30
Jun

Social Media: just another term for Multi-Level Marketing

Posted by Steven Hodson in Monday, June 30th 2008      

Ah the life of luxury and money In my youth I had the opportunity at one point to be introduced by friends to the wonderful world of multi-level marketing. I was shown ways to travel that road to riches and all the goodies that came with rolling in the dough. Even I could one day attain the impossible dream of vacationing where ever I wanted in the world as long as my private jet could fly there. I could own incredibly beautiful homes full of all the latest goodness that being rich could bring you.

Well needless to say the friendships didn’t last much longer than it took them to cash my entrance fee into this rarified dream world. Neither did I ever end up owning a mansion or a private jet and neither did I ever get to vacation in the playground of the rich and famous. I did though manage to piss off a lot of family and friends in the process of following these tried and true practices of wealth building.

Flash forward thirty some years to when the Age of the Internet is well underway and it has become the new playground of the nouveau tech rich crowd as they flit around the world from conference to conference and startup to startup. To a time when voices like Stowe Boyd, Chris Brogan and Marc Canter (when he is making sense) are preaching the gospel of freenomics and the power of TwitPitches to a new generation of wide-eyed and breathless neophytes of the social media generation.

A generation that eschews the need of business models and cradles itself in the warm bosom of the Angel investors. A generation who have been made to believe that making a pact with the devils of advertising in order to bring the illusion of software and computing freedom to the great unwashed masses is a fair trade. Once more we are being presented with a dream world by the privilege few who managed to grasp this new style multi-level marking of social behavior and in turn set themselves up as the sages of this social multi-level marketing bonanza of financial duplicity.

Where traditional multi-level marketing (MLM) folks were at least sideways honest about their leech like behavior once they deceived you with their getting together with friends meetings and took your signed in blood sample case check the social media mavens dangle the word free. It is this kind of tactic that almost guarantees that the ranks of social media multi-level marketing will swell incredibly fast with both those dreaming of a pajama job lifestyle and those wanting something for nothing.

Nothing for nothing - the credo of the easy life After all isn’t that the ultimate goal of life - to be able to get something for nothing and so what if you have to put up with advertising. There’s the rub though. You aren’t getting something for nothing are you unless of course you’re smart enough to know what ad blockers are and how to install them. This minor segment of gullible mooks though are an acceptable loss for the ad networks all clamoring to get their hooks into this willing and forever growing group of mindless link clickers.

While these social media ad providers startups might like to blindly think they are doing good all they are really doing is lining the pockets of those smart enough to have figured out this new MLM scheme. It is a scheme where both the money people of these startups and the advertising networks have come together to create this perfect model of money generation called social media. Along the way they attract people who maybe out of good intentions become the voices for this new social media and because of their reputations provide a nice cover for what is really happening - a small group of people making a lot of money by convincing another group to talk their friends into trying out this new social media thing that is all the rage.

When you look at how MLM advances itself through its faux pyramid build up it always has charismatic people in the forefront who by their very strength of personality convince a number of folks to sign up with the understanding that they will make a lot of money. From there this group then spreads out and begins evangelizing (or advocating as that is the new hot buzzword for this) their money making scheme. As more and more people sign up for this impossible mission of a rich lifestyle with minimum effort those who started the whole movement sit back and watch the money roll in.

This is not really any different that what has happened with this whole social media shebang. A small ground of folks got together and using the word free as the entry price managed to convince another small group of folks about their <em>good</em> intentions which got them engaged in the process and out there evangelizing this whole new way of communicating. The masses as a result of this new freenomics have rushed headlong into this social media with some thinking that they to can be a part of this new road to riches and the rest falling head over heels for the free stuff being handed out like candy.

In the end you can say what you want about social media and freenomics but it all boils down to making money by It's really all about the moneyproviding the same type of top to bottom weaving of dreams of riches but this time there is no price of entry. Where MLM in the past have made their money from the initiation of fresh meat being brought into the game by previous suckers this new Social Media MLM has made it so everyone you know can be that sucker as long as you know their email address except this time the circle of real money makers is even smaller and the base of the pyramid is the size of the Internet.

Don’t fool yourself by the warm and fuzzy rhetoric of the freenomics and social media mavens - this is all about making money the easiest way possible and that means making you think you are a part of the process and can have the same access to the riches as them. Don’t think that this is about leveling any playing fields or making the world equal for all - this is all about making you do all the work like the MLM peons before you.



under: The Social Web    Tags: , ,

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Viewing 10 Comments

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    Wait. I'm writing about multi-level marketing? Weird. That must be my Tyler Durden self. My last ten posts were about:

    * website information
    * YouTube- potential money model
    * realtors and community
    * podcasting as an information channel
    * friendfeed (mostly a problem I was having)
    * pointer to a report
    * neat sales article that gave me a few ideas
    * pointer to a presentation
    * video about a book
    * a flickr project

    Wow, I seem so very interested in MLM and free stuff.

