Multi-level marketing (MLM) (also called network marketing (NM)) exhibits a business model which exemplifies direct marketing. Typically, independent business owners (IBOs) become associated with a parent company in a contractor-like relationship. IBOs receive remuneration for shopping within their own business, for selling products and for expanding their network of people ("downline") doing the same. An IBO receives a percentage of the profits generated by the network of all IBOs introduced to the system by him or her, and also of the profits generated by the people introduced by those IBOs, and so on. A points system, where the points represent the volume of products sold through the IBO network, tracks rewards.

Multi-level marketing has a recognised image problem because of difficulties in making a clear distinction between legitimate network marketing and illegal "pyramid schemes" or Ponzi schemes. Nonetheless, many NM/MLM businesses operate legitimately in various parts of the world. See NM Companies for more information.

Critics contend that some companies produce revenue primarily by attracting new participants, as opposed to selling products. Amway (the world's leading company in network marketing, with annual turnover exceeding USD $1 billion) in particular often receives criticism for generating considerable revenue from selling instructional and motivational materials to its participants. The United States Department of Justice indicted the company, but Amway secured an acquittal.

Excel Communications, a $1 billion-plus Dallas-based company founded in 1988, exemplifies a successful MLM company. The top money-earners for Excel, such as Paul Orberson, Phil Mims, and Chuck Hoover, rank among the highest earners in the history of MLM.

Among the companies known as MLM:

• Amway
• Equinox (MLM)
• Herbalife [1]
• Mary Kay
• NuSkin
• Pre-Paid Legal
• Primerica
• Vector Marketing (sells Cutco knives; known for its aggressive targeting of college students with promises of "summer work")
• World Financial Group

Over the course of decades, companies have devised various MLM compensation plans:

• Breakaway plan. This plan features two types of distributors: managers and non-managers and three types of overrides: (1) Baseshop overrides (2) Generational overrides (3) Executive bonuses.

• Matrix plan. This plan limits the width of each level in a distributor's group, hereby forcing strong distributors to pile their recruits over people who did not sponsor them.

• Binary plan. This plan limits the width of each level to two legs. Commissions are based on "cycles" where a distributor is paid a fixed amount whenever both legs achieve a certain number of sales units each.

• One, two, four, eight pyramid structure. This plan features a "game board" where each participating distributor would pay in one or more product units, and that the "one" would receive consideration when the "eight" had paid in. After this the structure would split, the "two" advance to the "one" position and an additional "eight" would be required for each of the structures before the "one" would be paid and the structures again split.

see also: marketing, direct marketing, personal selling, list of marketing topics

• MLM Watch — a skeptical guide to multilevel marketing, by Stephen Barrett
• What's Wrong with Multi-Level Marketing by Dean VanDruff
• MLM Survivors
• MediaMoogle: Cross examines Pre-Paid Legal's product and business opportunity.
• The REAL Secret To MLM Success excerpts from a book by Karl Loren, a successful MLM businessman
• Newsletter for Small Business Owners and Network Marketers Tips and training for MLM and network marketing people by HP Jeschke
• Real time MLM business opportunity leads Real time recruiting leads