The Problem with Internet MLM Programs

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Inherently, Multi-Level Marketing (MLM) is a perfectly good business model; at least it started out that way. Companies such as Amway,  Avon, Pre-Paid Legal, Plexus and others still use it, legitimately and with much success.

Originally, MLM was designed so that companies would have a way to develop a distribution network for their products. When a person joins an MLM company as a distributor, they earn commissions in two ways. The first is by the sale of the actual products. The second income stream results by recruiting additional distributors and then earning a commission on their sales. There is nothing inherently wrong with this business model.

The problem is the original concept of MLM has come under heavy abuse by scam artists. The advent of the Internet has only exacerbated that situation. The abuses fall into two basic categories: pyramid schemes and Ponzi schemes. In both cases the emphasis has gone from the sale of a product to recruitment of additional members. Therein lies both the practical and legal problem.

Pyramid schemes have been around for centuries. Basically, they work like this: you pay into a program that, in theory, sells a particular product. You are also encouraged to recruit other members. In the case of most Internet MLM programs however, you don’t actually sell anything. The money you “invest” goes to the people at the top of the pyramid (the program originators). The people on the lower levels of the pyramid are promised huge profits, but in fact, they get very little or nothing.

Ponzi schemes are similar to pyramid schemes except there is no pretense of having a product to sell. You pay into the program and then recruit additional members to do the same. Chief among these types of scams on the Internet are the so-called “Randomizer” programs. The concept is similar to the old “chain letter” scams where you send $5 to the 5 people at the top of the list,  and then put your name on the bottom. Supposedly, in a few weeks as your name moves up the list, you will receive a small fortune in the U.S. mail. As WC Fields would say, “there’s a sucker born every minute”.

Besides the question of legality (and that is a serious issue), the problem is these programs are created to earn money for those at the top. As an example, let’s assume a pyramid/Ponzi where each person has to bring in 5 new members just to recoup his or her original investment in the program. For instance, if your “entry fee” into the program is $25, a “payback” of $5 for each person you recruit for the program requires 5 additional people for you just to break even.  Sound reasonable?  It isn’t. Let’s look at the reality.

It’s all about simple math and the power of 5 (5x5x5x5…).

The first level doesn’t require anything to recoup the original investment since he/she is the scheme originator. The 5 people in the second level need 25 new members in order for each of them to break even. Those in the third level then need 125 additional people to join the program. Those 125 in the fourth level require 625 new members. The fifth level requires 3,125 new members. Level six needs 15,625 new members. By the time you get to level 7, a total of 78,125 new people need to join in order for the suckers on level 7 to just break even. God help the people in the next level, who need 390,625 new members. Just keep multiplying by 5. Before long, the number of new members required would exceed the population of the planet. These schemes simply, and ALWAYS, implode by the weight of their own membership and the requirement for new “recruits”.

And in case you aren’t aware of it, Pyramid and Ponzi schemes are illegal.

Are all of the MLM-type companies on the Internet scams? No, they aren’t. There are numerous perfectly legitimate affiliate programs that use similar models. Some of these programs do make money for the hard working affiliate and are operated in a professional and ethical way. The operative word is some.

If you are contemplating this route you would be well advised to do your research. Join some of the many Internet Marketing forums and ask other people. Check the scam monitoring sites available on the Internet. If all else fails, ask an attorney.

But as a basic guideline, the formula is simple. If the primary focus of a particular program you are contemplating seems more focused on recruitment than sales (especially when there appears to be no actual product), and the claims of instant riches sound too good to be true, I would suggest you run for the hills. Once the program has reached its point of diminishing returns, the program owner will fold the tent and you will be left holding the (empty) bag. And for these reasons, we prohibit any kind of MLM activity on our network. Buyer beware.

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SOPA Tech Blackout – Would Taking Your Cat Photos Away Make You Care?

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Google, Yahoo, Facebook and Amazon are considering a day of blackout to protest the “Stop Online Piracy Act” or SOPA. Cenk Uygur and Ana Kasparian discuss SOPA and what kind of impact this protest would have.

Most people are completely oblivious as to what SOPA is. We hope that a tech blackout DOES occur so you can whine and call and complain that your cat photos aren’t viewable on the Internet. The Young Turks, no affiliation (yet), explain it above pretty well, but we’ve added some additional information below. We’ve given several examples of who is supporting it in past blogs and highly encourage you to go take a look before you logon to the Internet one day and have a stroke because you can’t look at cat photos on Facebook.

