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Billing A Better Future

Billing A Better Future

May 14, 2010
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" the topic of billing models is as important as the subject of billing methods "

When discussing the subject of online billing in conjunction with offers of adult entertainment products or services, many operators focus on finding the lowest rates on their processing fees, or on developing just the right banking relationship to cater to their merchant account needs — as if these topics were all that encompassed "adult billing."

However, the topic of billing models is as important as the subject of billing methods — yet it tends to get much less limelight — so we will take a closer look at it here.

Consider an easy example: a content owner seeks to profit from his erotic inventory by expanding into online distribution, and opening a paysite in an attempt to market his content directly to consumers. The obvious solution for this type of adult operator is (or at least was), to open a subscription-based premium membership website — driven by an affiliate program to deliver traffic and sales. For this application, recurring monthly credit card billing is the preferred billing means for many sites — especially those targeting the American market. For this operator, billing choices might have revolved around using an IPSP (and if so, which one), or going the merchant account route.

As the market for adult continues to evolve, this merchant may see fewer sales of his product, however, and the real reason may be hard to identify — with the economy, price points, content quality and quantity, and other issues mistakenly taking the blame.

Indeed, an endless list of factors can be analyzed without ever considering that shifting consumer purchase preferences may be the culprit — or in other words, folks are not joining because they don't want to "make that commitment." This is a nice way of saying that they would like to have your content, but they have joined other porn sites in the past, and do not want to jump through hoops to cancel and have to fight mysterious charges again. While overcoming some of those objections may not prove easy, altering your billing model can make some of these pushback points moot.

For example, consumers that are wary of recurring billing (and the cancellation hassles they may have faced in the past) may be willing to pay for porn, if they see a non-recurring monthly membership option. Here, it is not the billing method that is being changed (it is still a credit card, for example), but the altering of the billing model that makes the difference — and leads to the sale.

Taking this further, if offering a one-time, rather than ongoing, membership is in fact proving profitable, then this "less is more" approach could perhaps be extended into the content choice arena, by offering items ala carte.

For example, the videos you are trying to sell could each be available individually as a direct digital download or streaming file, sold as a separate item. A surfer who was only interested in one specific scene or title may get it without further hassle or commitment. This is the heart of many VOD and "clip store" offers. Of course, the option to get all of the titles is one convenient package will still fuel your membership sales, but the ala carte approach picks up money otherwise left on the table.

The funny thing is that some operators will scoff at trying to sell a single clip, and say that "if the customer wants it, he'll have to buy a membership" — and he will say this while giving that clip away — loading it up to a free tube site "for promotion." Why not stick a 99-cent price tag on it and put it on the shelf? Now, that same clip is not only marketing material, but also provides at least two different products — the individual clip offer and part of the "get it all" membership offer.

The owner of a dive video company I used to shoot for in the Virgin Islands taught me the importance of flexible billing options years ago, saying "We take everything but the Mobile card" when folks asked how they could pay for our content. If he could have taken the Mobile card, he would have. He also told me that "If they have no money, give them our card — they can call the '800' number and order a video when they get home." He would work for the sale — not make the customer work for the sale, and was fond of saying that folks could send him "a shoebox full of pennies in the mail" and get a video.

This was back in pre-Internet days, but excellent customer service and providing easy and comprehensive payment solutions to a global market is timeless — and it serves as a good lesson in the importance of all this.

Business models meld with consumer preferences today to drive billing methods and models — and these interactions are often subtle and easily mistaken for the evidence of other issues that are affecting your operations.

Do you need Direct Debit billing to satisfy Europeans? Perhaps Argentineans would buy more porn if prices were lower, or Japanese consumers might pay you if your videos were available individually, in the latest format, and with the ease of an SMS transaction — all of these issues and more are easily addressable by having a flexible billing plan and the processing options needed to make it work.

The upshot of all of this is that the billing arena is chock full of needs and nuances —and your ability to understand and stay on top of banking and card association rules and your chargeback ratio, the latest payment platforms, cascading tools and fast-changing currency exchange rates, and the myriad other attention-demanding issues is vital. Just do not forget the most important factor in this: the consumer and his needs — and you will be well on your way to billing a better future.


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