When PayPal first came on the scene, people were highly motivated to use their service. One, because it made online transactions so much easier, and two, because PayPal offered a generous referral program. In early 2000, if you joined, PayPal added $10 to your account and credited your account $10 for each new member you referred, up to $1,000.

Online companies use affiliate and referral programs to take advantage of "word of mouth" and the "viral" nature of the Internet (you tell 5 people, they each tell 5 people, etc.). There are probably thousands of companies with programs that reward people for sending them new members. (Most are probably not as lucrative as the initial PayPal program.)

Affiliate programs usually require you to have a Web site, while referral programs do not. There are 3 keys to participating in affiliate and referral programs: 1) the product or service you are referring should be worthwhile from a reputable company; 2) the product or service you are referring should complement your own services; 3) it should generate enough revenue to make it worth your while.

One affiliate program that has been around for years is Amazon.com http://www.amazon.com/exec/obidos/subst/associates/join/associates.html. As an Amazon.com "associate," you earn up to 15% of the sale price on individually linked books that you feature on your site and 5% on anything else that is purchased through your links, including CDs, videos, DVDs, toys and consumer electronics.

It's free to join the Amazon Associates program, but you must have a Web site. You must submit an application, and there are restrictions. Amazon will not allow Web sites that it feels are unsuitable. Sites that promote sexually explicit materials, violence, discrimination or illegal activities are prohibited.

Restrictions
Most affiliate programs pay quarterly and wait until there is a minimum amount in your account before cutting you a check. In addition to having to wait for commission fees to accrue, there are usually other restrictions. For example, many programs have anti-spam policies. And some programs do not allow you to apply your own purchases to the program.

Amazon will apply commission fees to your account for the duration of the visitor's stay on the Amazon site when they have entered through special links on your Web site. Once they leave Amazon, you earn nothing unless they re-enter through links on your site.

Reports
AuctionBytes joined the Amazon affiliate program in 2000. I'm very happy with the program, and Amazon makes it very easy to create links and view reports. I can specify dates and look at traffic and order information. A note about privacy - I can never tell who ordered what. The reports show aggregated figures only. If there are 100 books sold in January, I don't know if one person bought 100 books, or if 100 people bought one book each. But I do know which books were sold, and how many people visited Amazon from my links each day.

I can create links to specific books and include them in this newsletter (for example, here's a link to the book, "Protecting Your Collectible Treasures - Secrets of a Collecting Diva" by Judith Katz-Scwartz http://www.amazon.com/exec/obidos/ASIN/1564773884/auctionbytescom on Amazon). I can also create many kinds of banner links for the Web site. See our front page at http://www.auctionbytes.com and look in the lower right-hand corner.

Here are links to more information about Affiliate programs:
http://www.webreference.com/promotion/affiliates.html
http://www.wilsonweb.com/cat/cat.cfm?page=1&subcat=em_Associate

I've created a chart of some affiliate and referral programs that might be useful to AuctionBytes readers (Note - I do not endorse any of them - please use caution and research them thoroughly yourself). I've posted the chart in the AuctionBytes forums at http://www.auctionbytes.com/forum/phpBB/viewtopic.php?topic=175&forum=7& (in Online Auction Services).