More info about it states on this pastebin:

Stop Online Piracy Act(SOPA) is a bill that would create America’s first Internet censorship system. In a nutshell, its similar like the censorship in China, Iran, etc.

Time Magazine’s Graeme McMillan wrote this about it:

SOPA: What if Google, Facebook and Twitter Went Offline in Protest?

Can you imagine a world without Google or Facebook? If plans to protest the potential passing of the Stop Online Piracy Act (SOPA) come to fruition, you won’t need to; those sites, along with many other well-known online destinations, will go temporarily offline as a taste of what we could expect from a post-SOPA Internet.

Companies including Google, Facebook, Twitter, PayPal, Yahoo! and Wikipedia are said to be discussing a coordinated blackout of services to demonstrate the potential effect SOPA would have on the Internet, something already being called a “nuclear option” of protesting. The rumors surrounding the potential blackout were only strengthened by Markham Erickson, executive director of trade association NetCoalition, who told FoxNews that “a number of companies have had discussions about [blacking out services]” last week.

According to Erickson, the companies are well aware of how serious an act such a blackout would be:
“This type of thing doesn’t happen because companies typically don’t want to put their users in that position. The difference is that these bills so fundamentally change the way the Internet works. People need to understand the effect this special-interest legislation will have on those who use the Internet.”

The idea of an Internet blackout should seem familiar to anyone who’s been paying attention to the debate so far. In addition to a blackout already carried out by Mozilla, hacking group Anonymous proposed the same thing a couple of weeks ago, suggesting that sites replace their front pages with a statement protesting SOPA. That suggestion itself came a week after Jimmy Wales had asked Wikipedia users about the possibility of blacking out that site in protest of the bill.

As a way of drawing attention to the topic, it’s something that will definitely work. Just Google alone going dark would cause havoc online, but the idea of it happening at the same time as Facebook, Twitter et al. follow suit seems almost unimaginable.

The question then becomes how to translate the inevitable confusion and outrage from those who don’t know what SOPA is into activism. The key, I assume, lies in the execution of the blackout: Will the sites that voluntarily go down be entirely unavailable or will they follow the Anonymous-proposed model of replacing the front page with a statement explaining what is going on, why and how users can best become involved in the discussion? If the sites do go entirely dark, is the hope that the resulting outrage will be enough to fuel news stories about the reason behind the decision? And that users will not transfer their frustration to the sites themselves, as opposed to the bill they’re protesting?

The fact that Facebook and Twitter are both said to be considering taking part in the blackout is simultaneously heartening and worrying. The former because, well, they’re standing up for what they collectively believe in — and that’s a good thing. But the latter because the lack of availability for social media on the proposed blackout day feels like it’s giving up the best chance to harness the frustration and energy people will feel about the temporary loss of the Internet as they know it, and a great possibility to focus and direct that energy into productive activism against SOPA. Then again, it may take losing Facebook and Twitter to really drive home how dramatically SOPA could affect the Internet.

All of this may come to nothing, of course. The companies may decide not to black out their sites and find other ways to protest SOPA. That could be for the best; collectively closing down the most trafficked sites on the Internet to prove a point will certainly garner a lot of attention, but the effects it’ll have beyond that (and the reactions it’ll cause as a result) are difficult to predict and could easily end up causing a backlash against the sites responsible at a time when they least want it. But still … just try to imagine an Internet without Google, Facebook or Yahoo. Even for a day. Almost makes you want it to happen, just to make people realize how reliant we are on the Internet as we know it now, doesn’t it?

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When Apple’s Siri Kills People [VIDEO]

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Siri: The Holiday Horror Movie (Trailer)

If Apple’s hands-free assistant Siri one day turned against the human race and transformed into a freakishly evil killing machine, well, that would really, really suck. However improbable, that hypothetical situation is exactly the fodder Rooster Teeth Productions used to create the “Siri: The Holiday Horror Movie (Trailer)” clip above.

The clever spoof shows Siri taunting, attacking and killing a group of friends who all received the iPhone 4S for Christmas. At one point — in its familiar female voice — Siri quips, “Life has no meaning. It’s true, you’re alive and then you die, you die, you die, die, die, die … ” After that, all hell breaks loose.

SEE ALSO: Siri’s Abortion Stance, and 4 Other ‘Insensitive’ Technologies

Earlier this year, Rooster Teeth also brought us the explosive “Angry Birds: The Movie (Trailer).”

Via: Mashable – Viral Video of the Day for December 12th, 2011.

