DENVER, Colorado – Empower Network, a web marketing company, announced plans to release its own blogging platform, Empower Network 2.0 (EN2), at its affiliate conference scheduled for July 19-21 at the Bellco Theater in Denver. The company stated it has invested over $3.2 million in EN2 and anticipates it will compete with established platforms such as WordPress, TypePad, and Tumblr. This announcement follows Empower Network's previous use of WordPress as a core component of its offerings, which critics have described as a product bundled within a monthly subscription model primarily funded by affiliates.
Empower Network, founded by David Wood and David Sharpe, has operated in the internet marketing sector, primarily promoting a system where affiliates purchase access to marketing tools and content, and then recruit others to do the same. The company's business model has consistently drawn scrutiny, with critics frequently alleging that its compensation structure resembles a gifting scheme rather than a legitimate sale of products or services to retail customers. Affiliates have historically paid a monthly subscription fee, often $25, which qualifies them to receive commissions from participants they recruit. This structure, according to critics, means payments largely circulate among affiliates, with limited evidence of a significant retail customer base purchasing products independent of the affiliate recruitment incentive.
The impending launch of EN2 marks a shift for Empower Network, which has previously presented WordPress as its primary blogging solution. The company’s public statements now refer to itself as a "software company," a designation observers note is recent. Prior to this, Empower Network affiliates would gain access to a WordPress-based system as part of their subscription. However, the underlying issue, as highlighted by critics, has not been the technology itself but the financial mechanism. Affiliates, and those they recruit, effectively pay each other directly, with the monthly subscription fee acting as a gateway to participate in the commission structure. This arrangement allows affiliates to avoid paying their own monthly fee if they successfully recruit another affiliate or customer to make the payment on their behalf, maintaining their qualification to receive payments from those below them in the recruitment chain.
Empower Network claims its investment of over $3.2 million in EN2 positions the platform to rival major blogging systems. WordPress, for context, powers approximately 14.7% of the top one million websites globally, according to Alexa data, and was reported to power 22% of all new websites as of August 2011. The widespread adoption of WordPress is often attributed to its continuous innovation and extensive community support. Critics of Empower Network's claims suggest that while the company may replicate some of WordPress's functionality, achieving comparable market penetration or innovation would be a substantial undertaking. Previous attempts by Empower Network to develop proprietary platforms, such as a video platform intended to rival YouTube, have seen limited adoption outside of its affiliate base.
The $3.2 million investment figure cited by Empower Network for EN2 is presented as a total investment in the platform, without specific breakdowns of how the funds were allocated. This broad categorization means the investment could encompass various expenditures beyond pure software development, potentially including acquisition of existing software components, hosting infrastructure, network setup, documentation, staff training, graphic design, and the creation of marketing materials. Without further clarification, it remains unclear how much of this sum was directly allocated to the creation of proprietary code designed to compete with established, often open-source, platforms. The prospect of developing a comprehensive blogging platform from scratch that can genuinely rival WordPress for $3.2 million is viewed skeptically by some industry observers, given the scale and maturity of competing platforms.
A consistent criticism leveled against Empower Network concerns its transparency regarding revenue sources. The company has faced repeated calls to disclose the ratio of its revenue derived from retail customers versus that generated by its affiliate network. Critics argue that without this crucial information, it is difficult to ascertain whether Empower Network primarily functions as a product sales company or as a recruitment-driven scheme where the primary "product" is participation in the compensation plan itself. Despite public statements affirming a commitment to transparency, Empower Network has not publicly released detailed breakdowns of its retail customer ratios, leaving questions about the sustainability and legitimacy of its business model unaddressed by those outside the company.
The fundamental issue, according to critics, persists regardless of the technology Empower Network employs. If the compensation plan remains unchanged, where participants primarily pay other participants rather than purchasing a standalone product or service from Empower Network itself, the underlying concerns about the model's structure will continue. The company's branding of itself as a "software company" and its assertion of having a proprietary product to sell are seen as insufficient if the core financial flow still primarily involves affiliates paying other affiliates to qualify for commissions. The absence of clear sales data indicating a significant base of non-affiliate customers purchasing EN2 or other Empower Network offerings further compounds these concerns.