AGLOCO: Scam or Smart Move?

“Own the Internet” is the intriguing slogan of AGLOCO, which also describes itself as ”the Internet’s first member-owned economic community.” Is it a scam or a smart move?

AGLOCO is just a few months old, and is, in fact, just in the pre-launch phase. What is AGLOCO? And, is it viable?

AGLOCO is an acronym for A GLObal COmmunity. The slogan “Own the Internet” is a bit presumptuous, but it does suggest the objective of giving ordinary Internet users the chance to own at least a piece of the riches of the Internet. AGLOCO also uses the more accurate: “Get your share of the Internet.”

AGLOCO was started by a group that includes some of those who were involved in the ill-fated AllAdvantage company in 1999 – 2001. AllAdvantage gained a reputation for its early efforts in “viral marketing,” desktop user tracking, ad targeting, and for pioneering the installation of a Privacy Officer.

In its heyday, AllAdvantage was one of the most visited websites on the Internet, had 10 million members, and paid out over $120 million to its members. Then it crashed.

AGLOCO looks like it is on a much sounder footing than AllAdvantage ever was. Surfing tracking technologies, affiliate programs, and Internet advertising revenues are much more developed than in 2001. Although AGLOCO promises cash payment to its members, the program should be sustainable, as any payments will wait until the money is actually earned.

How will the money be earned? AGLOCO promises its members a share of the billions of dollars currently sloshing through the Internet: for doing searches, clicking on ads, referring others, and buying products.

Members will download a “Viewbar” (currently in development), and install it on the bottom or top of their computer screens. Ads will appear on the Viewbar targeted to the websites the member is visiting. Members will also be able to search and buy through the bar. Members will be rewarded for using the Viewbar, up to a maximum of five hours per month.

Members, however, will not need to change any of their surfing or buying habits. At least initially, individual members will not be paid for their own product buying. Instead, members will be paid a share of the overall AGLOCO revenues.

The company will be structured so that all of the company’s shares are owned by the members. (The management team will be paid 10% of the revenues as its compensation.) The ownership scheme is quite ambitious, as the company is open to people from all over the world. The company currently is “exploring public offerings of the stock on various major global stock exchanges as a means to facilitate the issuance of shares to members.” How these shares will be valued, and traded across many different countries, are among the many details yet to be worked out.

AGLOCO’s structure reminds me of the co-operatives and credit unions that are popular where I live in Western Canada. These co-ops are owned by the members and sell groceries, gasoline, and other products. (Credit unions are similar and provide banking services.) Members join by paying a nominal membership fee, such as $5 or $10 (Canadian).

Although anyone can shop at these co-op stores, each individual members’ purchases are tracked through the year. At the end of the year, members are refunded a portion of their spending, based on the success of the co-op’s overall performance.

Typically, part of the refund is made in cash to the members, and part is allocated to the member’s “share equity.” This latter amount is like a reserve and usually only paid out, for example, when the member moves from the area or reaches the age of 65.

These co-operatives are owned by all the members. The co-op is governed by a Board of Directors, who are elected by the members at the Annual General Meeting (AGM). One member gets one vote. The Board hires and pays managers and other staff to run the operation.

In a similar way, AGLOCO members will own the company and will receive a distribution of it’s profits: partly in cash, and partly in shares. As mentioned earlier, however, the distribution largely would not be based on the individual member’s purchasing or viewing (other than using the Viewbar). Payments would be based on the success of the company as a whole. (The company also later plans to add some payments based on each member’s individual purchases.)

There are no details yet on the AGLOCO website about the company’s governance, such as the selection of its Board of Directors. Being Internet based, however, there is potential to involve members in selecting and interacting with the Board of Directors much more than in conventional institutions.

An important point of difference with many traditional organizations: membership in AGLOCO is free of charge.

AGLOCO also offers a referral feature, where members can benefit from signing up new members. This aspect builds on the social networking and affiliate marketing characteristics of the Internet. The AGLOCO program will reward members for their referrals, and for their referral’s referrals, up to four levels of extended referrals.

