Empower Network Review: Customers or affiliates?
Despite frequent requests to review Empower Network over the past year, I’ve consistently knocked back further analysis of the company initially believing it not to be MLM.
I briefly looked over it initially and all I saw was a blog platform members sold for $25. When people contacted me about it this is what I told them and that was that.
Over time and with keeping general tabs on the MLM industry, the odd article about people earning hundreds of thousands of dollars in Empower Network has caught my eye from time to time.
This did on occasion did make me wonder how the numbers added up but then I always figured that if people were achieving these commission amounts on nothing more than selling access to a $25 replicated blogging system, then more power to them. It still wasn’t MLM.
Recently however things changed I ran into a discussion about Empower Network where the terms “inner circle” and “going all in” were mentioned.
With these terms frequently used in the more shadier MLM opportunities out there (particularly “going all in”), I figured Empower Network warranted another (and more indepth) look.
Here’s what I found.
Empower Network was launched in November 2011 with a suite number and street address in the US state of Florida on the company website. Heading up Empower Network are founders David Wood (CEO) and David Sharpe (President).
Update 6th December 2013 – In December 2013 Empower Network appointed Jonathan Cronstedt as CEO, with former CEO David Wood being assigned the role of Chairman.
Cronstedt appears to have more of an affiliate marketing background than MLM, having been previously involved in Digital Marketer (2013, e-learning), Kajabi (2012, digital publishing), Affiliate Awesomeness (2012, consulting), the Glazer-Kennedy Insiders Circle (2011, training and coaching), Traffic Geyser (2009, website traffic generation). Prior to that Cronstedt was employed in the finance sector (mortgages).
A Google search on the provided Empower Network address reveals that the building is named the “Palais Royale”. The Palais Royale rent out “virtual offices” for $90 a month.
The Empower Network domain whois information provides a different street address in Florida, however this appears to be a residential area so I’m not sure what’s going on there.
To make matters even more confusing, the company provides yet another address in their Terms and Conditions, this time in the UK:
UK office address: (please do not send mail to this address)
Empower Network Limited, 66-68 High Road, Bushey Heath, Herts WD23 1GG
Why Empower Network do not wish to receive mail at this address is not known.
I also couldn’t help but notice the apparent ties to Costa Rica, where founder David Wood lives and company events and “retreats” are regularly held.
Costa Rica has a flexible corporate regime and bank secrecy is enshrined in law. A high degree of corporate anonymity is possible; there is no legal requirement to reveal beneficial ownership of companies.
Costa Rican companies pay no tax on income generated outside of the country.
Make of that what you will.
As far as the founder’s respective histories in MLM go, the official marketing spiels propagated all over the internet state Wood was living “homeless” in a van prior to Empower Network. Similarly Sharpe’s backstory is also a rags to riches hook that heavily leans on him being a former drug addict who cleaned himself up, something something and now he earns a bajillion dollars a month.
A more detailed look into their histories reveals several years of online marketing experience.
Prior to Empower Network, I’ve seen Wood tied to a few “traditional” network marketing companies (Prepaid Legal was one name that popped up). From what I’ve been able to piece together Wood worked these companies for a few years and then moved to Hawaii in the hope that he’d be able to live off of a residual income. Whilst living in Hawaii, Wood lived in a van which is where the whole “homeless” backstory originates from.
Not entirely focused on recruitment anymore, Wood’s commissions eventually dried up and he re-entered the internet marketing niche. Wood became an affiliate with My Lead System Pro (MLSP).
As the name suggests, MLSP is an affiliate driven MLM lead generation opportunity.
Sharpe was also in MLSP at the time and this is apparently where the two met. In mid 2011 Wood held a $2997 “event” in Costa Rica (where he lives) which Sharpe attended.
Although not officially referred to as such, this appears to be have been somewhat of a founders meeting and laid foundation for Empower Network, with the company launching just months later that same year.
