Online music sharing and tiered users, combined with affiliate marketing, may bring back vague memories of the major US illegal pyramid scheme, BurnLounge. But the chief executive officer (CEO) of a new patent-pending ‘social network marketing technology platform’, says his legitimate venture is 'distinctly' different to this.
CEO and founder of Tell My Friends (TMF), Ben Looi, has created an online music sharing platform, with affiliate marketing at its core. As well as the TMF website, there is also a mobile phone app.
After a complaint back in 2007, the US Federal Trade Commission filed a lawsuit against BurnLounge, due to ‘alleged deceptive acts and practices in connection with the advertising, marketing and sale of opportunities to operate online digital music stores’.
While there may be some similarities, such as the ‘music sharing’ aspect, to the subscription-based BurnLounge business; Looi said TMF is 100% above board, has no subscription charge and has had a great response so far.
Looi has filed an international patent application on the software and system, and is in talks about raising venture capital to further the startup.
We caught up with Looi to get the lowdown on the Singapore-headquartered business:
Q: Can you summarise how the business works and explain why you came up with the concept?
BL: Online piracy is a big problem for the creatives like music, e-books and movies. I came up with this idea because it gives consumers something better than free. It's not about being better than iTunes, but it's about being better than pirates. Affiliate marketing is the only model that is able to give consumers the motivation to buy and share music and other e-goods.
The way TMF works is this: We get a distribution license from the content owners (labels, independent artistes/bands), and using our patent-pending system, generate links or unique URLs to the purchase page of the song. When A buys the song, he/she will receive another link for that purchase to share via social networks. When B buys from A's links, A receives a commission from that sale in the form of credits. When B shares his/her link and C buys via B's links, B receives a commission, and A also receives a commission. This goes on for 10 tiers. The credits can be used to buy another song, cashed out when you accumulate $15 and above, or donated to a charity or cause on our Secret Angel programme.
Q: Has the business ‘officially’ launched, in what countries and what was the response?
BL: It has not officially launched yet. We are testing the system with 600+ users. The distribution license for the songs are global. Anyone can buy. In today's internet and e-commerce, territorial licensing is obsolete. It doesn't really make sense to shut yourself off from other markets. We have about 2,960 paid downloads. That's more than four conversions per user on average.
Q: Can you explain how the affiliate side of things work for the business and what your wider views are on the affiliate marketing industry?
BL: TMF is what I term ‘social network marketing’, a combination of social networks and network marketing. This couldn't happen electronically before there was Facebook, Twitter and online micropayments.
The affiliate marketing industry, in general, has a less-than-credible reputation, mainly because there are too many scams and bad-hats, and lack of complete consumer education. The weary ones are those who are ill-informed, and most consumers do not understand the difference between legal and illegal multi-level marketing (MLM).
The illegal ones are cleverly disguised in a convoluted scheme that basically sell subscriptions, memberships and other recruitment bonuses, which sometimes is hard to distinct between the actual marketing and sale of products and services. The simple test is this: benefits derived from an actual sale of a product is ok. Benefits derived from recruitment and memberships are not.
Q: Who is your target audience?
BL: The target audience is dependent on the product, not the platform. Our clients have different target market. F*** magazine, for example, targets movie buffs with their e-magazines, while different music genres target different segments like yuppies, those in their 30s, teenagers etc.
Q: What type of response has the business had overall?
BL: We have enquiries from artistes and music executives / label reps from US, Amsterdam, UK, Malaysia and Singapore. We have signed clients mainly from Singapore, one from the UK and one from Hong Kong. We are in talks with a few from US and SideSteps is the first UK band on our platform.
We have advocates of TMF in the US and UK, though not officially representatives. We plan to work with overseas representatives on this once we have some funding to expand.
Q: What expansion plans do you have and to what markets and when?
BL: US and Southeast Asia. US because piracy is a big problem for a big market, while Southeast Asia because it is closer to our base, and there's lots of potential.
Q: How does the business stand apart from others and who are your competitors?
BL: There really isn't any direct competitor that we know of, although we are usually compared to iTunes, Spotify, Deezer etc because we are in the music space. Tell My Friends is really just a platform that enables affiliate marketing at cost-effective rates. It is not cost-effective to account and disburse $0.01 with current affiliate marketing accounting software which still requires a man-in-the-loop to enter sales orders and commission tracking.
Q: Prior to running the business did you work in any similar roles and did you have much affiliate marketing industry knowledge?
BL: I did tons of research. I attended MLM ‘ra-rahs’ and presentations from reputable, established health and personal wellness companies. I was careful when I came across this similar music-related US MLM called BurnLounge, which was fined millions of dollars by the FTC and shut down. Now when the US market hears about TMF, they think ‘oh no another BurnLounge’. But TMF is distinctly different from that, as we really only give commissions from sales of songs, and don't require any joining fee, subscription fee, etc.
Q: What lies ahead for the rest of 2013?
BL: We are improving the user experience for our service. Users who buy different tracks and products can make their own playlist or ‘mix tapes’, and sell that personal compilation. Who doesn't want to be a DJ? We are also working with physical product players like fashion and consumer electronics to sell and market their products online via TMF. That would be exciting as the sale values are higher. We welcome enquiries from anyone who wants to leverage on TMF's social network marketing technology and platform.
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