Adult Industry Blog
Sex, drugs & rock ‘n roll. That used to be the unofficial motto of Hollywood. And it worked. For years, the so-called scandals of celebrities in public were enough to keep tabloid headlines fresh, interesting and attractive to readers. Now though, it’s 2014: we’ve seen it all and it is no longer enough to simply report on what celebrities are doing in the public eye. A new unofficial motto has taken hold of those that fancy themselves the gatekeepers of celebrity information: sex, more sex, and leaked private media.
In recent times, not only have there been a rash of leaked photos from consumer-driven websites like 4chan, we’ve also lately seen stories of big name production labels, such as Vivid, considering the release of celebrity sex tapes. Rapper Iggy Azalea is at the center of the most recent controversy, with reports that a former boyfriend is shopping around a sex tape involving the entertainer to various media outlets including Vivid Entertainment.
Images or videos released to the public which were not originally meant for public consumption bring with them a wide variety of legal issues and pitfalls. That being said, there are four main issues in this realm which should be noted for anyone considering publishing this increasingly popular category of material.
Copyright: Initially, the person who created the media presumptively owns the copyright in the media. Sounds simple enough, right? Not exactly. This clear principle can quickly be made muddy, given the way we all create copyrightable “original works of authorship” these days. For example, consider the famous case of the Ellen DeGeneres Oscar Selfie. DeGeneres licensed use of the now widely known photograph to the Associated Press. But did she own the rights to license? It is unclear. DeGeneres is the one who got all the famous stars together, posed them, and set the scene for the photo. However, she was not the one to click the shutter button on the phone: Bradley Cooper was. The traditional presumption is that the photographer – meaning, very literally, the one who clicked the shutter button – owns the copyright and can distribute it. Additional confusion arises when the photographer is acting at the specific request of another – particularly without a ‘work for hire’ agreement. Within the rash of leaked celebrity photos on 4chan, this principle would mean that the copyright in each of the selfies was owned by the celebrity who took the picture, providing that individual with a strong intellectual property case to go after anyone who published the images. Conversely, however, in the case of Iggy Azalea, if her former boyfriend shot the video, he would have a good argument as to ownership of the copyright in that case. That’s not the only consideration for leaked media, however…
Publicity/Privacy/Commercial Exploitation: Even if Azalea’s former boyfriend properly owns the copyright, Azalea, as the subject of the video, also maintains rights to control the publication of her personal depiction in the video. A model or subject depicted in media has a right to profit from the display of their ‘image and likeness.’ This is usually called the right of publicity; or sometimes, the right to commercial exploitation, and is separate from the copyright. If the recording was done in secret, there may be privacy rights at play as well. All of these rights would typically need to be waived by execution of a model release. If not, then the individual depicted in the video retains the rights, and can sue for violation of those rights. Naturally, with celebrity sex tapes, there typically is no model release signed before the ‘performance.’
Section 2257 Records: The elephant in the room regarding celebrity sex tapes is compliance with 18 U.S.C. § 2257. As virtually all producers of erotic material know, Section 2257 imposes an obligation to review and compile certain performer identity and age documents prior to filming and/or publication. If those records were not created beforehand (which rarely, if ever, happens with a private sex tape or leaked content), the content is presumptively illegal to publish in the absence of accompanying records. The original producer must keep the original records, and all secondary producers (including webmaster) must keep copies of the records, along with generating their own records, such as the URL’s associated with the person depicted in the video. A notice of where the records are kept must be associated with the video, in the manner required by the statute and regulations.
Publication Risks: What happens if you publish a sex tape without 2257 records? The answer may depend on your role in the publication process. The original producer of the material, and the person responsible for initially uploading or publishing the material on a website, are clearly responsible for any non-compliance, which can include a multi-year prison sentence. So how are all these images being published on the Internet, presumably without 2257 records or model releases? Often, the content is uploaded by an anonymous customer of a ‘user generated content site’ such as a tube site, or posting forum like 4chan. The operator of the site will assert a Section 2257 exemption, designed to protect hosts and social networking sites from liability, and excuse their compliance with 2257 records maintenance obligations. The validity of the exemption depends on whether the site operator was actually involved with soliciting the sex tape upload; or in some cases, actually posting the content. If that activity can be uncovered, the site would almost certainly fail in asserting any attempted 2257 exemption. If the posting was done through a legitimate, unsolicited third party user upload, the site may be off the hook for 2257 compliance. Once the content appears online – somewhere – as user generated content, other ‘indexing sites’ link to it, categorize it and reproduce it, on a multitude of other sites; which ultimately display and drive traffic to the user-uploaded file. Section 230 immunity and DMCA safe harbor typically protect the tube sites and indexing sites from monetary liability for violation of publicity rights, privacy rights and copyrights, with respect to legitimate user uploaded or indexed content. All of this anticipates that the individuals depicted in the videos were over 18 years old when the content was created. If not, none of the exemptions, immunities or safe harbor protections will help the publishers with regard to child pornography allegations. Failure to report such content, once being made aware as website operator, is also a violation of federal law; Section 2258A.
