People often ask me the question “Are All Revenue Sharing Sites Ponzi Schemes?” Below I detail my own investigation into this rather complex query. This will allow you to judge for yourself which sites are at higher risk of closure by the authorities. If you just want to know about more stable sites that information is at the bottom of this post 😉
I conducted quite a lot of research into Traffic Monsoon when thousands of people where joining it. Due to that, and the fact similar Revenue Sharing Sites have been deemed to be illegal Ponzi Schemes, I thought I would look at this in more detail. There is a huge amount of information available about what makes something a Ponzi Scheme already. In my opinion however it is still quite confusing. There are still a few additional questions to discuss:
The Investment Question
According to Wikipedia the definition of a Ponzi Scheme is ” is a fraudulent investment operation……”. The image below for example uses the words ‘investment’ and ‘investors’ throughout. This is the same for any other definition of a Ponzi scheme I have seen. Is a Ponzi Scheme ALWAYS something that involves making an investment? Or is it always obvious you are making an investment?
One of the reasons I highlight the term ‘investment’ is because there is a huge emphasis on the ‘fact’ the revenue sharing sites are not an investment opportunity. This video regarding My Paying Ads is a clear example of that:
When looking at the definition of ‘Investment’ however Investopedia makes it very clear that the purchase of an item “with the hope that it will generate income or appreciate in the future” IS considered to be an investment.
A lot of these revenue sharing opportunities say they sell “online advertising credit ad packs” and are not an investment. However the important aspect for the Ponzi Scheme definition is the promotion of the revenue sharing (profit sharing) opportunity provided from buying these ad packs. So are the purchase of ad packs made with the hope of generating income from them? That answer is a simple Yes. This means this IS an investment opportunity regardless of what they say.
The Funding Question
The next part of the Ponzi Scheme definition involves the payment of returns to existing investors from funds contributed by new investors. Again I feel there is a bit of a smokescreen around this by many online advertising revenue share sites. Part of this is obvious as they highlight the commission structure for introducing people into your downline, but this is not the problem. Commission payments for introducing new members are extremely common practice in this industry. In a Ponzi scheme the important thing is there is no real way of generating profit without new members (investors) providing the money. I have already discussed this in Where is the money coming from?
So the important question is ‘If no new investors (or new investments by current investors) were to happen would there be any profit to share? Unfortunately without access to the financial records it is frequently not really possible to determine this accurately. I know sites like this try and imply there are other sources of profit. However as these companies sell advertising it is almost impossible to distinguish between purchase of ad packs (for profit sharing) and genuine advertising purchases. The lack of genuine purchases however can become apparent in the next step.
The Collapse Question
The final part of the Ponzi scheme definition is about the collapse of the ‘business’. Due to the lack of genuine purchases, Ponzi schemes require a consistent flow of money from new investors. Without this new money the business will collapse. When it becomes difficult to recruit new investors, or when a large number of investors ask to cash out at once any business based on the Ponzi Scheme Model will inevitably start to fall apart.
I personally had a lot of concern about both Traffic Monsoon and My Paying Ads right from the beginning. These are just 2 examples of Revenue Sharing sites, and there are many more popping up daily. The main warning signs for me were:
- the fact I could not see any clear profit generation outside of the Ad Packs.
- the payment system was tiered. This means with each withdrawal made more earnings are required for the next one.
- the history of Charles Scoville and his involvement in so many previous similar businesses that failed.
- the various requests for members to continue with their purchasing after Paypal restrictions were put in place.
This video was emailed to all Traffic Monsoon members by Charles Scoville:
I gave this video a lot of thought. Surely if sufficient genuine advertising sales are being made the fact the fund hold by Paypal should not really have such an impact….or maybe I am being naive about this? IF there were a large pool of genuine advertisers there would be sufficient new money coming in from non ad pack purchases to prevent the withdrawal issues would there not?
Comparison With More Stable Non Revenue Sharing Sites
Lets compare this with some more stable online programs such as Clixsense and Neobux. I recently found out that Neobux also had their funds held by paypal. This was in the early days of the business. The paypal hold is discussed in this interview with the owner of Neobux (question 16). This interview question reveals 2 very important things:
- Neobux is a real business and complied with all legislation so their paypal hold was released quickly – “PayPal had, and I think it still does, a very professional approach in which all accounts with high thresholds are blocked twice in their early days. The second time, however, is only unlocked by real businesses that comply with all legislations”.
- Neobux was not dependent on members purchases to continue, and they were asked for small donations only, which turned out to be unnecessary to maintain the business – “For that period we kept doing business as usual and only requested small donations from our users, until we balanced the other payment processor’s funds, which wasn’t necessary since the recovery was faster than anticipated”
The Most Stable Revenue Sharing Sites
In my opinion there are a few more stable revenue sharing sites.
Future Net is an example of a revenue sharing site that has clear additional profit generation. This one has a social media part that works like facebook to raise money from EXTERNAL advertising companies. These adverts are easy to spot on the site as well. In addition there are several extra products available for purchase. There are various business tools such as landing pages and blog hosting too. More recently an additional shopping feature has been added, and there are Future Net branded products for sale as well. All of these are additional revenue streams for the business which provide them with a profit margin not related to ad pack purchase.
My Paying Ads has now also made it on to my more stable list with a note of caution. I do still have some concerns about this one at the time of writing this post. However it is clear the admin is making positive changes. I continue to monitor this site carefully and want to see more clear funding sources outside of the Ad Packs before removing the caution notice.
Edit: A membership program is now in place which does add funding outside of the Ad packs. I’m still not 100% satisfied with this as it is still a form of internal funding (from members of the site) rather than external.
I advise caution in using any investment opportunities. My advice is:
- Do not invest money you can’t afford to lose because ALL investments have a degree of risk attached.
- Withdraw your initial funding balance as soon as possible.
- Set a target limit for investing and stick to it.
I know this is a bit of a long post, but I do hope it has helped to clarify some of the issues regarding ‘investing’ in the online advertising revenue share style sites that are popping up like an epidemic right now. Do feel free to share with others who may be in need of clarification, or ask me any questions you may still have on this issue. Overall please just be careful what you are doing with your hard earned funds 😉