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Comment by VyseofArcadia | Hacker News Reader

> So I came up with the idea to get my users to share it, so that I didn’t have to. To do so, I set up a very enticing referral program:

>> Users could share their referral link and get a 10% cut of the ad revenue from every app the referred user makes, forever.

> For example, if user A brings in user B, and user B makes an app that brings in $10/day, user A would get $1 every day without lifting a finger.

> If user B decides to upgrade to a premium account, user A would get a commission every time user B pays his subscription.

This sounds like a pyramid scheme...

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Not at all. A pyramid scheme typically has no external source of income, which they have here (ad revenue). In a pyramid scheme there would be no way for user B to get an income without referring more users.

If it were recursive -- if User B then referred User C, and User A got a cut of the revenue -- then I'd say that's a pyramid scheme.

If it were recursive it would be a form of Multi Level Marketing (MLM) scheme, which are perfectly legal but border on morally bankrupt.

It has some of the negative aspects of a pyramid scheme but the day to day operation is around selling a good or service and giving a cut to the guy who recruited you, the lady who recruited him, and so on up the chain.

At some point it’s about recruiting others to do the work for you.

I am definitely not a fan of this guy's project but this just sounds like an affiliate or resellers program to me . . .

It's not. Free users have already agreed to share a percentage of their ad revenue. The 10% that goes to referrers is taken from that percentage.

Yep. That's basically the definition of a pyramid scheme.

No it isn't. Imagine that A convinces B to sign up.

A pyramid scheme pays "A" with the signup fees from "B". If people stop signing up, then you can't pay B.

Here, "A" is paid IFF "B" makes money. if B makes no money, then A makes no money. It's revenue sharing from referrals, not a pyramid scheme.

not really; in a pyramid scheme (at least the generally understood scammy sense) you pay money to buy in, and then recovery that money by inducing other suckers to sign up. the money you pay goes to support the people higher up the pyramid.

in this case, the people at the bottom are actually making money, rather than paying it; it's just that some percentage of their fee is shared with their referrer (it comes out of the company's cut, not the user's)

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