The Empower Network Product Line
Empower Network operate in the internet marketing niche and offer members access to a blogging network as well as digital marketing training product.
The Empower Network Blogging Platform
Officially referred to as the “Empower Network Viral Blogging System”, this appears to be a blogging network powered by WordPress with a custom template designed to encourage people to join Empower Network.
Empower Network members pay the company for access to the network (which is hosted exclusively on the Empower Network domain), and for a monthly membership fee are able to blog about any topic of their choice.
Each blog published by its members is then slapped into the Empower Network recruitment theme. Little emphasis is placed on the content itself, with all of the “above the fold” real estate dedicated to advertising Empower Network itself (signing up new members).
In this sense Empower Network functions as a content farm, with the idea being that the more information their members pump out onto the internet, the more exposure their recruitment theme gets which in turn translates into more signups to Empower Network itself.
Empower Network’s Inner Circle is an audio based training program that is updated “2 to 4 times a week” with “new audio material from marketing experts within the online marketing, direct sales, and network marketing“.
The Costa Rica Mastermind Intensive Video Series
As the name suggests, this is a 12 hour video marketing series of
a retreat held in a 10,000 square foot home, overlooking the ocean near David Wood’s mountain home in Costa Rica.
(It covers) in detail the entire business structure of starting, maintaining, and growing an online information marketing empire.
I believe this is the same $2997 retreat held at Wood’s Costa Rica house prior to the launch of Empower Network.
The Empower Network Compensation Plan
The Empower Network compensation plan is most easily explained when split up into three separate recurring one-up compensation structures.
Each of the three products above has its own compensation plan attached that operates independently of the others, and each requires an Empower Network affiliate to qualify for commissions.
In order to qualify for commissions on each of the three tiers of the compensation plan, an Empower Network affiliate must either buy into that tier themselves (and continue to pay the monthly fee if applicable), or sell access to the tier to a non-affiliate (customer).
Empower Network Viral Blogging System and Inner Circle Commissions
The commissions structure on the Blogging System and Inner Circle tiers of the compensation plan ($25 and $100 a month respectively) is essentially a perpetual 1-up style compensation plan.
In a traditional 1-up structure you sell something to someone and pass the first sale up to your upline and then earn commissions on all future sales.
Empower Network continue to apply this idea on future sales, expanding it from the 2nd sale to include the 4th, 6th and every 5th sale thereafter. When applied to “every 5th sale” after the 6th initial sale is made (3rd commission passed up), in this sense the 1-up system is perpetual.
Eg. You sign up to Empower Network and buy into the $100 membership level, your upline gets the money.
You then sell “A” membership and you keep their money. Your next sale (2nd) from “B” is then passed up to your upline (who might pass it up to their upline depending on what number commission it is for them).
Your 4th and 6th sales are also passed up and then every 5th sale after the 6th, with the first being the 11th and then every 5th thereafter.
Commissions are paid out at a rate of 100% of the membership cost, meaning you and your uplines receive either $25 or $100 a month from each new member depending on what membership tier is bought into.
Note that the Blogging System and Inner Circle tiers are able to be stacked, resulting in a total $125 ongoing monthly commission provided membership fees continue to be paid.
Costa Rica Mastermind Intensive Video Series Commissions
With no monthly membership fee attached to the Costa Rica video series, this equates to a simple $500 commission paid out per sale of the series.
Commissions on the sale of the video series follow the exact same perpetual 1-up style that the Blogging System and Inner Circle commissions are paid on.
First an affiliate must either buy the series themselves or sell it to a non-affiliate to qualify, and from there their second, fourth, sixth and every fifth sale thereafter it passed to their upline.
Joining Empower Network
Membership to Empower Network as an affiliate is $19 a month.
Out of the three tiers that make up the Empower Network compensation plan, the video series would appear to be the most viable in terms of sales to non-affiliates.
