Starting out, checking my bases, etc...

Hi all...

Well, hello all you perverts.

I have been working now, diligently, for the past few months organizing a production company and web outfit and I was curious if there was a static thread or wiki/faq listing the 50k bulllet points one must check off when getting off the ground.

While I have a good business mind, and we're operating as if we're just a bunch of indie film producers, I'm well aware there are plenty of dynamic issues related to gay porn and a subscriber based site. I already have legal and accounting consultation, in addition to my own knowledge, but I'm kneeling, humbly, for some more advice/input, even if I've already heard it.

Some things I'm curious to gain some statistical data on are inital subscriber figures in the first few months, drop off rates, etc, just something to prepare me for budgeting out the next few months. Who is the best merchant/CC processor in terms of low fee (is 14.5% the best really? for subscriptions that recur) and least hassle (domestic vs. off shore.)

Oh, and I rarely get down on my knees, so consider yourself lucky. =)

Thanks in advance for your help.

-Chris

you're in california, so most important things are to protect yourself. if you haven't talked to a lawyer regarding any and all 2257 requirements, be sure you do. 2257 is complex and requires a lot of the custodian including that he/she must continue to be the custodian of records even after the content is removed from the web. if you are using a corporate or any kind of attorney who does not specialize in adult, you are probably using the wrong attorney. and then there's the local employment regulations.

that 14.5% is standard but if you have high sales, you can usually negotiate it down. ccbill and epoch are both very very good processors in every way, although each are best for differnt things. you'll make around 11% more money if you cascade them both, and that means buying/leasing a huge program suite. you'll make more initial affiliates if you use ccbill.

there are no general stats for retention or sales. i'm a paysite consultant and i can tell you for 100% certain that some sites rebill at 70% after the first month and some at more like 30%. figure 45-50% is standard. the numbers people tell you on the boards are not always accurate. many factors affect retention - price of site, amount of content, frequency of updates, size and quality of content, how well the content fits in with the niche of the site and fulfills the promises of the tour.

In addition to what Patti mentioned, being based in CA you should also speak to an attorney who will be able to advise you on your consumers privacy rights, a couple of years back CA passed several laws concerning online privacy.

Also, i seem to recall HDK Bill was posting recently about something to with production companies models not actually being 'independant contractors' but the state saying that they were employees so you need to handle them as such you may want to look in to that also.

Welcome to the community btw :)

Regards,

Lee

Thanks for your input.

Actuallly, to me, the 2257 laws seemed most simplistic and easiest to handle. The text of the law itself is fairly simple, as are the record keeping requirements. Is this just my naivete and am I missing something? Custodianship is also something easy, since we will keep and maintain all our records.

So if the retainage of first-time subscribers falls in between 30-70%, the dropoff would be the inverse I suppose. Do many of you find the model of prepaying 2 or three months as the first payment of a recurring signup a bad or good business idea?

Has anyone ever used the idea of charter membership to boost initial sales? With success?

Would you recommend a good cascading program? And does your figure of 11% represent that increase from one processor declinging the transaction while the other retains the sale?

Thanks. =)

Quote:

---

Originally Posted by recyclemysoul

Some things I'm curious to gain some statistical data on are inital subscriber figures in the first few months, drop off rates, etc, just something to prepare me for budgeting out the next few months. Who is the best merchant/CC processor in terms of low fee (is 14.5% the best really? for subscriptions that recur) and least hassle (domestic vs. off shore.)

---

First off welcome aboard Chris! :bunny:

In regards to the above it's important to remember you're in the entertainment industry. I see An adult site as being a lot like a movie. The success of a site is multifaceted and complex. A formula which most are still working to completely understand, and just like movies, the gamut for drop off rates, and growth, run the spectrum based on a crude formula. (i.e. audience reach, content, design, update schedule, affiliates, etc.)

I use verotel for processing. I pay 6.9% as a pro merchant. No processor is safe in the current adult processing market. Many processors have closed down, leaving us scrambling to find new processors. CCBill and Verotel seem to be the most stable for the past few years.

Heading out the door now.. hope this helps

Quote:

---

Originally Posted by recyclemysoul

Thanks for your input.

Actuallly, to me, the 2257 laws seemed most simplistic and easiest to handle. The text of the law itself is fairly simple, as are the record keeping requirements. Is this just my naivete and am I missing something? Custodianship is also something easy, since we will keep and maintain all our records.

---

No offense intended, but 2257 is ANYTHING but simplistic and easy to handle. In fact, the regulations that went into effect 6/23/05 are riddled with internally conflicting language and very poorly written and extremely vague language. So much so that the more competent adult industry attorneys will tell you there *are* no certainties in interpretation, and if you comply 100% with one section you are, by definition, in violation of other sections of the law. Add to that the even more muddled language of 4472, and you really need someone competent to keep you on the right track. The old phrase "The lawyer who represents himself has a fool for a client" applies here.

As for memberships, charter memberships and the like... you'll get a lot of opinions from a lot of people. What we've found, after a lot of experimentation (which we continue with) is that there is no formula that consistently works. It's too dependent on your particular genre or niche, your traffic sources, the quality of your content and updates, competition in your market... literally, a site nearly identical to yours might have a totally different pricing structure if its traffic sources are different... so my best advice is just experiment with a bunch of different pricing structures and see what works for you.