Publishing sex tapes and leaked celebrity content is risky business, particularly in the absence of Section 2257 records or model releases. Celebrities have money and power…and lawyers. They can afford to enforce their rights, and may have enough influence to get law enforcement interested in pursuing criminal investigations. While some online service providers may be able to rely on federal law to skirt liability for the publications, any involvement in soliciting, posting or producing this category of erotic content generates significant legal risks.
Ah yes. Batteries. Can’t live with ‘em and can’t live without ‘em especially when it comes to good ol’ sex toys. While many products are being released with a plethora of new battery-charging technologies (USB chargers, anyone?), my heart and soul are forever dedicated to those fabulous AA, AAA, Cs and Ds. Yep, batteries.
Batteries and I go way back. I have always believed that every job I ever had would eventually be linked to my future life as a sex toy entrepreneur owning my own store, Grand Opening! Yes, I had a job for many months as a technical library assistant for, you guessed it, Duracell. True! And during that time and after working in so many areas of the sex toy biz, I learned so much about batteries and I’m going to share that info with you.
As we know, batteries come in all shapes and sizes and there are basically just a few sizes that are used in our industry. Let’s look at all of them after we learn about some basic battery care.
Probably the most important thing to know about the most common cylindrical batteries is that there is metal at both ends. I know you’re thinking “Duh” but did you know how careful you should be with them? Whenever the metal end touches anything metal, it will create a slow and painful death for your battery, slowly drawing energy from it and making it conk out much sooner than it should. Keeping your batteries in a pile or in a metal coffee can will kill them quickly. Best to store batteries on their sides, in a cardboard or plastic container so the ends won’t come in contact with anything metal. In fact, I store my batteries in a plastic pencil container and they fit in it pretty well.
Some people keep their batteries in the freezer but it is generally not recommended for today’s batteries as condensation can build up on them and in them. Best to store them at room temperature… in plastic or cardboard.
Getting back to storage and whether or not you should leave batteries in their designated products, well, think about it. If metal drains batteries and the battery contacts in vibrators are metal… well, better make that vibrator a dildo by keeping the batteries out of it until you’re ready to transform your toy into a vibrator to buzz away. Put those batteries in before you apply lube to your fingers and giblets and you should be good to go after that.
Another difference to be aware of is that of alkaline vs. carbon batteries. Carbon batteries are kind of old school: they are lighter in weight and sometimes don’t last as long as alkaline ones (more on that in a moment). But the thing is, if a vibrator runs particularly and peculiarly hot, one might want to switch over to the lesser-powered and not-as-hot carbon batteries. They will work as well without making your battery-powered vibrator feel as hot to the touch. Carbon batteries are often branded as Everyready batteries and Panasonic batteries and you can read the package as to what batteries are made of what.
Alkaline batteries are the industry standard these days with Duracell and Energizer leading the pack on these. They may run hotter than carbon batteries because of the more concentrated power but they do tend to last much longer.
Now, we also know that SIZE MATTERS! Before, the thinking was the bigger the batteries and the more of them, the more powerful the vibrator will be but since technology has outpaced popular thinking, there’s some suckers out there that sure pack a wallop and run on several teeny tiny batteries. So let’s see what size is all about…
The small “button” cell batteries, commonly known as LR44 (or A76 or AG13 size), are used in many small vibes, including those in cock rings. Stumbling around the web, I came across http://www.lr44batteryequivalent.org/ which really spells out a lot of info about these little suckers! You learn something new every day! Anyhoo, as a responsible retailer, make sure you sell replacement packs of these when you sell a smaller vibe that uses them. If your customer has to go out and buy them as hearing aid batteries, they run about $3 EACH that sometimes, when your gizmo has three of them in it, can be more than the toy itself. Selling the button batteries when you sell the product creates a nice, caring upsell you can offer to your customer and so be sure to ask your distributor who has them available.
I also entertain myself with the fact that the word “battery” in French is “une pile” – pronounced “peel” which to me sounds like “pill” which is exactly what these look like – but don’t swallow ‘em!
Let’s move up to the next size. Those pesky yet still used “N” batteries. I can see your eyes rolling now, my friends. I hate these batteries! They are smaller than a AAA battery in length but about the same circumference. Now here’s the rub: there are two different sizes of N batteries and they are not compatible with each other! Agh! There is a slight difference in the circumference and the nipple end (“What? Batteries have nipples?”), you know the positive end with the bump on it as opposed to the flat end, is a slightly different size between the two. I really wish manufacturers would dump this battery as they are tough to find replacements for. Sigh.
Next up are the common sizes of AA and AAA, both of which are readily available to the consumer. In my years of reviewing sex toys for XBIZ, only once did I come up with a vibrator that was powered by four AAAA batteries (so that would be four four A batteries – something a slight dyslexic would have a hard time figuring out). Good luck trying to buy AAAA batteries someplace… it would have been better to design a more consumer-friendly toy using readily available batteries to begin with.
Then come the larger and sometimes unwieldy C and D batteries and I don’t know about you, but I’d prefer to refer to C and D only when referring to bra sizes. They are big and clunky batteries to be slipping into toys and thank God they’ve pretty much gone by the wayside along with advertising for hard plastic, ivory-colored vibrators that were good for those “hard to reach places.” Keep them for your flashlights, folks.