It’s a product that can’t be used to market the income opportunity directly, and relies on those purchasing it to actually feel there’s value in the series itself (assuming of course that affiliate’s aren’t just buying it to qualify themselves to earn $500 commissions by then trying to sell it to others).
According to Empower Network’s Earnings Disclosure statement however, over the last 30 calendar days (14th November to the 14th December 2012), 87% of their members made $499 or less.
With commissions for the video series coming in at $500, this means that by and large the overwhelming majority of commissions being paid out in Empower Network are coming from the Blogging System and Inner Circle tiers.
Both of these tiers can be stacked and they have ongoing monthly payments, which quite obviously, according to the Earnings Disclosure, appears to be a more attractive proposition for Empower Network’s affiliates.
Before we continue, let’s get the obvious out of the way first. It’s entirely possible to join Empower Network, pay your $19 affiliate fee, $25 for blogging commissions and $100 for inner circle commissions – and earn money solely by signing recruited affiliates up to these two tiers.
They pay their monthly fees and you continue to get paid. If they wish to earn anything then they have to recruit new affiliates and sign them on.
Due to the 5th sales being passed up company wide, money then trickles its way up. How fast depends on how wide the base of your downline is. As long as those at the bottom continue to recruit new affiliates and sign them up at the $25 and $100 tiers (or ideally both) though, sales will continue to trickle up.
For those who got in early with downlines in the thousands and the fact that everybody’s paying monthly membership fees, it’s then easy to work out where commissions of thousands of dollars are coming from.
The photo below was taken from an Empower Network event and shows founders David Wood (left) and David Sharpe with other top earners holding up giant checks:
The check being held totals $778,779 and is dated June 6th, 2012. Both affiliates in Empower Network, Sharpe and Wood are no doubt positioned #1 and #2 in the compensation plan and enjoy the eventual rollup of commissions company wide (again, remember that every 5th sale is perpetually passed up by everyone).
Now if this money was primarily coming from affiliates, then we’d of course have a big red flag right there. Whereas your traditional membership based 1-up scheme has only one tier of membership, here we’ve got two with an additional $500 once off tier thrown in to boot.
Simplified, this would equate to joining Empower Network as an affiliate for $19, buying into both the $25 and $100 tiers and then earning money by recruiting new affiliates who buy in (and can then only earn money by doing the same).
If people participating in Empower Network as an income opportunity (affiliates) made up the majority of people paying monthly commissions at both the Blogging System and Inner Circle compensation tiers, essentially you’ve just got affiliates paying affiliates with no retail level to the company.
What’s worse is those affiliates at the bottom have no possibility of earning anything unless they themselves go out and get more recruits. These new recruits will of course then inadvertently also become affiliates based on the fact it’s the opportunity that sells rather than the services attached.
Unfortunately Empower Network do not publicly disclose (at least not anywhere I could see) how many of their paid monthly members are affiliates participating in the income opportunity vs. how many are customers.
I’m hesitant to use the term “retail customer” here because the only difference appears to be payment of an additional $19 a month. As far as the Blogging System goes, whether you are an affiliate or not it still generates Blogging System commissions meaning that passively “customers” are earning commissions.
Not being qualified to earn said commissions (they didn’t pay Empower Network an additional $19 a month), these commissions are passed to their effective uplines. $19 a month qualification does not change the fact that they are still generating commissions directly via use of the Blogging System.
And that brings us to an important point: The probability of customers outweighing affiliates participating in both the Blogging System and Inner Circle tiers of the Empower Network compensation plan.
As mentioned previously Empower Network themselves do not publicly reveal this information so all I can work with is probabilities.
In analysing this our first port of call is the Blogging Network. Typically the Inner Circle appears to only be advertised after a prospect has shown initial interest in Empower Network itself (through prominent advertsing of the opportunity via the Blogging Network).
Once signed up for and paid, Blogging System users are able to create blog entries that are hosted off the Empower Network domain. They look like this:
Now you’re probably wondering if I’ve cropped out the actual blog article, and the answer is I haven’t.
