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Paysite Power: Questioning the Affiliate Model

Paysite Power: Questioning the Affiliate Model

May 11, 2015
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" I believe affiliate revenue should account for no more than 20 percent of a paysite‚Äôs total revenue. If you have affiliates earning heavily, evaluate the possibility of hiring them, acquiring them or partnering with them. "

May of 2015 will mark my 15th year in adult. I remember it like it was yesterday, most notably how confused I was when I crossed over from mainstream design and corporate marketing.

To say that the way things were done in adult was very, very different is a gross understatement.

I had read about masses of celebrities being given free tickets to ensure Disneyland heavy press coverage and public fanfare on its opening day in the mid 1950s. I’d read the story of how Mrs. Fields got her cookie empire started by handing out free samples to passers-by on the sidewalk outside her little shop but the Walt Disneys and Mrs. Fields of the world did nothing like what I was about to take part in. Never had I see companies distributing free product in such astonishing volume.

Somehow pumping out free sites and hundreds of pages with free content was wise. It was so wise, entire strip clubs were being rented and stretch limos were being used as buses to cart affiliates there so they would be more willing to give away a company’s content. Affiliates were encouraged to raid member’s areas and take as they pleased.

This wasn’t enough. We were soon paying for their bandwidth in addition to paying them 50 percent of the company’s gross earnings for doing this, not to us, but “for us.” It worked out well … for a while anyway. There was more than enough money to go around.

There was plenty left over to pay for things like giant trade show booths and limo buses and renting strip clubs to throw convention parties where at the end of the night someone had dropped $50,000 so a bunch of total strangers could drink free booze and gawk at naked women half as hot as the ones we saw all day at work. And it didn’t matter that an hour after the party ended, no one remembered who threw it.

And here I sit 15 years later atop the paysite management software mountain and I shudder every time I hear someone tell me they just purchased NATS or are thinking it’s the missing element they need to grow their empire. I shudder even more when I hear one of my established clients tell me he wishes he could get more affiliates and that’s the only way he’ll survive. I’m hard pressed to think of many large, viable industries built upon paying sales personnel a 50 percent gross commission structure but somehow this still seems like smart business.

I ended one of my recent articles with the statement, A paysite is not an ATM machine, it’s a commercial enterprise. If you expect it to generate the kind of revenue you want it to, you need to treat it as such.

Unless you’re so reliant on it that it’s akin to you being plugged into life support, I strongly suggest you abandon the affiliate model as soon as possible in relation to your overall business strategy.

Just so there’s no confusion, I didn’t just say you should not have affiliates. I believe affiliate revenue should account for no more than 20 percent of a paysite’s total revenue. If you have affiliates earning heavily, evaluate the possibility of hiring them, acquiring them or partnering with them.

Affiliates are costly. Trust me, I know. I used to be one. Years before Elevated X, when I worked for studios and designed paysites for clients for a living I was also running TGP and MGP sites, had a part-time gallery submitter and pushed a fair amount of traffic via my own sites and SEO work. I loved nothing more than when I would get a members pass and could raid a site and take everything. It was even better when a new site would open and you’d get the jump on it and huge checks would come for a few months and then the site would get saturated and sales would slow down and you’d move on, discarding the site or the affiliate program like a lion abandoning the used up carcass of its last kill.

Before you get the wrong idea, I’m not anti-affiliate. In fact, I’m very pro-affiliate. What I am is anti-affiliate program. I would much rather see my clients making direct deals and keep control over their content than open things up and have their content devalued more than piracy is doing to it already. In my perfect world, affiliates account for 10-20 percent of the total monthly paysite sales made by a site Elevated X powers. And yes, I also want to see a unicorn, a mermaid and follow a leprechaun over the rainbow to the pot of gold.

I realize the percentages I’m listing are a fantasy for a lot of sites but if the majority of my clients can get to even the range of 75 percent of sales being in-house, the results would be stellar.

From where I sit, I see that more paysite owners need to be catering to their customers, not to other webmasters. I’ll get emails with comments about how “people want” something, be it a certain tour style or a responsive design or whatever “it” might be that’s missing. “People” actually don’t want those things. In fact, most paysite customers have no clue what a responsive or adaptive design even is, nor do they give a shit.

If your site works well for them and looks good and is useable across platforms on the favorite devices they use to view it they’re happy. Customers really don’t care “how” you choose to do it or how fancy it is but you bet your ass other webmasters and affiliates do. Design is similar. I shut my design business down in 2008 to concentrate on running Elevated X full time but even back then I remember having conversations with customers about how they wanted designs that would attract affiliates. The goal of making a site look worth of promotion almost trumped designing the site so it would pull sales.

It’s simple for me to say how this is done but doing it isn’t so simple. More site owners need to be their own affiliates. This means learning how to market their content and their sites, or hiring people who do. It means acting just as an affiliate would. Be it SEO work, social content posting and tube submissions, viral marketing efforts, buying ads, working CPC and CPA programs, etc., those who are relying less on affiliates and holding onto more of their revenue are doing these things in-house or contracting out for them.

I’m by no means a pioneer and am certainly not a visionary — but until paysite owners figure out a way to market their content effectively without giving up 50 percent of their gross revenue and leaving themselves with less than 15 percent net profit after billing fees and expenses, I foresee more and more dropping like flies every month and missing out on the sales upswing a lot of other site owners have already been seeing.

Replacing affiliate revenue with in-house sales isn’t something that will happen overnight. That’s an impossibility for almost any program, maybe even for one with a massive budget. I don’t believe that’s the answer either. This is more about long-term solvency and sustainability and paysites slowly transitioning the balance over a period of years by way of slow sustained efforts that position them to still be going strong for many years to come.

AJ Hall is a 14-year adult industry veteran and CEO of Elevated X Inc., a provider of popular adult site CMS software. Hall has spoken at industry trade shows and written for several trade publications. Elevated X software powers more than 2,000 leading adult sites, has been nominated for more than a dozen industry awards and won the 2012, 2014 and 2015 XBIZ Award for Software Company of the Year.


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