Here’s a couple of more things about batteries. Make sure you have a battery tester available to test the batteries you have in your testing vibes at your store. When the batteries are weak in a vibrator, a vibrator will be weak, too, which can disappoint a customer looking for a good thrill. I’d say to check the batteries in the toys at least on a weekly basis and perhaps you’ll find some on a weakly basis (I couldn’t resist that one).
Also, remember that batteries make an excellent upsell item! Buy them in bulk (but please, not the ones that say “Kirkland” on them because we all know you hauled your sorry ass to Costco that week). Invest in Duracell or Energizers and offer them to your customer at the point of purchase and most of the time, they will buy them for a buck a piece just so they don’t have to go scrambling around at home to dig one out of the coffee can that won’t work anyway.
Besides which, if you offer them batteries in your store and it’s a long ride home, maybe they can try their gizmo even before they reach their destination.
I think I’ve been living in L.A. too long…
Next up! Vibrator care and feeding!
See ya on the next blog!
And now for JOTB (joke of the blog):
Once a little boy was walking with his mother and he came across a butterfly. He quickly stomped on the butterfly, killing it. His mother was appalled and yelled "That's it Matthew! No butter for you for a YEAR!" Matthew looked up at his Mom and replied "Whew! I'm glad it wasn't pussy willow!!"
What are your constitutional rights when it comes to viewing pornographic, violent or controversial material in your own home? This is a question we frequently address as First Amendment attorneys, and on which there is still some confusion in the minds of consumers. Is there a right to view or possess pornography? What about obscenity? The answer to both of these questions, under the First Amendment to the United States Constitution and the Right of Privacy, is indisputably yes.
Stanley v. Georgia was a U.S. Supreme Court case in which the home of Robert Stanley, a Georgia resident, was searched by police. Stanley was previously convicted of bookmaking, and was suspected of conducting such nefarious activities again. Police had a warrant to search his home for bookmaking paraphernalia, and instead, found pornographic material in a drawer. Under Georgia law, it was a crime to possess obscene materials. Stanley was charged and convicted, and the conviction was upheld by the Supreme Court of Georgia.
That was not the end of the Stanley’s story, however. The U.S. Supreme Court overturned the conviction, and in the process made clear that all state laws criminalizing the mere possession of obscenity were invalid. In doing so, the Supreme Court noted that there is also a fundamental “right to be free, except in very limited circumstances, from unwanted governmental intrusions into one’s privacy.” Regarding the notion that the State of Georgia could control the contents of an individual’s personal home library, the Court said this was “wholly inconsistent with the philosophy of the First Amendment.”
Out of Stanley comes the legal principle that individuals are free to possess and view pornography, even if that material is considered obscene, in their own homes. Stanley placed no specific restrictions on the content or subject matter of the materials. Individuals are free to possess extreme erotic material in their own homes, and may additionally view whatever fetish or subject area they wish.
This right is not absolute, however. The right to view pornography comes with one important limitation: the prohibition against even mere possession of underage material. In Osborne v. Ohio, the U.S. Supreme Court held that states’ prohibitions on the mere possession of child pornography are not inconsistent with the First Amendment and therefore, even private possession of child pornography is illegal. What constitutes possession, however, varies by state. Some states have court rulings or statutes saying that viewing without downloading constitutes possession, while other states require active downloading onto the hard drive to meet the possession threshold. Under federal law, “receipt” of child pornography via the internet or other interstate transmission is prohibited as well, thus triggering potential federal penalties for these acts.
Importantly for advertisers and operators of adult websites, the U.S. Supreme Court has held that it is also illegal to promote something as containing underage materials even if it actually includes only adult performers, pursuant to federal “pandering” laws. Importantly for viewers, anything that is suggested to be underage material may actually contain such material, so it would therefore be best not to access such materials at all. Additionally, “morphed” or “photoshopped” images, containing the bodies of adults but the heads or faces of minors, have been the subject of recent and conflicting court decisions. Nonetheless, consumers are warned to avoid this content as well, given the potential risks.
Aside from the possession of underage materials, what is legal to view in your own home is a large category and includes exceedingly controversial content; such as images of violence, animal cruelty, and even “virtual” underage images, videos, cartoons or drawings. For violent images, there is interestingly no limit to the amount of simulated or real violence that can be viewed, as obscenity laws only apply to sexually-oriented materials. Although extremely controversial or violent materials may be legal to view, one must make his or her own personal decision whether to support or endorse content depicting self-harm or individuals being exploited. Another important point for viewers to note is that downloading a video depicting a real crime of violence may place you in the position of possessing relevant evidence, and subsequently destroying such evidence may, itself, be a crime.
Excepting the possession of underage materials, as noted above, individuals are free to view and possess a wide variety of violent and erotic content in their own homes, without fear of criminal prosecution. The First Amendment needs sufficient “breathing room” to survive, and part of that is tolerating the private possession of material that might be illegal in other contexts, like obscenity. However, with the widespread use of smart phones to create a diverse amount of both erotic and violent material, substantial questions remain regarding the legality of “producing” images that might be perfectly legal to possess.
Most individuals who have been working in the online adult industry marketplace during the past 10 years agree that making money and being successful has gotten more difficult and costly. Many of those individuals have spent a lot of time attempting to place blame on the change in the marketplace and not enough time working on either changing their aging business models or creating new products and services. On the other hand, many individuals have moved past older business models and looking for people to blame and have engineered new products, new business models and have continued to be successful in the online adult industry.
