NEWS: Amway tunes in, invests in media sales site

Original Source

Amway tunes in, invests in media sales site
Wednesday, November 21, 2007
By Chris Knape
The Grand Rapids Press

ADA TOWNSHIP -- Alticor is going to the movies.

The Amway parent company is the lead investor in Fanista.com, a new social networking and media sales company that launched Tuesday.

Fanista uses an incentive system to reward buyers of music, DVDs and, soon, books and videogames, that will be familiar to those involved with Amway and its Quixtar online store.



While using the site is free, users can sign up for a free membership that provides them a 5 percent cash or store credit bonus from purchases made by friends they signed up.

The Beverly Hills, Calif.-based company is led by Dan Adler, whose career includes stints with Walt Disney Imagineering and the Creative Artists Agency.

"The more we built the business model, the more and more I saw Alticor as the perfect business partner," he said. "We welcome who they are and what they are and what they can add in terms of value."

Jim Weaver, vice president of corporate enterprises at Alticor, said the company first invested in Fanista in April 2006.

"We got into the business because it was a natural fit," he said. "For us, if you think of Amway and what Rich DeVos and Jay Van Andel started, it was a social network of friends selling products to people they knew."

Fanista takes that idea into the 21st century and focuses on a younger demographic with its entertainment-focused product line.

Alticor has no day-to-day role in Fanista's operations, nor does Fanista have any West Michigan presence. Fanista's distribution system for media it sells is handled by a third party.

Members who sign up friends become "uplinks" while those friends they sign up are "downlinks," a hierarchical system similar to Amway's "upline" and "downline" distributors.

Uplinks also get a 5 percent discount on merchandise and a chance to earn a 5 percent commission on purchases made by friends their downlinks sign up if their downlinks buy at least $100 in merchandise each year.

Fanista omits the use of the term "multilevel marketing" in explaining its system. The site calls its system "common interest commerce," or CIC.



A spokeswoman for Quixtar said the company's distributors have been notified about Fanista and are free to join, but the company is not doing anything special to get Amway distributors involved in Fanista yet.

The site addresses concerns commonly associated with Amway in direct, sometimes humorous ways.

A list of frequently asked questions includes: "So if I sign up for CIC, does that mean I'll be able to afford a diamond-encrusted iPhone?"

The answer: "In a word, no. Don't quit your day job. You'll make some decent change on CIC, but it's not going to pay the rent."

There's also: "This isn't one of those illegal pyramid schemes, is it?"

The answer: "Not even close. A pyramid scheme promises to pay for the act of recruiting others, who in turn recruit others, and so on, like a chain letter. While we would be delighted if you personally sign up thousands of people, just signing them up won't earn you a penny. It won't earn us much either, since no one pays to register."

There is no mention of Amway or Alticor's involvement in funding the site, although a New York Times story Tuesday heavily played up the Amway tie.

A scan Tuesday of the site, which is still in a beta-testing phase, showed prices of seven of eight featured CDs on Fanista ranged from 1 cent to $4 higher than the same items on Amazon.com.

"Curtis," by the artist 50 Cent, was $9.98 on Fanista and $13.98 on Amazon.

Five of eight Fanista-featured DVDs were less expensive at Amazon. Two were cheaper by a penny at Fanista. One featured DVD, "The Rocketeer," was 51 cents cheaper at Fanista.



Adler said Fanista will constantly assess pricing, but it believes the price issue will become less important if Fanista provides a compelling place for people to connect.

The company also hopes to attract users by offering exclusive content. The first such product is a videogame for PCs and Macs slated to be released next week.

Fanista is working on partnerships with artists, who could create downlinks filled with fans. Fan purchases could generate bonuses to support a celebrity's favorite charity, Weaver said.

Digital downloads also are in the works with music downloads slated to be added by the end of the year.

Fanista is independent of Spout.com, a movie-based social networking and DVD sales site launched in 2006 by Rick DeVos.

Rick DeVos is the eldest grandson of Amway co-founder Rich DeVos.

Spout does not offer a sales incentive program like Amway's.

Rick DeVos and other Spout executives were not available for comment.

Adler said he has spoken to DeVos about the Fanista and sees some overlap in the concepts, but there is no relationship between the two companies.

Fanista is one of several efforts Alticor, which said it had sales of $6 billion last year, has undertaken to diversify its international multilevel sales business.

Alticor also owns Fulton Innovation, which is developing wireless electric charging systems for phones and other gadgets.

In 2006, the firm paid $40.8 million for Gurwitch Products, a luxury cosmetics company marketing the Laura Mercier line.

Send e-mail to the author: cknape@grpress.com