If belonging to a program or owning a product before you can promote it is a requirement of an affiliate program it is a pyramid or MLM in disguise. While use of or knowledge of a product is usually a good idea but it should not be required in order to sell it online or off.

• How many locomotives does a locomotive salesman own?
• How many 747s does the Boeing Salesman own?
• Does a car salesman have to own a Mini Van to Sell one?
• Does a bankruptcy attorney need to be bankrupt to represent clients?
• How many men sell women's clothing and vice versa?

I sell many products and services online that I have no need to own to be able to sell them properly and if you are paying to belong to a program to sell it your efforts are being cannibalized by program owners and organizations.

You efforts are being used to build an internal marketing list for them and you are paying for the right to do it and may even be commiting a crime in many States and Countries.

The Federal Trade Commission defines Pyramid Scheme as:

"...They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure... the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public..."

What this tells me if you have to be a paying customer to promote a product or service in order to recieve compensation from it it is the very definition of a pyramid scheme. Even if does not appear to be MLM on the surface.

There are some products out there that may provide a decent service to it's members in the form of eductaion or a tangible product but if all of the internal marketing is based on recruiting others and selling product to those recruits it is not affiliate marketing it is a pyramid.