Have you ever wondered what difference is? MLM operators claim they're not operating a pyramid scheme. Matrix and "forced matrix" operators claim that what they have is better than MLM. So what are differences?Pyramid Schemes:
Pyramid Schemes are illegal in USA, and probably abroad. We all know how these schemes work, or at least get jist of idea. A person (the originator) starts by sending a message to several people. Usually people he/she knows. The message in some round about way, will tell everyone to send him $5 or so...and then send message to someone else. All while adding names to list, and each new recipient must send money to first person, second person...etc
There are a million variations of Pyramid Scheme, but main attribute that define a pyramid scheme ( also known as chain letter) is that there is no product, it's just people sending money. The term "Pyramid Scheme" is derived from fact that it starts with one and size of those involved increases as you move towards bottom. On paper, it looks like shape of a triangle, or pyramid.
Multi Level Marketing:
How is MLM different from a pyramid scheme? After all, on paper any MLM looks like a pyramid in reality right? The differences are very simple. In MLM there is a product being sold. Income is generated from "commissions". It's actually a pyramid scheme, except that participants get something back...regardless of whether people they refer actually pay for something...
In MLM, participant always gains from their investment. The catch is in value of product that participant receives. This is reason that MLM is so big on internet. Because, information can have a monetary value, and it cost distributor nothing. So ebooks, software, newsletters...etc... these are most common products used in MLM. MLMers have added tangible products as well, and home products were first to use MLM as a primary marketing strategy.
The Forced Matrix:
With so many MLM programs on market these days, originators have tried to make their programs more desirable than others. Hence forced matrix idea. In a regular MLM program, your monetary gains are based entirely on how good you are at marketing program. However, most people arent' very good. So it would benefit less talented if they had help from talented. Basically, if number of people who can join under you is limited in any way...then it's a forced matrix. The idea being, anyone else you refer extra..will go under someone else. The best implementations put extra person under one of people YOU have under YOU. Hence it helps person under you, which helps you too.