BurnLounge.com Launches Viral Marketing Effort in New York City

I was invited by a friend to New York City’s Coffee Shop Lounge, where about 150 “b” and “c-level” independent music industry executives, djs, artists, performers, songwriters and ancillary music hanger-ons from all walks of the industry gathered to listen to a pitch from New York’s most recent “Music 2.0” (an acronym describing the post-crash Internet music economy) start-up, BurnLounge.com.

The company launched a multi-level, viral marketing campaign to have designated sponsors (otherwise known as “music moguls” according to their literature) sign-up partner’s interested in hosting a downloadable music store on their own web sites using BurnLounge.com’s music download store package.

A flashy, slickly produced, techno-laden infomercial was shown mid-way through the get together on the bar’s flat-panel tv’s, giving the crowd a generic look at how one can get involved in “making money” (as one of the principals emphasized in a follow-up speech) by selling music downloads as a registered partner in BurnLounge’s affiliate program. From the video, I learned about the three distinct tiers an affiliate partner can sign-up for; the Music Fan, The Affiliate and The Music Mogul.

The first tier, Music Fan, is for the general consumer or music fan who wants to feature tracks of his/her fav artists by embedding links to specific titles from BurnLounge’s catalog on their personal web page. The more tracks sold, the more points earned for redemption on BurnLounge.com’s site for prizes distributed as products or downloads.

The second tier, the Affiliate, is a program that turns downloads into cash. Targeted to small and medium sized web sites, BurnLounge will license their technology (basically a fully-functional download store with complete backend and transaction technology) for a richer user experience. Take this package and share a percentage of your download revenues with BurnLounge.

The third tier, Music Mogul, has a chief sponsor (or “mogul”) signing up a number of other web-based partners to create their own mini-network of sites. The Music Mogul manages those relationships, benefitting by taking a commission of sales of all tracks on his/her own download store as well as a percentage of all transactions within the mini-network of sites he/she is credited with signing into the program.

I admire BurnLounge.com for coming up with a way to spread their brand and using web services to generate sales with this multi-level marketing strategy, however, there are a few kinks in the armor if anyone thinks they’re going to make millions tomorrow from music downloads.

Mom and Pop are up against a formidable array of legacy download providers who currently have a tight strangelhold on the market and benefit from preferential treatment because of their size, traffic and revenue generating capability.

Take into consideration the folowing:

Today, Reuter’s reported from MIDEM, the world’s largest music industry conference going taking place this week in Cannes, France, that with over 355 digital download stores in existence, many music industry executives are talking about the bubble bursting, afterwhich industry consolodation takesplace.

The article reported Napster is stating over $100 Million in cash reserves and 500,000 registered subscribers paying $9.95 a month. Not bad work if you can get it. One web site generates all those subscription fees! And, people said that would “never happen!” Well…it’s happening!

Real Networks claims 1.2 Million subs to its Superpass and Music store subscription service. Today, I cancelled my account because I can’t play Real files on an iPod, and frankly, I’m not interested in listening to radio content from sub-saharan Africa. I guess there are many people who need or want that kind of programming. More power to’em, I say! I love Real. I even own stock in Real, but until interoperability takes place, I’m on the sidelines for now.
The iTunes store, benefitting from Apple’s powerful marketing muscle and convergent digital lifestyle strategy, have to date sold over 500 Million downloads and almost 40 Million iPods. Remember, iPods can only play AAC and MP3 format. Sales of digital media players that play all other formats, including Sony’s A-Trac, Microsoft’s Windows Media and Real Networks Real Media lag far behind.

You cannot purchase songs from Burnlounge, unless they were in .mp3 format, to play on an iPod. It’s common knowledge that Apple will not license their proprietary AAC encoding format to other companies as they protect their idea by maintaining their market share and dominance. This single fact slices your potential download market in half or even more! No one at the event said anything about that. All they said is, “you can make money too.”
In addition, consider this:

BurnLounge.com license their tracks from LoudEye, a digital distributor. The company charges a (according to the biz dev person I spoke with on the phone two weeks ago) $100,000 upfront payment to help a client launch an online store using their technology with an additional $10,000 a month licensing fee to keep it running and have access to their music database.
The woman I spoke to broke down the commission structure for me. First, the label take is about $0.70 cents per download. Then, LoudEye takes between, I think she said, $0.12 to $0.18 cents a transaction, depending on the deal you broker with them.

So, for arguments sake, let’s say it’s $0.15 cents. BurnLounge.com takes $0.05 cents per transaction when you sign up with them. So, between the labels, LoudEye and BurnLounge.com, the total take before you see any money is a grand total of $0.90 cents. I think there’s even another split of a few cents for the publisher, or something like that, but don’t quote me on it, because I’m not exactly sure. Maybe that comes out of the label slice. I’d have to research it a bit more to be exact.
If you’re an affiliate, you have to share that $0.10 cents with your “mogul,” leaving you with 5 or 6 cents on the dollar. Now, figure in your overhead, web maintenance, employees, marketing costs, etc…

You’re making a few pennies on the dollar. You’ll have to sell hundreds of thousands of downloads to make any kind of real money. After marketing and promotion costs and other costs of doing business, it just doesn’t make fiscal sense to open a BurnLounge store. I’d rather go out and find investors and compete on a level playing field, then give BurnLounge my money and have to work ten times as hard to make ten times less than I could if I were and independent download store owner.
The BurnLounge folk say one of their partners, a Hawaain-based lawyer, made $50,000 dollars in commissions last month. His store consists of hard to find Hawaiian music, as I’ve been told. And, we don’t know what the terms of his deal are. Does he own the actual music? Is the music he’s sold considered major label music or is it niche music that only he has the rights to?

If you’re one of those 140 in the room, you’re competing with everyone else in that same room by having those same million tracks from LoudEye. The only differentiation is how you want your store to be perceived. Content on the home page can be changed to feature music that may interest your target audience, but is that the point?

Oh, one thing I forgot to mention, BurnLounge.com’s start-up fee is $144.00 or so, plus a montly subscription fee of around $12. So you’ve got to sell a lot of downloads to make up that estimatged $360 for the year, before you even can think about turning a profit.

Again, I’m not saying it’s a bad idea. It can work for some people. If you’re a Music Mogul and you sign up 100 sites that are premium brands, and they use the technology effectively and market to their customers, you can stand to make that $50K a month in commissions.

It’s the slackers that will kill you. Sign 100 restaurants and lounges and hope that they upadate their music pages and promotional web sites on a timely basis. Make the sites an integrated experience with the brick and mortar operation and maybe you’ll see some traction, but when it comes to online production, it’s tedious work just like any other data entry job. Why do you think we’re outsourcing all this data entry work to India? Because American’s are too busy consuming to do that themselves.
Now remember, you’re competing against major players in the download world; Apple, Sony, Microsoft, Napster, AOL, Yahoo and maybe someday Google. You’re at a immediate disadvantage because the iPod only play AAC and MP3 formats for audio and .mpg and .mov for video.

Major label content downloaded through BurnLounge is encoded with a DRM using other formats that won’t play on an iPod. I’m sure there’s a crack somwhere, but at the end of the day, it’s all about access and portability, isn’t it?

If you’re sitting at home cracking proprietary files, that’s less time you have for the beach, running, work or doing whatever it is you love to do. There’s a reason why million’s have downloaded from the iTunes store–it’s called convenience.
Being a pioneer in the Internet music space, many of my friends from the dance music industry who were at the event asked me what I thought about the program. I told them out of the 150 or so people who showed last night, only 2 (besides the BurnLounge principals on hand) will make any real money. Everyone else will decide that it’s too hard and that no one told them they had to invest so much time, money, energy and passion into something that gave them pennies as a return on their investment.

As for Netmix, would I open open a store? Well, for me it would only be a value-add to my constantly evolving business plan to drive traffic. Kind of a loss leader, like Walmart selling DVD players for $25 and CD’s for $10.

I’m not going to start my own music store, so sure, I’d partner up with BurnLounge to see what happens. It’s a write-off for me if I don’t make my $360 back and maybe I can sell some of the tracks I feature in my mix-shows, who knows?

Do I plan on making money with it? Well, from the looks of the rev/share split, I’ll be on social security by the time I get my first real check. I mean, even though you see all these Google adsense ads on my site, not many people are clicking on them and I’m not really sure why. They’re not as relevant to my content as I’d like them to be, but it’s hard to manage that, unless advertisers came to me directly.
You’d think with about 30 to 50 visitors a day to this blog, I’d be making some money with Adsense and the Amazon program, but I’m not making anything that makes a difference…not yet anyway.

I tell people all the time. The Internet is not the holy grail. You still have to know and understand your customer, provide value and excellent service. That takes time, energy, commitment and possibly an investment of capital. It is what you put into it. I don’t post enough to get a mass audience and it’s slow going. In order to make any real money on the web, you gotta hustle. Just like everything else. Get rich quick schemes only make the ones who think of them rich, and everyone else is used for their brainpower and hard work.
Remember what they say, “if it seems to good to be true, it probably is.” But then again, they also say, “if you can’t beat’em, join’em!” Take your pick!

