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How the porn sites do IT

How the porn sites do IT

A recent study claims that adult e-commerce (let's call it "e-porn") raked in as much as $US1 billion in 1998. That's one-tenth of the total e-commerce enchilada. With profitability for some of the more successful portals o' porn as high as 30 per cent, porn continues to be one of the few online enterprises that actually makes money. Gareth Branwyn investigates.

Here is one inescapable fact. Sex sells, right? Get naked and the world will beat a path to your Webcam? Well, maybe not. Progressive technologies and trade practices at least partially account for sites staying competitive and profitable.

Peeking behind the curtain of the adult business is a very peculiar experience. Lorded over by silicone-enhanced former porn stars, mom-and-pop swingers who sell memberships to their sex lives and oodles of old-fashioned sleazeballs, its virtual storefronts sport names like Bad Girls of Detention Hall, Greek Freak, Hoochie Hut and Digipimp. Trying to figure out who owns what and who's partnered with whom (in the business sense) is tricky.

Twisterlike entanglements and colourful characters aside, you would think an online enterprise that pulls in this kind of traffic would be on everyone's radar. After all, successful e-commerce isn't easy. But few in the "legitimate" business community want anything to do with e-porn, at least when they're not quietly servicing it with hardware, bandwidth, programming and so forth. Hosting services do a stellar business trafficking in e-porn, top vendors can't sell enough of their servers to porn purveyors and countless Web-development firms play on both shirts and skins teams.

But don't expect to see any of this on corporate reports or in industry briefs. Some analysts even stammer when asked about their tracking of e-porn, nervously declaring, "We don't have anything to do with that."

So, how can they simply ignore such a huge chunk of the online marketplace? The usual explanation is that porn buyers are different from other consumers. Yet, at least one analyst, Mark Hardie of Forrester Research, disagrees with this assertion.

Hardie appears to be one of the few who is not timid about studying e-porn and teasing out the technologies and business practices that can be applied elsewhere.

Staggering revenue

He sells his findings to corporations like Disney and Warner Brothers, insisting that they keep an eye on the adult business to anticipate market and consumer trends. And do they actually listen to such a suggestion? "Absolutely," replies Hardie, although he refuses to give more details.

To arrive at the figures in its adult-content report, Forrester interviewed adult-site operators, banner exchanges, credit-card fulfilment houses and traffic-measurement firms. From this analysis, it came up with a staggering $US750 million to $1 billion for e-porn revenue in 1998, with rapid growth predicted for 1999. "Before we did the study, we were throwing around figures that were almost an order of magnitude lower," says Hardie. "I suspect that the figure could be closer to the $1 billion end, maybe even higher."

Hardie paints a rosy picture of the e-porn business. He downplays the widely reported dirty Net tricks whereby sites steal from each other using image tags that point to content on other sites (called "hot-linking"), trap visitors with pages that loop back on themselves ("circle-jerking") and falsely report traffic by creating bots that generate phony hits. He sees many of these practices as things of the past, or at least activities ignored by a growing association of more ethically minded adult sites.

"What I see when I look at this industry - putting aside any moral judgments about reprehensible content - is an amazing example of an industry that has banded together to protect its business, push revenue across the industry and innovate cutting-edge technologies," says Hardie. "I think there's a lot here that can be applied elsewhere."

So what are some of the e-porn practices others might want to pay attention to? We identified four: informal and formal partnering, understanding your market, outsourcing and hitting 'em one more time.

Partnering. Even those who see little in e-porn that's applicable elsewhere marvel at how the industry has built impressive and dizzyingly complex business associations. "It's truly amazing," says Barry Parr, director of Internet and e-commerce strategies at International Data Corporation (IDC). "There are the 'top sites' lists, Web rings, indexes, banner-exchange programs, adult-verification systems, trade organisations, all sorts of partnerships and associations." Mark Tiarra, president of United Adult Sites and an adult-content provider, agrees: "It's actually a very cooperative business. If you get into it, it doesn't take long before you realise that the people who are making money are the ones who are working together."

Sean Carton, a managing partner at Baltimore's Carton Donofrio Interactive and a regular market columnist for Clickz, a marketing Web site, thinks the model should be applied by the rest of the e-commerce faithful. "The rest of the e-commerce community should wake up and realise they can benefit by forming network relationships similar to what we see in the adult community. In the adult world, they try all sorts of wild schemes at once to see which ones shake out."

One of those schemes is Adult Verification Systems (AVS). IDC's Parr thinks AVS offers an interesting partnering model. "That's a fascinating way of getting people to buy one subscription to gain access to a bunch of content on associated sites. I could see this working in other areas online - say you subscribe to the Wall Street Journal and you get [the San Jose] Mercury News and other top publications with it. I think something like this makes a lot more sense than the whole micropayments thing."

