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According to a report broadcast on MSNBC in early October, surfing the Internet may now become a lucrative opportunity. What reporter Bob Sullivan calls "perhaps the logical conclusion of the Internet’s gold rush to gain market share at any cost", a number of Internet companies are now giving away money to attract users.

The concept: allow part of your computer to serve as advertising space via software you download when you sign up, and earn 50 cents per hour for your time. Although this isn’t the first scheme to lure Net users with compensation ( offers Net coupons for looking at ads), this is the first time consumers are being paid cash. Most services top-off your monthly payout at about $20.

But the real attraction is the new multilevel marketing concept that lets users recruit friends and receive part of their earnings. They also earn money for each online hour of that person’s recruits. There is no limit to the number of referrals, so even at 5 cents an hour, the money adds up. started their multilevel marketing referral service in March. CEO Jim Jorgenson says the company has already sent out a dozen checks of more than $1,000 and they expect that number to increase.

According to, they have 2.5 million users. Their website was just 5 months old when, according to PC Data, it hit the top 25 on the Net in August. (The company’s closest competitor is who hit the 1 million mark in August, ranked 53rd). And the company recently completed a $31 million round of funding with cash from Times Mirror TMCT Ventures and Walden Media.

With millions of members earning potentially $1,000, why doesn’t the cash dry up? According to Jorgenson, "the mathematics of an MLM pyramid works because doesn’t pay out more than 80 cents an hour, including 50 cents to the surfer and a maximum of 30 cents for five levels of referral surfers (10 cents for the first level, 5 cents each for four more levels.) That works out to $4 for every 1,000 ads the company services --- a maximum that is unlikely to be reached."

Jorgensen does admit that lining up advertisers fast enough to prevent the pyramid from collapsing is a challenge. "We get members at Internet speed, and we sell ads over the phone."

The risk of such a collapse is even more real with the addition of new pay-for-surf programs. There are now nearly 20, although and are the only ones who have sent checks so far.

Other challenges of pairing-up multilevel marketing and the Internet include hackers who have already written tools to trick the service into getting credit for extra hours of surfing. When this occurs, companies say they immediately terminate these accounts. Complaints have also been voiced that pay-for-surf programs slow down surfing because they require near constant communication with an ad server.

And there’s a debate over the value of "paid" advertising views. Rob Enderle, an analyst with the Giga Information Group contends that "this shows people can be bribed to watch advertising. The problem with paying cash is, it lowers the quality of the user to the advertiser." "Advertisers want hot leads," he says, "and mass audiences who merely tolerate ads for pay are far from the holy grail of direct marketing."

Although there may be skepticism from consumers about any pyramid scheme, Claudia Bourne Farrell, a spokeswoman for the Federal Trade Commission says "pay-for-surf" programs don’t appear to have the elements of a pyramid scam, since users don’t pay any fees to join. "What you do give up is your personal information," she points out. "For some people, privacy is a more valuable commodity than others."

MSNBC reporter Sullivan also points out the very real "saturation point which all pyramids eventually reach." Profitable at the beginning with hundreds of referrals, users who sign up later have a hard time building broad inroads of referrals. But CEO Ian Simpson says "the power of the Internet puts the saturation point far into the future. It’s not limited to a geographic or demographic market as you are in a classic MLM." (As of yet, none of the services pays surfers outside the U.S.) "We’re talking about no boundaries. We will not hit the saturation point for a long time because it’s growing every day."


Original Source: MSNBC, October 11, 1999