so cesperanza's post about Multi-Level Marketing and monetizing fandom is still going around, and I keep wanting to put mostly-side-issue long comments on other people's posts, so here they are here instead.

I commented on the original post about how I felt like the correct comparison was not MLMs to fandom patreons (etc), but pyramid schemes to predatory publishers. The people who tell you how your novel will be a best-seller now that they've discovered your genius, and all you have to do is give them thousands of dollars for them to ship you thousands of copies of a badly-edited, badly-bound book for you to sell to your friends and family, they're the ones coercing writers to destroy their own social networks for other people's profit.

And in a lot of ways, the fandom monetizing methods actually inoculate against this - a member of a fan community who know about things like patreon and crowdfunding and kindle originals and legit self-publishing, who is friendly with other pro authors, who knows the histories of other people who've made the transitions and can chat with other people in the process and has things like beta-readers and knows that there's more to getting readers than just writing a thing - that person is way less likely to fall victim to a predatory publisher.

There's a lot of people misunderstanding MLMs in this discussion, too. Multi-Level Marketing has come to be used as a euphemism/synonym for pyramid scheme because calling something a pyramid scheme in the press is technically defamatory in the US unless you can prove it is one by the legal definition. But not all MLMs are pyramid schemes, only most of them (and nearly all of the trendy flash-in-the-pan ones).

An MLM is an organization where people recruit new people into the organization, and they get a percentage of their recruits' revenues in exchange.

In a classic pyramid scheme, this is literally all that happens. Person A says, "If you join and give me a $5 membership fee, you can recruit new people, and they'll give you their $5, and everyone they recruit will give you a percent of their $5, and before you know it you'll have hundreds coming in every day from new recruits far down the line, just like I do!" In that kind of scheme, as soon as new membership fees stop flowing in, the entire thing collapses.

Pyramid schemes are illegal in the US, but it's not the MLM structure that illegal, it's the fact that the main revenue source is the new member fees, rather than any actual value or profit.

There are non-pyramid scheme, reasonably legit MLMs, and the difference is: in a non-pyramid-scheme MLM, there is actually value being provided in exchange for the money that flows up, preferably at all levels. Even if no new sellers were recruited, and people just sold product, everybody would still be making money, and the organization would survive.

Lately, the most obvious way to tell the difference is that the more legit ones like Avon don't require new sellers to go into debt to start up - you sell from a catalog, or you don't have to pay for product unless it's sold, and you don't have to pay large fees for training or membership just to start selling - the training/set-up is free or a nominal cost for materials and travel. Also, in a sustainable MLM, the upper-level sellers are doing pretty intense mentoring/training/monitoring/support of the people under them, and are actually earning a lot of the money that flows up, because they want the people below them to succeed - it's a different structure but the same effect as money flowing up to management in a more standard structure. And nobody makes any money at all if the product doesn't sell, so usually there's incentive for the product to be something people want at a reasonable markup, and sellers can actually sell it.

There's still more risk to sellers and less chance of making a living wage, and often a fair amount of pressure tactics, but it's a reasonably workable business model long-term, and if people aren't making money, they can just quit with no big loss. (Really, it's just a more formalized version of how small home businesses sell by word-of-mouth in expanding social circles.) There was a recent Buzzfeed article about what Avon is up to lately that gives a pretty good view of how a non-scam MLM functions.

In a pyramid scheme, new sellers have to put up money up front, often for expensive training or something and are also often required to buy a very large amount of product on spec, which they can't return if they don't sell it. (This is very similar to the process of being "published" by a predatory publisher, and not essential to the MLM aspect.) This puts sellers under a huge amount of pressure just to make back their initial investment (and the vast majority of them don't), and generally forces people on higher levels to focus more on recruiting new sellers than mentoring existing ones, because nobody makes money on selling no matter how much mentoring is going on, because that's not the point of the thing, and since that's not the point, the product is probably shit and nobody can sell it anyway. (Often it's something like dietary supplements that's a swindle no matter how it's sold.) It's also why it's uniquely damaging to social relationships: you're not just selling to your friends, you're being coerced into actively swindling your friends, and usually before you've been in the thing for very long, you realize that, at some level, but you've invested so much you can't get out. It's poison all around.

MLMs are legal; pyramid schemes aren't. So the pyramid schemes have to have just enough of a 'product' to pretend they're a real MLM long enough to take the money and run, which makes them harder to talk people out of. And the problem isn't so much the MLM structure as that the whole thing's a swindle.

And we certainly have swindles in monetized fandom! Any method of making money can be turned into a swindle, by someone who wants to swindle people. We can probably all name several exciting chapters in the history of online fandom when fan swindlers have succeeded, for a little while at least.

And any method of making money can feel like a swindle if the people involved in it are just really bad at it (which also applies to a lot of v. small publishers who look predatory through sheer incompetence, but aren't actually making any money for themselves either.) We can all name situations like that too, probably.

And any profit-prioritizing corporation under late-stage capitalism is, at some level, built on a swindle, because our entire global economic system is currently built on a series of stacked swindles. So there's some stuff that does make me side-eye things like Patreon and Kofi, and what they try to promise people, even as fandom uses them more and more, but that's really pretty ancillary to the question of MLMs. And even at their worst, they don't require the initial outlay of capital to chain you to the swindle, or pressure you to pressure your friends to put themselves into the same level of debt as you.

So I'm still way more worried about predatory publishers going 'ooh, girls are selling fanfic now! Our fandom market's not limited to boys with no social support and WoW-with-the-numbers-filed-off epics!' or about homegrown swindles and for-pay fanfic sites than I am about people using crowdfunding or commissions to fill out that last couple of hundred dollars of rent. The real, ongoing problem with monetizing that destroys relationships is large corporations recruiting people to swindle other people for them, not individual fans looking for compensation for labor.

(The question of compensation for creative labor in general is an entirely different one.) (as is the question that's silently threaded through this whole discussions about helping needy people via pure charity vs. under a smokescreen of nominal 'earned payment', and whether that choice should be up to the helper or the helped.)(as is the question of to what extent patreon and company are themselves exploiting the fans who use them.)

(one of my cousins over christmas seemed to think I was anticapitalist or something, dunno what gave him that impression.)