Despite my intention to not stir up debate, a whole mess of folks are rolling through the site looking to defend Burnlounge. Judging by some of the e-mail I have received, some readers might have confused my opinion with what other readers say in the comments.
So, to reframe my previous post, here's what I think of Burnlounge:
If anybody wants to legitimately sell more downloads, more power to them. Competition is good.
Personally, I like MLM when it replaces traditional marketing. Even here at spinme.com, we use an affiliate program instead of spending tons of money to advertise the site. I'd rather put money into the pockets of our members than into the coffers of an ad agency. Of course, we don't charge folks to join our affiliate program.
Personally, I would stay away from any online business model that required a huge upfront cash investment, especially when other, similar business models allow me to get started without spending any money. (Burnlounge requires a fee, the iTunes affiliate program does not. Point to iTunes.) Some folks in the comments say that $400 is not huge. I think that, for nearly every musician, every expense over ten bucks requires a little analysis. (That's why I lowered the price of our own premium service.)
The biggest danger in MLM is that some overzealous fool in one of the top two or three tiers will start doing something totally stupid to build their team. Whether that activity is sanctioned by the head office doesn't matter -- all these goofballs going nuts and charging Burnlounge store owners extra training fees doesn't bode well. Likewise, the inflated language makes folks lost trust in the core service.
The second biggest danger in MLM is that a bargain-seeking audience starts looking for cheaper sources for the same material. Unless you add lots of value to your Burnlounge store or you inspire tremendous brand loyalty, it can be tough to hang on to your customers. (And I don't see any clear way to make the Burnlounge store truly private label, though I am sure someone will be glad to share a way in the comments.)
The Burnlounge advocates are correct: iTunes downloads only play on iPods, unless heroic measures are taken. Unfortunately for them, the iPod owning majority of MP3 player users show no signs of switching, and they're not going to bother with Burnlounge unless there's something there that they can't get from Apple. I don't know if I would want to battle over the remaining 20% of a market.
Would I want to be in this business? No. I can find plenty of other ways to make money that don't involve an upfront fee and don't require the care and feeding of a Burnlounge store.
If a client or a member of our mentoring program asked me whether I thought they should join, my answer would be contingent on meeting three guidelines:
Paying your Burnlounge startup or maintenance fee must not put you at risk of cutting into your savings or missing a bill payment.
You should have 10-12 hours per week to devote to marketing your site. It won't just sit there and sell itself -- you have to get people to your store.
You should already have a mailing list of 1000 people to get your store off on the right track. If not, focus on building your mailing list first.