Skimlinks Is The Real Story Behind Pinterest’s Success

I love it when a startup I’ve been covering for literally years suddenly finds itself in the spotlight, and for the right reasons. In this case, Skimlinks, originally from London but now with a growing US base, has been revealed as powering the affiliate links behind Pinterest, one of the hottest startups on the map right now. For some that appears to be a little bit of scandal, at least for Pinterest, though not for Skimlinks.

LLSocial uncovered the practice, whereby if a post on Pinterest happens to link to a commerce site with an affiliate program, Pinterest uses Skimlinks – a third party service – to modifiy the link to add their own affiliate tracking code. Anyone making a purchase from that click through sends affiliate revenue, via Skimlinks, back to Pinterest. Kerching, everyone benefits.

This is very old news in the word of affiliate schemes. What is getting some people hot under the collar is that Pinterest hasn’t made this very explicit. And fair enough, they should, though I seriously doubt it would send their users running elsewhere, and – as BetaBeat candidly points out – most users would simply shrug and carry on. After all, on free services, we are the product, right?

What is more interesting is the effect this will have on Skimlinks. This could be the moment – which I for one have been waiting for – when people realise just how powerful Skimlinks’ business model could be. It puts a great deal more power and control in the hands of traditional content generators, but when applied to a social network where users are creating the content by the bucketload it could be very, very powerful.

With clones of Pinterest proliferating all over the planet, suddenly Skimlinks could be sitting on a goldmine, and that is good news for its investors.

Skimlinks has so far raised a modest $7 million, the latest from Bertelsmann Digital Media Investments late last year which put in $4.5m. Dave McClure of startup accelerator 500 Startups also participated. Other early investors include Angel investor Alex Hoye, Sussex Place Ventures, NESTA Investments and TAG.

Skimlinks’ main competitor is Google-backed VigLink, although VigLink hasn’t iterated as fast as Skimlinks, which has formed much deeper relationships with publishers a lot faster.

With offices in London, New York and San Francisco, Skimlinks is in most of the right places to talk to media owners and – increasingly – the startups that will be watching the Pinterest model with interest.

No doubt this new Pinterest story will mean Skimlinks’ phones will now start ringing off the hook.

The other slight hilarity is that – shock horror – Pinterest is actually making money on its Beta because of its relationship with Skimlinks – that is news on its own.

That Skimlinks could well be a monetization engine behind new social platforms is, for my money, the real news.