What is network marketing?

I recruit you, you buy products, I make commissions. You recruit three people, they buy products, and we both make commissions. Is this network marketing? You might answer yes—until you read the next paragraph. Then you might stand up in rage and disagree with me, even though you now understand that what you thought was network marketing is actually an illegal pyramid scheme, at least in Europe and definitely in Norway.

The European Commission (EU) directive of 2005 defines an illegal pyramid scheme as “establishing, operating, or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.”

In the regulations of the Norwegian Lottery Act, the EU directive is to be understood as follows:

“The EU directive sets as condition for a ban that the income is primarily a result of recruitment. [...] The Ministry understands the directive thus, that if more than 50 percent of the income is derived from recruitment, it may be illegal.”

In other words, the directive states that a minimum of 50 percent of the turnover leading to commission payment must come from sales of goods to customers who do not participate in the income opportunity.

If you are like me when I first read this, you may be tempted to believe the Ministry must have misunderstood the European directive. Nevertheless, this is the law not only in Norway but also in Belgian courts, which interpret the directive the same way as the Norwegians do—and the Belgian capital, Brussels, is the host city of the EU parliament.

We can argue or we can get real. Think of speed limits: no one likes them, but they are good for us; that’s why we have them. This European law is good for people. In truth, the law is good for business. I recruit you, you buy products, and I make commissions. You get five customers and we both make commissions (plus, in many programs, you get your own products for free and I only make a commission off your customers, not off you—taking away one of the major irritations of our critics). Next you recruit three people and they buy products; we both make commissions. Then they get five customers, and we both make five times the commission. That is good for you, me, our upline, our downline, the team, and the company. This is network marketing.

My point is that the European standard is not only legal, it is better. So don’t fight the law; make a leadership shift and promote it. And when you see your people speeding, please notify the authorities.

In his mid-thirties, FINN ØRJAN SÆLE already
has a fifteen-year-long networking career.
He is the author of three books that together
have sold over 100,000 copies. Today he is
a network marketing company co-owner
and he is building a network together with his wife, Hilde.