Andy Edmond is president of SexTracker, a firm that follows adult content online, offers a suite of other services and hosts a number of adult sites. He is not quite as sanguine about AVS, but does agree it could work with modifications. "Let's say you're getting 50 subscriptions a day," he says. "Not bad - but what if you were partnered with 10 other complementary sites that were bringing in a total of 1000 sign-ups a day, and you were sharing the revenue? This is the kind of thinking we do in the adult world."

Understanding the market. At 30, well-known nude model and dancer Danni Ashe is already an Internet old-timer. She traces her online history back before the Web gold rush when she used to show up on Usenet alt.sex newsgroups and no one would believe it was really her. Her Web site, the woman-owned, all-woman-oper-ated Danni's Hard Drive, which she coded up herself in 1995, has become one of the most successful sites of its kind, with 25,000 paying members and five million hits a day. For $US14.95 a month, the site offers sex in bulk, with 1000 nude photos a month, more than 1000 video sex channels, several sex e-zines and a cooking column featuring a huge transvestite named Miss Peg.

"We're much more profitable than most because we don't rely so heavily on advertising to get traffic," says Ashe. Instead, she works to create a community atmosphere that makes members want to stay on month after month. Where other e-porn pay sites are lucky to hold members for a month or two, many of Ashe's members stay on for several years. Insiders credit her obsessive . . . hands-on approach to the site.

Ashe herself says: "We give people what they want! That may sound obvious, but so many sites, both adult and non-adult, don't seem to ask themselves the simple question: 'What do our users really want?' I spend an inordinate amount of time trying to get inside our members' heads."

Similarly, SexTracker's Edmond claims his company spends more time trying to figure out who its users are, what they want and how to sell it to them better than other e-commerce companies do.

Yet, doesn't every e-commerce site think they're doing this? "[Yes], but they're just not focused enough on getting people from the content to the shopping cart," Edmond says.

"We try to learn as much about our users as we can from the data we collect, and then create services and products that respond directly to their online behaviour - not what they say they want on feedback forms, but what we know they want from how they behave online."

Outsourcing. "Almost everybody outsources their video content," says Jane Durall, who runs Jane's Guide, a site that reviews other adult sites and features a weekly adult Web zine. "The bandwidth you need, the hardware, the models - it's just too cost-prohibitive."

While you might not need a video feed from BabeNet on your Web site (oh, but think of the traffic!), the outsourcing of content, a popular move in the e-porn world, is showing up elsewhere.

In the adult world, one trick that's used is upselling. Paying customers get the video feeds as part of their membership, but if they want to talk with others watching the same feed or to direct the actions of the models, they have to pay extra - directly to the content provider, not the pay site.

Outsourcing is showing up in the nonporn world, too. San Francisco-based iSyndicate offers free news and information content from partners like AP and Reuters. The participating sites display the partner's brand identity and the hyperlinked news and article headlines. When users click on a story, they're taken to the originator's site. ISyndicate gets traffic, and their customers get regularly updated content from reputable brands.

Hitting 'em one more time. In the e-porn world, it's all about drumming up traffic to free sites and then directing that traffic to pay sites - where, if all goes well, surfers will cough up their credit-card numbers. Like sperm travelling upstream so one lucky swimmer can fertilise the egg, the e-porn ecology relies on thousands of visitors for every handful of member sign-ups.

As the market has expanded and competition has grown fiercer, pay sites have increased the bounties they pay to free sites that can deliver them greater numbers of visitors "fresh from the farm", as Edmond puts it. In the non-adult world, the closest thing to this kind of relationship would be Amazon.com's Associates Program, in which Web sites sell books through an Amazon.com link for a small commission.

Accelerated competition has led free-site operators to take more extreme measures to get traffic to the pay-sites' doors. The result for the consumer is an annoying Whack-a-Mole world of pop-up browser windows and Java consoles that don't let you leave until they suggest a half-dozen other sites you should visit.

On the face of it, this technique might seem unlikely to work elsewhere. In the porn world, people supposedly put up with this nonsense only because of their intense desire for the final payoff. But if you look beyond the blatant avarice, there are techniques here that just may be ahead of their time.

Andy Edmond offers an example of the next-generation console: "Let's say I go to Amazon all the time and buy books on motorcycles and fantasy. I click through five pages within Amazon and then decide to leave - why not pop up a console that suggests a list of relevant partner sites based on my purchasing behaviours? I think you're going to see a lot more of this type of thing soon."

While e-porn excites extreme reactions, from blanket condemnation to extravagant claims of marketing genius, it is not that hard to imagine that out of this ethically and technically promiscuous commercial environment real innovations bloom. Just look at the IDC figures and you'll realise that, when it comes to making profit, "Cam's Perfect Breast Bonanza" starts to look like as good a place as any to hunt for advice.


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