Here’s my Google ad below…I guess I’m joining them…lol.

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214 comments

  1. Tony Zeoli says:

    There are some who took my writing about "b" and "c" level executives to heart and called me on it to say they thought my descriptive text was overboard and insulting.

    My intention was to write a paragraph about the fact that I ran into industry heads who are doing good work in the industry, but aren't the top executives. It was my goal to be descriptive about the attendance, so my readers could get a feel for who was there and who wasn't and what that really means.

    And they could take away from that, that there were a lot of good people there, but they weren't necessarily the movers and shakers in the digital music world. They were all there to find out how they could get involved in the digital music revolution, which is great!

    I was told that there were regrets for extending the invitation to me and that I probably won't be asked to attend any more events, which I think is really sad, but that's their right to do so. I just think that's so short sighted in the scheme of things, but then again, they think I'm short sighted for writing the word 'b-list."

    What's funny is, no one is using this comments section to complain here on the blog itself. They'd rather call me and ask me to retract than get involved in posting a rebuttal, which is what blogs are all about, no?

    Not everyone is going to agree with what I write. This isn't the New York Times, it's a blog about dance music, dj culture and the Internet, among other related topics. I'm not a PhD and I don't claim to be the world's best writer. If I thought I were offending anyone, then I would have written that sentence another way.

    But I didn't, so I'm not going to change what I wrote, because that's what I saw. And for goodness sake…I was there! That makes me a "b-list" executive and I'm damn proud of it. I hope to aspire one day to be "a-list," but now I've been told that because I wrote that, people won't help me get there.

    How petty is that? I think there are more important things in life to be concerned with than two words I said in a blog that people will forget tomorrow. Get over it.

  2. Hazel says:

    Hey Tony-

    My name is Hazel B. Zoleta VP Promo and A&R of Tommy Boy . Well that's great you included yourself as a B or C LOL. I guess I am included too in your B and C category of Executives which is cool to me because that's only your opinion since I did feel like I did contribute a lot to the scene with my ventures back in the day with DJ International (founding label of house),SOS RECORDS (Short Dick Man, Lick It, and discovered Maxamillion which still plays all over the radio until today and was the only INDIE LABEL START-UP that had 6 records on the BILLBOARD HOT 100)Profile Records (grand daddy of RAP),V2 (where I got to promote and break Moby and Angel Moon) and now Tommy Boy Records (where I am proud to say I discovered and BROKE ROC PROJECT "NEVER"). On top of that I founded my own MANAGEMENT and Marketing Company called On Cue Management where my partner and I basically have my producers and rap acts going to all 4 Majors,Great independents, and people like Lou Pearlman plus we were responsible for the Christina Milian "DIP IT LOW" Remix you hear on KTU. I know I am not Monte Lipman,Eddie O, Jay Z, but I have a great relationship with all of them where if I needed them all I have to do is pick the phone up, can you do that? Is that a B and C thing? I talk to Label and Radio Heads all the time that are involved with this… Joey Carvello at TVT,Vic Latino at KTU, Riddler KTU,EMAN at POWER 106 in LA, Jazzy Jim, Tony the Tiger from POWER 96 in Miami and Eddie Mix are very loyal BurnLounge people…I think they don't like that B and C thing you said because they can easily get on the MIC and say NETMIX DOT COM Who? But then again !I don't think they even know who you are either LOL and won't waste their time like I am right now. On that note I have NO CLUE WHO YOU ARE AS until someone on my team told me to look at this article and was very upset. One thing I don't like is an upset team member. Anyhow I got that out of my system. I think you thought this was the Grammy's so if you wanted to SEE MEGA STARS turn on MTV this event is on how to become a Digital Download Retailer through Grass roots marketing. The way you make the money is FIRST sell the FRANCHISE then SELL the MUSIC. BurnLounge has 10,000 franchises sold and AVERAGING 250 a day. We are the world's largest Digital Retailer. Did you know Subway first made money selling the franchises then made money on the sandwiches. We are still in BETA STAGE…BETA… and trust me now we're on our 3rd RAISE in investment the site will be upgraded to compete. It's an opportunity for people to help market NEW MUSIC as well as sell the 4 Majors catalog. Beatport helped build this site which is the LARGEST Indie Internet retailer and BurnLounge is acquiring their catalog for the BurnLounge Retailers to use. Are you calling everyone at Beatport B and C too….LOL…okay okay I'll stop. Just messin' with you Tony. I know you tried to defend yourself afterwards but I had to answer you too man. Because I do believe in this and so does my team…and we just did all this on grass roots. The party was more for Q&A's since JT the head of marketing was in town. It was informal…it was not GRAMMY MATERIAL RED CARPET LOL. I am happy that people got to meet JT and at least get any unanswered questions answered. It's about makin'money and having fun again. I can BE A "B" but I like the "C" cuz the "C" to me means CHECK! On that note…it was informal event…Richie Rich, Jelly Bean, and I had only literally a day and a half to plan it.

    Yo for the 10 people who read this! Go to my site!
    http://www.burnlounge.com/OnQMGT

    Peace Out Tony What's Your name! JK! I think?

    PS Few people from my BurnLounge team is coming with me to the Power 96 concert and they can come to the MIAMI Burn Party to hang with Sean Paul,LUDA,Pitbull,Trina,etc. Wanna Come? Psyche! JK Tony! You know a punch for punch…

  3. Tony Zeoli says:

    Hazel,

    I'm a bit puzzled as to why anyone would get upset about this, in light of the fact that there are more important things in the world to discuss and deeper problems to address.

    I do appreciate your comments and they are always welcome in this forum. If you're personally offended by a word in a blog that describes a scene so other people can understand what was taking place, then I don't know what to say. Your perception is your reality. If you felt I was talking about you, then that is only real for you. And you have every right to dispute that, which you did, and I thank your for doing so.

    Good luck with your work. Sounds like you have some great things going on!

    Tony

  4. Tony Zeoli says:

    By the way, I have to respond to your point about franchising. BurnLounge isn't selling a franchise, what they are doing is very different. It's MLM, short for MULTI-LEVEL MARKETING. I did the numbers based on what I've been told so far, and you have to sell around 14,400 tracks to make up the approximately $360 you'll spend per year as an affiliate rep. Even more if you figure in the cost of marketing, promotion and overhead.

    I'm so glad you're so passionate about this, but to me, it's a loss leader for my site and if I get involved with it, I'm sure I won't see any real revenues for year's to come. Because I'll have to sign up with a sponsor, who is signed with a sponsor, who is signed with a Music Mogul, who is signed with BurnLounge. So, I'm four parts removed from BurnLounge…and what's the split for me…not even pennies! It's half pennies!

    The further you are from the top, the harder you work to make less of a share of the pie…that is NOT A FRANCHISE…that is a PYRAMID system which does not leave an equal slice of the pie for everyone. You love it because you get a cut of everyone you sign up, but as you start signing up more and more, the cut gets smaller and smaller. If you sign up ten people, and they sign up ten people, and they sign up ten more people, everyone is taking a little more of your pie for the effort, but then again, you're at the top so it's less work you have to do. But what happens if BurnLounge falters? You've built your whole business on the backs of someone else's system, and then you're out all that time, energy and money (if you put any in yourself; you're overhead), instead of going out and opening your own download store and taking a larger slice of the pie for your efforts.
    A FRANCHISE is an entity where you pay a certain amount of money to have YOUR OWN Starbucks, McDonalds or Subway. The parent company supports you with products you can sell, but you only have to split the revenue with the parent, and that's the difference. YOu don't have to split it ten ways to Sunday. The more you sell, the more you make. Sure, the more your partners partners sell, the more you make, but the revenue is diluted so much that the pennies that are coming in don't justify the effort.

    I could see if you were selling something like jeans. The markup on jeans is fairly high, so the splits are in the dollars, not in the pennies. If you make a dollar a pair, sell 10,000 pairs and make 10,000 dollars. With Burnlounge, you have to sell 200,000 tracks with your share being about $.05 cents a track to make $10,000. The rest goes to the label, your sponsor and BurnLounge. To sell 200,000 tracks, you're going to have to invest in marketing and advertising, which means that if you spend $10,000 of your hard earned money, you've MUST GET 200,000 people to buy a song, or a variatioin thereof.

    Are you ready to do that? Can you get 200,000 people to buy from you? That's a lot of people. It took me 5 years to get 1 Million unique visitors to visit Netmix every 365 days. And they weren't buying anything. If I sold stuff, the law of averages says only about 10% of that 1 million would have even considered a transaction. 

    So, my opinion is that for you to compare BurnLounge's multi-level marketing strategy to Subway is simply irresponsible and untrue. And if you go around telling people that it is, then you are spreading false information.