On my (admittedly) small laptop screen, the entire above the fold (content viewable without scrolling down) is taken up by Empower Network opportunity advertising – regardless of whether the blog article author is an Empower Network or a customer.
If I bother to scroll down, it is only then that the blog entry can be viewed, but again approximately a third of the horizontal viewing area is taken up by yet more Empower Network opportunity advertising.
Given this it’s hard to see the blog entry as anything more than secondary content (or more cynically, SEO ranking fodder), with the advertising for the Empower Network opportunity itself being the primary focus of the page.
From a customer viewpoint, I’m at a loss as to why they’d pay $25 a month for this. Advertising aside, Empower Network runs on WordPress, which is free and host all blog entries on their domain.
So for $25 a month an Empower Network customer can write their blog entries up on a blogging platform that itself is given away for free, have it hosted on a domain they don’t own or have any control over and have whatever content they upload plastered with dominant ads marketing an income opportunity they don’t earn any commissions on. Even if someone signs up using an ad shown on one of their blog article pages.
Let’s face facts, in today’s blogging landscape even if Empower Network was free you’d be hard pressed getting anyone to signup given that complete opportunity based above the fold advertising dominance over the actual content published.
Now remember, without any official numbers this is simply an analysis of the probability of non-affiliate customers making up the majority of revenue Empower Network is paying commissions out with.
Why is this important? In tangible product based MLM companies you have to be selling your products to retail customers, otherwise you just end up with a bunch of affiliates stockpiling inventory in their garages month after month to keep the commissions rolling throughout the company.
Of course those at the bottom of the compensation structure eventually get sick of this (or can’t afford to continue paying the top earner’s commissions) and quit, resulting in commissions stalling and sales in the company collapsing (or expansion into new countries to keep the recruitment drives going).
In online based service or product MLM companies it’s no different. If you’re not selling to actual end-user retail customers who are not in any way shape or form part of the compensation plan, you’ve got a problem. Not to mention the casting of a big question mark over the long-term sustainability of the company itself.
As a prospective Empower Network member at a bare minimum I’d be making enquiries with my potential upline into exactly how many non-affiliate customers they have paying monthly membership fees (either $25 or $100 a month, it doesn’t matter which), and if possible the numbers for their upline.
Be careful about how this information is relayed back to you and ask to see some hard figures if possible, ditto your upline’s upline. Remember that you’re trying to guage whether or not you’re going to be making money recruiting affiliates or selling to actual end customers, so vague answers aren’t going to cut it.
If your upline is hesitant about sharing this information with your or just flat-out refuses, then that’s probably a good indication that there’s more affiliates in their downline than customers.
Naturally I’d also encourage those that do find out this information to share it here to help others looking into the opportunity (and provide the rest of us with a more accurate insight into the customer/affiliate ratio within the company).
If the customer balance is there (preferably a dominant majority then there’s nothing to worry about. If we’re looking at an affiliate populated opportunity though… well, we all know how those wind up.
Footnote: I’m entirely aware of the sheer depth of marketing nonsense surrounding Empower Network that exists out there (“wussies” this and “badass” that) and just so we’re clear, please note that this is not the place for that sort of crap.
Due to the abundance of painfully cringeworthy marketing material I had to wade through during my research for this review, I anticipate that I might need to explicitly clarify that on top of the no recruitment comment rules already in place, any rubbish about just being too afraid to jump in, affiliates earning money proving legitimacy or any other such feeble marketing strategy rebuttals will just be sent straight to the spam bin.
As with any review published on BehindMLM, open and objective discussion about any points and potential issues and concerns raised in the review are always welcome and encouraged.
Update 2nd November 2015 – As of November 2015 Empower Network changed their compensation plan to a two-level unilevel style structure.
BehindMLM published a review of Empower Network’s new compensation plan and product lineup on November 2nd.