The Federal Trade Commission (FTC) has filed suit against BurnLounge and former University of South Carolina football player Rob DeBoer has been named in the suit. BurnLounge and DeBoer are being accused of running a pyramid scheme and misrepresenting the earnings investors made with the company.
My personal experience with BurnLounge is much like that of SC Attorney General Henry McMaster. According to The State newspaper, “McMaster suspected the company [Burnlounge] of being a pyramid scheme after hearing a sales pitch for the company with his wife.”
A friend recently tried to recruit me into BurnLounge. He had asked me to visit a website called yourburnteam.com, call a toll free number for more information, and then attend a presentation by former USC quarterback turned attorney Todd Ellis. Ellis is mentioned in the article linked above. I visited the site and called the number. Then I proceeded to warn my friend via email by saying, “This program is a multi-level marketing (MLM) strategy at the roots.”
BurnLounge retailers are expected to get customers simply due to having a personal relationship with folks. The customer buys music much like they would on iTunes. This lawsuit is likely resulting from the questions raised from potential retails like reading thins like this:
The investment is $430 per year in U.S. dollars, plus $14.95 per month. This may change for different geographies to reflect local economic realities. ($609.40 per year total with no guarantee)
The upside is almost unbelievable, and Australia and Canada are the first countries that we are moving into..
In the first year, we had over 50 people earn over $100K, and several who earned from $400K to $600K in personal earnings. The amount of personal income that you create is up to you, but the opportunity to achieve life-changing income is real and attainable. (These bullet points were taken from the “Investment vs Return” section of a promotional email I received in late April 2007. My emphasis added in bold.)
Those talking about downloading the most music say they use torrents and P2P solutions. Those who buy their music fair and square from iTunes or Walmart.com have already busted past the initial impulse music purchase after acquiring a new digital music player for the first time. After a brief informal survey of friends using services like iTunes, I found that all fell squarely in the middle of the estimates made by David Caulton, a Zune contributer as reported on the Electronics Design Strategy News web site. David says:
“iPod owners initially buy 30 tracks in the first three months, but then drop off to one track per month or less on average.”
Based on the above information and a couple of things that grabbed my attention in the “Back-end Compensation Tutorial Residual Sales” presentation on the myburnteam.com site, I was led to my decision to not participate.
-Single orders totaling less than $9.90 DO NOT count towards your sales quota
-A single order with (1) 99 cent track DOES NOT count towards your sales quota
-A single order with 10 or more 99 cent tracks DOES count towards your sales quota
These bullets were taken directly from the “Back-end Compensation Tutorial Residual Sales” presentation on the Burn Team site. To see it for yourself, go to http://www.yourburnteam.com and enter as a Guest. Click on the menu icon once the Rob DeBoer flash video starts. You will find a section called “Compensation Training” that includes this “Back-end Compensation Tutorial Residual Sales” presentation. Oh, this presentation does not play well with Firefox.
What all this tells me is that if the numbers give by David Caulton are even close, then revenue for a BurnLounge retailer from music downloads will be nonexistent after the first month a person joins.
As a web site and blog builder, I can not image gambling $430 to see if I might be able to generate some revenue in much the same way I am already doing so with affiliate relationships that are FREE. I spend less than that per year in total web hosting expenses.
I believe that BurnLounge is preying on the ignorance of those who have never built a blog or web site before. Intensionally? I don’t know. The amount of revenue a burn page retailer will generate is directly proportional to how effective they are at delivering visitors to their web pages. Any experienced web site owner will tell you that drawing traffic is not always a cakewalk, unless you are [uhm] something like a former college football celebrity with the name recognition that might be able to immediately draw a ton of Internet traffic.
After you run through the references in this story, if you find that you just can not live without becoming a BurnLounge retailer, then I will hook you up with my friend. On the other hand, if you want to make money on the Internet the old fashion way, then just drop a comment in this post or send me an email (check the about page). I will be glad to help you get started for way less than $609 per year.