MAKING CASH SURFING THE NET
IN MULTILEVEL MARKETING FORMAT A HIT---
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 Internets 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
isnt the first scheme to lure Net users with compensation (Cyber.com 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 persons recruits. There is no limit to the number of referrals, so even at 5
cents an hour, the money adds up.
AllAdvantage.com 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 AllAdvantage.com, 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
companys closest competitor is GotoWorld.com 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 doesnt the cash dry up?
According to Jorgenson, "the mathematics of an MLM pyramid works because
AllAdvantage.com doesnt 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 risk of such a collapse is even more real with the addition of new pay-for-surf
programs. There are now nearly 20, although GotoWorld.com and AllAdvantage.com 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 theres 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
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 dont appear to have the elements of a pyramid
scam, since users dont 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
GotoWorld.com CEO Ian Simpson says "the power of the Internet puts the saturation
point far into the future. Its 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.) "Were talking about no boundaries. We will not hit the saturation point
for a long time because its growing every day."
Original Source: MSNBC, October 11, 1999