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Twitter Logo

Twitter Best Practices Learned With Hard Knocks

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Four years ago, if you would have asked me to sign up for Twitter I would have refused, laughed at you and mocked it as the next MySpace. So what was it that stopped us four years ago? Privacy concerns? Not wanting to play into what we thought may be a fad? Refusing to adopt new technology (weird to hear here, I know.)? It’s obvious we’re on Twitter, enjoy ourselves being there and interact with a pretty entertaining number of people and brands. So I’d say it’s probably a mix of all of the above. But we just keep Tweeting!

As I sit here writing this, I have two memories come to mind “before Twitter”. The first is a radio broadcast on NPR, I believe. It was about the growing concern of Internet privacy discussing how we were becoming a culture of over-sharers – letting complete strangers into our innermost thoughts. The broadcast went on talk about Facebook’s polices, how people weren’t able to actually delete their profiles and how the content when shared became a part of Facebook. Then the talk became more centric around a younger audience who were already sharing everything in their lives and already feeling the sting of being fired because of what they posted they did last Friday on Facebook. And how Facebook’s policies were already longer than the constitution. It put me on edge and I joined in with the rest of the people who reacted to the media and committed “Facebook suicide“.

Before you go off the deep end and think that “Facebook suicide” is actual suicide, it’s not. It’s actually the process of completely removing everything that you shared, posted, linked, removing every tag you were tagged in – virtually vanishing and removing your face from Facebook. Since I already had a pretty good feel for Social Media and was seeing Digg and Mixx die, I knew as an advertiser I had to do something to drive traffic and attention to gain business on the Internet. Reddit was a no-go. At the time, I certainly wasn’t inspired to do what I do on Facebook today. Google Wave was horrible. I had no choice; I had to join Twitter. And it was awesome.

The second memory is one that comes from about 2,500 tweets in to participating on Twitter when I was being asked to teach a group how to use and market with social media platform. The same philosophy that I taught then I still have to this day. Be real and engage people. No one sits in a dark room actually expecting people to come to them and be social. You have to go outside, do things that you enjoy and engage others that enjoy those things, too. For me, a lot of my time was spent playing video games or doing introverted things. But I learned some valuable lessons. Talking to people can open doors. And if you don’t know how to converse, it makes it even more difficult. I don’t have any of my notes from my lecture, but several thousand tweets later, following and un-following lots of different types of personalities, the notes have pretty much become embedded.

Twitter still is a confusing platform. The searches people do to find you are all based off of what you say. A human search engine, sort of. I remember people being baffled about hash tags and know some who still are or who will complain about what the top trending topics are. You see, Twitter is contextual and somewhat like Facebook, you start to meet people you have similar interests in. A hashtag in 2008 could connect you with likeminded people pretty quickly and to this day still does. But then there was the even more baffling limit of 140 characters. People began shortening their thoughts, seeing it as a restriction. I saw it as a challenge. What better to do than mix hash tags with a topic that interests you. Conversations were abound and people were sharing what was happening and what they thought instantly. The pressure to share “what’s on your mind” was and is still there, but it, as the broadcast predicted, became easier and easier to do.

I decided to jot down some thoughts that I came to know as truisms for Twitter over the years, hence this post. To some, you may disagree and to others, it may be exactly why you seem to be beating your head against a wall and what you can do about it to soften those hard knocks.

1. Follow Friday is a Twitter tradition. Participate in it. You may have someone you’re following who you’ve seen using the hashtags #FollowFriday and #FF with a list of @ names following. Quite simply, this is how you participate in Follow Friday. My business partner at the time and I came up with a not-so-unique idea since Twitter has evolved called TWIFF (TWItter Follow Friday) that generated a list of your followers in a random order and in no more than 110 to 120 characters a list of automated tweets. In less than 10 minutes every Friday we ran our scripts, tweeted out the entire list of people we followed back and who mutually followed us as well in nice organized tweets. The key was to be random every time since duplicate tweets at the time were frowned upon. Nevertheless, instant Twitter karma, more followers mentioning us, new followers every Friday and it brightened someone’s day every time to be mentioned. Eventually Twitter’s staff got pretty mad and didn’t like the volume of traffic we were creating and suspended us and probably would do the same if you recreated TWIFF. Today, the API restricts us from really going about Follow Friday in a not so annoying way, but at least Twitter has stopped frowning upon “scheduled tweets” or automation. I digress. Follow Friday is a tradition and a way to show your followers that you remember talking to them and want to engage them. So why not tweet more than 120 characters?

2. Try not to tweet using more than 120 characters. In short, you’re taking up room that someone could use to reply and quote you. When we joined Twitter, being mentioned was king. It somehow ranked you higher in their algorithm to be seen the more you were talked about — the more you were engaged. You still can easily spin a topic or subject into a conversation or cut yourself out of one just by re-wording what you said into something shorter. But why not just say what you’re thinking?

