Revenue Sharing For Dummies

By in Miscellaneous on February 12, 2016

revenue-sharing

Perhaps, given the way almost all revenue share administrators operate their systems, the title should have been “Revenue Sharing IS for Dummies”!

Before you consider this might be a scathing attack on the general concept of sharing revenue, note that this is particularly targeted at the recently dressed-up High Yield Interest Program (HYIP) business model feigning value as an advertising platform.

Credit where credit is due, things have moved on from the typical HYIP scam, where “investors” were incentivized by the promise of effortless returns for injecting monies into supposedly profitable commodities.  Nowadays there actually is a product or service attached to such systems – “investors”.. sorry, the term “investment” is now strictly forbidden (big brother is watching), members receive advertising credits to promote their businesses.

This.. is what many consider is a rather lame attempt at legitimacy, brought about by significant interest from certain government bodies, particularly the US Securities and Exchange Commissions (SEC).

But.. the model, has origins that do little to hide the fact HYIP is still in the DNA of the typical advertising revenue share platform.  The most cynical depiction of these platforms’ modus operandi is that of robbing Peter to pay Paul.  This is where funding from new members is used to honor the withdrawal requests of existing members based on their accumulation of shares and or referral commission which are a percentage of personally introduced members’ spending.

Under close scrutiny, which basic due diligence is sufficient to unearth, these platforms can be described as “closed loop”.  There is no outside influence acting upon revenues being shared.  In short, once the membership tires of injecting fresh funds or the majority consider that their potential to profit requires no further input from them, the company’s overheads (namely member withdrawals) start to out accelerate the incoming revenue – in other words, profit turns to loss.

It’s an invariable outcome!

The majority of administrators fix specific repurchase percentages, which to the uneducated appear to introduce funds into the revenue stream.  In actual fact, this serves only to decelerate the depletion of reserve funds, hence making the system appear to last longer and giving more time for unsuspecting new members to become part of the prolongation equation.  These new members will unfortunately never see a long enough service form the system to benefit, nor break even in many cases.

By definition, revenue sharing systems involve the sharing of operating profits or losses among associated financial actors (paying members).  And the current breed of program administrators prey on this, covering themselves by highlighting the fact that revenue can only be shared when sales are made.  And, if losses occur, by participation a member accepts all risk.

HYIP and Revenue Sharing systems are not new, they’ve been around for a significant amount of time and have resulted in numerous high profile legal cases in which sentences were passed on the perpetrators who profited the most.

In light of this information, one could be flabbergasted by the fact that the exact same model, often referred to as PONZI, lives on today without so much as a consideration from administrators to opening the revenue stream to outside influences.  These “experienced” administrators either have no technical ability nor the financial backing to employ programming teams with the capability to introduce such functionality, or… they simply don’t care.

Revenue Sharing scripts can seemingly be purchased for very little money (in the grand scheme of things) and operated by the average man in the street.  And this has sparked the advent new programs on an almost daily basis.  But the fundamental flaw of such a model lies not in the proliferation of readily available scripts nor the inexperience of the program administrator, but the lack of an outside source of revenue.

These types of system attract members in the hundreds of thousands and administrators hold the prime position to monetize them.  But given what you now know, why do you think there is still such appeal in advertising revenue sharing platforms?  Many would say the potential to earn significantly without the hardship of becoming educated in Internet marketing.

But.. there are a few simple facts relevant to succeeding with revenue sharing deals..

[1] Initially choosing one with good potential for longevity

[2] Joining as close to the launch as possible

[3] Funding with significant funds to enable compounding as soon as possible

[4] Introducing others for referral commissions that can boost active share totals

If the administrator, his intentions and his reserve funds balance are unknown, how can potential longevity be measured?  A poorly managed business can “go down” extremely quickly making that early entry potentially the fastest way to lose a lot of money online.  Lack of available funds can make progress and compounding to increase shares a slow process.  And without those necessary Internet marketing skills, referral commissions will be non-existent.

Without being able to guarantee three of the four points above, every revenue sharing advertising platform is a potential non-starter.

Surely, anyone who sees a genuine opportunity to enhance their life with a system containing so many variables must be considered a dummy? 

For Internet marketers, an advertising product does have value.  But for it to be integrated into a revenue sharing model the core product(s) MUST be offered to non-members in order to generate a source of “outside income”.
Offering effective advertising without the commitment to becoming a member presents a more financially beneficial system capable of supporting the flow of revenue beyond members’ financial contributions.

Assuming the offered products and services are valuable and garner results, customers will continue buying and of course can be tempted into membership with the offer of a money saving benefits package.  Such a package should include a monthly subscription or a significant but discounted one-off or annual charge to keep the system profitable. Offering additional member bonuses for completing more constructive tasks that offer more value in terms of genuine attention to customer ads will encourage greater participation thus breathing life into the site.

One such task could be enabling customers to set a few generic multi-choice questions related to their ad that a member has to answer in order to receive a greater benefit than the base which would be offered for simply viewing or reading the ad and confirming having done so.  This would focus the member/reader so they could maximize the value of their unit of work – and this increased attention to a customer or other member’s ad could be the difference between making a sale or simply earning a click.

Alternatively or additionally, another feature could be to incentivize social sharing that results in additional financial or credit-based benefit for the member (where an accumulation of credits could go towards member advertising or additional profit shares) and greater exposure for the customer as their ad goes viral.

In fact you might be surprised, with the prominence of social networks, that revenue sharing program administrators/owners haven’t already adopted the above strategy, shoehorned it into a custom script and distributed it across the internet via potential domains like “viralrevshare.com” or “socialrevshare.com”.

In essence, there could be a multitude of focus-based tasks that offer customers and advertisers real value for money when placing ads on these types of sites.  It’s just up to the administrators to devise and implement them.

About the author: Kevin Waldron is an affiliate marketer who enjoys writing quotes and sharing his perspective with a view to inspiring others. Feel free to connect with him on Facebook.

1 comments
kevinwaldron
kevinwaldron moderator

Until an administrator, owner or company delivers a platform upon which value to the customer is the main focus and it's monetary operations can be proven to be mathematically feasible, revenue share advertising programs will remain nothing more than closed loop money games where money is moved between it's members.

Stay away from them!