During the past few months of my working from home programs experiment, naturally I receive endless emails from people trying to recruit me into their programs.
One type of program that I have come across very often is these Revenue Sharing Programs. If you don’t know what that is, usually it is some sort of a website that offers advertising and/or traffic exchange. You can join for free and surf for credits which in turn get your website displayed to the other users. However, if you don’t pay any money into the program you won’t get any money out.
Normally what happens is you can pay in a certain amount of money, anything from $10 up to $1000s or even unlimited. You then surf the required amount of websites that week and at the end of the week you receive a certain % on the amount you paid in. For example if you paid in $100, that week might have a 10% payout thereby earning you $10. You can then continue to surf every week and theoretically get $10 every week for the rest of your life. If you want to make more than $10 per week you simply pay in more money. eg if you paid in $100,000 and did the same surfing, and 10% was the payout amount you would theoretically earn $1000 per week just for surfing a few websites for a few hours.
Because of this simple way to make money it draws in a lot of people looking for a better way to get a good return on their investment. Especially with the banks paying such paltry interest rates.
Another way in which you can usually make money with these programs is by recruiting others to join you and do the same thing. Most pay you about 15% commission rate which can be great especially if you recruit someone who is serious and perhaps pours $100 or more into the program (landing you $15 or more in commissions).
This creates a viral effect and causes the memberships of these programs to grow very quick. It is this growth that is KEY to the business’ success but it is also this growth that is the cause of their downfall, let me explain.
The common problem with any online business, especially new ones, is people don’t believe. There have been too many scams out there so everyone is naturally leery that the next new program is a scam. So when a new revenue sharing program opens people join as they always do and just pay in the minimum $10 to see what happens. They do their surfing and get their $1.50 per week or whatever which builds their confidence, so they decide to risk a slightly higher amount say $20 or $30. This process continues and the program continues to pay everyone on time.
This in turn increases everyone’s confidence in the program so they tell their friends and family who do the exact same thing and those friends and family also do the exact same thing.
But one needs to stop and think, what is ACTUALLY going on? How can the company afford to pay out incredible 10-20% per week returns? The answer is they are just paying you back the money you have already given them.
Take for example someone who pays in $100. If they receive 10% per week payout, then it takes 10 weeks for the company to pay back the entire $100 to that user. It isn’t until the 11th week that the company is now losing money on that user and in turn that user is finally making a profit. However what tends to happen is the user gets confident that the program is working and before the 10th week arrives they have already poured more money into the program in order to get more money out.
However, some users are smart and wait until they are in profit before pouring in more money. So how is that possible you ask? The profit that the 1 user gains is simply coming from the other users who have just joined and are maybe on their first or second week etc. This is where the growth factor becomes key for these programs survival.
Therefore, it is just a “rob Peter to pay Paul” set up. Unless there is some sort of money coming in from a different source, then the company is just using your own money to give back to you. There is no REAL actual profit anywhere.
You have perhaps heard of Ponzi Schemes? If not do some research on what a Ponzi scheme is. These advertising revenue sharing programs are just that. The difference is these are completely legal. Why? Because they give you something for your money. A Ponzi scheme is illegal because it’s just “invest in me and make a return every week”. The advertising revenue schemes never make any promises as to whether you will make money or not. They never use the word “invest” as that would be illegal. When you pour money into them you are buying advertising. The revenue sharing aspect is just a bonus which they can stop whenever they want with no legal ramifications.
This is perhaps what people take for granted. Past performance is by no means and indicator as to the future. If you decide to join one of these revenue sharing programs then be sure to join with the idea of buying advertising. Assume any money you pay is gone forever. NEVER approach these schemes from the standpoint of trying to make a profit or you will fall into the trap and lose a lot of money.
However, if you are determined to make money from these programs then my advice to you is get in early and pay your big lump sum in early. Of course in my opinion this is far too risky, perhaps even stupid, but the only ones who make money in these programs are the ones who get in early. They all tend to do well for a few months or even up to 1 year so long as the membership numbers are growing. However, once the new member sign up rate slows down, that’s your sign that it’s time to bail. With these programs however “bailing” is impossible because you can never ask for your money back.
Remember, any money you pour into the company (by buying advertising) you can NEVER ask or get back. If you pour in $1000, that’s it. It’s gone. You can’t email and ask for it back because it wasn’t an investment. That $1000 bought you a non-refundable product i.e. advertising. That’s what makes these revenue sharing schemes completely legal, and that’s also what makes them extremely popular. New ones pop up as soon as old ones shut down.
This is exactly what happened with a company called Adventures4U. A few months ago I received tons of emails from people raving that this was the greatest thing ever. They paid consistently every single week, each time giving a 7% cash return and 7% re-investment. People were pouring more and more money into this program as it had a rock solid reputation and their membership exceeded 60,000 members. Then all of a sudden the revenue sharing aspect of their program stopped. I personally know one member who poured in about $10,000 however he did this very early and overall made a profit of a few thousand dollars. But stop and think where did his few thousand dollars profit come from? It came from the pour souls who lost money believing in the scheme. Therefore, one man’s profit is another mans loss. Do you really want to be a part of that?
I had many friends encouraging me to join and benefit from the “cash train”. I refused and even wrote an article on my blog warning people of the dangers. Of course no one listened as they had “faith” based on the past performance. Then, BANG! No warning, the revenue sharing plug was pulled. Now Adventures4U still stands but it’s just an advertising portal, no revenue sharing. Many people made money from it, but many more lost.
However, legally speaking they didn’t lose anything as they still have the advertising credits they bought. No one has any right to say they were scammed because legally they weren’t. The company offered advertising and that’s exactly what they provided. However, people are people and in their mind they were scammed as they expected the revenue sharing to go on forever.
Oddly enough, the very next day after Adventures4U pulled the plug on the revenue sharing, lo and behold Adshares4U opened their doors offering the exact same system. Here we go again?
I urge one and all to be smart.