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E-Business Secrets
Brian Livingston
Credit Card Model Suggest a Profitable E-Business

It's encouraging to see business models that can make a profit solely from the Internet, although they don't always look the way you might expect. One example is, a business that makes a profit on each new customer and expects to be profitable on its overall operations soon.

VivaRebates offers consumers a no-annual-fee credit card, but with a twist: The company pays you $10 for each additional cardholder you directly refer, which is called your "first level," and you also receive $2 for each additional cardholder your "first level" cardholders refer, down to the tenth level.

This sounds like multi-level marketing, which has acquired a bad reputation due to schemes that over-promised what they could pay out. But VivaRebates has a reasonable payout because the most it ever pays for a new cardholder is $28 ($10 goes to the immediate referrer, and a maximum of $18 for nine referrers at $2 each). Most cardholders will cost VivaRebates less than $28, because the majority of them won't fill all levels.

In an interview, CEO Don Ashlock explained that VivaRebates already has bankers who pay $25 to $50 for each new cardholder, which covers the cost of the commission payouts. The bank keeps about 2.5 percentage points on every dollar a cardholder charges, while VivaRebates receives 0.5 points, or 50 cents per $100 charged.

The most profitable portion of the arrangement, though, results from the fact that participating merchants pay a percentage of each sale for a listing in a shopping guide called -- cardholders are credited with a rebate if they use their cards at these stores. Ashlock says the cut that VivaRebates receives from these merchants runs as high as 18 percent of each sale. He says merchants with perishable goods and services, such as hotel chains that lose money if rooms aren't filled, are willing to pay the cut in order to acquire new customers.

Ashlock says VivaRebates signed up more than 160,000 cardholders within 60 days of launching its offer at the beginning of this year. Remarkably, he says, these customers originated from only a few dozen e-mails sent to people known to the company's marketing team. The company had $50,000 budgeted for advertising, Ashlock says, but it was never spent because the response exceeded all expectations. Now that's a viral marketing campaign.



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Livingston's E-Business Book Review

With all of the print-oriented graphic designers who are moving (or want to move) to Web design, it's a relief to see a new book, "Taking Your Talent to the Web," that doesn't emphasize over-designed Web pages.

The author, Jeffrey Zeldman, approvingly quotes David Siegel, author of the 1996 book "Creating Killer Websites," on the three cardinal virtues of Web design:

1. Clarity

2. Brevity

3. Low use of bandwidth

Good Web sites are further summarized by the following three rules, which say successful navigation should have the following characteristics:

1. Be easily learned

2. Remain consistent

3. Continually provide feedback

The book provides many examples of good Web site design and cites what is possibly the ultimate resource:, a site that awards prizes to outstanding Web pages that consume fewer than 5,000 bytes (keeping Web pages under 32,000 bytes is the usual goal). Overall, Zeldman's book is an excellent teaching or learning tool.

"Taking Your Talent To The Web: Making The Transition From Graphic Design To Web Design"

by Jeffrey Zeldman (New Riders Publishing)

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Livingston's Top 10 news picks o' the week

1. Thieves swap credit numbers in identity theft ring

2. Juno's new Brandmeter tracks buyers, not just clicks

3. Get Web software at deep discounts from dot-gones

4. The four fatal mistakes e-commerce sites must avoid

5. CEO sells site for $100 million, starts ad business

6. State of Utah seeks move of Silicon Valley companies

7. The annoyance of pop-up ads and how to stop them

8. ICANN's Stockholm meeting deals with alternative Web

9. New site publishes information on troubled tech companies

10. 3,700 baby videoconferences sold in 100 hospitals

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This week's "They can't do that on the Web" page

For the latest in video games, State of Emergency invites you to destabilize the "American Trade Organization" in a send-up of the World Trade Organization disturbances in Seattle last year.

State of Emergency video game:

Click the joystick icon (Games), then click "State of Emergency."

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E-Business Secrets: Our mission is to bring you such useful and thought-provoking information about the Web that you actually look forward to reading your e-mail.

About the author: E-Business Secrets is written by "InfoWorld"

Contributing Editor Brian Livingston. Research Directors are Ben Livingston (no relation) and Eryn Paull. Brian has published 10 books, including:

"Windows Me Secrets":

"Windows 2000 Secrets":

Win a book free if you're the first to send a tip Brian prints. Send to


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