A few days ago I got an e-mail from a visitor with the subject: “How do you sleep at night?” The message:
Your site advertises get-rich schemes! How can you do this and sleep? You write on a frugal site for God's sake! Have you no shame?
(I corrected some spelling errors in the message, but that's not the point.)
I'm guessing this visitor saw that one of the ads in one of the sidebars came up “How to turn $20 into $1,360 in your spare time” or something like that. These ads come up from time to time. It's probably someone in one of these programs running a keyword campaign to get some more signups.
As long as the program is a legitimate multi-level marketing program and not a pyramid scheme — and yes, there is a difference — then I have no issues with them. Hey, more power to you! Build up some extra income for your bad self!
Let's say that I have an e-book, and I want to use a MLM model to sell it. I could sell my MBH Wonder Guide of Prosperity and Happiness for $20. Some guy who wants to help me sell the Guide can sign up under me, and then sign people up to sell it under themselves. In doing this, he builds up a downline of referrals: he signs people up, those people sign others up, etc. I could structure the commissions so that anyone on the first four levels of his downline bought the $20 Guide then he would get a $4 commission. So now, here's the 4×4 Monster Truck Extra Income Plan in action:
Four dollars per sale, four levels deep! Turn $20 into $1,360 with just four sales per person:
Level Referrals Commission 1 4 $16 2 16 $64 3 64 $256 4 256 $1,024 TOTAL 340 $1,360
Does this table lie? No! If you sign up four people who buy, and they each do the same, down four levels, then you'll make $1,360 in commissions. That's the math.
Is it easy to do this? Yes, or some version of it, if you're prepared. If you have an opt-in mailing list of 10,000 subscribers who like this kind of opportunity, and catch the program just as it's being launched, then it's not asking too much to get 100 sales right off the bat with a single e-mail to that list. That's $400 in your pocket immediately, and if you get 20 or 30 of those people who sell one or two, and five superstars that sell ten or more, then you're doing really well. If you're not prepared, don't have a list or some other way to get the offer in front of a whole bunch of people, and just plan on asking your friends and family to help you out, then you probably won't make this kind of money.
Getting back to the ad that the visitor to my site saw: It doesn't really bother me that these kinds of ads pop up once in a while. MLM businesses are just that: businesses. They don't pay off without a lot of work. They don't pay off without a good plan and a good follow-through. They don't pay off if you can't tell the difference between a legitimate one and a pyramid scheme. The ad indicates that someone is trying to make some money in a business that compensates him for sign-ups. Hey, good for him! Beats waiting for a bailout. Rock on, man! Hope you stick with it long enough to get some cash!
Now, I'm off to sleep. 😉
I agree with you that pyramid schemes are not illegal. However, everyone who joins is told that they can make tons of money on affiliate income. Eventually, though, there are not enough people foolish enough to join. The is always some salesman on the bottom working for the people on the top.
Thanks,
Nate
I have no problem with legitimate business who are very clear about what they're doing and how they're doing it. Problem is, though, many of these sort of businesses are very scammy towards those that sign up, charging unexpected fees and even taking money directly from people's bank accounts. Sometimes that sort of stuff is hidden among pages and pages of tiny fine print, sometimes it's not even there. Bottom line, I wouldn't touch them with a ten foot pole!
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Quite often it's not the business – it's the people behind them.
Just make sure you're doing business with honest and caring individuals and MLM's might work for you.
I received plenty of emails awhile back for trying to use MLM on a product saying the same “How can you live with yourself” BS. These people just need to do a little research first. With MLM the guy at the bottom still gets his product. Pyramid Scheme’s the guy at the bottom usually gets screwed.
Every large business is based on the pyramid scheme. There is nothing wrong with a pyramid scheme as long as it is legitimate and you are close to the top.
@Jay
I think it is useful to distinguish between pyramid-like things and pyramid schemes. Just because a business has more people on the bottom than the top doesn’t make it a pyramid scheme.