The information on the AGLOCO website may get some members dreaming of overly optimistic revenues for signing up additional members. In the “Member Calculator” section, members are invited to enter a hypothetical scenario. I entered a modest three direct referrals, with each of them getting three referrals, and everyone surfing the Internet for five hours per month. The monthly calculation? 458.75!

But that number is “Hours accumulated towards earnings.” And there is this disclaimer: “For illustrative purposes only. Your actual earnings could vary from this example.” By clicking on the “Global Earnings Table,” one is supposed to “see the current listing for hourly rates, hours and minimum payout limits.” The actual information, however, is basically non-existent.

I think that this part of the AGLOCO website should be suspended until there is more specific information about the payout procedures. The monthly hours / earnings confusion and the disclaimer itself do not fit with the tone of the rest of the website. I think that this part of the website supports those who accuse AGLOCO of being a “scam.”

Some more realistic estimates seem to be in the Simmons research report, linked to AGLOCO’s company blog. The Simmons report figures that an average user - even with no referrals - could expect to receive $150 worth of company shares, plus $5 to $15 cash monthly. Each referral generated would be worth an additional $30 in shares, plus some additional cash distribution, according to Simmons.

The basis of the program seems sound. AllAdvantage paid out for each new member until it went broke. In contrast, AGLOCO’s clout in the Internet marketplace actually increases with each additional new member.

As AGLOCO points out, many activities on the Internet are already based on referral and affiliate payments. “Just about every time you view an ad, click an ad, search, buy something, download something, join a community, or post a story, picture, or video, some person or some company is making a fee, commission, and / or sale from your activity.”

Many successful websites – like YouTube or MySpace – were built by the input of the ordinary community members. As AGLOCO asks, “The users created the community, where’s their share of the profit?” AGLOCO invites everyone to help build a new Internet community, and share in the proceeds.

Two of the criticisms of AGLOCO centre around privacy and sustainability issues. Privacy seems to be dealt with by the company’s commitment, but there is a certain amount of trust needed anywhere. Building on the pioneering work of AllAdvantage, AGLOCO promises to respect the privacy of its members.

Members, as the owners, can also help to make sure that their company keeps its pledge: “Privacy is paramount. No spam, no pop-ups, no selling information, no emails from people you don't know, no emails to people you don't know, and no tricks. Period.”

Is the referral system itself just another scam: another form of pyramid or Ponzi scheme which depends on more and more people buying into it, with only the first members actually getting paid? This argument is refuted by the fact that the process is reversed: the members are the ones being paid. Since membership is free, members really have nothing to lose, and only something to gain.

I like the overall feel of much of the AGLOCO website. I like the co-operative aspect, with members owning the company. I like the fact that membership really is free and there is no “upselling,” hidden fees, or costly “premium membership” that you discover later.

I like the idea of the vision that is as lofty as the name itself: a global community. “The Internet unites the world across cultures, borders and languages,” says the website. “AGLOCO wants to bridge the divide in global understanding and promote itself as a cross cultural, socially aware and responsible community.”

The “mass collaboration” potential of all those members is a feature that could be further developed. Members could be engaged in creating the community, not only economically but also culturally. Hopefully, this broader vision can be fleshed out as the company grows.

There will also be a provision to donate one’s shares and cash earnings to the charity of one’s choice. As well, an AGLOCO Foundation has been set up “to promote free access to information across the world.”

The major disappointment has been the delay in releasing the AGLOCO Viewbar, leading some to wonder if it is just a “scam.” However, if the Viewbar is released soon, there could then be a flurry of interest. Those who got in early and started signing up others would look like they made a “smart move.”

Suggestion to AGLOCO: change the wording on the website about the Viewbar release. It has stated the Viewbar “will be available to download in several weeks” for months now! AGLOCO could be better at making itself look more like a “smart move” rather than a “scam.”

I myself joined AGLOCO in December of 2006. I haven’t seen anything yet, but it hasn’t cost me anything, either. And, there is all that potential. If you would like to learn more about joining, click on my referral link here.

See you in the global community?