I think the real insight here is the underutilized resource. By all measures the model works and it fills a gaping void. It does have its flaws - many individual contributors working hard for marginal returns while a fortunate few are reaping all the rewards (why does that sound familiar?). What did not work in this example is the company itself and people who were running it.
I think you've lost the plot.
MLM's are exploitative, dishonest con jobs. There is no "good" way to run one.