Before I can answer either question we should first look at why companies would want to give you a free iPod in the first place. The simple answer is that they want to give you a "free" iPod because they can make money doing it. This may seem counterintuitive, so let me explain.

The way most of these offers work is that they first ask you for your e-mail address or zip code to see if you qualify. Not surprisingly everyone who lives in the United States qualifies and sometimes people living in Canada, Australia or the UK may qualify as well. The catch is that to get your iPod you have to complete a few promotional offers from their sponsors, as well as, get five of your friends to do the same.

Now this still may seem like a good deal, who cares if you have to spend $20 or $30 to complete the offers, it is still way less than the $150 for a brand new iPod nano. However, the problem lies in the fact that five of your friends also have to complete the offers. The obvious result of this is, is a classic pyramid scheme, where only a few people at the top will ever see their iPod. At some point it will be impossible to find five friends who are also interested in a free iPod who have not already signed up for this kind of offer.

The companies giving away free iPods make money from these offers in three ways. First, and most obviously these companies will go and sell the e-mail and other information you provided to other marketing firms that will send you more advertisements through e-mail, direct mail or telemarketing. Second, the iPod offering company gets money from the promotions you must complete. They usually make between $10 and $30 per completed promotional offer from the advertiser, who in turn hopes to make money by having you continue using their product or service after the promotional period has ended.

Finally, the company makes money from all the promotions your friends complete as well. This becomes especially lucrative once the pyramid has become sufficiently large enough.

As an example let's make a few assumptions to make it a bit simpler and give you an idea as to why there are so many companies that want to give away free iPods.

For this example, let's assume that we go to a company claiming to be giving away a $150 iPod nano if we ourselves sign-up for two promotional offers and get five friends to do the same. Also, that there are one hundred people interested in this offer, they each sign-up for their two offers and that everybody is as good as everyone else at getting other people to sign-up under them. Finally, that the promotion companies pay the iPod giveaway company $15 per completed offer, for a total $30 ($15 each offer) X (Two offers completed per person interested in a free iPod).

Let's look at the numbers, person #1 signs-up for the offer so there are now 99 people left who are interested in the offer. Person #1 then gets five more people to sign-up under him so there are 94 (99-5) people left interested in the offer and person #1 gets the first iPod. Persons #2-6 have now completed the offers and have each signed-up five friends, so there are now 69 (94-5(5)) people left interested in the offer and iPods #2-6 have been sent out. These 25 people now try to sign-up five friends each, but find they can't because they need a total of 125 (5(25)) interested people, but there are now only 69 people left who are interested.

Assuming the remaining 69 people sign-up, the company giving away the iPods will be very happy along with persons #1-6, who each got their iPod at a discount. However, persons #7-100 got nothing and instead they had to pay money out of their own pockets to participate. So, overall the company received $3,000 ($30(1,000)) from completed offers but only gave away $900 (6($150)) worth of iPod nanos. This results in a nice profit of $2,100. No bad for giving away a free iPod and this does not even include the extra revenue that the company will earn from selling your e-mail and other personal information.

Although, this is just a simple example and real world offers will vary in their requirements, numbers, gift amounts, etc. they are clearly a bad deal unless you are the company itself or one of the people at the top of the pyramid. Now, I know some people will read this and still think that they can get in at the top or somehow get enough people to sign-up under them. I say good luck, but if you are determined to sign-up for these offers here is some advice.

Tip 1 – Sign-up early for a new offer, as we saw the only way to get your free iPod or other gift is to be one of the few people at the top of the pyramid.

Tip 2 – Do not use your real e-mail address, since you will get tons and tons of spam and other e-mail advertisements.

Tip 3 – Give out as little personal information as possible, because the company will most likely sell this information to other marketers.

I hope this clears up any questions you had about whether or not you should sign-up for one of these offers. If you haven't done so, I would recommend not doing it. If you have, I am sorry but you are most likely going to see many, many marketing offers in your future. Either way good luck and remember you don't get something for nothing.

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