The Burn Lounge Online Music... Any THoughts?

01/05/2007 Gio "Lemme hear ya say GO!" G. says:

I'm hearing too much about this now...ANYONE?

01/05/2007

This post was removed because the yelper who wrote it has closed their Yelp account and is no longer a registered yelper.

01/05/2007 Kamau "Clayton Bigsby" W. says:

Yeah it's bullshit. Modern day pyramid scheme

01/16/2007 Dale R. says:

Pyramid Power? No say execs at music download firm BurnLounge. They see 'concentric marketing' as key to sudden sales surge
BurnLounge Inc. of Los Angeles has quickly become one of the music industry's hottest acts, ignited by an Internet version of multi-level marketing.
In less than a year, it has caught on with such industry heavyweights as deejay Rick Dees, Justin Timberlake and Kanye West & attracted such advertisers as Cadillac and Nokia.
Moreover it has enlisted an online army of more than 40,000 retailers known as "burn team members." They sell music for downloads and the retailers share commissions with those who enlisted them.
Founded by Chief Executive Alex Arnold, Chief Operating Officer Ryan Dadd and Chief Creative Officer Stephen Murray, the company combines iTunes-type music downloads and eBay-style retailing with traditional multi-level marketing..
BurnLounge's Arnold bristled at the suggestion that his company's multilevel marketing--he prefers the term "concentric sales"--could tip into anything illegal.
"I would call it more of affiliate marketing meets fan-to-fan promotion."
In order for a multilevel marketing model not to be considered a pyramid scheme, the majority of the proceeds from sales must go to the retailers, not to those who recruited them.
The business works like this:
Users create pages where they post and sell artists' music of their choosing for buyers to download. Downloads of a song typically go for 99 cents. Each participating artist signs a non-exclusive, one-year license agreement with BurnLounge and gets between 50 percent and 70 percent of the revenue generated by sales of their songs.
Of the remainder, BurnLounge corporate takes 60 percent while the retailer who sold the song gets 40 percent. However, the retailer must give 20 percent of his take to the one who recruited him. The recruiter must pay a percentage of his take to the one who recruited him, and so forth.
In addition, each retailer gets a $50 bonus for each new retailer recruited; all retailers are part of a "Burn Team," directly tied to the person who recruited them.
"You get rewarded for your team's sales. Music is a fairly low margin product, so you are earning pennies and cents--a little bit of a lot of people," Arnold said. "That's the beauty of it; nobody makes that much money on a single album sale."
BurnLounge is not a pyramid scheme because financial success for the retailers is not solely dependent on recruiting others. A pyramid scheme relies on enrolling new sales people in order to make money...
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01/17/2007 Kamau "Clayton Bigsby" W. says:

Like I said modern day pyramid scheme.

01/20/2007 Dale R. says:

Question:  Why is the focus on "signing up people" and not selling music?  That seems like a pyramid.  It concerns me that your primary focus is selling stores and not music.  

Answer:  First of all, a pyramid, is illegal.  They do not promote the sale of a product---we do.  Secong, that person obviously doesn't understand "smart" business.  Almost every time someone says "this is a pyramid" that person falls into one of (3) categories:  1)  They are broke/unsuccessful and can't get involved anyhow; therefore it is convenient for them to throw that word around even though they don't understand it.  Trust me, ask them---what is their definition of pyramid and they will fail miserably trying to give you an educated answer. OR 2)  That person is miserable in life, their current job, etc... and certainly doesn't want you to be part of something that could be great.  They are negative about everything, not just Burnlounge.  OR 3)  If the person suggests this is a pyramid, and they actually are successful, I can guarantee you that they are so full of pride and ego, that they will never take an honest look.  Quickly ask that person if they have ever heard of a guy named Warren Buffet.  Mr. Buffet is actually an old neighbor of mine in Omaha, Nebraska, and he happens to be one of the richest men in the country.  He also happens to own a little ol' company called Pampered Chef---a direct sales "pyramid' company that sells kitchen utensils through relationship marketing.  By the way---Mr. Buffet is a multi-(B)illionaire.

01/20/2007 Dale R. says:

Now for the meat of the answer.  To begin, most smart business people never ask this, because they already understand, but here is the answer.  1)  What is our goal?  Sell lots of product.  In fact we sell a host of products.  Our focus right now is selling a powerful piece of software we call "digital space" and everyone is trying to sell it.  Myspace, Amazon, etc...  Through that digital space, everything digital will be sold (music, movies, ringtones, TV shows, games, etc...) OK, then why wouldn't we conduct business like every other successful business that has come before us.  Let me explain.  You can use any franchise model, but we will use Hardees fast food chains.  They sell 99  ??t cheeseburgers the same way we sell 99 cent songs.  Well, how did the founders, who happen to be people we personally know, create their fortune---focusing on 99 cent cheeseburgers at a single store?  Nope.  Selling stores? Yep.  Franchisors make fortunes selling the "whole package" NOT just product.  They sell you the name, systems, marketing materials, etc... for YOU to sell product.  Well, that is exactly what we do with Burnlounge.  Do we sell music?  Absolutely.  Would a smart businessman or woman make that their primary focus?  Absolutely not---YET.  Especially if we are in a Beta test site.  Smart business sense would never suggest that you target customers to buy a product from a test site.  Smart businessmen and woman would sell stores, and more stores and more stores.  They want market share.  Customers will inevitably become a reality if they capture market share.  Make sense.  We are in the business of setting up "digital space" distribution and Burnlounge is the brilliant model that was smart enough to drive that model through us, and our relationships.  This WILL change (2) industries---music and direct sales.  Why?  It simply makes sense.

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