    Please don't paint with Amanda Chapel colors, Stephen. I believe that social software are tools, and that they can enable enterprise, non-profit, personal, and other forms of communication and collaboration.

    Twitter isn't the body of my work (thank the sweet little 8 3/4 pound baby Jesus).
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    Two things Chris.

    Normally I don't get to fussy about the spelling of my name but its Steven not Stephen.

    Secondly nowhere did I say anything that writing about MLM was a requirement just as the "products" of MLM are about the way that MLM is set up so please rather than assuming I mean something - which I don't - read *what* I wrote not what you think I wrote. Could I be totally off base with something that is nothing more than a written down stream of thoughts - you betcha I could be but at least be arguing the right points.
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    Sorry about that, Steven. My dad is a Stephen, so that's why I get it wrong all the time.

    I think the points in general are good. I'm just not down for being called part of the "cumbaya and kissing" crowd, when my typical conversations off-blog are with Intel, IBM, Thomson Reuters, and the like. Defensive? Maybe. But also making the point that the tools and the movement are two different things. I'm subscribed to both at different levels.

    Overall, I'm with you that the "let's all kiss and give everything away" mindset has to alter. But where/what/how? Maybe that's what you'll suss out here.
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    No problem Chris - like I said I don't usually get bothered by it but I was still working on my first pot of coffee :)

    Here's something else to consider as well. As much as the warm and fuzzy crowd of Social Media might not want the stink of MLM attached to the movement the possibility is that MLM could be looked at as very much a fore runner of Social Media. After all from their point of view they are trying to do the same thing - move people and concepts forward through a group effort but their "product" is actually goods and money rather than the "attention" and "recognition" that Social Media like to use. But in the end it really all boils down to who is making the money and how they are making it.

    Why do companies like Intel, IBM or Thomas Reuters want to understand how social media works? Because it can affect their profit margins and to think otherwise in my opinion is foolish and extremely short shighted.
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    Nice analogy Steven. I'm not sure if it quite fits, bit the point is clear ;-) I guess in any business model where the user isn't upfront told exactly about the way revenue is being generated, this scenario holds. I guess that is where the catch22 lies.
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    There's two differences here, though: 1) If the social media world is analagous to an MLM, it removes the most insidious part of the MLM, and that is the preying on the naiive by stealing their cash. 2) and more importantly, the freemium and ad supported models have been proven to work for more than just one or two folks who steal others' time and money (though I'd certainly be the first to admit that it isn't as widely applicable to all situations as so much of the Web 2.0 world would believe).
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    It's not cash that's flowing up this time...it's attention. The formula for each seems similar, though. I see so many otherwise interesting people get sucked into this black hole. Formula: your upstream personalities get you in to a new social space with a cool exclusive invite. You can't really use the tool effectively, though, without people to interact with...a downstream. You might get a few friends/co-workers to join up, but the more people you can be friends with the more interesting the space becomes. In order to get these friends you have to get people's attention. To do that you find yourself ingratiating yourself to some personality that's grown a following by being loud and connected. Glomming onto these people gets you followers, only what your followers see isn't you being yourself it's you bring someone else's groupie. Their attention flows to that loud and connected personality.

    This must be silly to read. I find it silly and I'm the one typing it. But over the past year I've seen otherwise interesting people succumb to these kind of weird popularity contests. I've been in these spaces for a year now, and I'm having a hard time believing that this was the promise of social networking. I'm hoping it'll even itself out when more mainstream folks move in, but will that even happen if this is what they see when they check it all out?
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    Jim I'm not finding it silly at all (and I'm the one reading it :) ). The Attention argument doesn't work all that well as just about everyone within the social media sphere have acknowledge that "attention" is the new commodity and commodities have at some point financial value for someone within that sphere.

    Just as in MLM the "cash" one made was their recognition value - which incidentally were showed off by the badges idea a Technorati concept of meatspace - whereas in the Social Media world that cash at the lower levels has been replaced with this illusionary concept of attention but as you rise up in the ranks that attention can then be translated into hard cash.
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    Heh...that's the endgame I didn't bother spelling out. One does not live on eyeballs alone! ;-)
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    In regards to #1 I would suggest that Social Media *could* still be preying on naivety - especially when it comes to the massive number of user generated Web 2.0 services - because the majority of people sign up for these things thinking that they are getting access to the cool stuff for free when in fact they are getting it because some-one was smart enough to figure out they could sucker in people to do all the hard work and get advertising thrown at them. In the end though, it is still the early ones who make the serious money.

    For #2 very very few have even come close to real money making success using the fermium or give-away outside of Web 2.0 Software authors have tried so many variations on this idea since before the internet even but you could probably count on two hands - maybe one even - the number of traditional companies that have made anywhere near the millions or billions of dollars that Web 2.0 and Social Media companies have made.

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