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My hunch is that it's not profitable enough to cover the prizes, but that their growth rate is fast enough that they're able to pay out to the earlier affiliates because they get exponentially more new ones each week. Like a Ponzi scheme...they'll make a lot of money, then they'll make excuses when the pyramid crashes. Wired ran a favorable article a while back, but never delved into the numberical details. Their latest follow-up said a lot of people are wondering where their iPods are, with freeipods.com saying it's because Apple can't make them fast enough. Amazon, on the other hand, projects 1-2 day turnaround on iPods, so that seems an iffy excuse. Maybe the scheme is starting to crumble already?
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