In this article I want to give the readers a quick breakdown in the differences between an MLM, an Affiliate Program, and a Pyramid Scheme.
To put it simply, and Affiliate Program is basically a way for you to make money by referring people to a website where they can buy some type of product or service. If they buy, the company gives you a percentage. That's how Amazon took off.
A Pyramid Scheme is illegal. Generally there is no product involved and it costs an "x" amount of money to start. All of the money that you paid to start goes directly to your sponsor. Then, when you sign up your own people you receive 100% of their startup costs as well...don't get involved with these, they are illegal and eventually fall apart because they are not based on a product.
An MLM stands for multilevel marketing and is another way to create an additional stream of income. Let me use an example.
Lets say you go to a new store and you really like the product they sell. You buy it and it was even better than you thought. The next day you tell your friend about it and they go and buy some as well. The owner of the store is so happy that he gives you $10 for referring your friend and tells you that he will give you an additional $10 for every person that buys the product based off of your recommendation. You refer 10 friends and you get $100. Now you tell your friends to do the same thing and they go refer the product to other people just like you did. For every person they refer they get $10 as well, though the owner of the store also gives you a small percentage for your friends' recommendations. (Ex. 5% or $0.50) Now your friends tell other friends how to refer people to the restaurant and eventually all those percentage slivers add up.
I hope this helps to clear things up.
Andrew Leone
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