Seth replies to my "Newsvine/Squidoo doing the MLM thing" post.
Seth says "Neal is correct. This isn't MLM, not by any definition (not that there's anything wrong with that.) You are entitled to your opinion, whether I like it or not, but your facts are wrong."
Squidoo's email offers:
"2. Refer a friend, get $5. When someone you've referred earns her first $15, you and she BOTH get an extra $5. Find out more here: http://www.squidoo.com/lensmaster/refer"
Wikipedia defines MLM as:
"In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor and are compensated based on their sales of products or service (as well as the sales achieved by those they bring into the business).
I rest my case.
Seth does say he doesn't have a problem with MLM, so I'm not trying to pull a "gotch," nor can I. I'm just saying I don't like the talent that MLM programs draw.
Being the brilliant marketing maven Seth is I'm sure he loves MLM stuff (of course Seth is the same guy who defended the Buzz companies who's contractors were involved in deception back when).
As a publisher I *hate* MLM programs (schemes) because they draw the wacky people of the world. I'm all about the long tail, we based our business on it, however you get way down that tail and things can get really scary. There are a lot of freaks at the end of the long tail. The best producers don't need to play MLM games because they can command straight up fees. Why would they produce stuff for contingent/MLM compensation? I don't see it. In fact, Seth had a post yesterday about folks not being motivated by money.
Seth gives a couple of Squidoo sites saying "There is nothing on gizmodo or about like this, is there?"
http://www.squidoo.com/teajunkie/
http://www.squidoo.com/reymysterio/
http://www.squidoo.com/moleskines/
Nope, you won't find niche blogs/publications about one brand of notepad or individual wrestlers. However I'm sure there are some solid tea publications out there (anyone know the leading tea pubs?).
The problem with hyper-niche pubs is that they don't change enough and the readers don't need them often enough. Now, I'm sure Squidoo can make a nice business out of getting tens of thousands of people to make hundreds of thousands of these--provided that they are indexed well into the Google. However, it is doubtful that these tiny pubs will ever make any serious money for the folks who build them. Of course, the folks building these are doing it out of passion in large part (I guess).
I'm fascinated by Squidoo, it's a great mashup of a bunch of models (Wikipedia, About.com, Webogs, Inc)... I'm just don't think MLM stuff will work.
Update: Hugh's take on all this:
Seth Godin says Squidoo is not MLM
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(Page 1 of 1)2. This is a fairly common affiliate marketing arrangement. If you think all that is MLM too, then I won't bother arguing with you.
All I'm saying is it's not like Seth is blazing new Internet referral marketing ground here. This post could have been written 9 years ago if you were concerned.
Posted at 7:41PM on Apr 2nd 2006 by Brian Clark
3. Sorry...I shouldn't use the right side keyboard number pad... the 9 should be a 6.
Posted at 8:02PM on Apr 2nd 2006 by Brian Clark
4. The key feature of MLM is that the actual product is secondary to the tiered marketing/referral structure.
For example, with Amway/Quixtar, they're typically selling products people are unfamiliar with and would be unlikely to pay the extra premium to purchase. In reality, Amway/Quixtar reps and their friends and family end up buying the bulk of these products.
Squidoo, as far as I can tell, wasn't set up primarily to funnel cash upstream like MLMs -- its purpose is to provide human aggregation of content. Given that, I'd say Squidoo is not an MLM. You're free to dislike its marketing approach, of course.
Posted at 9:05PM on Apr 2nd 2006 by Jonathan Cohen
5. Umm, http://www.moleskinerie.com/?
6. So I hate MLM. Why? Not because I don't think you can make millions (I know people who have here in Dallas - Kenny Trout). I could never participate because to be successful you have to make it your life - everyone you know is a potential client/salesperson for you. You MUST sell to everyone. You all know the pitch. So MLM models work, but at a very high price.
In the case of Squido, I agree it sounds like MLM, but perhaps this is the sort of MLM I could live with. You don't really have to sell to everyone. Or do you? I guess if you want to get rich you would. Ug! I will never make millions doing the MLM thing...
Posted at 10:05PM on Apr 2nd 2006 by Alexander Muse
7. "5. Umm, http://www.moleskinerie.com/?
Posted at 9:40PM on Apr 2nd 2006 by kellan"
...
Yes? What about my site?
Posted at 11:32PM on Apr 2nd 2006 by Armand B. Frasco
8. Moleskine Art: http://www.moleskineart.com/
Actually that's in the Squidoo lens, but it's so great I had to link to it in case anyone who likes Moleskine but doesn't like Squidoo drops by.
Anyway, on the MLM question it seems to me you are wrong in fact but right in "gut feeling."
It takes more than a refer-a-friend bonus to be true MLM in the common understanding of it. I do realize that the Wikipedia article could be seen as disagreeing with that statement, but whether that means anything depends on your idea of "common."
However, I wholeheartedly agree with you that things with even the slightest smell of MLM attract some pretty slimy characters. (Of course, this being the Internet, so does success.)
I didn't get any such mail from Squidoo (or it didn't get through my spam filter) -- but I think it's a mistake to try to attract people to a service like that with money. I even think it's a mistake to do it with the "shared revenue" pitch for the blogads etc.
(Yeah yeah Seth, I've been meaning to write this up elsewhere, but here I am here...)
The thing is this: I don't need an extra $5-15, and I don't need n% of x% of y. When a web service is intrinsically worth my time, I use it. Period. And I think that's true, frankly, of anyone whose content you really want to host.
In the case of Squidoo, the obvious (potential) value is that I get great info from other lenses, so I'm inspired to make good lenses of my own. For the karma, for the eyeballs, whatever. But basically as some combination of community and self-promotion.
At the moment, I don't think Squidoo really gets me that, and I've been thinking about why and will hopefully find time to write about it soon. But so far I think their problems are in execution, and that their intentions are good.
So, again: I think they mean well, but they're just asking to get slimed with that kind of incentive.
(Meta: God, what a long comment. Wish you had a preview button.)
9. Actually,by the very definition of MLM you're incorrect on this. It states, "...compensated based on their sales of products or service (as well as the sales achieved by those they bring into the business)."
The key word is SALES. There are no sales going on when someone is referred, nor are their any products involved. It's a very basic referral program. Google even uses this type of referral approach/structure for their Adsense Referral Program. MLM? Nope, not by a long shot.
Posted at 9:28PM on May 22nd 2006 by Aaron Cook
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1. It's just one level of referrals that you get paid for so it's not really MLM. Is it a commission, or a referral fee, yes, but MLM no. Even good pays a referral fee one level deep (you get paid when the person you refer earned 100 through adsense).
And your wiki quote says the people on top are compensated based on the sales of those below, this isn't really true, not only is it a one time bonus, but it's flat rate. The only reason it is based no the member reaching $15 is to ensure that they are a 'real' member.
But yeah the clincher is that it's only one level that the commission is being paid, not multi-levels.
I'm sorry to say t your dead wrong on this, unless you want to argue at adsense is also a MLM scheme?
Posted at 2:23PM on Apr 2nd 2006 by Steve