How Multi-Level Marketing Works

Multi-level marketing or MLM is a $22 billion industry today and employs more than 10 million people. It works primarily as a person-to-person sales system where a salesperson has two main roles:

1. Distributor - buying directly from the company and selling directly to other individuals, usually friends, family and work associates, making a profit with each sale.

2. Recruiter - signing up other distributors who will work for you. You get paid every time he buys products from the company and makes a sale to other individuals.

So MLM has two ways to make money and as you sign up more distributors, you build up a "downline--all those you recruited and also all of those recruited by them, going down unlimited levels. Similarly, your "upline" would be the person who recruited you and those who recruited them and so on upwards for possibly many levels. As you can imagine, most of the really successful multi-level marketers make most of their money from their downline rather than by selling products. This is why MLMers put most of their efforts into recruiting new members rather than selling products.

However, it is actually illegal to only recruit new members without making any individual sales of products because this is classified as a "pyramid scheme" which is meant only to make the creators of the scheme rich while making everyone else in the program poor. One such popular pyramid scheme is the selling of "special reports" on the Internet that supposedly teach people how to make money online but also encourage each new purchaser to become an "affiliate" and make money by selling the same report to others. In the end, the only money being made is by those who are selling these reports.

MLM is not intrinsically a bad way to "earn money from home" and many individuals are making a good living with it while being completely ethical and considerate of others. It is just that the system is easy to abuse and has been abused. We simply need to be careful when we choose a program and ask a lot of the right questions.

Jay is a retired Wall Street veteran with 2 plus decades of experience. If you find this article to be of value, please check out his latest diversions at Antique Persian Rugs and Antique Persian Rug Types.

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Internet multi level marketing is the way mlm is going whether the old time network marketers want it or not!