Hope that helps.

Again thank you all for your warm welcome.

While I don't doubt that everyone makes some mistakes starting up, in fact I expect a sufficient amount, I'd rather try to avoid as many as possible. And I obviously want to avoid 2257 implications.

I understand completely that every site and niche and fetish is different, and mine will be no less, but would anyone is the business of producing original content for their own subscription website care to share what their initial membership tallies were like? 50 the first month, 500, somewhere in b/w. I know that too is affected by marketing strategies and the like...but just someone throw a bone out here. =)

Look forward to being a nice neighbor in the community. Thanks again.

Quote:

---

Originally Posted by recyclemysoul

I understand completely that every site and niche and fetish is different, and mine will be no less, but would anyone is the business of producing original content for their own subscription website care to share what their initial membership tallies were like? 50 the first month, 500, somewhere in b/w. I know that too is affected by marketing strategies and the like...but just someone throw a bone out here. =)

Look forward to being a nice neighbor in the community. Thanks again.

---

I have an original content site.

When I initially started about 6 years ago, and finally got to the stage of opening my site for business, the only advertising I had was an email that John at fratmen.com sent to his customer base. The first month, with that advertising, I had 251 subscriptions. A few months later I decided to quit my day job.

After that I started advertising with menonthenet and a few other sites, to keep the customers coming, while filming new content and publishing it to the site.

That was my experience and everyones experience is different depending on what your resources are at first publishing, the content, and all the other variables we've mentioned.

Squirt, thank you very much. I do appreciate you sharing that.

Any one US-based use Verotel for recurring subscriptions?

-Chris

Quote:

---

Originally Posted by recyclemysoul

Squirt, thank you very much. I do appreciate you sharing that.

Any one US-based use Verotel for recurring subscriptions?

-Chris

---

No worries

I'm American

My company is a U.S. corporation and is based in America.

I live in Australia and film hot Australian men :bunny:

i don't care for verotel. their stats are annoying and cumbersome and as far as i know it's harder to link directly to free hosted content through them. also several of my friends moved to ccbill and saw an immediate and substantial increase in sales.

recyclemysoul - there is no way anyone here can generalize number of sales in the first month. these pretty much count on three things - but the one that is essential is traffic. i know people who start out with a few hundred hits a day, a few thousand hits a day and many many thousand hits per day. not amazingly, the guys who start with thousands of daily hits make more sales than guys who start with a few hundred.

and then we get into affiliate programs. the easiest way to make some sales without really doing anything is to submit your site to review sites. i write reviews for several, and a few of the best sites i write for can make 10 - 20 sales on the first day of a new review.

and don't forget the tour. a good tour, which is not always a slick and sophisticated tour, can make you 3 or 4 times more sales than a not great tour - and this is no exaggeration. in fact, a really poor tour can make sales at worse than 1:1500 even with great content where a good tour for the exact same content can sell at 1:250. there's a certain amount of experimenting involved for EVERY site - and don't forget the join pages. your site should end up with several looks and layouts and prices on the join page before you settle for one or more.

even your video trailers and pic choices for the tour can have a huge impact on sales.

the bottom line here on what affects your sales:

plenty of traffic
a good niche or theme
good content (which can be amateur quality)
the right tour
the right prices
the right join page layout
good trailer

there is no one size fits all here. some great looking sites start out at 1 sale per day or less where amateur looking sites start out with 20 sales a day. why? more traffic, better page flow, better niche - you name it.

and don't forget text and how well you give your tour a personal feeling. that can also make a big difference.

btw, if you think 2257 is simple, perhaps you are looking at the original version and not the new regs. right now, the DOJ isn't even sure about some of the stuff that came into effect june 23, 2005. i'm not kidding. you may OR MAY NOT be able to use i.d. with blacked out addresses for models. you may OR MAY NOT be able to use content shot in another country by a u.s. producer. what is considered sexually explicit was just redefined by another law. or try this one - do softcore dressed images from a hardcore shoot require i.d. to be supplied to affilaites? no one is sure INCLUDING the DOJ.

and we haven't touched the obscenity laws.

Perhaps I should have expounded more then I did, but what we will be doing is a production company from the ground up. I am not setting up a webpage to buy other people's content, but building a restaurant to sell our own food, metaphorically if you're not with me here.

I realize that the state of legal affairs in this country is about as ripe as a freshly manured field, perhaps one with hot farmer boys scattered across, and that the fear-mongers in government are waging successful wars against our creativity, and driving us nuts about decency and the impending legal ramifications, but I respectfully disagree with some of the views here on the 2257 law. Yes, everything and everyone can construe things one way or another, it is, after all, a grey world and laws are meant to be black and white. But there is essentially only so much we can do, I can do, to protect myself (ourselves) and really what it comes down to is common sense when contracting with models (or in some people's cases, primary producers.) Be diligent with your records, check IDs, keep up to date copies, check them against ID publications, etc... If one day the FBI chooses to raid my office and search my records, it's gonna happen outside my control, one way or another. If I keep good records, then I know I'll have done the best I could.

