Yuwie, Scam or Not?

by Ali-Asad Somjee

"The world's first social networking site that pays its users".
Yuwie tag line

For those not in the know, Yuwie is the latest money-making venture using the much faulted pyramid scheme; these are basically business models where your revenue depends upon the number of people you refer into the scheme. Now, these schemes have a tumultuous history. AllAdvantage and AGLOCO are two examples of pyramids schemes that went bust. So, the question surfaces: is Yuwie any different?

Firstly, Yuwie’s revenue generating system differs greatly from that of AllAdvantage and AGLOCO. These latter two schemes sought to make revenue by having users download a program that would record web surfing time and advertisements viewed in that surfing time. Thus, the amount of time surfed would generate revenue for the user up to a point. Additionally, users would gain a small percentage of the revenue that referred users generated, and hence the pyramid scheme. But Yuwie works differently.

Yuwie relies on the social networking concept as basis for revenues. Online networking sites such as MySpace or Facebook generate revenues mainly though advertising. Why does this strategy work? Because a great number of people use these sites and so these websites are of great value to advertisers who know their ads will be displayed to a wide variety of customers. But where does this revenue go? Straight to the owners of Facebook and MySpace. This is where Yuwie differs; it styles itself as a social networking site that aims to give the users, whose page views generate the advertising revenue, a share of that revenue. How? Yuwie allocates this revenue to users based on how many profile views that user and his referrals have.

Sounds good? It should; pyramid schemes are by nature a very attractive concept. But the traditional pyramid scheme involved having a new user making an initial fee. Then, the user base for the scheme would increase exponentially making the whole system unsustainable. And so, only the users who joined the system early end up benefiting from the whole scheme. But the new online schemes do not have an upfront free. AGLOCO required the downloading of software to track your web surfing, and so the actual cost is your privacy and setup time. Here, Yuwie stands out; the only cost is time which you would have spend doing the exact same activities on other websites such as blogging, networking, posting images etc. But even if the Yuwie system works, flaws exist.

Yuwie pays you a tiny fraction of a penny per profile views. Therefore, it would take tens of thousands of views and more for you to make any substantial income. Further more, Yuwie will only pay out after you have earned $25. Surprisingly, Yuwie will not charge for sending your money to your paypal account, and there is only a $1fee to get your earnings as a check. Yuwie’s terms of service agreement looks quite gimmick free but keep one thing in mind; Yuwie has the right to alter the “revenue sharing rate” – that is the factor by which your page views are multiplied to get your earnings. This rate is already quite small and theoretically Yuwie could easily lower the rate to a level which makes earnings extremely small. This flexibility has led to the downfall of other systems, and so needs to be kept in mind. Having dealt with the potential problems, what are the advantages to this system?

You have very little to lose. As I hinted above, earned revenue depends on being an active visible member so that you get page views and the people you referred get page views as well. So, if you make no money from Yuwie, you would have lost the time you would have spent on other social networking sites anyway. Yuwie offers the same sort of social networking community feel of MySpace. Hence, on balance I would slightly favor joining Yuwie, and only slightly because of the time required to attain the potential earnings that are not 100% guaranteed. But I have taken the plunge, and so you can find my referral link at the bottom of this article. You may cry out ‘conflict of interest!’ but I have tried to remain as objective as possible. You be the judge.

And that’s just the tip.

Comment below.

References

Pyramid scheme, Wikipedia

When Bubble era standouts are exhumed, Techdirt

Lesson Learned: AllAdvantage 2.0 shuts down, GigaOM

It's no longer a test!, Yuwie Scam

Terms of Service, Yuwie