January 29, 2008
Fanista: Generating Value Back to Users

An interesting new site has launched in the past few months that provides users a chance to receive value for their proselytizing, for the site itself, that is. The site, called Fanista, sells media products and then gives you a cut on your friends' purchases if you convince them to sign up on the site. Basically it's rewarding the proselytizer for all future purchases they have a hand in generating. It's a traditional store online by any other means, but the incentive to recommend and sign others up is significant.

The short of it: for customers who join the site based on your recommendation, you get 5 percent of their purchases. The beta of the site is available here, and the way the site is built emphasizes the importance of these personal connections. Reviews are a major part of the site, and--if other customers who you recommended the site to buy products based on your review--you get a small share of the profit.

As this New York Times article by Brooks Barnes points out, the company was originally backed by Amway (Alticor), which perhaps not surprisingly led to plenty of comments about pyramid schemes--see Sean Aune at Mashable, for instance. There was also intense scrutiny of the company in relation to the Amway connection (see here).

Only a month after its launch, however, the company which created the site--Power of Entertainment--purchased Amway's interest in Fanista (see more here).

Now separated from Amway and both the sturdiness of its backing but also the baggage that comes with it, I'm intrigued to see how Fanista comes together. As with user-generated content, there is some feeling that the services fans offer should be valued, since word-of-mouth is at the root of all sales. In my own work about proselytizing, I have said repeatedly that companies should realize the value these fans have, instead of just being angry at negative word-of-mouth from consumers. I'm not saying this guarantees that Fanista will be a success, but it is an intriguing model that incorporates some of these philosophies.

C3 Consulting Researcher David Edery wrote about these issues at this time last year, saying, "Past failures and frauds aside, there's clear evidence that creating economic opportunities for users can result in big bucks for businesses. This has long been obvious outside the entertainment industry--eBay, Google (adSense), and Amazon (Marketplace) all make a ton of money by riding the efforts of users But in entertainment, many people remain fundamentally opposed to sharing the wealth. Why bother, they ask, when users aren't demanding it? (see MySpace, YouTube, etc.)." Edery goes on to answer that question in his post.

I've written as well about ways to value consumers, including various initiatives designed to value user-generated content.

Will Fanista be one of the communities/products that takes this concept to a new level? I guess time will tell. In the meantime, see more about the site and the idea of "common interest commerce" here.