    I don't think I can buy a Subway franchise from a franchiser, but I can buy a franchise from Subway corporate just like everyone else has the right to do. And then we all compete on a level playing field. We all put in the same investment, and we all get the same return.

    In BurnLounge's case, I get less of a return the further away from the top I am…and that's a major problem for me and it should be for you and anyone else you know that signs up three or four tiers below the top. Because you have to work longer, harder and invest more money than those that came before you to earn what they are earning on the backs of all your hard work.

    There are studies, and it's been proven, that the further you get from the top…the harder it is to make money. That's a fact.

    Check out http://www.mlmwatch.org/ for more real facts on the downside of MLM. 

    You want to read about the problem with MLM or Network Marketing…here's an article on About.com that should give you a reality check;
    http://entrepreneurs.about.com/cs/multilevelmktg/

    Let's see where you are with this a year from now…

     Tony Z.

  5. jamic says:

    Tony, I ran across your article after being hit from everying and their brother about joining up with Burnlounge. Thinking it was too good to be true, and I wasn't about to make $35,000 within months of becoming some kind of mogul, I did as much research as possible on Burnlounge. I've always been of the opinion that if it sounds too good to be true, it usually is.

    I loved the article, but wondered if you would correct your spelling in the 4th para….their are a few kinks should be there are a few kinks. I'm not an ass, and only mention this because it sort of takes the wind out of the article somewhat and that's a shame since it's a really good overview of MLM.

    I've always thought that the group was way too involved in creating the tiers and recruiting than they are with the product, and that worries me since, after all, aren't they supposed to selling a product?

    Anyway, thanks for the article. Hopefully I won't have to say I told you so many times to everyone who's investing believing they're going to get rich quick.

  6. Tony Zeoli says:

    Thanks Jami,

    Sorry for the dreadful English. I'm always full of ideas but there's no one to check my work, so I don't mind when readers ask me to correct a spelling error here or there. I need to be more dilligent when it comes to these things.

    Despite my errors, I'm certainly glad you got something out of this post. To tell you the truth, this has caused quite a controversy amongst me and my industry friends. They were a little dismayed at the length I went to shine the spotlight on this situation, because I kind of rained on their parade. But that's what a blogger is supposed to do, call it how he or she sees it.

    Tony

  7. JimGross says:

    Hi Tony,

    Interesting stuff and overall not a bad overview of MLM's. First time I have ever sent a blog, but felt a major topic was missing here. I have never been a MLM fan probably because they all have one thing in common – I always seem like a target for something I have no interest in. But this seems different. People are going to have specific reasons for getting involved with this business. I did not hear much talk here about one of the major goals of BurnLounge – to get independent artists music heard and distributed. As a flamenco guitarist who has been working on an album project for a few years, I did not see much point in finishing the project since I am not signed by a label. My chances of selling my box of 1,000 cd's is slight unless I do the concert tour thing. Well, I can tell you that when I heard that burnlounge takes independent artists music and makes it available on their library and you can even feature it on your own store, I immediately started where I left off with the album and hope to have it completed within a few months. How much did you say the label takes – 70 cents per download? I have heard that artists are making as much as 60 cents per song (if you know the exact number – please correct me – but I think it varies from artist to artist). The point is that I believe that artists all over the world will embrace this and their fans will buy their music where the artist tells them to? Not convinced, go to http://www.tednugent.com. As far as downloads, very few of my customers even know how to download, and they ask me to help them or do it for them. It is just the beginning of downloading, not oversaturated. I also disagree about the MLM thing. The the local subway owner in my town is a friend of mine. Subway offered him the choice to either buy another franchise or recruit and train another owner and make a cut of those stores. Hmmm Pyramid… I don't think so. Honestly don't know enough about MLM's to make the decision… Franchise or Pyramid. But I refuse to get caught up in it. Our team will focus on musicians and downloads – not on selling friends on becoming a mogul. The beauty of this model is that you can sell it however you like. If you like multi level marketing…go for it. If you are interested in clearing the playing field so that musicians can afford to make and market their music then pursue that. http://www.burnlounge.com/BurnLoungeMusicStores

  8. Bob Page says:

    I was going to get my band on there. But know I really don't know… I just really need to find a place where I can sell single songs easily. Easy for me and easy for fans. Myspace should workout something with i-POD. They'd kick azz!. ~Bob~

  9. burnlounger says:

    Excellent review!

    I wish you were on myspace, so I could add you in and get updates when you post them.

    Yes. I took the plunge as a music mogul w. university (the $444.90 package) and my team is completely focused on building our teams of music moguls.

    I understand your focus on the retailing aspect, and I'm surprised you hadn't noted that the Burlounge retail site interface leaves much to be desired, BUT.. as others have noted, the site is still in final stages of Beta.

    YES, if you setup one store, and you then said "I will now fight against multinational, extremely well funded music download sites such as Walmart.com, Rhapsody, iTunes, Yahoo! Music" et all, then I would say that was a foolhardy ambition.

    The reason why I feel that we are all so focused on signing Moguls, is because, yes the return on our initial investment is faster (we can cycle out w. the points we've earned to earn cash faster) BUT we are focused on building a distribution network as deep and wide as possible, so when this puppy breaks out from its quasi underground status, our retailers and distribution network will be out, up on the web, and available to take orders. The way I see it is this, iTunes, Rhapsody (love that you can listen to full songs first by the way Burnlounge app dev team, hint, hint!) are one site, utilizing millions of dollars in advertising to get the word out. Burnlounge took the tactic of direct & personal relationships and then spending the money they would have blown on mass media advertsing to pay the folks who are building their distribution network.

    I consider it, not just one site, iTunes, Rhapsody, etc.. but Burnlounge is now millions of sites, saturating the search engines when folks are looking or a particular artist or style of music, for which to download.

    A retailer will NOT make money, following the tactic you described, so the scenario you played out was self fulfilling prophecy. The only way to "make it" is to build a distribution network, sites of sites if you will, to catch a couple of fish @ each site, but to gain benefit of multiple sites catching those few fish w. the money flowing back six levels. THAT is the key to Burnlounge w. respect to ROI.

    Burnlounge will be a host of different things to different people. Some will sign up at the base levels, because they like the idea of being able to retail digital content. It may be a nice additional revenue stream to their exisiting businesses, etc. Others will see it as strictly a "headhunters r us" type scenario, where they are focused on ROI and building a distribution network in order to catch the tidalwave that is coming w. respect to music downloads. Whatever your take on it, there will be the vast majority who will sign, and not do anything, that is the same in any industry.

    With respect to your banging on MLM.. Yes, I've seen some pretty shitty things out there in the marketplace, just the same as ANY industry. For every successful multibillion dollar business like Mary Kay, Amway, Excel (now defunct due to the mobile industry by the way) there are a slew of failed ventures. All I can say to that is, as in life, business is alot about calculated risks. I may, or may not make back my initial investment. I DO know that I have a strong social network across the country to introduce this to, I just have to get my ultimate warm and fuzzy about it, before showing them (and through this discussion, and your blog, and the forums I've been lurking on, I'm doing that). To me, its more about my personal integrity being protected, and not abused. My day job (I'm a partner in an IT support company) easily takes care of my daily bread and needs. With Burnlounge, I'm focused on playing w. the technology & business model to see if it has any lasting merit. The initial investment, yes, to some people, its hefty. To me, I see it as a way to start potentially lucrative new revenue streams, because as you know, it's all about the multiple streams of income and recurring revenue. 🙂

    Hopefully I can subscribe to your blog, and get email updates. My desktop is full of so many icons as it is! LOL.

    Peace.

  10. Tony Zeoli says:

    Hey burnlouger:

    Thanks for the post. My two biggest concerns about Burnlounge are:

    A. The rev/share as you drill down from Mogul to Affiliate. The split is pennies on any major label product which is distribued through Burnlounge by Loudeye. In order to make any real money, you have to sell hundreds of thousands of tracks. What about your marketing costs to earn customers? You will have to sell thousands of downloads to make up for the money to earn one customer.

    B. Apple owns and estimated 70% of the music download market. You can't play DRM'd Burnlounge major label tracks from Loudeye on an iPod. Simple equation. You can't sell to 70% of the market, then why try and compete with the Napsters and Rhapsodys of the world. Without a marketing budget, you'll get no where.

    Those are my main points. For the artist who needs a download store for his her own web site, that's a different story. Sure, use the Burnlounge technology, but when their MLM implodes, you lose your store and your revenues.

    I say, build it youself and they will come. Keep all the money!

    Tony Z.

  11. Mark says:

    Just got hit with a Burnlounge offer…sounds very much in line with a pyramid/ponzi scheme, but the ability to focus on indie music does offer an outside revenue alternative that ponzi/pyramid's do not.

