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The Referral System: Accountability versus Profitability
Title
The Referral System: Accountability versus Profitability
Description
A discussion on the issue of referrals and the reliance of the HYIP industry on it.
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[COLOR=purple][SIZE=7][B]The Referral System: Accountability versus Profitability[/B][/SIZE][/COLOR]
[B]Fuelling the industry’s growth[/B] The HYIP industry (in its narrowest sense possible – the pyramid- and ponzi-sctructured games and autosurfs proliferating on HYIP forums) is one whose growth has always been reliant on the influx of members and participants. The individual HYIP’s aim is always to open its doors to the widest audience possible: more people signing up and investing mean more funds or capital collected.
Yet the industry cannot expect to gain members on the premise of high-yield returns alone. Not in a choked crowd of programmes offering returns on the day, hour, minute, and even second. So it is of little surprise that many HYIPs try to distinguish themselves by presenting rewarding commissions through a structure commonly called the “referral system”.
Taking into account that today’s many HYIPs and their autosurf cousins barely last a couple of days, the referral system has become an increasingly attractive alternative to the basic act of investing. The idea is simple: get someone to sign up as a member through your referring link and receive a percentage of that member’s deposits as commission. When you consider that most referral systems pay out as much as 5 to 10 per cent commissions, you quickly realise the potential for quick, risk-free profit.
[B]The referral rush[/B] Hence the mad dash for referrals whenever a new HYIP launches. Helped by the fact that most HYIPs launch referral contests in their early stages (winners are usually the members who refer the most active members), the competition for referrals can get very fierce.
A typical HYIP begins its cycle by alerting a handful of monitors or list owners about its launch date, allowing them to sign up first. Then, as it launches amidst hype and pomp, these monitors and list owners blast promotional emails to those on their lists and in forums (not uncommonly including the use of spam). Drawing tactics include benefactoring (paying back a referral part of his commission) and talking up of the new programme.
[B]Accountability versus profitability[/B] There is nothing wrong with being a referrer; it promotes your HYIP and is integral to the industry’s continued well-being. But the fact remains that the largest and most capable referrers are monitors, list owners, and people with sizeable downlines. Brian Page of Programalert.com believes that “the reality is that there is a conflict of interest” (http://www.programalert.com/AutoSurfNews29.html). The first responsibility of a monitor, list owner or HYIP blogger should be to their members: they are there to provide a neutral and honest view of the HYIPs they monitor; to protect their members’ investments. But on the other hand, a monitoring site or list owner stands to gain more from referral commissions by promoting every HYIP that pays them to do so. And can you blame a monitor or list owner for prioritising profitability?
Brian is of the opinion that the industry must act to improve on its accountability to members. Himself a monitor who profits largely from referral commissions, he distinguishes himself by promoting only programmes which he feels are likely to succeed in the longer term, and holds a reserve fund for members who make losses in programmes he recommends. It is his feeling that the industry is in danger of falling farther into disrepute should its leaders fail to be more responsible.
Not many people share his views, however, as expressed by Dave Origano of HyipAdvice.com. Equally as candid as Brian, Dave responds defensively on allegations of him being a “referral whore” when he promotes a relaunched autosurf on his blog. To him, being a player in the HYIP industry means “nothing more then (sic) outsmarting the other investors” (April 11th 2007 entry). Surprisingly, he doesn’t feel that this is negative for the industry, as he believes that the HYIP industry will evolve and adapt, and that good monitoring services will work hard to help ignorant HYIP players.
[B]Can’t live with, can’t live without[/B] But what does this all really mean to the HYIP investor? Many still depend on monitors and networkers for their advice on which programme to invest and diversify in. In fact, most monitors depend on discussions and opinions of each other for decisions on new investments. Perhaps the issue doesn’t really matter to the investor. One way or other, a HYIP needs a referral system to survive and grow. Perhaps in the end, all HYIPs depend on an army mix of profit-minded referral whores and accountable monitors.
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