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When recommendations pay off online

A woman looks at the Internet site Pinterest. A growing group of websites, like Pinterest, lets you cash in on your opinion.

You've seen the stuff your friends post on Pinterest? Usually, it's pictures of shoes, jackets or that amazing affordable mid-century rocker from Urban Outfitters.

What's not so apparent is that if you click on their photo and buy it off the site, they might be getting a commission. Word of mouth or advertising? 

Like everything on the social web the line between the two is blurring. Pinterest, Facebook and Twitter have turned “word of mouth” into a marketing opportunity. 

In the old days, if you loved a brand, you’d tell your friends in conversation. Like real time conversation. “Hey, that new restaurant is great!” or “You have to watch this movie.”

“It wasn’t controllable” or easily tracked by the restaurateur or the movie producer, said Eric Goldman, the director of the High Tech Law Institute at Santa Clara University.

Now, of course, it’s often amplified on the social networks for everyone to hear and it’s all tracked. And you know that Facebook, Twitter and et al are making money off that information by selling relevant ads. So why shouldn’t we make money off it too?

A cottage industry of websites like Pose, Fancy and Referly are allowing you to do just that. At Pose, an online fashion magazine, users original photos of themselves, their friends or cool stuff they might see in stores. If the item is sold at one of Pose’s partner stores, you can link the photo to the shop’s site. If your friend clicks and buys something, you get a commission from anywhere between 5-10 percent.

If you friend makes money off your recommendation, the Federal Trade Commission says they have to identify yourself as an advertiser.

“There’s a line between authentic content and 'inauthentic' content,” Goldman says. “Authentic content is what people truly believe." "Inauthentic" comments are what you’re being paid to say.

But can’t both be true at the same time? Can’t I really love something and if my friend buys it, why shouldn’t I get a cut of it too?

Goldman says while the black-and-white rules might have worked in old-media, the FTC is treading on thin ice when it comes to new media.

“The FTC is reaching very deeply into our social relationships,” Goldman said. “Regulating the ways in which we talk among friends is a very awkward position.

And in the end, it’s probably not one the FTC will be able to enforce. Goldman says it’s a little like holding your hand up to a tidal wave. The wave is coming and the old rules won’t hold it back.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.
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