PayPerPost tests your ethics, & Edelman’s fake blog for Wal-Mart

PayPerPost is a Florida start-up that lets bloggers get paid for writing about products and other companies.

It has just got $3 million in funding from Silicon Valley venture firm Draper Fisher Jurveston and others.

People have said this is a controversial company, because regular readers can get duped if bloggers don’t disclose they are getting paid.

Others have said that the real intent of the service is to help the advertisers paying for the blog posts to boost search result rankings for their companies (the more bloggers writing about their company, the more incoming links the company is likely to get, and thus the higher it will go in results).

We talked with Josh Stein, venture capitalist with DFJ, who led the deal, and he’s steadfast in his belief that the company is doing a “good, valuable” service. He concedes it’s controversial: “Like many things, if you look at the most cynical interpretation of it, you could see how it could be a source for bad.”

But he said that some companies feel so much pressure to get more users — no matter how many users they may already have — that they’ll want to generate publicity for their new products. And they should have the right to pay someone to write about them. Bloggers, Stein said, have to decide what sort of disclosures they want to make with their readers about this, and whether it fits with their ethics. But the market should decide that, not PayPerPost. “The blogger knows better than we do what their social contract is with their reader base.”

The ethics question arose today in the Blogosphere, when it emerged that public relations firm was writing a fake blog on behalf of Wal-Mart (UDPATE: Although see comments below about dispute on this):

In case you missed the story, a blog ostensibly authored by a couple traveling across America in their RV and spending nights parked in WalMart parking lots turned out to be a fake blog, the brainchild of WalMart’s PR counselors at Edelman. While fake blogs (and other fake social media) are nothing new, it’s dismaying to see it emerge from Edelman, which has some of the smarter new-media people on its staff (Phil Gomes, Michael Wiley, Steve Rubel and more), and which touts itself as the PR firm that truly gets social media. This is the third time (as Todd Defren noted in his post) that Edelman has botched the whole social media thing on WalMart’s behalf…

DFJ’s Stein said PayPerPost is about to release some tools that give bloggers a variety of disclosure policies to put on their blogs if they use PayPerPost. These can be badges on their blog that say the blogger is paid for some posts, but doesn’t disclose which ones, or it can say the blogger discloses when any post is paid for, and so on.

PayPerPost launched three months ago, and Stein says the response has been “dramatic.” Even before the publicity emerged this month after DFJ invested, the company had made $100,000 in revenue. Every day, ten or fifteen new advertisers arrive at the site, looking for more bloggers to pay, he said.

Notably, what got Stein excited about PayPerPost, he said, is his recollection of his own scorn for search engine Overture, when it launched. That site was for paid results only, and he remembered thinking all the same thoughts that PayPerPost is getting criticized for: “I thought it was the sleaziest, dumbest idea I’d ever heard of.” Of course, Overture went on to become a popular company, when Google borrowed many of its aspects, and the model was refined. “I told myself, ‘I’m not going to make the same mistake again,'” he said.

Techcrunch first wrote about the company here.

Below is an example of a PayPerPost listing: