A rant. The zero sum game, and why most "make money gurus" are scammers.

[mikeb]

[rant]
One phenomenon I hate is people who go from buying "make money products" straight to selling them, and only ever trade in the "make money" niche, breeding newcomers selling to newcomers selling to newcomers.

Sadly many if not most of the "direct marketing gurus" including many of the most famous are EXACTLY of this type.

Since these people only know how to sell "make money products", then despite all the smokescreen, all they are qualified to do is sell "make money products", which leads to another generation of newcomers selling make money products to newcomers.

And it is all a scam.

The problem is simple. It is a zero sum game. No new wealth is created. Draw a circle around all aspiring marketers in which we include our guru, his disciples and those that follow and all transactions occur inside the ring.

Net result is , every single ££ is earned at the expense of somebody else in the ring!! Each big winner is at the expense of many losers.

And the only way this "chain letter" exists is by enough new blood entering to lose money to the gurus.

They do all they can to encourage the next layer in this giant MLM scheme by saying "since you don't have a product, why not sell my course as an affiliate" - here is how to create the website, all you have to do is promote it, so forums become a blaze of affiliate links, with false testimonials for the "guru" saying how great a guy he is. When in reality the only money any of the disciples make is by selling the guru scheme on to another generation of inevitable losers.

There is also the problem that since they have no business outside selling make money products, they are not testing what works, so they have no up to date information on what is working except in the "make money" niche: net result they sell out of date stuff. Which is passed on from newcomer to newcomer. Some well known gurus on niche subjects such as PPC, dont actually do it for a living, they sell training instead, so how would they know what is working?

The zero sum game is real.

The only way wealth is generated is by bringing money in from outside the ring of would be marketers, so disciples selling something else to someone else, ie doing something else!! succeeding despite the guru and system , not because of him:

I am a member of a lot of expensive marketing clubs.

My guiding rule is simple. Buy only from people who have a business outside selling "make money" products - who are
simply teaching what they do for a day job.

Interestingly in the unfair selling regs it is now illegal to promote an MLM scheme in which most of the revenue is generated from selling "dealerships" ie starter packs to would be sellers, rather than selling to end customers. It is a pity that most of these gurus are not trapped by the same legislation.

[/rant]

[Clinton]

Excellent post, again, mikeb. I must congratulate you on being one of very few members who made two green repuatation blobs before getting to 20 posts and only the second one ever to get there within a week of joining!

One phenomenon I hate is people who go from buying "make money products" straight to selling them, and only ever trade in the "make money" niche, breeding newcomers selling to newcomers selling to newcomers.

Sadly many if not most of the "direct marketing gurus" including many of the most famous are EXACTLY of this type.

Ah, but they're smart enough to invent some "evidence" of their expertise - to twist, exaggerate, fake proof - in order to appear credible and sell product. The talk up the size of the market, the ease with which one can succeed and the "power" of their course material. Unfortunately, even some of the people I respected in the website buying and selling market sold up to chase this cheap and dirty money.

Interestingly in the unfair selling regs it is now illegal to promote an MLM scheme in which most of the revenue is generated from selling "dealerships"

The FTC also now has rules about disclosure of affiliate relationships and about posting only genuine testimonials. How many prosecutions have you seen so far?

[mikeb]

In the UK none, on the new legislation that I am aware of.
Although it does provide a valuable purpose, like defining the abuse of the word "FREE" -
and stopping the likes of ASDA advertising christmas deals to get people in, then having no stock, forcing you to buy other stuff.
etc etc,.

There have been a few relatively unreported cases of direct marketers being sent down - it is one of the problems that there is no right in FOI for getting access to court records, so make money schemes and franchises shut down in the public interest are not routinely publicised.

They are too slow to catch cold, and there is little if any mechanism to report scams, let alone act on them.
As I said - I tried a challenge under new ASA guidelines to police the web on one such "guru". They simply cannot act quickly enough to shut down offers.

In the US - I am sure you are aware of "operation empty promises" which has shutdown a great many scams, but as for testing of the affiliate rules, I have not heard of any, but a lot of people are running scared.

