(This article originally appeared on ArtistsHouseMusic.org.)
I have a confession to make. I once ran an Amway business. I know what you’re thinking… and you’re right. But I was young, in college, and I needed the money.
Amway, for those of you who haven’t heard about the multi-level marketing wonder, Amway is a company that gives financial incentives to people who buy the Amway kit (their “business”) and then sell to others or get others to open their own Amway business. Friends and family members of an Amway business owner will tell you that Amway has the distasteful side effect of making the Amway business owner really annoying, what with all the conversations of “going gold” and dream building. Hence, the confession.
Now, Amway hopes to conquer entertainment distribution with their new site Fanista.
Fanista runs on a much more savvy multi-level marketing platform. Essentially, if you are a member of Fanista and someone buys a CD and identifies you as the referrer, you get 5% of the purchase price.
Instead of the multi-level marketing of old, Fanista has coined a new phrase “common interest commerce.” The idea, according to the New York Times is:
On Fanista, members create and customize profiles where they list favorite DVDs and CDs — preferably to Fanista, ones in its inventory of about 500,000 titles.
The next step is to invite friends to join. If they become members and identify you as the reason, you will always earn a 5 percent commission on any purchases they make on the site. Fanista has additional hooks, too.
If, for instance, your friends’ purchases within a year total $100, you get a 5 percent discount on any Fanista purchases.
The idea is that once people are brought inside the site they will make impulse purchases by reading reviews from their circle of friends or people who are passionate enough about items to write personal reviews.
Fanista is still in beta – and we’re waiting for our email letting us in but one has to wonder if this idea isn’t a day late and a dollar short. The New York Times article makes the program out to be a glorified affiliate program – the type Amazon and others have used for years (right down to the customer reviews). Beyond that, Fanista looks as though its competition will be traditional online retailers like Amazon and not iTunes. With the market continuing to shift to a digital distribution model, Fanista seems to be competing for a shrinking market.
In truth, it’s hard to see where the innovation is in the site (especially without having tried it first hand). Fanista seems to rely on customer created content to sell merchandise. I know it wants to be part MySpace, but history says no. Wal-Mart already tried that and it sucked really, really bad. So much so that it only lasted 10 weeks before being yanked offline.
On the other hand, Netflix just awarded a prize of $50,000 to a group of AT&T Labs researchers in a multi-year contest to improve their recommendation algorithms based on limited user input. The researchers were able to improve the recommendations by 8.43%. While no one has yet to win the top prize of $1,000,000 by improving recommendations by 10 percent or more, it’s hard not to believe that algorithmic recommendations are the future.
That being said, Amway is a $6 billion company that has wide support. If there’s an incentive for Amway user to use Fanista, legions of Amway business owners will rush to the store and will try to convince their friends to do the same. Call me cynical but I bet most of their friends are already getting all their entertainment needs met through other means.
Once the beta invitation for Fanista arrives, I’ll follow up with first hand thought about the service.