Magpie is a pay-per-tweet service through which brands can pay individuals and companies to promote their products.

Nothing wrong with that. What many Twitter users find objectionable, though, is the fact that well known and established companies like Kodak, Adobe, Skype and Apple are paying consumers to advocate their products, or in other words, say something good about the company or its product in their Twitter stream, without actually disclosing that they’ve been paid to do so.

The obvious question such a system raises is, how much of this “appreciation” is genuine?

A lot of people would certainly be tempted to earn a few quid by endorsing a product, even if they have not actually used it, or worse still, they are not entirely happy with.

Magpie works on a keyword-bidding system. When the advertiser’s keyword matches the words used in a tweet, the advertiser can bid on it. The highest bidder will get to tap into that twitter user’s account to promote their products. Advertisers have the choice of bidding on a daily basis or on a cost-per-thousand impressions basis.

Users with more contacts earn more money through the Magpie system. An additional 30% commission is paid to Twitter users on the transaction fee for each new advertiser that signs up to advertising on the stream for a whole year.

According to ReadWriteWeb, most of these companies might not be directly involved in buying these tweets. It is more likely that their outside agents are doing so. The end result, however, remains the same in the eyes of the consumer.

Such false advertising will hurt these companies more than helping them, as people will start to doubt the integrity of their services and products.

Examples of sponsored tweets from Apple, Skype via Magpie