Burnlounge – Music’s MLM
June 17th, 2006 at 1:30pm

In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business.In a legitimate MLM company, commissions are earned only on sales of the company’s products. No money may be earned from recruiting alone (“sign-up fees”). Some, less legitimate, companies produce revenues primarily by attracting new participants or selling them marketing services, as opposed to selling actual products. One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from new-recruit bonuses or business support sales. – source

Initially, Burnlounge seems like a wonderful revolution in the music industry. Through my own internet surfing I have run across countless people with their own “Burnlounge Stores” and thought nothing of it!

In case you aren’t familiar with it, Burnlounge is a company that allows users to set up a digital music store. You sign up under one of three different levels for a set up feee along with monthly fees. At the bottom you get the chance to set up your own store within the site where people purchase digital music , and you get a commission. At the top level – not only do you get this, but also the ability to recruit (and earn a bonus from recruiting) others to open their own burnlounge store AND have them do the same. You get bonuses from everyone signing up as well as a commission from yours and their sales.

This is a “legal pyramid/MLM”. Pyramid companies only become illegal when they break the FTC’s rules (ie too much money comes from recruiting and not enough from the product). But when you analyze the digital music marketplace (apple – selling mp3s for the same price barely breaks even and they have a much larger market share), you realize that Burnlounge store owners that come in at the higher subscription levels stand to gain much of their profits from the recruitment of others.

The best part is the people involved themselves. You hear the usual MLM things “every business is a pyramid – the owner always makes more than the employees” (No, thats not what a pyramid is, thanks.), “I know someone that made $5783957938 in the first month” (riiiiiight), etc. If any business offering comes to you, and these are their responses, RUN – RUN AWAY!

Not to mention the ties of this company with a now out of business MLM called “Janglefish” who was doing the exact same thing! Red flags everywhere. If you are in an indie band and interested in selling your music online, I suggest you look INSTEAD at “Digital DIY: Six Download Services that Empower the Artist” here – from Hypebot

And for a little more about the ecomonics of burnlounge:

http://netmix.com/wordpress/burnloungecom-launches-viral-marketing-effort-in-new-york-city/

http://www.digitalmusicnews.com/blog/310

So…Basically, BurnLounge store owners will only make significant profits by recruiting other store owners. Those that arent at the “subscription level” to recruit – have no chance at seeing any real $. The store owners that CAN recruit, are going to end up becoming the typical MLM recruiter types, promising great things, delivering little. I would say you are way better off either running a real business on your OWN, or as a band.. and utilizing other services.

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