As part of reinventing and renovating themselves, more than ever, individuals and businesses have been collaborating and sharing resources in order to provide consumers with products and services that could not have been offered without the collaborative effort. In fact, many of the collaborating parties used to consider each other competitors and would have never dreamed of working together. These collaborative efforts have led to the creation of new products and services that share content, URL's, traffic, and advertising.
It is very important for collaborating parties to not neglect considering the legal ramifications of collaborations. For example, many parties have been sharing content, whereby a content producer or content owner has been providing content to a website for purposes of marketing and/or inclusion in the website's paid subscription area. In exchange for allowing (licensing) the content to the website operator, the website operator compensates the content producer or content owner via revenue share, pay per click etc. In this example both parties need to consider the substantial legal issues that could arise including but not limited to, i) content licensing issues ii) payment issues, iii) content piracy, iv) and disputes between the parties. In this instance (and all other types of collaborations), it is essential for the collaborating parties to reduce their agreement to a written contract. The written contract will not only define the rights and obligations of the parties but it can (and should) also resolve how disputes shall be dealt with between the parties (if they ever arise).
The fact is, collaborative projects frequently terminate for numerous different reasons but the majority of collaborative disputes arise because one of the collaborative parties become disatisfied for financial reasons. A solid written agreement between the parties will not only dictate how things will proceed during the good times but the written agreement will also control how things will proceed in the event of a dispute. Being lazy or cheap is the wrong approach. Stop with the verbal agreements and napkin notes that never get memorlized into a legally binding contract.
One final point that I'd like to make is that my experience has taught me that family and close friends often make the worst collaboration partners and can result in the ugliest disputes. Do not engage in a coloborative effort with family and close friends unless you are prepared to lose that relationship. Unless you are going to be prepared to lose the relationshp then walk away; money isn't everything.
It's very exciting to see how more people are realizing that the sharing of resources can often turn into an incredible product and I'm looking forward to the continued colloborative projects that result. Just don't forget to make sure to cross all of your t's and dot all of your i's before proceeding.
Thanks for reading.
Google, a name most associated with the popular, gargantuan search engine, has been making its way into the headlines for a different and much more egregious reason: censorship across its platform of products. The company recently made waves for prohibiting adult material on its advertising network, AdWords. Now, it seems, Google has expanded its censorial policies and many are wondering just where the company will stop.
Xbiz.com founder and editor, Alec Helmy, called out the search giant for its hypocritical behavior; echoing the concerns of many in the adult industry. In an open letter, Helmy wrote, “Your decision has left countless businesses in dismay, bewildered about why an ultra-progressive company that is so committed to ‘Freedom of Express’ would make such a decision. These same companies also remain concerned about what the future may hold – specifically, whether you will also decide to place adult oriented websites at a decided disadvantage in organic search results.”
Through a spokesperson, Google claims its restrictive policies on adult advertisements are not new. However, many familiar with Google and the adult industry do not agree. Theo Sapoutzis, chairman and CEO of AVN Media Network, said he was surprised by the move: “I was one of the very first advertisers for AdWords back in 2002. It’s something that’s been [untouched] for 12 years, so you don’t expect change is going to start happening.”
Tom Hymes, senior editor at AVN, agrees, noting that many in the adult industry have been abiding by Google’s rules for years and are now being abandoned by the search giant: “There are many people who say the biggest losers are the ones who play by the rules. The winners are the huge properties with a lot of free content and frequent updates – the type of actions the Google algorithms really like.” BaDoink CEO, Todd Gilder, added to the chorus with a scathing open letter to Google, noting: “When an organization as visionary, powerful and dominant as Google starts kowtowing to shrewd, faith-based special interest groups with federal lobbyists like Patrick A. Trueman at the helm, it’s a sad day for freedom and a sad day for IT.”
Now, Google is taking its censorship on advertisements a step further and directing business users to cover up “sexually explicit content” in the form of album covers. The search giant has instructed music website Drowned in Sound (DiS) to pixelate, thereby censoring explicit cover art. Sean Adams, founder of DiS said that “it seems crazy that they feel they can police our editorial.” He also wondered just far Google would go with its censorship policies in the future. Just recently, Google surprised many users when it removed several thousand links in an effort to comply with the EU’s “right to be forgotten” law.
Adams is certainly not alone in questioning the lengths and depths of the company’s censorship. Many people, both in and out of the adult industry, are uncomfortable with Google’s recent decisions and wonder what will come next. Attorney Michael Fattorosi stated, “This is another example of a mainstream company turning its back on the industry that has supported it. The question now becomes: Will they block adult content from their search results?”
Google has also previously attempted to keep adult content out of other major products: developers are not permitted to share Google Glass apps with sexually explicit content and sexually explicit materials are banned from Chromecast.
Many are speculating that pressure from conservative groups caused Google’s policy changes regarding adult content. Morality in Media, an ultra-conservative media activist group, claimed through a press release that Google’s policy changes came after a “productive meeting” between the two. Google has refused to confirm the connection. If accurate, this kowtowing to a family values group is a first for the search engine giant, which previously prided itself on commitment to free expression principles.
