Business idea: crowdaffiliates for digital products
Stop me if you’ve heard this one, or if you know why this wouldn’t work. I can’t get this idea out of my head. So, here it is. Please, someone build it.
I’m calling it “crowdaffiliates” for digital products. Here’s how it works:
- You set up a digital product for sale, much like Gumroad or SendOwl. There is a deadline for purchase.
- Julie buys that digital product. Let’s say it’s a video course on design that costs her $179.
- Julie then gets a unique URL she can share with her friends and followers.
- Julie shares her unique URL with Andy, and Andy buys. Julie gets a credit on her account for 10%, or $17.90. (Also, Andy got 10% off to entice him to use the URL.)
- When the purchase deadline arrives, the amount of credit Julie has is refunded to her account — up to the full purchase price of $179. If she refers 10 friends, she gets her product free. (Her landing page shows the number of discounts still available.)
Julie is incentivized to share, Andy is incentivized to buy, and — in turn — Andy is incentivized to share. The deadline motivates action in all parties, and makes the process of refunding the credit accrued much less messy.
If all goes well, the product goes viral. But, the world isn’t perfect, so there are always edge cases and surprises. I’ll try to think some through here:
- Refunds & Chargebacks: If someone asks for a refund, or does a chargeback, nobody should get a credit for that person’s purchase. Otherwise, the system could be abused. The best defense against this might be a 60-day waiting period after the deadline before the credit is refunded. (Of course, that makes the whole thing much less exciting.) Also, would a payment processor frown upon such a high volume of refunds? (when returning the credit) Is it even possible to credit a purchase at a date that ensures all referred buyers are legit? Maybe a 30-day refund window, and a 60-day credit date? Since the best-case scenario for a buy would be to get the product free, it might not be worth committing fraud here — just torrent the damn product.
- Math? I’m no mathematician, so I don’t know how this looks in the long game: Given a certain percentage of referrals, and accounting for some “superreferrers” who refer their limit, how would this look? I’m inclined to say: very good.
- I Am Not a Lawyer: Would this be legal? Pyramid schemes are illegal in many countries, however, this doesn’t look like a pyramid scheme to me, since the buyers don’t stand to profit. Each buyer’s best-case scenario is to get the product for free.
I’d love to see this service exist. Why doesn’t it?
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