3. Don’t share irrelevant information; Be concise and informative. For example, no one wants to read what the weather is like unless they ask. Sure, you may love the sunny day or hate the hurricane you’re living through, but that’s what The Weather Channel is for. Try to talk about something that excites you. And if the weather really does excite you, share it and engage them with it. And preferably with a hashtag so other people who enjoy talking ’bout the weather get to know you. But if you’re a brand or business, how do you share your products and services?

4. No one wants to be sold something on Twitter. Do you remember the last time you went to a car dealership and wanted to have an annoying salesman engage you for the purposes of luring you into his office to buy a brand new vehicle? If you said “Yes” to that, we should have a chat. Soon. No one wants to be haggled, annoyed, told how great one service or good is over and over…and over. It comes across the same way the bastardized idea of a used-car salesman is. Sure you can be excited for a product or brand, and if you follow us you know we have one in mind we love to talk about. The difference is that we use those products or services to engage in a conversation with people we’ve gotten to know over the years. Or maybe we find something that we love at the office, like our Keurig coffee machine. The coffee machine is worth talking about because it’s cool and we like it! The difference is we’re not trying to sell you one. Perhaps we are losing a potential market by not tweeting about what we can do for Web Design or what we’ve done for our clients in the past, but Twitter is a “right here, right now” social media platform. And what about those people who won’t shut up?

5. Chances are the people who won’t stop talking, who are generally annoying or honestly don’t get Twitter have a disproportionate follow-back ratio. People are not engaging them for some reason. If you scroll down their timeline and take a moment to read what they’ve had to say in the past, you may find instantly that you’re not going to enjoy engaging them. One really good reason is because they’re a feed, or rather they have linked their Facebook profile to Twitter thinking they can knock two birds out with one stone. No one wants to read Facebook when they’re on Twitter. Why talk to someone or interact with a brand you don’t like. If you like Deadmau5, it’s probably likely that you’re not going to get along on Twitter with someone who likes to talk about Justin Bieber constantly. Proportion of follow-backs, I said? Yes, I did. Before you hit that follow button, look at how many people someone is following and more importantly, how many people are following that tweeter back. One of the most important things I’ve learned is NOT to follow others on Twitter who are following way more people than are following them back. Easily 9 out of 10 times within a week, I’ll unfollow them. What about celebrities and huge corporate companies?

6. Engage those you find interesting! If I didn’t make my point clear enough, this is the part where it becomes crystal clear. Sure, celebrities may have hundreds of thousands of followers and are only following a few dozen back. Most of them followed the people they’re following back because they are relevant, concise, don’t over share, don’t try to sell them something and have engaged them in conversation — or at least attempted to — on more than one occasion. And most of the time they’ll have a cute little sticker showing they’re “verified” when they’re actually who they say they are. Unlike the account @Apple, which at one point simply had “I like apples” as the only tweet, it’s not actually Apple in Cupertino. Occasionally you’ll engage a celebrity out of dislike, which someone here at the office did, and they responded. Jimmy Kimmel. I don’t find him funny and neither did who tweeted at them. It was one of his very first tweets and apparently it “bruises his balls“, but it got some interesting attention and engagement. Here’s the thing: when a famous personality engages you, the most important thing to do is be yourself. After all, that’s what Twitter is all about.

So I’ll end this with two sites that I’ve found extremely helpful in managing the numbers game of followers on Twitter. The first is a site simply called Friend or Follow. You don’t have to sign up or sign in. Simply type in your username and it will show you who you’re following that’s not following you back. That annoying tweeter who you want to get rid of, I can almost guarantee you he’s probably already un-followed you as Twitter has made it pretty difficult and not so obvious for the average user to know the status of being followed back.

The second site I give high kudos to. It’s called TwitCleaner. You sign in, allow it to scan who you’re following and it will give an analysis of your followers back to you that’s surprisingly brutally honest. The site was created by a New Zealander named Si Dawson. (Just to nail the other point home, he’s following less people than are following him back. Quality usually comes from people who show this proportion.) I’ve yet to find a more accurate tool on Twitter to gauge just how many people you’re following are really just trashing your timeline up. It will tell you if they never engage others, if they are nothing but app abusers, if they have been inactive on Twitter for a period of time and so much more. Invaluable information to someone who is serious about quality and not quantity. Go use it, we promise it’s amazing and tweet that TurkReno sent you for good measure.

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