    The problem seems to be the intentions of Burnlounge. By signing with Loudeye, they are showing a desire to be in the corporate pop music game, which puts them in direct competiton with Apple and Napster. By focusing on indie/niche labels, they have an open market to tap into, but not the broad appeal of corproate pop music.

    I don't see how they can be both at the same time. People like "Hazel" are not in this for indie blood and sweat because the returns will not be as great due to having a niche audience. You're then left to depend on the marketing of indie bands, which has been tried before by old-school sites like mp3.com pre-buyout.

    In the end I'd say it has a chance, but not at the level of business they are reaching for which is apparent with all the "investment rounds" F'd Company jargon. After this thing crashes and all the quick change artists are gone, I could someone using it for succesful guerilla tactics.

  12. Pearsall Smith says:

    Tony,

    Your opinion makes for some good conversation to help flesh out misunderstandings about Burnlounge.

    I think folks like yourself should be embracing Burnlounge, not picking it apart. An MLM that can help promote LEGAL music downloads is not bad for the industry. "Burnlounger" makes a great point; you won't get rich with your own store. I think the overall strategy of Burnlounge (from a corp. perspective) is amazingly sound. You can't take on iTunes by trying to out-advertise them. Noone has been able to make dent in Apple's share of the pie by throwing up a website and hoping people will come. The viral nature of MLM will make Burnlounge a serious competitor.

    Who cares if Apple owns 70% of the market? Does that mean that we should all just throw our hands up and resign ourselves to using iPods the rest of our lives? There is still a HUGE market that doesn't even own an iPod, and quite a few other manufacturers who are vying for the hardware market. I just don't believe your argument holds water, but that's just my opinion.

    I value your thoughts on Burnlounge, but I'd encourage you to dig further into the program/concept. It's not deserving of a witch hunt.

  13. Tony Zeoli says:

    To address what Mark said above, I completely agree. Correct me if I’m wrong, but what I understand Burnlounge does, is to get hundreds of people to host Burnlounge stores on their web sites, which means they begin to compete with each other for the nascent share of the download market that buy DRM’d files that play on non-iPod devices.

    Although that market it growing, it’s minimal at best as Apple has a stranglehold on the so far. I’m not saying that’s right. I’m just stating it as a fact.

    I’m not here to argue whether or not Apple should have as much of a share as the do. What I’m hear to argue is that Burnlounge’s business model is built on a deck of cards that can fold at any minute. The people who think they are going to become millionaires overnight by selling downloads using Burnlounge technology realize that their little slice of the pie on each major label download is so small, and has to be split so many ways– between moguls and whoever signs each other up–at the end of the day; how are you going to make back your intitial investment against what you put into it in time, money and resources?

    BTW, Sony pulled their Bean from the market due to lack of interest and there are few players out there that have generated any enthusiasm from the consumer marketplace so far. Few, not none.

    If you operate your Burnlounge store as an online download store only and sell major label music through via distribution partner, Loudeye, you have to compete both with the majors, the indy’s (Emusic, MP3.com) AND you’re other Burnlounger’s. If you have 50,000 Burnlounge reps, the law of six degrees of separation states that you’re going to begin to compete for your brother and sister Burnlounger customers. Did you ever think of that?

    On the other side, if you are a record label or an artist selling your own music through Burnlounge, the split is different. You take 60 or so cents on the dollar. If you want to split that much with a download partner selling your own MP3’s; why spilt when you can build your own little download shoppoing cart with open source software with a PayPal plug-in and off you go?

    Now, there are many people who aren’t technologically savvy, so I understand why you’d want to use Burnlounge, but I’m partial to Musicane myself. They are upfront about what they do, and they’re not showing some slick marketing movie about how you can make millions and join the MP3 revolution with Burnlounge. I think their message is misleading…and that’s my opinion, because it doesn’t give you rev/share facts when you watch the movie.

    Mark, to your point again, I don’t think they can be both either. Serve one or the other, but don’t try and compete with the majors because there is NOTHING that differentiates Burnlounge from the estabalished players, who have customer support and partnerships at high levels of the industry.

    Will a Burnloung rep give better customer support than Real, Apple or Napster? I think one would be fooling themselves if they though so. I mean, it’s kind of hard to actually get in touch with Burnlounge through their web site. Last I checked, you couldn’t even call them on the phone. I sent an email inquiry two months ago and NEVER heard back from anyone.

    Pearsall,

    I have to pick Burnlounge apart piece by piece. You know why? It’s my responsibility as a good citizen of this democratic society to speak up to help protect my fellow citizens from something I truly believe is misleading. When I went to the BurnLounge event and they showed that video, it made me sick to my stomach to watch all my dear dance music industry colleageus being pitched something by two guys with absolutely no record industry experience whatsover.

    I’m sure you’ll respond with a comment to the effect that anyone should be able to enter the digital music marketplace and compete. And, I would say that you are right. BUT, I would also say that if you entered the marketplace, then you must be A. authentic, B. telling the truth, and C. have a certain level of transparency instead of hiding your details in the fine print.

    That night, at no time did the Burnlounge representatives on hand explain the rev/share split to the crowd. At no time did the Burnlouge representatives explain that you had to pay them a fee to use their technology, until AFTER the presentation and only in a one on one setting. When I emailed them, no one responded.

    If you think the overall strategy from the corporate perspective is that the Burnlounge model is sound business practice, then I’d say you’d be best served to go take a few business classes at a local college and the professor will tell you differently. I’ve run businesses. It’s not like I’m speaking out of my ass here.

    Pearsall, hear me out…I am NOT AGAINST ANY COMPETITION TO APPLE”S MARKET SHARE…what I am against is a company coming into the market and potentially misleading its representatives by not telling them the TRUE cost of doing business.

    You do the math like I did in one of my first posts. If you sell Major label music through burnlounge, your commission after the commission taken by Burnlounge and the Mogul and whoever else signed you up can be literlly pennies.

    Any business worth its salt has to spend money to drive sales. And if you say you don’t have to spend money, then you have to spend time. And what is the monetary value of your time. No matter how you slice it, if you normally make–let’s say, $25 dollars an hour–and you put in 40 hours a week, you have to sell thousands and thousands of downloads a week just to cover yourself. Then, what about your computer, web connection, marketing campaign (flyers, phone calls, emails) and the list goes on.

    Any business person can see that the ROI on housing a Burnlounge store on your web site is a HUGE loss leader. The margins are so low on Major label product that it would be years before you made a profit, especially if you’re competing with 100,000 Burnlounge affiliates.

    The download game is a game of billions, not thousands and certainly not hundreds. To play in that world, you have to have a big budget and differentiate yourself from the competition. You tell me, how would your Burnlounge store be ANY different then what I can get out there from Apple, Rhapsody, Napster and Yahoo. And where would I rather shop for music, with brands I know and trust, or with the guy down the street who is here today, gone tomorrow?

    Everyone knows that MLM comes and goes. Once you reach the longtail, you’re done. MLM can only go so far before it falls apart. It’s been proven. Look at Excel…gone!

    If Burnlounge made it the same for everyone; one affiliate program where everyone is treated equal and takes the same share of the pie as their brother or sister Burnlounger, then I would stop picking Burnlounge apart. Until that day happens, Im on this soap box my man, helping protect you and others from entering into something that I just can’t support.

    Tony Z.

  14. Joe Merkel says:

    I reading these comments about burnlounge and I understand one thing. You just don`t get it. and thats ok. It`s true that Apple has the major share of the download market, It is also tru that Apple controlled the market before Microsoft came on the scene and now look who holds the market. I don`t know what you have gotten out of the Burnlounge information, but I have been in for just over 2 weeks and have already made my money back. I f thats all I earn (unlikely) then I haven`t lost, and it was fun.
    For those who say it can`t be done, please stay out of the way of those who are doing it.
    Thanks, Joe

  15. Tony Zeoli says:

    Joe,

    Glad someone's making money with it. Maybe I'm wrong, I don't know, but I'd like for you to prove to me that you're making money. Who bought what tracks from your store directly over the past two weeks and not the stores of anyone you signed up to the program? How many of those tracks are major label downloads and how many are indy artists you own or either manage or represent? And, how far from the top you are as a burnlounge affiliate? How many levels are below you? How many tracks did you have to sell to make your money back and how are you marketing your service?

    Don't just come here and say your making your money back with no proof. Put your money where your mouth is.

    Tony

  16. Ok, I've asked this question on my discussion site and gotten no answers. Maybe someone here could answer it for me…

    On this site http://www.explainburnlounge.com/docs/ConcentricR… on page 5 there is a compensation plan listed. I don't understand it…

    I don't think it will post here, so if you could load it up and check it out, then come back and explain to me how the shared compensation works. I am trying to put together a model that shows what it would take to be profitable with BL based on the following scenario:

    You have a BL retail site. You have 6 direct sales teams. Each of them has 3 direct sales teams and that goes all the way down your "downline" to the limit.

    You are selling 24 albums a month and each of your downline is selling 24 albums per month.

