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Questions about a special membership model

by karlstech
7 replies
Hey there,

Just had a thought regarding a special model for a membership site. Doesn't matter what niche or industry it's in, just want to discuss the sign-up marketing model.

Say that John starts a membership site on cars and he charges say.. $29 as a monthly fee for members. He offers exclusive content, videos, a forum and special offers on products to members.

To market this he sets up an affiliate program if you will. If a person signs up and recruits new members, this person gets a commission of the their sign-up fee's (if this is a monthly fee or one-time is unclear right now).

So, to gain access to the affiliate program a person must first sign up.

Example: John recruits 3 members who recruit 3 members of their own and so on. Each one gaining commissions as they recruit members.

Now, this was merely a fun thought I had when riding the bus to work today. I understand the setbacks and problems with this if you're on your own:

- A LOT of work for one person. Will need several employees most likely.
- I have no idea on how to run an affiliate program or whatever.
- The founder will need a decent starting capital for unexpected costs, affiliate payouts and so on.

Now to my question of worry: Is this a pyramid scheme? Or is this a legit business model?

Please share your thoughts!

Karl

P.S: This was just a thought, nothing really serious at this point mind you, was just playing around with website ideas!
#membership #model #questions #special
  • Profile picture of the author Brent Stangel
    Offering your affiliate program only to members is nothing new. Some memberships automatically make you an affiliate, instantly on sign-up.
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  • Profile picture of the author Ken Somerville
    lol 90% of ads online or affiliate based, so no it's not elegal, as for how you structure the payouts, etc, that is were you can run into trouble. What ever type of business you set up, you will fall into a category, mlm, direct sales, etc. You need to figure that out before you look to far into the future.

    hope that helps
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    • Profile picture of the author Wealthyclark
      It could be massive if structured correctly and it could benefit all parties involved. If structured incorrectly while using a payment gateway such as PayPal, it could cost you your account.

      Is it a pyramid scheme, I would say no but expect opinions on this to vary.

      I wish you much success!
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  • Profile picture of the author TeKn1qu3z
    Example: John recruits 3 members who recruit 3 members of their own and so on. Each one gaining commissions as they recruit members.
    Recruiting members undergoes into Pyramid scheme. These types of schemes are banned in most countries and please check your country laws.
    This program gets money from the downstream to pay upperstream.
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  • Profile picture of the author Ron Killian
    Not only is it risky, but you really need to do the math, if enough money would be there for every one.

    But, yes as said, the basic idea sounds just like a pyramid scheme. Your sure not the first one to think of it. It's not exact special. Sorry.
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  • Profile picture of the author Jack Gordon
    I won't speak to the legality of it. I am certain there is a right way to do such a thing, and probably many wrong ways. But I have never heard that it is inherently illegal or even unethical.

    So, do your own research.

    However, on the technical side, I know aMember Pro's built in affiliate manager offers that exact functionality off the shelf. And it is completely customizable. You might start by looking there.
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    • Profile picture of the author karlstech
      Thank you for the replies folks!

      Well, it was just a fun thought and I figured that this was already being done (Bluehost and Hostgator for example). This idea isn't really going to happen now since I don't have the people, money or knowledge right now.

      This might however become a reality in the future, you never know.

      Regarding the pyramid scheme, yes it might seem like one. But as someone pointed out, if it's done correctly and everybody wins then it might work.

      Anyway, was just a fun thought on the ride to work
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