This post is a big diversion from my typical entries. I wrote it about a month ago as I was obsessed with the machine behind Pinterest -- and ruminating on how I could work there. :)Countless articles have been published that say essentially the same thing:
Pinterest doesn't have a business model. They created something huge and now they are trying to figure out how to monetize it --once we are all can't fathom life without it!
They have somewhere in the neighborhood of $37 million in funding, 16 employees and a boatload of servers. Remember, they don't house much of the content - only (the few) images that users upload. The rest is
data and
relationships.
It is essentially a
referral site -- remember the old concept of a portal and the list of categories on Excite and Yahoo!? Same idea here, except content is drummed up by users and the new-in-the-last-five-years concept of social networking. Silicon valley peeps remember the idea of "content managers". The content manager is now YOU, dictated by people you follow and (may or may not) know. It's like a ticker - content is fresh and relevant. I love that some links say "way long ago" -- as in more than a few weeks. Time flies on the Internet, people!
Back to money. The only thing it seems they are really making money on at the moment is through Skimlinks -- an affiliate network that gives Pinterest a kickback on purchases. Not all companies are involved in affiliate networks, however, and even considering the colossal amount of traffic buzzing through Pinterest, most experts say this isn't a huge money-maker.
Realistically... Where are most of those pins pointing? Momma blogs. Magazine content. Some fashion and home sites. And people much smarter than I are figuring out how to monetize it. (God bless them. I have kids to get to school, projects and meals to execute, a home to keep organized and Pinterest to look forward to when I get them to bed.)
Here are my observations on the potential winners and losers :
(potential) LosersMAGAZINES: while nothing will replace print for me, I've got think I am able to devour more magazine-type content in an hour on Pinterest than with Real Simple, Living, etc. On the other hand, traffic is likely up to their sites, contributing to ad revenue and replacing dollars leaving the print business. Worth noting that home-oriented magazines have been hard hit, with many shutting down in the last few years.
FACEBOOK: Is Facebook seeing a decline in usage with Pinterest's meteoric rise? With an average user time of 98 minutes (!!!) that time has to come from somewhere -- kids, spouses, Facebook... Or sleep.
(potential) winners: BLOGGERS: Pinterest is a wading pool of cool stuff people put on their blogs -- which until now likely had limited followers. Pinterest changes all that and drives traffic to the blogs. And if the blogger is trying to monetize their blog with ads (which I'm not) they are getting more views. More views = more money... (unless the monetary the value of views declines and THAT model shifts)
SPECIFIC SITES: polyvore.com, etsy shops...
CRAFT SUPPLIERS: surely Michaels has seen an uptick in sales. I picked up a can of spray glitter at Walmart for a pinning project and noticed they were sold out of the nail polish combo that is supposed to be better than gel nails. It may be small, but it will add up. My friend Renee has bought enough wreath forms to keep Michael's open!!
GROCERY RETAILERS: I think we will see a move from prepared foods to ingredients, but not significant enough in the grand scheme to make a dent in that industry. Spices not with standing (holy cow they are expensive!) this is probably a wash.
TOP PINNERS: who are these people and how did they get 300k followers? Surely they have found a way to make money... and they are becoming celebs in their own right. There is a business model I there and much like those crazy eBay-ers 10 or 15 years ago, there is probably a way to replace your income if you are savvy.
RETAILERS: pages already exist for brands you'd expect... The question is, is the content going to be inspirational (check out Boden) or self-promoting? On traditional sites, can companies exponentially convert existing traffic into VIRAL traffic by adding "Pin It" buttons on their pages?
Regardless, it seems Pinterest presents a
shift in the traditional product consideration and adoption model for many products. It is certainly a player in creating "buzz" for a product and has the potential to leverage peer marketing. Remember when "email this to a friend" was big? Pinterest is what those merchants and producers were looking for - and it's beyond their wildest dreams.
But, the purist/capitalist dynamic remains -- is it going to stay "cool", relevant and noncommercial or is it's insane growth and consumerism going to spoil it?
Right now, it's almost too good to be true for users. Bloggers and retailers might be able to monetize it, but will there be a sacrifice? And then there is Pinterest itself. Surely the investors expect to get something out of their capital...
I can't wait to see it evolve. But now, back to pinning when I should really be sleeping! :)