    I cannot tell how much commission you are earning from your downline. Your direct sales pays either $0.50 per album or $2.00 per album, depending on what "shared compensation" means.

    Your "direct team" or "ring one" pays either $0.20 per album, or $1.20 per album, again depending on what "shared compensation" means.

    I have no idea what rings 3-6 pay.

    Does ANYONE who is telling Tony that he "doesn't get it" understand the compensation plan? And if so, can you clarify it for idiots like me who can't make sense of it? Thanks,

  17. Greg Warford says:

    Hi Tony,

    You are welcome at any of my events any time. I have been in referral marketing for over a decade and I know that the model will prove itself to you and to the world in time.

    BL is not a “get rich quick scheme” and thank God it’s not. There is no such thing as money for nothing or in my experince “chicks for free”. LOL

    Here is the reason I contend that BL is a house with a solid foundation and not “built on sand”. Ask your self this question: At the end of the day who is the best person to sell music? A fan! In other words someone who likes it right?

    I feel that we have a major compelling advantage over I tunes in that we have the ability and the desire to ingest independent artists content to our stores in roughly 10 days. This was not possible through Loudeye and so BL built it’s own program in house. This will allow us to build the largest catalog of indie artists in the world and this is already happening. Did your presenter mention this? Did they even know about it?

    Let’s talk about the artists for a second. I’m not even up to a “C level” in the music business but I have friends who have gotten record deals, thought they were set, only to make a few thousand and have the sales fizzle out.

    Burn Lounge is nothing more than a digital street team, The street team marketing model is not on trial as it was proven by Ludicrous and many other artists. However to develop a street team an artists needs product right? Not with BL. They have no production hard costs for CDs, no delivery problems and can in fact market their music at a lower cost. There is NO CHARGE to the artists for this service.

    Additionally the artists are not put in a “box” by the labels who only want them to make music that is of a style they know sells. In my opinion this robs the artists of their creative rights to make the music they want, how they want.

    Interestingly enough our number 1 sellers have been indie artists who are partnering with their fan base. Is it possible that by partnering with their fans and offering them burn rewards or(if they choose the affiliate or mogul level CASH) they might stop stealing the music? Ask Ted Nugent or read what he has to say at http://burnlounge.com/nugent

    I tunes, no matter what you say has backed themselves into a corner with their refusal to allow compatibilty with other devices. Check it out for yourself and you will find that some countries are considering NOT allowing i tunes to market in their respective countries.

    Are you old enough to remember BETA tapes (PRE VHS) brought out by 1 MFG who much like Steve Jobs had a short sighted mentality that they THOUGHT would garner them a larger market share. Where is BETA today? Gone! Superceded by a product that allowed other manufactures to produce equipment which played the VHS tape and then the DVD.

    Competiton is good for any industry as it drives prices down and makes for a better over all product for the end consumer.

    Does Viral marketing work? You tell me: I know for a fact that Sprint started with an MLM company called network 2000, I know for a fact that MCI used friends and family very succesfully to take market share from the former monopoly known as At & T. I know for a fact that Net Zero and Hot mail garnered millions of customers.

    There was also a CRAZY high school football coach named Art Williams who wanted to use the concept of friends and family marketing to sell insurance. The insurance industry thought he was nuts yet the next year his Co., A.L. Williams (he put a lot of thought into the name) outsold 3 of the largest insurance companies COMBINED. Today that Co is known as Primerica and all of the companies I mentioned have been a part of some very large mergers, acquistions and IPO’s on wall street.

    As for your comments on employees our model does not require or recommend this. I have had a company with employees and every employee equals 1 headache. This is to put it bluntly a better way to make money

    As for your comments on the % paid out please allow me to respond with the correct information. First of all you are pretty close to 1 portion of the pay we earn as retailers. You forgot or perhaps your presenter did not know how to explain the other portion.

    I have friends here in Dallas who own one of the largest dry cleaning franchises in existence today. They make millions on small transactions. Why? Because they have tons of stores. During their initial growth phase did they make their money on cleaning clothes? No! They made it by selling brick and mortar stores to entrepeuners who wanted to own thier own business.

    In much the same manner BL pays the moguls to help them build out the marketplace with digital stores. However, compared to a true Franchise our model is affordable by the masses. We did this to make it easy for millions to participate. Once we have a few million stores we will be out selling I tunes with no problem.

    By the way i tunes has sold over 1 billion now, not 500,000. We sold voer 100,000 downloads last month (we are still in BETA phase), we are on pace to sell over 1 million in May and quite frankly I think we will hit 1 billion downloads quicker than I tunes. This will only be possible by enlisting the help of music lovers & entrepenuers in the US today and eventually on the international market.

    Speaking of the international market do you think that Japanese nationals here in America would like to have access to their countries music? What about people from Hawaii who love Island music but can’t easily get it here in the mainland? Our model allows us to ingest content from other countries just like we do for indie artists and labels.

    I’m sorry that your presenter told you not to come back. In my experience when you have total confidence in what you are doing you need not fear inspections or other opinions.

    Typically in MLM the reps are forced to sell a product that is over priced in order to “feed” the comp plan. We are the same price as i tunes.

    For years the so called MLM gurus have said that by the 2000’s 50% of all goods and services will be sold via MLM. BS! Not as long as the companies are selling over priced goods.

    Fortunately todays technolgy allows Burn Lounge. http://burnlounge.com/gregw to sell our products at the same price as I tunes.

    My advice? Get in. You might be glad you did, and as you stated the initial miniscule investment is a write off any way.

    Greg ” you might be a networker Warford”

  18. Tony Zeoli says:

    Hi Greg:

    Let me respond to your well thought out and concise comments. I agree with you in some respects, but disagree with you in others.

    You said:

    {BL is not a “get rich quick scheme” and thank God it’s not. There is no such thing as money for nothing or in my experince “chicks for free”. LOL}

    When I was at the Burnlounge event, one of the founders and a major investor where there. The theme I got was that you can “make millions” with burnlounge and that a Burnlounger in Hawaii made some $40 thousand last month on his downloads, but they didn’t break down what kind of music he was selling, nor did they break down what his split was or how far he was from the top.
    That being said, I felt I was watching an informerical for guys who wanted you to give them money to have a burnlounge store, but there was little explanation about how they would support that, other than a free montly magazine. And the never discussed territorial protections, such as those of a true franchise.

    So, do I think it’s a “get rich quick” scheme? I’m not going to go as far as saying that it is, but they sure acted like you could “make money” with burnlounge, instead of teaching you how to operate an online store with territorial rights in your market and other rules and regulations put in place to help you succeed. As a Burnlounger, you now have to compete with other online stores, besides the thousands of other Burnlounger’s…who, at the end of the day, are your competition, not your friend.
    {Here is the reason I contend that BL is a house with a solid foundation and not “built on sand”. Ask your self this question: At the end of the day who is the best person to sell music? A fan! In other words someone who likes it right?}

    I totally disagree. Fans are the best people to learn about new music from. But, are they the best people to “sell” music? Absolutely not. I don’t like all the music some music fans express to be the best. Their ear could be just horrible, and I’d rather get my musical info from a trusted source at a record store who deals with a lot of customers, face to face. But that’s for me, not for everyone.

    And, let me give you a scenario.

    Burnlounge launches and signs up, for arguments sake, 50,000 affiliates. Out of those 50,000, five thousand are moguls. The other 45,000 are two tiers from the top, that means that the moguls and burnlounge share in their revenue.

    Now, let’s go down to the next level: an affiliate of an affiliate of a mogul; then burnlounge, and that’s before loudeye and the respective record label.

    Say 20,000 of the remaining 45,000 are at that level. There is going to be a huge incosistency between 20,000 people promoting Burnlounge technology and download sales, instead of having consistency across the board on one web site. The value of all the reps may be diluted in certain markets based on performance and consumer backlash; or whatever other situation comes into play. You can lose hundred’s of affiliates overnight and with that hundreds of customers.

    It stands to reason that with everything, there is always the BIG PUSH to sign up as many affiliates as one can. But, then you start to hit a wall, because there are only so many people who want to buy-in to the program. And, after those people realize that their investment isn’t paying the huge dividends they thought, because they don’t have marketing budget to drive customers, they’ll start dropping away and leaving holes in key territories and customer service problems.
    You know, most people who are proponents of Burnlounge never make these assumptions in public. And it’s funny, the message is so targeted toward’s enticing people to “make money” befort it is to “sell music”, that I think people need time to digest the info, and then they don’t really have the opportunity to ask questions. I also feel that Burnlounge reps and moguls think that everyone of their respective affiliate reps will be a stellar sales and marketing person and that will drive the market. I have news for you, those people are their own “employees” and many of them may be their own worst enemy.