And as far as I know the current 2257 law is dated July 2006. The text of the 2257 law is quite short, actually, I was surprised when I first read it.

My personal theory is that if someone cannot keep decent records like checkbooks, contracts, and proof of age statements, or such corresponding records filed in organized and easily accessible places, ready to be transmitted during the sale of such content to secondary producers, then perhaps they shouldn't be running a business. And obviously if someone cannot prooduce valid documentation on such produced content, why do business with them? The burden of record keeping is nothing new to businesses, and in an industry like adult film, it should be expected that there is going to need to be heightened awareness.

I have spent the past seven years working in the very highly regulated gambling industry, so I'm no foreigner to regulated oversight and mandatory reporting and record keeping procedures. Frankly, the 2257 laws seem much less burdensome than other sin industries.

Re: affiliates and "the easiest way to make some sales without really doing anything," this seems to be against every successful business plan I know of, since not "really doing anything" is antithetical to hard work. Perhaps it will take some months before I understand the benefits of an affiliate program.

I completely understand, basschick, that generalizing stats is just that. I just wanted some comfort that someone actually had more then 10 people sign up the first month. I'm trying to figure out how long I need to sustain the business before the revenue makes it self supporting, or potentially how long it could be.

Anyhow, I'm grateful for everyone's input. I may come across as over confident about all this here, but trust me, I'm still nervous about it all. Anyone would be with a substantial investment on the line...as well as the thought of 2257 jail time. Going from one sin industry to another should be easy, right? lol Thats what I thought too. Silly me.

-Chris

I'm not looking to piss anyone off, thats for sure. But I guess something I just truly don't understand yet is how the affiliate thing works in reality. I've never actually worked as an affiliate so I don't know the work that goes into that or the benefit the website receives. Again, something I look forward to learning.

Quote:

---

Originally Posted by recyclemysoul

If one day the FBI chooses to raid my office and search my records, it's gonna happen outside my control, one way or another. If I keep good records, then I know I'll have done the best I could.

---

Thank you ! :cheerleader:

You know if Larry Flynt listened to his lawyers, they would have told him not to sell Hustler in Georgia.

You know there are all these GOTCHA style scenarios people worry about endlessly. Frankly, if that really happens, and the DOJ tries to prosecute you for having improperly filed records, the solution is simple: Go to court and insist on a jury trial.

Consider the end results: If you can go to court and show that you've hired adult models, and that your prosecution has nothing to do with prosecuting child porn.... do you think a jury would convict you?

I really think a jury in the metropolitan areas that most of us live in would find it absoulutely bizzare that this federal law written to stop child porn is being twisted like this by the DOJ.

And I still don't understand how the US Department of Justice has this regulatory authority over an industry, like say the Federal Communications Commission specifically has over public radio and television airwaves, from which all parties involved can receive written communications of their rights under the law, as well as the ability to participate in public meetings run by appointed commissioners.

Steve

Quote:

---

Originally Posted by recyclemysoul

I'm not looking to piss anyone off, thats for sure. But I guess something I just truly don't understand yet is how the affiliate thing works in reality. I've never actually worked as an affiliate so I don't know the work that goes into that or the benefit the website receives. Again, something I look forward to learning.

---

Recyclemysoul:

What GayDemon is talking about regards your company's marketing plan. Most online companies utilize affiliate programs to sell their goods and services. You pay affiliates for the work they do to market your products to your target audience.

One reason Amazon.com became a leader in online retailing is because they created one of the first affiliate programs which effectively created an army of independent sellers for them, swamping their competitors like Barns & Noble or CDnow.

Another reason affiliate marketing is valuable to adult businesses is because your channels of communication are limited by the nature of the business. You cannot take out a full page ad in the New York Times for your new movie production, like Warner Bros. Studios can, nor can you buy a banner on MySpace.

So as a consequence, adult affiliate programs pay higher commissions than non adult ones.

But then the margins on adult products are siginificantly larger, so in the end everyone does well.

Good luck on your business venture.

Steve

benefits of an affiliate program for review sites:

1. review site signs up to promote your site for 50% of moneys.

2. they do a legit review and tell surfers about it - keep in mind that most review sites have large amounts of regulars who drop by their site every day or few days, so interested surfers will go to your site.

3. since the surfers who go from the review sites to your site are already interested - the site was accurately described to them - even the worst tour will make some sales regularly every single week. sites that are not the worst will make more sales every week forever. and this is without having traffic or having to generate it - which is usually the hardest thing in our industry to do.

keep in mind that you still keep 100% of your own sales, so if you are pretty good with free sites, search engines, buying traffic or galleries, all the traffic you drive to your site that buys is ALL yours. but with review sites - or other affiliates, but review sites are the easiest and convert very well - you have a traffic source you get half the income from while doing nothing.

ya can't beat making money for doing nothing ;)

just adding a quick hello and welcome to you

cheers
Luke

HEY recyclemysoul ! ! !
Welcome to GWW, Chris - I do hope you enjoy your stay.

yes, welcome recyclemysoul -

this is all very helpful info - you've come to the right place