't give a crap about you, me or the entire arts & craft market. We're a financial fly spec in a $224.2 Billion annual retail e-commerce economy. But it is an aspect of a fast growing part of how we all make a living, and we feel it is important for our peers to understand the electronic marketplace better. Jim, thank you for raising questions and digging into a subject that is confusing and an anathema to a lot of us. There will be a lot more to come as social networking, affiliate marketing, real time data interaction and behavioral analytics converge.

Comment by Jim Binnion on March 21, 2012 at 10:08pm

John, If you are not signed up with an affiliate marketing service no one will be able to charge you anything via  Skimlink or be able to somehow hijack your link.   If you participate in affiliate marketing then you expect for incoming links to have a charge on them and since you are paying for the link I am not certain how it matters that it is a Skimlink client that is getting some of the revenue stream.  If you pin your art and links to your Etsy site or your own website on Pinterest yourself then they cannot hijack or direct your link in a way that results in a charge to you.

Comment by 2Roses on March 21, 2012 at 8:15pm

Jim, whatever you believe about Pinterest, affiliate marketing and your copyright protection is up to you. We see these issues from a different perspective. At the very least you have made an attempt to educate yourself about the underlying issues and we respect that.

We do agree on this point: "There is no free lunch, no one is going to market your work for nothing. They are going to get paid somehow. So if someone offers to market your work you had better understand how they are going to get paid before you allow them into your business."

That's probably the best take-away from the whole discussion.

Comment by Jim Binnion on March 21, 2012 at 7:50pm

Ok I still do not believe what you have written about Pinterest is correct.  You are combining several different topics. 

It seems to be popular right now for some in the art community to bash Pinterest without any proof that they are doing anything nefarious with the copyright issue.  I think if there is ever a court case involving it  their assertion that they own the copyright to any image you post will be ruled invalid.  But that is for the lawyers and courts to work out. I can pretty much guarantee that if they tried to claim ownership of a tremendous amount of the images that are being pinned they would get stomped by the multinationals that own the content the some Pinterest user has pinned. 

As for their using Skimlinks that has nothing to do with the vast majority of us. If you are running affiliate advertising on your site then it is skimming some revenue.  I don't really like the concept (and am curious how legal it is) but I don't like affiliate advertising in the first place much of it it is a cesspool of ethically challenged marketers and really could care less if they start loosing money.  Pinterest does not direct your link to a site with affiliate advertising  but rather Skimlinks mucks with a link that is already directed to an affiliate marketing network. So as long as you are not posting links to an affiliate marketing site you should have no problem with this process. If you are interested you might want to read about how affiliate marketing works here http://en.wikipedia.org/wiki/Affiliate_marketing

So as far as I can tell the main issue in your post that might be of concern to us has nothing to do with Pinterest, it is giving someone access to your Etsy shop  to "market" your work and them ripping you off.  Why would anyone give someone the right to do this? This is pretty much like getting involved with a Nigerian "we want to buy all of your most expensive items " scam.  What does Pinterest have to do with this?  If you link directly to your own website or Etsy page there is no affiliate marketing code involved so Skimlinks will not be able do do anything to you.

There is no free lunch, no one is going to market your work for noting. They are going to get paid somehow. So if someone offers to market your work you had better understand how they are going to get paid before you allow them into your business.

A modern metalsmith/metal artist can be found working in traditional metals as well as in nontraditional materials. The designs can range from the classic to the extravagant, and the techniques can either be centuries old or decidedly current.

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