*supercollider

Example 1: Blue Chip Expert

I received an invite recently for Blue Chip Expert, billed as a premium, invitation-only recruitment service. Which it may well be, but it’s main claim to fame seems to be it’s unusual, MLM-style compensation scheme.

CNN Money explains:

Once you create a Blue Chip profile outlining your skills for hire, you can invite friends to the site. If one gets hired for a project, you’ll be rewarded with a cut of her project fee. A $200,000 gig, for instance, would net you $4,000.

But as with Amway, the fees extend across degrees of separation. If one of your friends’ contacts gets a $200,000 project, you’ll get $2,000. The incentive is designed to quickly build critical mass for a national talent bank.

BCE is counting on the recruiters and consultants to rush to spam all their friends to join, with the promise of future rewards from everyone they snag.

And similar to referral codes offered from hosting providers Dreamhost and Bluehost, blogs and forums are filled with people talking about the service as an excuse to give out their referral code.

(I haven’t signed up and don’t have a code, so you can exhale now…there’s no sales pitch coming.)

Example 2: Popcuts

An example of a similar approach in an entirely separate industry comes in the form of Y-Combinator funded startup Popcuts, who promises to reward you for the music you buy.

TechCrunch explains:

When an artist signs on to the store, they allocate a certain portion of the revenue generated by their songs to go back to their fans. This money is then distributed according to how early each user purchased a song (the earlier you buy, the more you make). For example, the band My First Earthquake has decided to pay out 30% of its revenues to its fans. The earliest adopters (say, the first dozen people to buy the song) will break even after the song has been purchased by around 25 other people. Fans buying the song later on will still earn credit, but it will be earned at a much slower rate (the site will tell you how quickly you’ll be earning credit before you buy a song).

I imagine the vision is the site becomes where early adopters seek out and promote indie music, as they get a cut of anything they help break.

The reality is somewhat less compelling for the moment, with PSFK pointing out that besides the fact there’s only a tiny library of unsigned music to choose from, you only get paid in credit for more song purchases on the site as well.

That has the unfortunate association with those used book stores that only provide contra for books. Good business model for the owner, not so much for the customer. With so many ways to listen to great free music these days, from Blip.fm to Hypemachine to RCRDLBL, it’ll be interesting to see how Popcuts fares.

Why it matters: implications for social marketing

Marketing is becoming increasingly focused on influencing and leveraging social networks, and encouraging other people to tell your brand story or promote your product on your behalf.

Ideally this would be because you are nice or interesting, or provide a unique product or great customer experience, thus creating things that people naturally want to talk about.

But you could see how marketers could be seduced by the dark side, and encourage advocacy via more direct incentives (aka bribery) instead, or as a booster. Reward early adopters, and use their self-interest to help propel your campaign forward.

Even fun campaigns like the Orange Balloon Race tapped into people’s self-interest to get them to promote the race to their friends, rewarding them for getting clicks on their balloon, thus encouraging players to distribute the balloon on their social networking spaces and appeal to their friends for clicks.

A brilliant idea, but strip away the fun game and playful balloons and you are left with a framework based less around real advocacy and more around affiliate-style promotion.

It’s more than slightly off-putting to think that a big part of the next generation of marketing will be based around subverting social networks rather than contributing to them, but as long as people play along there will always be temptation.

So what do you think? Is MLM and incentive-based friend-get-friend schemes destined to be a key part of marketing in the future, encouraging and rewarding product advocacy? Or once the initial shine wears off, will these programs simply be seen as social spam, and be confined to a relatively small but lucrative niche, like Amway?

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