Well, you can call this program a variation of the pyramid scheme, but the truth of the matter is, it is bascially a pyramid scheme.
The company cannot possibly deliver free ipods to every member. So what's the solution, use the membership fees of the ever expanding member base to pay for the ipods delivered to the top tier members. This is the definition of a pyramid scheme.
In order for this scheme to work, the company has to attract an ever increasing number of members who pay membership fees. This exponential expansion cannot be kept up in the long term. If ever the rate of membership expansion starts to decline, that is, the rate of cash flow declines, the whole scheme will start to collapse.
Okay, so this particular plan asks its members to sign up for various internet services such as aol, geneology services, etc. The rationale is that members can cancel their subscriptions before a certain deadline, and thus incur no subscription fees.
This may work within a limited introductory period. But companies are here to make money, not to lose money. Each company may have a set amount of advertising dollars set aside for this "free ipod" advertising. But as soon as that budget is used up, those companies will start to tighten up their subscription cancellation requirements, making it more and more difficult for members to cancel their subscription.
Have you ever tried to cancel you AOL membership? I was foolish enough once to try that 60 day for free AOL offer. I wanted to cancel the service after 30 days. What a nightmare that was trying to cancel my subscription. In the end, I basically ended up telling AOL that I am packing up and moving to the grasslands of inner Mongolia where there is no electricity, no telephone, no internet, no running water, no satellite dishes, no cell phone services, and I'll be living in a tent, before the customer service at AOL will allow me cancel my subscription. And that wasn't the end of the story. 2 weeks later, I received a letter from AOL in the mail informing me that AOL is happy to hear that I chose to continue with my subscription. It took another round of phone calls before I made sure my AOL subscription was canceled.
Anyway, these are just my thoughts. There is no free lunch.