    {I feel that we have a major compelling advantage over I tunes in that we have the ability and the desire to ingest independent artists content to our stores in roughly 10 days. This was not possible through Loudeye and so BL built it’s own program in house. This will allow us to build the largest catalog of indie artists in the world and this is already happening. Did your presenter mention this? Did they even know about it?}

    If I’m an independent artist, I can set up Musicane and sell music on my own web site in less time that you can get it in your store. And who cares about getting indy artists in the burnlounge chain if thousands of your affiliates are promoting major label artists on the fronts on their web sites? You seem to think that every Burnlounger will focus on indy artists. Hey…I have MP3.com and Emusic for that–MySpace or other sites that promote the indy artist over the major artist. You’re going to have mixed marketing messages across hundreds of Burnlounge sites, and consumers will be confused about which Burnlounge site they saw what piece of music on. People like one place, one branded organization they can trust for their music purchases.
    I also don’t see giving someone my credit card number that I met on the street who says he or she has Burnlounge store. I’m going to buy from a trusted source, in one place I can always go back to with strong customer service. Even if a single Burnlounger is successful, that person will then have to hire “employees,” which you seem to dread and they’ll have their hands full.
    {Let’s talk about the artists for a second. I’m not even up to a “C level” in the music business but I have friends who have gotten record deals, thought they were set, only to make a few thousand and have the sales fizzle out.}

    So? Maybe they sucked? Just because you got a record deal, doesn’t mean people are going to buy your record. This is the music business, isn’t it?

    {Burn Lounge is nothing more than a digital street team, The street team marketing model is not on trial as it was proven by Ludicrous and many other artists. However to develop a street team an artists needs product right? Not with BL. They have no production hard costs for CDs, no delivery problems and can in fact market their music at a lower cost. There is NO CHARGE to the artists for this service.}

    There is a charge to the artist for this service. The artist has to pay an entry fee and a percentage of all sales to burnlounge. You should clarify that before you put it out there.

    Everyone incurs costs. The marketing costs are still the same whether you have a brick and mortar operation or an online store. If you don’t market your service and invest in yourself, real dollars, than how do you expect to get back. Especially when, you know have to compete with hundreds of other Burnloungers, in addition to iTunes and the rest of the download stores. Remember, you’re competing against your brother and your sister burnlounger, because there is no territorial advantage. So, how do you differentiate yourself from them? How do you expect to make more with your store than their store? At the end of the day, you’re not a huge street team; you are hundreds of small businesses competing against each other. Mark my words…there’s gonna be trouble in paradise.

    {Additionally the artists are not put in a “box” by the labels who only want them to make music that is of a style they know sells. In my opinion this robs the artists of their creative rights to make the music they want, how they want.}

    Artist’s sign record deals to get distribution to the masses. Sometimes, you have to compromise your creativity for a few years in order to have the mass appeal and star power you are seeking, and then you have the freedom to do what you want. Today, this is a known fact. If you sign a record deal, then you may be put in a box by the marketing department, who justifiably so, because they are giving you the money to record, can do that since they are ones who may know where your music is going to sell. We all sit here and blame the labels for everything, and that’s cool, because they do a lot to stupid stuff, but is it all there fault? Can every artist make it? I say no. And, what does all this have to do with Burnlounge anyway. You are exploiting the artists the same as the record labels. You didn’t create the music, but you’ll try to sell it to anyone who comes to your download store to buy it. I’d like to see you tell someone they can’t buy downloads on your store, because it will jeopardize your artistic integrity. So, don’t be a hypocritical because you, along with the thousands of other Burnlounger’s can’t wait to sell the music that has been creatively compromised.

    {Interestingly enough our number 1 sellers have been indie artists who are partnering with their fan base. Is it possible that by partnering with their fans and offering them burn rewards or(if they choose the affiliate or mogul level CASH) they might stop stealing the music? Ask Ted Nugent or read what he has to say at http://burnlounge.com/nugent.}

    To tell you the truth, I don’t really care what Ted Nugent says. I care what the Burnlounger who doesn’t have Ted Nugent’s high profile says. Sure, Nugent is going to capitalize on his name and likeness that were cemented by major label exposure. If he didn’t have that, he’d be like the rest of us.

    {I tunes, no matter what you say has backed themselves into a corner with their refusal to allow compatibilty with other devices. Check it out for yourself and you will find that some countries are considering NOT allowing i tunes to market in their respective countries.}

    Who cares about formats. What I’m talking about here is a multi-level marketing effort by Burnlounge to enlist thousands of people to sell tracks from their Burnlounge pages who have little experience in promoting, marketing or selling music. And when many of those people don’t see the returns they were expecting, then little by little, those people will start to lose interest in shut down their Burnlounge sites, leaving their customers in the lurch with no one to call.

    {Are you old enough to remember BETA tapes (PRE VHS) brought out by 1 MFG who much like Steve Jobs had a short sighted mentality that they THOUGHT would garner them a larger market share. Where is BETA today? Gone! Superceded by a product that allowed other manufactures to produce equipment which played the VHS tape and then the DVD.}

    Again, I’m not talking about formats. I’m talking about the fact that you have 10,000 or so Burnlounge multi-level marketers trying to compete for 30% of the music pie. And, what that mean’s to the music download space overall. As the record labels begin to ask for higher prices and the public continues to demand lower prices, the middle guys, i.e. the Burnloungers, are the ones who are going to get squeezed.

    {Competiton is good for any industry as it drives prices down and makes for a better over all product for the end consumer.}

    Yes, competition is good for an industry. Driving prices down is great, but when you get to the floor, there’s little money to be made on the product, and you have to do VOLUME to squeeze that water from that rock. How many Burnlounge affiliates will have the patience, perservance and marketing muscle to make that happen for them. How many of them even know how to market a download store? There may be a few who succeed at the top, but there are disappointing hundreds of others for a wasted effort at the bottom. You can’t honestly say to me that every Burnlounger will make money? Because they won’t.

    {Does Viral marketing work? You tell me: I know for a fact that Sprint started with an MLM company called network 2000, I know for a fact that MCI used friends and family very succesfully to take market share from the former monopoly known as At & T. I know for a fact that Net Zero and Hot mail garnered millions of customers.}

    Okay…who’s doing better, AT&T or MCI? Seems to me that MCI/Worldcome were in a pretty bad place a few years ago? No? I’d rather be AT&T, thank you. I’d rather buy from the leader and get quality over quantity, but that’s just me.

    {There was also a CRAZY high school football coach named Art Williams who wanted to use the concept of friends and family marketing to sell insurance. The insurance industry thought he was nuts yet the next year his Co., A.L. Williams (he put a lot of thought into the name) outsold 3 of the largest insurance companies COMBINED. Today that Co is known as Primerica and all of the companies I mentioned have been a part of some very large mergers, acquistions and IPO’s on wall street.}

    Not familiar with Primerica’s model.

    {As for your comments on employees our model does not require or recommend this. I have had a company with employees and every employee equals 1 headache. This is to put it bluntly a better way to make money}

    I don’t recall where I wrote something about employees, but aren’t you an employee of Burnlounge, in essence, as they pay you every time you sell a track? So, you must be a headache to them, in your own eyes, no?

    There is no best way to make money. No, let me take that back, the best way to make money is to print it youself. LOL.

    All kidding aside, the best way to make money, is to earn it. That’s my opinion.

    {As for your comments on the % paid out please allow me to respond with the correct information. First of all you are pretty close to 1 portion of the pay we earn as retailers. You forgot or perhaps your presenter did not know how to explain the other portion.}

    No, I didn’t forget to explain the other MLM portion. I have in my past postings discussed the shares of revenue a mogul gets from signing up hundreds of other affiliates. You take a piece as the transaction is passed along. This is not franchising, though. In no way does MLM resemble franchising, other than the distribution of the software to hundreds of people who will use a similar product to take the download transaction.

    {I have friends here in Dallas who own one of the largest dry cleaning franchises in existence today. They make millions on small transactions. Why? Because they have tons of stores. During their initial growth phase did they make their money on cleaning clothes? No! They made it by selling brick and mortar stores to entrepeuners who wanted to own thier own business.}

    This is true franchising. I will set up a model for you, and I will take a piece of your transaction and that’s it. And, you’re territory is protected by a 1.5 mile or so radius, so no other franchises can infringe on your territory unless its approved by the franchiser.

    I think it is absolutely wrong to compare traditional franchising to multi-level marketing. It’s misleading, unethical and it may be illegal, becuase you would be fraudulently leading a potential affiliate to think he or she is only sharing revenue at the top and that they would have a protected territory. With Burnlounge, this is definitely not the case.

    I really dislike when people compare Burnlounge to a franchise. It is not a franchise model, period.

    [In much the same manner BL pays the moguls to help them build out the marketplace with digital stores. However, compared to a true Franchise our model is affordable by the masses. We did this to make it easy for millions to participate. Once we have a few million stores we will be out selling I tunes with no problem.}

    Again, the Burnlounge model is NOT A FRANCHISE model. It is a MLM model that will benefit people at the top on the sweat of everyon at the bottom, who DO NOT RECEIVE an equal share of the pie. In my opinion, this is unethical and exploitive and I will not stand by idly and do or say nothing about it. I have the right to my opinion and as you can see, I have freely allowed others to express their opinion here on this blog, no matter whether I think it’s right or wrong.

