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Pay Site Revenue Streams: Part 3

Pay Site Revenue Streams: Part 3

February 3, 2002
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" While this revenue may not buy her a new X-type Jaguar, it may partially cover her expenses... "

In the previous installment of this series detailing my attempts to get a handle on the revenue stream of Dawn's site, we contemplated pay site revenue models, and some of the basic numbers behind them. I left off willing to pull "around $70" out of thin air as an average member value we should be "expecting." But the more I look at the numbers, the more concerns I have:

At this point I felt a little "back tracking" was in order. Could an average membership be worth $70 to me? Looking at some of the insanely high payouts offered by a number of sponsors, some people could easily believe so, but I knew that working the numbers would produce more insights — if not more "hard" answers.

Income
I decided to approach this problem with a series of questions aimed at starting a train of thought that would roll on, gaining momentum as it progressed. The first one was "What are the possible ways that 'Kitten' might make money with her pay site?" The answers that I wish to share include:

> Membership Sales: We've already taken a brief look at these most-obvious of pay site revenue streams: Direct, 3-Day Trial, and Monthly Recurring memberships. We'll leave these sit for now, even though the interaction of these percentages plays a major role in financial forecasting.

> Sponsor and Product Up Sells: As a basic matter of principal, we don't wish to make one sale to one customer, we wish to make many sales to all of our site's visitors, whether they are now members or not. This might include traditional sponsor up sells, "personal" merchandise, 1-on-1 Chat Time; anything the prospect might be interested in enough to actually pay for, regardless of the marketing methods we wish to use to present the offer, i.e. FPAs, consoles, newsletter ads, an auction script or "classifieds" board, etc.

> Personal Newsletter: Speaking of newsletters, Dawn Elizabeth will soon start a weekly opt-in newsletter containing both personal and Web site news, as well as targeted sponsor and product offerings. Her site will feature ample opportunity for members and visitors alike to subscribe to her growing newsletter, including a small console popped off of the site's "join" page.

In addition to these offerings, she might cull follow-on sales through the newsletter, made to those who previously canceled, or who never joined, but after reading an issue or two, decided that they wanted to become members. The possibility, no matter how remote, also exists for her to obtain direct newsletter sponsorships (given an average circulation volume that would justify it), and let's not forget the cash value of a good email list to marketers interested in purchasing such things — although I believe that to be an option we'll likely forego.

> Exit Traffic Sales: Considering an average per-sign up payout rate of $30 based on a typical range of $25 to $40 each, and an acceptable conversion ratio rate range of 1:350 to 1:750, we can easily project a profit of around $30 for every 500 'uniques' sent to the sponsor from our exit traffic pool. If she can make even one sponsor sale a day from her exit traffic, it should cover her bandwidth charges and a portion of traffic costs for those prospects who visited, but did not join.

> Webmaster's Area: Most "real amateur" pay sites offer a "Webmaster's page" where girls can swap links and trade traffic. Since many sponsors offer a Webmaster referral program, this is a great place to add some of those links. While this revenue may not buy her a new X-type Jaguar, it may partially cover her expenses...

Expenses
After I looked at the "income" side of this equation, I needed to examine the "expense" side of the scale, and so I asked: "What are the main costs for Dawn's pay site?" Here's some highlights:

> Content: As primarily a single-model amateur site, content acquisition is the least difficult and expensive aspect of this venture. Already possessing the necessary photo and video equipment, it is merely a question of time rather than money. This is where her site (plus any amateur site) has it "easy." Content can be one of the most expensive parts of running a pay site, especially a really competitive adult "Mega Site" — yet, it is a "fun" addition to our daily routine...

> Bandwidth: Virtually hosted and currently paying $1.69/GB for bandwidth, it is easy to calculate an approximate "full use" cost for this commodity, based upon one member downloading every last bit of content on the site.

Based upon a 500k gallery size, 100 exclusive photo galleries (~ 50MB) plus ~ 40MB of video clips, will leave around 10MB for stories and other content. This reflects upon Dawn's current "100MB of disk space" hosting plan, which means that with a 100MB content base, 10 members will be able to download her entire site for every gigabyte of bandwidth burned. On her current hosting plan, she will be able to support up to 100 "full use" members per month, at a cost of less than 17 cents each. Heck, "half" the pay from the member (if still profitable) is okay, as long as the sale is handed to me on a silver platter:

Now many member's won't be so-called "full use" members, downloading every available scrap of content on her site, but they all must be assumed to be at this point, until historical data can be gathered on her own, particular bandwidth patterns. Still, it is obvious given the size of her new broadband video clips, and the fact that 100 MB of content (unless it's carefully rotated) is not enough to foster long-term retention, that her current hosting plan will have to be substantially upgraded over time to accommodate additional content and use.

> Traffic: Unlike many sites (or so I'm assuming), I expect traffic to be one of the most significant expenses of this operation, whether she pays for it directly by buying highly targeted PPC SE traffic that she sends to equally well-targeted "join" pages, indirectly by paying for the additional bandwidth to host TGP/2 galleries, free feeder sites, or other traffic magnets, or as a percentage of sales if it's shown that her site has the ability to profitably run a 50% rev share program. Heck, "half" the pay from the member (if still profitable) is okay, as long as the sale is handed to me on a silver platter:

> Overhead & More: There is an infinite number of additional costs involved in the production of Dawn's site; from the studio space needed for shooting, to the electric power required to keep the computers running, to the time she could spend doing something else potentially more profitable, expenses are hiding around every corner. While many of these expenses might be mitigated through proper business and tax structuring, they must still be accounted for when determining the pricing and profitability of her site.

At this point I've had a chance to look at some of the areas of concern, and opportunity, when running Dawn's new pay site, and I've had a chance to massage some numbers even further. Stay tuned, we'll take a look at pay site profitability next. ~ Stephen


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