David Holmes, writing for Pando Daily, explains the greater problem of Google’s censorship and its impact beyond the adult industry. Holmes writes:
You may despise pornography, but the specter of “family values” has often been used to attack anything that threatens traditional Christian morality, from homosexuality to books about wizards. I doubt Google will ban Out Magazine or Harry Pottery anytime soon, but what about links to, say, a provocative work of art like Piss Christ? Or ads for birth control?
As Holmes notes, the importance of tracking Google’s policy changes is not only for their impact on industries currently hurt by the new rules, but also their potential to censor information Google doesn’t agree with in the future. Holmes colleague, Mark Ames, makes an important point: “Never in history has one corporation and one source had so much power over what we know and don’t know.”
Google’s power to filter the information received by the public is vast, and its ability censor disfavored speech, dangerous. Most importantly, this is everyone’s issue, not the select few whom Google has decided to target today.
Legendary Hollywood film producer David O. Selznick once quipped that there were only two ways to make money in motion pictures — either via very cheap, or very expensive productions — illustrating how profitability across the vast middle ground of content production has remained perennially elusive.
It’s a reality that continues to shape the media landscape, adult-oriented or otherwise, as evidenced by the current state of the online adult entertainment market, where producers on shoe-string budgets struggle to compete against monolithic powerhouses that are consolidating their virtual stranglehold on professional productions and high-volume distribution channels — while middle market players have all but evaporated from today’s scene.
The middle ground, like the middle class, is seemingly fading away — and leaving the smallest and largest of firms to prosper in the wake of this seismic shift.
This is an anecdotal assumption, however, so I set out to begin quantifying some of the data by reaching out to industry leaders at XBIZ.net for insights as to today’s adult website budgets, specifically, major expense areas and the percentage of gross revenues attributed to each, to see if we can come up with an average that site owners could use as a benchmark. Although companies of different sizes and market segments will have different percentages, they do share many of the same budgeting categories.
Additionally, I am interested in identifying approximate revenue ranges to stratify results, defining what we consider to be “hobbyist” or part time sites, small companies, medium and large firms based on their revenue breakpoints in 2014. Sure, this analysis is all “how long is a piece of string” conjecture, but some basis of comparison is better than none...
According to Grooby Productions President Steven Gallon, individual operators and hobbyists that want to make a living from the industry might be happy with $40,000 per year — but anywhere up from there would depend upon the scale of their operations.
Characterizing Grooby as a small- to medium-sized company with an office in Los Angles employing eight full-time staff members and another seven full-time remote workers, Gallon says that his company earns money from website, DVD and ad sales, along with white labels and other revenue streams.
“We’re primarily a content company, so a vast amount of our budget goes there, probably close to 30 percent for models and photographers and obtaining content,” Gallon told XBIZ. “Staff costs would be next up at 20 percent, including dividends, social security, health insurance and bonuses, but much of our advertising, editing, design and social media is done in-house, so that accounts for a lot of this also.”
Other expenses include 15 percent for bank and processing fees; 12 percent for affiliate payouts; three percent for server and technical costs; close to three percent for business development, including travel, hotels, dinners and show sponsorships — with about one percent going to software and services such as legal fees and DMCA pursuits, and another percent on advertising.
“We don’t spend a lot on advertising, but if we included the Tranny Awards (soon to be renamed the TEA Awards), then we’d only be looking at about one percent,” Gallon offers, adding “The rest goes into taxes, rent and office supplies, etc.”
Gallon confides that during the darkest days of porn’s decline, the company proactively tightened its corporate belt, preventing the losses that harmed less nimble firms, while paving the way for expansion.
“We’ve had year on growth for 2012-2013 and so far in 2014,” Gallon concluded, adding “Our plan this year is for 10 percent gross growth.”
Deemented of Oliya Productions explains that typical costs for Internet businesses include the pre-opening expenses, such as company start up, development, website design and the construction of the site’s front- and backend, along with intermediary expenses such as customer acquisition and product stock, plus sales staff, miscellaneous overhead and legal expenses, plus post opening costs, including fulfillment, restocking, accounting, returns and customer service.
“Marketing as an example is a cost of customer acquisition. If you sell DVDs or post new photo sets that is fulfillment. Front end may be a portal or the site and its URL,” Deemented explains. “You can fit different items of an individual business into different slots, such as an affiliate program could either be customer acquisition or sales or both. For most web businesses after opening, customer acquisition is the largest piece of the pie.”
Barefootsies of Reality Chexxx believes that adult website budgets involve too many variables to make averaging a valuable excercise.
“For example, corporate porn is going to spend a lot more on ad buys than the ‘piss ant.’ Many do very little cash money spend, and instead work the social and link trading type of things,” Barefootsies told XBIZ. “You’re also going to have labor (plus the costs that go with labor) and other expenses a small fry would not consider, as they are probably a sole operator or a mom and pop.”
There are many different factors affecting advertising, content, hosting, labor and more, causing the figures to also vary between tube and pay sites, for example.
Barefootsies outlined two basic options for building a pay site today: the first budgets $300-$500 monthly for hosting that can handle more content or multiple servers needed for storage and encoding. Next, $150-$300 per month for Elevated X or a similar CMS which could have additional costs, as well as four to five figures each for labor and content each month.
