This business strategy has been around a long time. Here are some other large modern examples:
Amway was founded in 1959.
[The FTC ordered] Amway to stop retail price fixing and allocating customers among distributors and prohibited the company from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
A 2004 settlement resolved a class action suit on behalf of 8700 former and current distributors that accused the company and distributors of "essentially running a pyramid scheme." A total of $6 million was to be paid out, with defendants not admitting guilt.
And both offer extremely informative insight on how to create a successful and profitable business.
Let's just say both of those examples are much better businesses than 90% of the tech that's been released on the web to date.
I'm concerned about the psychology of monetizing a product - because it's the same regardless - not the fact that their particular product isn't appealing to you. If you want to discount an entire examination of how people are convinced to give money to companies so be it. Given that I'm trying to accomplish that exact thing however, I'd like to understand as much about it as I can.
Yet both business still exist and are extremely profitable. Like I said, if you choose to discount the entire industry as unethical, believing it can teach you nothing, so be it.
I however would like to examine what and how they continue to be successful, with the thinking that these people - ethical or not - have clearly captured a way to monetize their customers that has been very effective. These principles can no doubt be applied in much broader strokes to varying degrees.
Yet both business still exist and are extremely profitable. Like I said, if you choose to discount the entire industry as unethical, believing it can teach you nothing, so be it.
I'm curious what you think people who sell other people on selling people on selling people have to actually teach someone that owns a company that survives by creating?
Other than how to sell the Brooklyn Bridge, that is.
Well, how about the fact that you the value of said creation is determined by the customer, not the creator?
If that's they way you want to look at it. I don't do business with that kind of person, since they usually try to sell me on the idea that something is worth far more than it actually is.
I'm curious as to why you're so emotional about the whole thing. It's really not worth such a long discussion.
I'd prefer to not see more SEO/MLM/MakeMoneyOnline posts on Hacker News, so I stated my disagrement with your comment.
If that's they way you want to look at it. I don't do business with that kind of person,
That is reality my friend. The customer and market determine the value, not the creator. You can choose to ignore this, but if you compare successful and unsuccessful startups, it usually comes down to the fact that the customer believes that the creation adds value, nothing more.
If you sell an individual on a perceived value that's higher than what you know they'll actually receive, that's dishonest, no matter how you try and dress it up.
How you couch that reality doesn't change what it is, and that's why I won't do business with that kind of person.
Where did I suggest doing that? And where does Problogger do that?
I'm suggesting that just because you think your creation is worth 19.99, doesn't mean it is. Often it means it is less, but just as often you'll find that the market thinks it's worth much more.
If you don't price it right, it could be detrimental to your business.
For whatever reason you seem to be fixated on this Amway/Herbalife deal. All I'm saying is that both those companies are obviously showing value to somebody, because otherwise they wouldn't be around. How they manage to do that is worth studying.
Suggesting that everyone that doesn't see things your way - including myself, and pretty much 80% of major corporations - is unethical is rather immature, to be frank.
Where did I suggest doing that? And where does Problogger do that?
Problogger/TwiTips are entirely predicated on selling you on the idea that you too can make money on your blog -- for evidence, just look at Problogger, which makes money selling you on making money on your blog.
At least the recursion is fantastic.
Suggesting that everyone that doesn't see things your way - including myself - is unethical is rather immature, to be frank.
Well, I doubt we'll agree. That's OK, but I don't think that there's anything immature about pointing out what I see as inherently dishonest behavior.
This business strategy has been around a long time. Here are some other large modern examples:
Amway was founded in 1959.
[The FTC ordered] Amway to stop retail price fixing and allocating customers among distributors and prohibited the company from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
http://en.wikipedia.org/wiki/Amway#FTC_Investigation
Herbalife was founded in 1980.
A 2004 settlement resolved a class action suit on behalf of 8700 former and current distributors that accused the company and distributors of "essentially running a pyramid scheme." A total of $6 million was to be paid out, with defendants not admitting guilt.
http://en.wikipedia.org/wiki/Herbalife#Controversies