    {By the way i tunes has sold over 1 billion now, not 500,000. We sold voer 100,000 downloads last month (we are still in BETA phase), we are on pace to sell over 1 million in May and quite frankly I think we will hit 1 billion downloads quicker than I tunes. This will only be possible by enlisting the help of music lovers & entrepenuers in the US today and eventually on the international market.}

    I don’t recall where I wrote 500,000, but I do know iTunes is over a billion downloads. Is that bad for the music business? Is that bad for artists? I don’t think so. Maybe the pricing model could be changed and people would accept paying a bit more for music, but the music industry screwed up when they tried to fight “free” instead of building a legal music service in the late 90’s. They put themselves in this box, because they are the one’s that negotiated the agreements in the first place. The public didn’t have a say in it.

    Good luck with 1 Billion download. Haven’t iTunes already hit that mark? I don’t understand your comment.

    {Speaking of the international market do you think that Japanese nationals here in America would like to have access to their countries music? What about people from Hawaii who love Island music but can’t easily get it here in the mainland? Our model allows us to ingest content from other countries just like we do for indie artists and labels.}

    {I’m sorry that your presenter told you not to come back. In my experience when you have total confidence in what you are doing you need not fear inspections or other opinions.}

    Regadless of whether my presenter told me to come back on not…no thank you. I do not want to be a part of Burnlounge at this point. As I said, I don’t feel MLM is an ethical way of doing business, and I choose not to participate. Until all affiliates are on the same level and all share equally in the profits, I’ll stay on the sidelines.

    {Typically in MLM the reps are forced to sell a product that is over priced in order to “feed” the comp plan. We are the same price as i tunes.}

    You are the same price as iTunes, but yet, none of your tracks can play on the iPod, nor can they play on Sony devices, which play A-Trac format. Why you keep comparing yourself to iTunes and not defining a new market is a mystery to me, if iTunes is so bad?

    Everyone wants to be the big guy, so they kick him in the shins over and over again until they knock him over. Then, when they become the big guy, they forget how they got there.

    {For years the so called MLM gurus have said that by the 2000’s 50% of all goods and services will be sold via MLM. BS! Not as long as the companies are selling over priced goods.}

    Of course, MLM gurus are going to say that. They are at the top of the Ponzi pyramid leading the sheep to their demise.

    {Fortunately todays technolgy allows Burn Lounge. http://burnlounge.com/gregw to sell our products at the same price as I tunes.}

    {My advice? Get in. You might be glad you did, and as you stated the initial miniscule investment is a write off any way.}

    No thanks. I’ll invest my time and energy elswhere. Why am I going to spend $400 plus dollars to write it off anyway. I’d rather spend and make money on my investment than to spend and take the loss.

    Tony Z.

    Greg ” you might be a networker Warford”

  19. Tony Zeoli says:

    Michael:

    Thanks for writing.

    As far as I know, and what I wrote in my first post is, the first split between a mogul and Burnlounge is this:

    Major Label: $0.70 per download
    Loudeye $0.12 to 0.18 cents per download
    Burnlounge $0.10 per download
    Mogul $0.12 cents if loudeye takes 0.12., $0.7 cents if loudeye takes 0.18

    This is on a $0.99 cent track.

    I don't know what the split is on a track that costs $1.99, but it stands to reason that it's similar.

    The Mogul split his/her share with the affiliate. Don't know if it's 50/50, but most likely it is. Someone would have to confirm this for me. That leaves you with 6 cents on the high end and 3.5 cents on the low end if you're an affiliate.

    Now, keep doing down levels, from 3 to 6, and the split of the 12 cents on the high end or the 7 cents on the low end starts to get divied up again and again and again. If you're six levels out…you're making a smidgen and everyone up the food chain is getting a piece of your action, so how are you supposed to get ahead? Work harder than they do, so you can make yourself some money, while they collect money for turning you onto Burnlounge.

    That's how I see it works. I could be wrong. Hopefully, someone will let me know if this is really true.

    Tony Z.

  20. Greg Warford says:

    Tony,

    Thanks for posting my replies. I think you are DUMB. Like a fox!!

    By stirring up controvesy about Burn Lounge you will no doubt explode the hits to your website. Why? Because Burn Lounge is Cool, fun and people like it.

    I feel the need to reply one LAST time. After this if you want to talk to me shoot me an email and I’ll gladly discuss BL with you. In a forum that is not serving YOUR interests to the possible detriment of a company that is simply providing a good MLM company to those who may wish to take advantage of it.

    First off. No I’ am not an employee of Burn Lounge. I’m an independent retailer or 1099 independent contractor. When you hire employees you are in a completely different category. Thi is not me saying this but the federal tax code. As a business owner you are more than aware of this, or did you also forget that you said that you were a business owner

    Next off I am not comparing Bl to a franchise by any means and I apologize if my attempt to explain the MLM model in a simplistic format for your little brain fell short and mis led you. A franchise is indeed protected by territory. It also costs tens of thousands to invest in. The advantage is that in essence you get to piggy back on the name and experience. All this for a price of course.

    The fact is that most people can’t afford a franchise but many still want to create an income in addition to their JOB. MLM should be a great way to do this but unfortunately the industry has been beat up and in many cases the bad PR is well deserved. Not in this case though

    There are no territories with BL. The playing field is level for all who wish to try the model. There are no gaurantees either. Just like in any other business

    You said that the fans are not the best people to sell music and that most reps will sell the content of the majors. Some will, some won’t. That is the purpose of the internal content editor. So they can place their favorite music on the front of the site.

    I said there is no cost to the artist for ingesting their content. True to your half assed self serving style you took this like any other comments that you could not logically rebutt out of context. The ingestion of content is free and the artists only pay a commision when their music is sold. They do not have to become a retailer or affiliate.

    I was trying to compare the SENSIBILTY of this model to an artist who may not have a lot of money for production costs. The fact is they do not have to pay for producing or delivering the music in the form of CDS. You even tried to make a comparison to myspace. There is no money in the my space model for artists. How does that compare?

    You said that “you are not talking about format” I’ll check back with you in 2 years. It’s simply history repeating itself and it’s ALL ABOUT FORMAT

    You said that you are not familair with the Primerica model. If you are going to pass judgement on an industry shouldn;’t you take the time to look at the succesful models? Oh yeah I forgot. you don’t really care about the TRUTH only about getting your blog out there.

    For example I named a handful of companies that have succesfully used viral marketing and you chose 1 (MCI) to comment about. The fact is that I used to work for At & T and when the cingular merger began to be discussed about 20 of us lost our jobs.

    They are a good company but the fact remains that there is no security in the work force any more for the average American and every body should have a plan B. If they can afford a franchise they can explore those opportunities but for most this is simply out of reach.

    I said you should join, you said NO THANKS. In your blog at the bottom you said I’ll probaly join them…

    I said that i tunes has sold over 1 billion not 500,000. You said I don;t recall saying that…

    This leads me back to my first thoughts after reading your reply. You don’t really care about the truth, nor do you even recall if you WROTE the truth. Amazing!

    If you want the truth then let’s hop on the phone. I’ll debate you in an open forum or a private call. I’ll not continue to waste my time here in a forum that has no interest in the truth and even worse with a so called writer that can’t even remember what he supposedly wrote…

    In closing I’m not saying the MLM model is for everyone it is not. But I will say that at least BL has a product that is priced the same as I tunes. I will say that at least they are providing a fair opportunity to those who wish to work at it and at least the reps don’t have to explain why the products cost SO MUCH MORE. And it is good for the artists, period.

    No MLM is not for everyone. Most people don’t understand it at all. You certainly have no clue about our pay plan based on some of your comments. However some of us LESSER individuals than your self need a fair chance to make a living. Not for you? fine! Those who can’t should not get in the way of those who can and are doing it.

    I doubt that you’ll post this because it does not serve you but either way I’ll not be back. I’ll be busy making it happen.

    AS far as getting rich? I’ll compare 1099’s with you any year any time.

    Greg Warford
    Burn Lounge Independent Retailer, not an employee or apparently not in the same caliber as you when it comes to writing. At least I’ll probably remember what I wrote though…

  21. Tony Zeoli says:

    Greg:

    First, of course I’ll post your reply. This is an open forum and I’m not about to censor someone who wants to critique me. That would be un-democratic of me, wouldn’t it?

    Second, I’m glad you called me “dumb” and that I have a little brain. If I’m so dumb and have a brain so little, why are you debating me?

    Third, I’d rather keep the debate in an open forum so everyone can see your replies and my rebuttals. That way, it’s all out there for everyone to see that, assuming you have “mogul” status, it is in your own self interests to reap a profit off of everyone else below you, who gets less of a share then you do. When you talk about artistic integrity, where is your integrity when it comes to an equal divesiture of profits for everyone across the board?