The second option is lower budget, running $99 per month for hosting a single site (or less content), plus $29.95 monthly for Porn CMS, “free” labor courtesy of mom and pop, and perhaps $X,XXX content expenses for small time productions or less scenes.
“As you can see, there are vastly different expenses and costs involved,” Barefootsies says, noting that the same range of expenses applies to tube sites whether they use MechBunny or a different CMS.
AJ Hall of Elevated X Adult CMS fame says that rarely do customers start out budgeting $800/mo. for software and hosting.
“The actual number is closer to half that as an average with the cost of the Pro CMS version and hosting each representing about half of that amount. If you go with the same hosting but with the single site Basic CMS version, the split changes to two-thirds of the expense going toward hosting,” Hall stated. “That simple change alters the software/hosting cost split by 25 percent, and that’s a lot, depending on a company’s revenue and what percentage these items represent.”
Hall adds that as a company grows, things like CMS, hosting and processing fees (which may be as high as 25 percent for a small company) will drop to single digits, and for larger companies will drop to a fraction of a percentage of total expenses.
“Don’t get me wrong, we’ve had plenty of people over the past eight years pay $150 a month for Elevated X and go with budget hosting and make a couple grand per month off a small pay site and be totally happy, but that’s usually not their ultimate goal,” Hall told XBIZ, emphasizing what he calls the seven P’s: “Prior proper planning prevents piss poor performance,” a lack of which he says is the number one reason for every business closure or abandoned project he’s seen.
Master Ryan of Porn CMS is amazed at how many new site owners sign up for a basic account that includes the video converter and hosting for $29 per month, yet are only able to last a few months or can’t afford staple items such as content, marketing and design.
“They come into this with practically nothing and want to make bank. I support them as much as I can, but there's not much I can do for people who can’t even put a minimal amount of investment into their new business,” Master Ryan stated, advising operators that wish to start a pay site that they need to budget a minimum of $1000 per month for expenses. “That’s assuming you pay next to nothing for the CMS and hosting (such as our $29/mo. package) and go with a generic design. You still need content and marketing and that amount can be a little lower if it’s a solo site and you don’t pay for content, but that’s only saving [perhaps] 10-15 percent.”
Master Ryan offers a rule of thumb where 20 percent of a budget should be devoted towards site development, including the content, design and software, while 80 percent is targeted for marketing.
“The marketing is the only part that brings in sales. even if you want to sit at your desk eight hours a day and do all the marketing yourself, it still needs to be 80 percent of your time,” Master Ryan explains. “I’ve had so many past (and a few present) site owners that spend 80-90 percent of their time on their content and tweaking their site, and they wonder why they aren’t making more than a few sales a week. Then I have very successful site owners who keep their site very basic and spend all their time promoting the site.”
“You can guess which ones run their sites full-time and which ones still have day jobs,” Ryan adds. “Making money in porn isn’t magic — it’s all about online marketing.”
Kelli Roberts of Kelli Internet Services told XBIZ the tale of two recent clients that both set out to build adult pay sites, but on vastly different budgets.
“One understood that you needed content and gladly wrote that check for $8,000, which actually he got a crazy good deal — it worked out to be about 100 DVDs, each [averaging] five scenes, so basically he spent $8,000 for 500 videos for his new site,” Kelli confided, revealing the other client was shocked to learn he had to spend money on content. “It was like, umm, then why are people going to join your site? What are they going to do when they get inside your members area, twiddle their thumbs?”
The client ended up spending around $1,500 for content, which bought him around 12 DVDs with 60 scenes in total.
“So now you have this great website, but nobody knows about it. So of course you have to factor in marketing and some basic SEO. They both spent insanely different amounts on this too,” Kelli told XBIZ. “In the end they both got what they wanted, a membership website — and both spent very different amounts doing it.”
One proponent of the low budget route is Woody of PlatinumAdultBusiness.com, who receives 65 percent of his income from designing turnkey adult websites, and notes that it only costs him $8.95 per month for hosting, plus SEO expenses.
Kelli Roberts was quick to explain that $8.95/mo. only buys virtual hosting on a shared server, saying “That may work for your first website, when you have no real traffic and just getting started, but you’ll quickly find once you start getting any amount of real traffic that you are going to need to upgrade to a dedicated, managed server and that at a very basic level starts at $99 a month and goes up from there.”
Adult Voyeur confides that on one of his sites, the average shoot cost is around $25,000, while the shoots for another site cost around $3,000. On top of this are expenses for “spec” and leased content and the bandwidth used — and those expenses are different for cam, dating, toy and other sites.
SGS of SDYPhotography tells XBIZ that while model costs have fallen through the floor, the company sees hosting as its biggest expense, but notes that this cost has come down annually, and that the firm will be seeking to make further reductions this year as well.
Explaining that UK producers of note have long gone from the adult sector, Oscar Storm adapted his business to suit the needs of models, earning himself a 20 percent return in the process.
“For me, my sites are not a way to generate income or make money, they are a marketing tool, part of the overall,” Storm says. “The costs come from my marketing budget and are small compared to the media advertising spend I do. As a cost they have to be justified in my overall business model.”
Storm outlines his expense percentages as being 50 percent for property, which is broken down to include items such as property tax, repairs, fixed costs, furnishings, lighting and laptops, etc., as well as 25 percent for marketing, including websites, advertising, emails, and sponsorships, of which websites account for only around five percent of expenses. Add in five percent for administration expenses such as general office costs and travel, and Storm is left with 20 percent profit.
