In short, Darren claims that blogs are not a great source of passive income. Despite what Darren has to say, that doesn’t stop many people from believing otherwise. I find something about that a little disturbing. Bloggers are starting to talk and act a lot like multi-level marketers.

What is Multi-Level Marketing?

What is multi-level marketing (MLM)? Think legal pyramid schemes. It’s the stuff you see advertised on late night infomercials as get rich quick schemes.

Essentially, a company that employs MLM is a company that sells products or services through multiple levels of intermediate marketers. A lot of effort is put into recruitment. You recruit Joe who recruits Sally, each of them signing up 10 or so customers. You get a percentage of every sale made under you in the tree.

Passive income is a popular selling point for MLM schemes. It’s also referred to as “residual income.” The thinking is that if I recruit just a few people, I’ll make a passive income off of all the future recruitment and sales that my recruits do.

What Harm Does MLM Do?

MLM recruitment in the US typically preys on innocent, gullible middle-Americans. They get lured in by grand stories of riches and the vast potential of such a business. They see potential for a passive stream of money flowing forever with just a little work today.

For a couple people in the scheme such visions may be true. However, the vast majority of these people end up trying to sell knock-off toothpaste to their grandmother, turning relationships with friends and family into business relationships.

Selling and recruiting friends and family is encouraged in MLM, and while it works and it certainly sells products, most people find it doesn’t make them nearly as much money as they thought it would. Usually they are just left with the dirty feeling that they just tried to hawk worthless vitamin pills to their elderly neighbor.

The debate for and against MLM and pyramid schemes has been going on as far as I can remember, and we could sit here all day arguing whether or not it is bad or good. Regardless, there is a lot of taboo surrounding MLM and that taboo isn’t there for no reason. The bottom line is that many people have low or mixed opinions on MLM, and I don’t want to see bloggers slip into that world.

How are Bloggers Headed Down the MLM Path?

In MLM, there are the people who make the products, the middle-men who sell the products, and the customers who buy them. That’s all pretty normal, and that’s how economics works. The thing that makes MLM odd is that they encourage just about every customer to also become a middle-man. Imagine going to the grocery store and not only buying soap, but then going home and calling all of your friends and telling them to buy the same soap.

This sort of behavior is starting to percolate into the blogosphere. We’ve all noticed the symptoms. Suddenly every blog wants to sell you something. The whole Web 2.0 and blog craze is starting to feel a lot more like MLM 2.0. It seems that every blogger has dreams of passive income. What’s causing this?

Just like MLM, blogging has a low barrier to entry and a high availability of products and services for promotion, thanks to companies like Google and Amazon. Therefore, it’s no surprise that bloggers are starting to think and promote like multi-level marketers.

Causes for Concern in the Immediate Future

Up until now, MLM has had a deep recruitment tree and blogging has been pretty flat. Bloggers go direct to the affiliate programs rather than being recruited by Joe who was recruited by Sally who was recruited by… you get the idea.

This is now changing, and that’s what scares me. Services are popping up that act as middle-men between the blogger and the affiliate program, effectively making for a deeper tree indicative of MLM. Take a service like Zoundry. They make it easier for you, the blogger, to tag your posts with product links. 

Pretty soon the MLMers are going to really catch on, and then blogging as we know it will turn into a cesspool for what we’ll call MLM 2.0. Selling knock-off toothpaste and worthless vitamin pills will become the norm. Innocent middle-Americans will get suckered into grand blogging schemes promising “passive income.” Such a thing isn’t all that hard to imagine. In the end, most people pulled into the scheme will be disappointed and blogging will be left culturally destitute.

Call to Action

Blog because you have something original to say or offer, not because you want to make a couple bucks selling diet pills. Don’t let the blogosphere turn into a massive pyramid scheme. Don’t fall prey to promises of riches. I guarantee that’s all you’ll hear once the MLM folks catch on to blogs. Trust me, if it’s money that you’re after, you’ll make a better living and gain more joy out of doing just about anything else.

Bill is part of Garage, a venture capital company, so he’s probably heard many pitches and knows what he’s talking about.

The tutorial comes in two parts, check them out:

• Building a Niche Minisite
• Building a Niche Minisite, Part 2

While the article doesn’t reveal any earth-shattering tips (in fact, most of it is pretty obvious), it’s a good enough starting point for anyone who is completely fresh to the notion.

In this post from Google, they clarify some issues relating to building link popularity. Here is the setup for the article:

Late in November we were at SES in Paris, where we had the opportunity to meet some of the most prominent figures in the French SEO and SEM market. One of the issues that came up in sessions and in conversations was a certain confusion about how to most effectively increase the link-based popularity of a website. As a result we thought it might be helpful to clarify how search engines treat link spamming to increase a site´s popularity.

The Google post has caused some confusion and incorrect speculation. Danny Sullivan elaborates and clarifies in an article entitled Stop the Freak Out Over Linking, which I recommend you check out for some no nonsense interpretation of what Google is saying.

For those of you who don’t know Guy is, I suggest you check him out and maybe pick up one of Guy Kawasaki’s books packed with entrepreneurial advice.  He’s an excellent entrepreneur and venture capitalist who contributes a lot back to the community in terms of information, tips, and advice.

Many of these “secrets” are fairly obvious - it’s a no brainer that a strong business needs traits such as strong leadership, quality talent, and a disciplined approach to their business. One that did catch me off guard, however, was “effective use of trusted relationships.” Read Anita’s summary or the report to see what that means.

Regardless of whether or not these traits are obvious, the Six Disciplines report provides some tips for increasing your performance in these areas. Perhaps some of these tips can help improve the way you do business.