    You stand to reap thousands of pennies from every Burnlounger affiliate you sign up as a “mogul”, and then those people have to work harder, and the next set have to work even harder to get a share of the pennies of major and indpendent label sales.

    If I am simply just a guy who wants to open a store, I have to go to you before I go to Burnlounge and you take a piece of my action, then Burnlounge takes a piece, then either Loudeye or the indy artist takes a piece, and if not the artist, then the label.

    It doesn’t take this small brain to figure out that there will only be so many people attracted to opening Burnlounge stores. I am already reading or hearing about people who are saying to me that so many people have approached them about Burnlounge to compete for their interest, business or whatever you want to call it.

    If a circle of friends are competing against each other in small markets, where does the growth come from if everyone’s an affiliate?

    Greg, I really do admire your passiona and enthusiasm for Burnlounge. But you must respect the fact that I have an opinion that you do not agree with. And that is your right. However, I am trying to let people know about something I don’t believe in, whereas you’re out there trying to convince people it’s in their best interests to become an affiliate member.

    Tell me, if you are a “mogul,” would you allow anyone you signed up to achieve “mogul” status, and that person would not have to share revenues with you, and may even compete with you for new affiliates? What would you do?

    If I opened a Subway on the corner of 2nd Ave and 3rd Street in Manhattan, my franchise agreement would probably say that there can’t be another Subway for, let’s say, 10 blocks in all directions. I have MY territory, and I can compete on price, service and hope that people will walk to my Subway franchise and buy from me because my employees are nice and my store is clean and I give them fast service.

    If, like in Burnlounge’s case, there are 30 Burnloungers in Boston, and some of them, because of the the theory of six degrees of separation, know the others…there is SO MUCH overlap that something has to give. 30 Burnloungers in a territory without borders simply cannot survive. That is my belief. Argue it you will, but I stand by that.

    As for THE TRUTH, here I am, admitting that I wasn’t sure what I wrote, because I didn’t really feel the need to go back to my original post to see what I wrote. So, if you feel the need to call me on that, go ahead. No big deal. I don’t, like you, feel the need to have to go back to every single word and explain myself.

    And, if you went back to read your own post, you would see that your words are confusing on the 1 Billion download question:

    {By the way i tunes has sold over 1 billion now, not 500,000. We sold voer 100,000 downloads last month (we are still in BETA phase), we are on pace to sell over 1 million in May and quite frankly I think we will hit 1 billion downloads quicker than I tunes. This will only be possible by enlisting the help of music lovers & entrepenuers in the US today and eventually on the international market.}

    Wait! Did iTunes sell 1 Billion already, but yet Burnlounge will reach 1 Billion before them? Let me reach into what you consider my “small mind” to understand this, because it doesn’t make any sense to me.

    Also, why don’t you say that BL has a product that is the same price as iTunes, but then add, “it can’t be played on an device that does not support Windows Media DRM”?

    BL’ers never tend to add that little tidbit in, now do they?

    You want to talk about formats? Okay…people want their music now, and they want it to play on their preferred device. Predominantly, the iPod. When they buy from Burnlounge TODAY, they cannot play those files, unless you’re selling MP3’s, I don’t know. (See, I admit when I don’t know something).

    These same people don’t care about the format wars. These same people don’t care how long its going to take to play out. As long as they can buy and play their music…that’s what they care about. Add to the fact that you can own an iPod and attach it to a Windows computer to download your music too, that’s pretty attractive. So until you come up with a better solution than that, let me know, because I want to ride on that boat.

    See…and I didn’t even call you any names! That’s what good, healthy debate is about. Discussion about the issues. I have my opinion, you have yours and we can agree to disagree.

    Oh, one more thing. As far as traffic goes, I wasn’t thinking about that when I first wrote about the issue, because I wrote about only after actually attending a Burnlounge event and hearing firsthand what was said in that room. I was a bit angy and concerned that BL did not give these people all the facts in that room, and that is my right to do.

    Sure, now this subject has the most postings out of any subject on this blog, but I didn’t plan it that way, it just happened. And you know what, I don’t have to share the revenue from ads (the little I get) with anyone, because I own and operate Netmix, and that’s my right to make money, just like it’s your right to own a Burnlounge “mogul” (I think) status and make money off all your affiliates.

    Why don’t you own up and say, yes, I have a special interest in seeing Burnlounge succeed, because it will enrich me on the backs of others who won’t share in the same success, because they are one level below me. You want to talk about artist integrity and what the artist doesn’t get and that the artist is put in a box, yada yada yada, but at the same time, you will sell those major labels tracks of those “box”ed up artists in your BL store without hesitation. Where is the self-integrity there? I’m looking around and I don’t see it…hmmmm?

    So, don’t come here, to someone who’s been in the music business for 25-years, with that argument that someone’s gotta look out for the independent artist…because you want to exploit that artist the same as any indy label or major label wants to, because you want to make money. Until you call or email every artist in your catalog and ask them how they want to be represented in your BL store, and then you change what is contained in your store to respect their wishes, your argument holds about as much water as the Mojave Desert I drove through on my way to Vegas a few weeks ago.

    C’mon man…admit it…you want to MAKE MONEY off of the artist’s your selling and the artist’s your extending sales team is selling. Nothing wrong with that…but don’t come to me with that I’m all about artistic integrity crap. If you’re in MLM, then you’re a capitalist just like the rest of us. Be who you are man. Do you.

    Have fun with your reply…I’m looking forward to it.

    Tony Z.

  22. I'm still confused.

    If the label gets $0.70 that leaves $0.29

    Let's say for simplicity that Loudeye gets an average of $0.15 – that leaves $0.14.

    Now if BL is getting $0.10 that leaves $0.04 – or what part of that am I misunderstanding?

    Again, I find it simply AMAZING that there are so many pro-burnloungers here SLAMMING you for questioning the program, yet NONE of them have any idea what the real payout is on this program.

    I believe it is because none of them expect to actually make money selling the music anyway. It's recruitment that makes you money with BL. I'm working up a spreadsheet and TRYING to figure out what the payouts would be. If Tony is even close to correct, then it is virtually IMPOSSIBLE to make any sort of real money selling MUSIC on BL.

    Come on Burnlounge retailers – step up to the plate and explain the compensation plan. Can you?

  23. Tony Zeoli says:

    Hi Michael:

    This is exactly what I'm talking about. On sales of major label tracks, the labels take the $0.70, Loudeye takes the average of $0.15 and that leaves $0.14 cents to split between Burnlounge and the person at the "Mogul" level. This is only for a $0.99 cents track. I don't know what the split is on other tracks that cost more.

    The "Mogul" level is one level from Burnlounge. "Mogul's" sign up affiliates underneath them. So for every affiliate a mogul signs up, he takes $.02 cents of that affiliates transaction (I think that's true, but I've never confirmed it). Now, what about an affiliate of an affiliate? Do they split and get $0.01 each.
    Now, if you are a record label or an artist and you want to use Burnlounge technology to sell your own tracks, then that's a very different story. You split 60/40 with Burnlounge on the sales of your own tracks. It's a little pricey, but not abnormal. I'm not knocking the "own your music, sell it through burnlounge" format.

    What I'm knocking is the MLM major label sales gimmick. Who makes money? The guys who own Burnlounge on the sign-ups, and the "Moguls" who own all the affiliates. Once you get down past that, you have to sell a couple of hundred thousand tracks to buy a cup of coffee.

    And remember, you have to sell them to only 30% of a market that can play the tracks on a Windows Media enabled device, which cuts your market down drastically.

    AND, you have to compete with iTunes, Rhapsody, Napster, Yahoo, AOL Music, Verizon VCast among others with no marketing budget to speak of.
    I think it's a joke…but that's just me.

    I'm glad you may be in agreement.
    Tony

  24. Oh, I'm in agreement Tony. I'm just trying to be fair and openminded. My plan was to see what kind of sales it would take (of MUSIC) for Burnlounge to produce a reasonable income.

    From what I can see, no one knows what the actual payout on music sales is to the affiliate (which is ASTONISHING to me) to even run a spreadsheet.

    Using a best case scenario of 6 personal stores for a mogul, and having ALL of his downline with 6 stores (each selling 24 albums a month) produces some astonishingly huge numbers in sales and units. But looking at the available $ to share upline 6 levels, it produces some astonishingly LOW returns to the mogul. Obviously, with the information so difficult to obtain, it is hard to come up with a hard and fast number, but I think that I can come up with some "extreme best case scenarios" that will show a maximum profit of less than $24k a year, and that is with an extremely optimistic "best case" scenario.

    I will say that without selling recruitment packages, most people will be luck to BREAK EVEN and a few might see a very little extra money from Burnlounge.

    I'll play with the numbers over the weekend and see what I can come up with…

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