Business Week is reporting that startup PayPerPost has received $3M in funding from Inflexion Partners, Draper Fisher Jurvetson and Village Ventures.
The scam business model behind PayPerPost is pretty simple. Advertisers can pay bloggers to post (positive) comments about their company or product. And, there's no disclosure requirement for the bloggers that they've been paid to write these nice things. Put best by Jon Fine in a previous BW article, "shilling without disclosure is a bad idea."
Of course, the folks at PayPerPost spin it somewhat differently, comparing it to product placement on television or a movie. But I don't see that. Instead, it looks more like radio shill host Armstrong Williams, celebrating the "No Child Left Behind" policy without disclosing that he was on the Department of Education payroll. Or, the Cato Institute fellow who wrote positive editorials and columns, in return for funds paid by Jack Abramoff.
For years, investor relations "consulting" firms offered to write pseudo investment research reports, funded by the company being written on. At the same time, various IT consulting firms will write a "white paper" touting various technology for a fee. Similarly, online seeding and other online "word of mouth" marketing efforts were used to launch the career of Christina Aguilera, among others.
As I've posted previously, one of the great challenges in the world of user-generated content is how to keep ratings trustworthy. While those questions may not be easily answered, requiring disclosure any time a blogger is being paid for their post would be a good starting point.
For more on PayPerPost, read Marshall Kirkpatrick's TechCrunch post, PayPerPost.com offers to sell your soul.
Disclosure: I have not been paid for writing this post.
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