For his part, Leo Karabatch of XCzech Empire offered that he started out with 50 updates featuring 10 models, and that he acquired this original, exclusive content and girls, building three sites with a custom CMS and video player, plus graphics and hosting, on a budget of $5,000 — showing frugality can lead to greater profits and lower barriers to entry — and Leo is not alone in this quest.
Self-proclaimed “piss ant” Crissy N. of Wikkid Vibes, operates an adult retail store and tries hard to keep costs low at this company run by a husband and wife team.
“Our total cost for a month is around $160. All our SEO is in house. We do our own blog. As of now we have been able to make our little piece of the adult world self-sustaining,” Crissy N. says. “We hope by keeping up with the trends selling what our customers want and providing great customer service we will grow a profitable company.”
Amelia G of Blue Blood’s SpookyCash echoed the difficulties in coming up with accurate figures, noting that “it is very challenging to get remotely accurate numbers in an industry where most of the players are privately-held.”
Looking at the wide range of expenses and revenues reported by adult entertainment companies in 2014, it is clean that size does matter; and whether you’re spending $8 or $80,000 per month or more, there are common issues you’ll be dealing with — the only difference will be your options, and profits.
The Digital Millennium Copyright Act’s (DMCA) “notice and takedown” procedure and the attendant “safe harbor” protections afforded to service providers often spark controversy and debate. Originally designed as a way to balance the interests of copyright holders and online service providers, the DMCA’s 14 year history has demonstrated that well-intended laws can quickly become outdated and misused. Often DMCA notices are sent by, or on behalf of, competitors seeking to damage another party’s business, or by those who do not understand basic “fair use” concepts. On the other hand, DMCA safe harbor can be manipulated and invoked by parties that Congress never intended to protect from copyright infringement liability.
Change is in the air, however, at least for traditional DMCA notice and takedown procedures. Recently, the United States Patent and Trademark Office opened a public forum in pursuit of ideas for improving the notice and takedown process explicated by the DMCA. The forum was to be the first of a series of such, all geared towards the ultimate goal of increased efficiency, as well as continued protection for copyright holders, under the DMCA. The public discussion came after a green paper released in July 2013 by the Department of Commerce’s Internet Policy Task Force examined problems with the current notice and takedown process.
The purpose of the forum, according to Patrick Ross, a USPTO spokesman, was to solicit input to answer the questions raised by rights holders, service providers and the public at large, as addressed in the green paper.
The speakers were from a diverse cross-section of those affected by the DMCA: The Software Alliance, the Computer and Communications Industry Association, the Artists Rights Society, Google and many others.
One of the most common complaints from rights holders, according to the forum, is the inability of small and medium-sized artists or enterprises (SME’s) to keep up with infringement of their work. A proposed solution to this was the encouragement of collective representation for infringement research.
Additionally, one of the main and pressing topics examined at the forum was whether standardization of forms for the notice and takedown procedure would be helpful, both to rights holders and service providers. Overall, many of the participants believed that standard forms for notices seemed a good beginning, but certainly not a good end. The feeling at the forum was that there remained much work to be done. Several of the speakers, both service providers and rights holders, stressed the need to maintain balance in any solution designed to bring more efficiency to the DMCA, so that both sides would find value in the notice and takedown procedures.
Another possible solution discussed was creating “Trusted Submitter” programs, something Google has done, to more efficiently process DMCA notices. More diverse solutions were offered as well, such as the potential creation of a certification mark or badge for Internet search results, to alert consumers which pages were authorized or licensed sites for the particular intellectual property being searched for.
Given the large volume of notices received by most service providers, which often makes responding in a timely fashion difficult and costly, this is a great moment in time to examine better and more efficient methods of protecting copyrights online. The DMCA has been an important tool, for both rights holders and service providers alike, and may need to be updated to continue as such.
As discussed at the forum, it is important to keep in mind the balancing of interests that goes into any intellectual property issues on the Internet. Rights holders must be given a fair and easy way to prevent and police infringement, while online service providers must have an opportunity to efficiently and easily handle incoming notices. Those who abuse the notice and takedown process must also be held accountable.
Does the virtual assistant on your smartphone just “get you”? For many smart phone users, interacting with a natural speech-recognizing, intelligent, digital assistant - ever-present on their devices - has become a way of life. It was impossible to imagine just a few years ago that we would become a society dependent on our bots, for everything from driving to a place we’ve never been to seeking out the latest movie reviews. Perhaps predictably, some individuals prefer interacting with artificial intelligence over human beings. Others have even developed ‘feelings’ for their digital devices. Yes, there is even a name for such a fetish: mechanophilia.
For the past several years, the popular online dating website Match.com has been defending a lawsuit alleging that the company utilizes fake user profiles in order to encourage real members to renew their subscriptions. The suit also claims that Match does not adequately vet their profiles, and that the site may be filled with hundreds of profiles that are inactive or scams.