[Mikl]

Mikeb, I can't add much to your very interesting post. But I particularly noted your point about challenging web-based adverts under the new ASA guidelines, in which you say that "they [the ASA] simply cannot act quickly enough to shut down offers".

The ASA has always done a good job of dealing with complaints about advertising in print, but in those cases time is usually on their side. I wonder if that's true with web-based ads. I know that some very simple complaints are usually resolved straight away (in a day or two), but many of them involve written responses from the advertiser, a formal adjudication, and possibly even an independent review. By the time that's all been done, the damage has been.

It's an interesting point.

Mike

[mikeb]

My experience of ASA has not been nearly as good. I have submitted several test cases, and the response was somewhere between useless and diabolical: they did not even take snapshots of the reported pages, at the time reported, they wasted 2 weeks with low level staff, stating the obvious about their role before assigning an investigator who then said "we cannot find the offending advert!".

I also have an in principle problem with an organisation that allows itself to be leaned on by such as Tesco and split hairs in finding against ASDA on the "cheaper guarantee" on the grounds that the advert did not include "non food products" when there is absolutely no doubt that ASDA IS cheaper. So ASA should have sent TESCO away!

Instead the "judgement" clearly acted partially in TESCOs favour with the words of the judgement. So who brought what pressure to bear I wonder?

[Saul]

Govt agencies are a useless waste of tax payer money, why even bother with them. If you want to take a scammer down you might try hitting where it hurts them most - their payment processor. This zero sum game activity is high risk in terms of payment processing and if they're not aware of it yet, you can make them aware.

I've read a post somewhere about someone (won't find a link now) being kicked out of PayPal even with low refund rates exactly because of money going around in on circle. You don't have to be a big scammer to get in trouble with this. Even Clickbank recently has kicked out the most notorious fellows, it's funny to see how they keep jumping from one processor to another and getting kicked around. Their latest trick of the day seems to be "instant 100% PayPal commissions!" which is nothing but passing down the payment processing risk to unsuspecting affiliates. Make enough sales as an affiliate this way as part of this scheme and you put your PP account into serious jeopardy.

[ekross]

Since I have started researching online businesses, I have seen this present itself time and again. I am accustomed to researching things that interest me online, but it is different with the affiliate programs. If I find an interesting article about a product or training class, I try and research it online. But the pages of google are just filled with "review" websites singing the praises of the product because they are all affiliates. It is frustrating. Any other research I've done online (buying a camera, researching vacation destinations) yields actual reviews. It almost makes me want to stop researching. But I know that there are legitimate ways to earn money online and I would like to know more about them. It seems to involve wading through a lot of trash to learn, though.

[Slowdive]

Finding a gem out of the MMO programs, courses and offerings is a lot of wading and a lot of work. However the principle of a successful on-line business is not that different to the principle of a bricks and mortar business.

You need a great, product or service and a way to get people to see, use and interact with that product or service. Even adsense sites, if your product is getting an advert seen by thousands of people, its as simple and complex as working out how to get a thousand eyes a day on that block on a webpage.
MMO products talk about seizing page one on google but no one brings up terms like viability, return vs time or business model. A lot of products claim to help you find a niche and exploit it, a wonderful principle but if your spending 40 hours a week and $50.00 to sell a product that returns $3 a click? Its likely not viable as a business model unless you can generate an incredibly high number of clicks.

On a more general note, have said it before numerous times and will keep saying it. Nearly every person on EP making any real money online would be making money in the 9-5 world if there was no internet. Its why new comers often flounder as well, the most important tool is the one that cannot be taught. The ability to see a potential or opportunity and seize upon it while remaining a viable business model. If I took twenty small business owners and 20 college grads and mentored both parties I guarantee a higher success rate among SME owners. So the point of all that is begin thinking on-line business over just a website and you will begin taking steps towards creating a viable income stream on-line. The biggest stigma the industry needs to destroy is the idea of low risk, easy money. Of course that's unlikely to happen as so many people rely on keeping that illusion alive to line their pockets.

[akirk]

Couldn't agree more... I am always concerned by folks who somehow believe that MMO is simple, easy and an instant way to riches... Yes in rare cases it can accelerate growth hugely due to fast access to the market, but generally the internet is simply a tool like any others and normal business principles apply...

Alasdair