If you could make $10k a month with a side hustle, would you quit your 9-5 job? For many, the answer is an easy yes — and this easy yes is how many TikTokers are lured into UGC.
UGC — or user-generated content — has dominated TikTok’s FYP for months. The hashtag UGC currently has nearly 200 billion views on the platform. Creators have boasted about making thousands of dollars a month by producing short-form videos for brands. And while we know the industry is legit, many marketing pros are skeptical that UGC isn’t as easily lucrative as it seems.
In fact, many are comparing it to an MLM. Today, we’re diving deep. Is UGC an MLM? Is it really a get-rich-quick scheme? If not, how are creators making bank?
Let’s find out.
TABLE OF CONTENTS
- WHAT IS A MLM?
- WHY DO PEOPLE THINK UGC IS AN MLM?
- TOO GOOD TO BE TRUE
- MORE COACHES THAN CREATORS
- NEW INDUSTRY
- SO, IS UGC A PYRAMID SCHEME?
What Is An MLM?
An MLM (Multi-Level Marketing) is a business model where people earn money not only through their own sales but by recruiting others.
These recruits then also generate sales and recruit others, creating a hierarchical structure. Because of this, MLMs are often compared to pyramid schemes, an illegal and fraudulent business model that also focuses on recruiting participants rather than selling products or services. It promises high profits for simply enrolling others into the scheme.
Participants are encouraged to invest money upfront, which then flows up the pyramid to those at the top.
So, what does that have to do with UGC?
Why Do People Think UGC is an MLM?
User-generated content is exactly what it sounds like — content created by social media users for the use and promotion of brands and products. Where influencers post sponsored content on their own pages — leveraging their own brands and personalities, UGC content is made specifically to be posted to brand pages; creators often don’t even bother posting it on their own accounts.
Now let’s address the elephant in the room. UGC does feel like a pyramid scheme, for multiple reasons. These include:
Reason 1: Too Good To Be True
$10k months? 15 second videos? Live life on your terms? Let’s face it, posting on social platforms about an incredible opportunity that sounds too good to be true gives off major MLM.
People are creating TikTok accounts and growing overnight by sharing blatant misinformation, essentially over-promising, under-delivering, and just oversimplifying UGC. UGC is not easy, but it’s simple, and there is very little barrier to entry. This gives too good to be true vibes.
Many UGC creators who are talking about the industry are posting about making ludicrous amounts of money, even life changing. But that’s not realistic for 90% of creators. When starting in UGC, it’s not uncommon for creators to have $0 months for the first X amount of months until they build up enough skill to command payment.
Reason 2: More UGC Coaches Than Creators
While many creators do make money by producing UGC content, most of the creators posting about it actually make their money by selling courses.
Several successful UGC creators have begun selling beginner courses or kits on how to get started in the side hustle. It’s unclear whether these “self-proclaimed gurus” primarily make money from creating UGC or make the bulk of their income from selling courses. Because there is no way to prove if someone actually has serviced clients as a UGC creator, many people have come out saying that these programs didn’t teach them much or that they felt scammed.
It’s not unusual to see brand spanking new UGC creators selling guides, cheat sheets and digital products almost immediately. Despite having little to no experience in the industry, they are offering resources that are priced at a price point that is absurd.
Reason 3: New Industry With Little Proof
UGC is a very new space, and there’s not a ton of expertise available for it. At least, not established expertise. Because of this, it’s difficult to work out who you can trust.
TikToker Crystal Harris recently broke down exactly how one “UGC creator“. The creator had claimed that they made $6,000 from UGC, so she went to their profile and saw they were selling a “cheat sheet” for $150. This meant that of the 20,000-ish average views that they get, they only had to sucker in 40 people to make $6,000.
Whilst it’s entirely possible that the creator had sold no cheat sheets and had in fact just made their bank by creating content, Crystal’s video showed the depth of mistrust in the industry.
So, is UGC a Pyramid Scheme?
No, UGC is not a pyramid scheme. UGC is a legitimate marketing tactic, and therefore a legitimate service for content creators to offer.
While it’s easy to understand why people believe that UGC is an MLM, it’s no different than being a creative contractor. If we ignore the videos that advertise UGC as a get-rich-quick scheme, we’re left with an industry that offers profitable opportunities (that won’t necessarily change your life overnight).
One of the most popular pro-UGC videos on TikTok implies that UGC is worth quitting your job over — and that’s where the danger lies.
Content creation is a real thing, and it can be very profitable, but you need expertise. You need to know how to take good quality videos. You need to know how to create content that actually converts. That expertise takes time.
Many accounts that simply fizzled out because they started UGC and realized that it wasn’t the overnight money-maker they expected. For those that were looking for a get rich quick scheme, they quickly lost momentum.