The concept of interacting with a ‘bot’ or artificial intelligence is not new. Many of us have clicked a ‘live chat’ help button, only to quickly realize that we were ‘speaking’ with a computer program designed to help resolve our issue before a paid employee was required to spend time figuring it out. But the technology driving modern artificial intelligence like Apple’s Siri is astounding – and only getting better. Soon it may be difficult to discern the difference between live chat with a human being as opposed to a programmed bot. For website users seeking purely online interaction or flirtation, the distinction may be unimportant.
The use of ‘virtual’ or ‘fantasy’ profiles is not new (or unique) to the online dating world, but recently the government has begun to question whether this practice is “fair” or “deceptive.” But is there anything inherently ‘wrong’ with individuals flirting with bots or artificial intelligence? Is it possible that some socially awkward or shy individuals may actually prefer virtual relationships rather than the thought of real human interaction?
Director Spike Jonze recently released his film “Her,” staring Joaquin Phoenix and Scarlett Johansson, about a man who falls in love with his operating system. Eventually, the OS, who goes by “Samantha,” tells the main character, Theodore, that she must leave (along with all the other operating systems). The implication is that the incredible number of relationships she was having with humans became too much for her and that she and the other systems no longer wanted to be among humans.
The question seemingly posed in the film was why any human would choose interaction with a bot over interaction with another human. A more relevant question might be: must we question why?
Many of the online dating websites using virtual profiles do so with full consumer disclosure, including statements on landing pages, in user agreements, and through distinct labels placed on the profiles and any messages they may send. Despite the disclosures, millions of individuals willingly interact with these programs, and apparently enjoy the process. The role of the government in regulating, or even prohibiting, this form of entertainment must be questioned.
This issue has increasingly made headlines. Just this month, a man petitioned the State of Florida to allow him to lawfully wed his laptop computer. In the case of Chris Sevier, the laptop wasn’t exactly his original object: His computer was filled with porn and due to this, he claims he “fell in love” with his computer and began “preferring having sex” with it over living persons. Sevier, in fact, argued that his “love” for his computer should be validly recognized by the court. While an extreme and perhaps humorous example, this case is illustrative of a trend on the horizon that can no longer be ignored: People are developing relationships with their digital devices and programs.
Maitresse Madeline, a fetish webcam model, has also spoken out about this very issue. Earlier this year, a man paid $42,000 for a single webcam session with her. Madeline believes that this exorbitant sum can be explained by the fact that individuals are actually paying for the virtual relationship, not paying in spite of it. According to CNET, Madeline told Kinky.com, "They're often paying for the ambiguity that a Webcam relationship can create and that relationship over Webcam is, essentially, their fetish." Sometimes, it seems, virtual relationships on the Internet are exactly the experience users seek. Madeline went on; "They often want to be whoever they can dream up over the Internet and prefer to only have a relationship online.”
This new world of virtual love has already been alluded to within the confines of the law. Michael Froomkin, a law professor at the University Miami, leads an annual conference called We Robot,” where the goal is simply to get people thinking about the legal implications of a world with robots in it. According to Froomkin, it’s not unusual for technology to get ahead of the law. “You design stuff to make it work and you don’t think a lot about the legal and social consequences,” Froomkin told NPR. “So by the time the lawyers get in the room, the standards are already baked and the stuff is already deployed.”
Froomkin’s point is a valid one and has played out repeatedly, as the law lags behind technology. Although we may be years off from a fully functional, human-like bot with a deeply developed personality like “Samantha,” we do currently live in the world of Siri’s and virtual profiles. The future of bots may not be here just yet, but who’s to judge how humans should be permitted to interact with the bots of their choice? The one aspect that distinguishes humans from bots is free will. As creatures born with free will, should we not have the choice to interact with, and be entertained by, our digital creations?
Adult film stars are reportedly having their bank accounts systematically closed by JP Morgan Chase bank, for no other reason than their connection with porn. According to industry publications and more directly, tweets from adult film performers, Chase has been busy sending letters to hundreds of performers, arbitrarily closing their accounts with the financial institution. One actress, Teagan Presley, attempted to open another account at Bank of America after her termination at Chase but was immediately denied. Our law firm has received numerous similar stories of account closures or denial of banking services.
This is not the first time financial institutions have targeted the adult industry. Last year, adult performer Chanel Preston reported being denied a loan from City National Bank in Los Angeles due to her status in the adult industry. Earlier that month, industry producer Marc L. Greenberg was also denied a loan from Chase on what the bank called “moral” grounds. Years ago, PayPal turned its back on the adult industry, and refused to process payments for most adult-oriented products and services. More recently, blogs have noted that online payment processors such as Paypal, along with WePay, have ramped up their hostility towards erotica, by shutting down accounts of bloggers involved in merely publishing content of a sexually-oriented nature.
In response to these discriminatory banking activities, a popular Change.org petition has been created, demanding that Chase reverse these decisions. The public pressure on Chase previously caused the bank to reverse its decision on the denial of payment processing services, through its subsidiary, Paymentech, to a condom sales company who challenged the action. The outrage felt by adult industry performers and publishers is certainly justified, but is the activity illegal? Certainly, private banks can do business with whomever they choose, right? That’s partially true, but there’s more to the story. Initially, there are some restrictions imposed on the banking and financial community when it comes to illegal discrimination. For example, banks cannot systematically deny loans and other services to disadvantaged minorities, without running afoul of federal law.
However, the stunning truth is that these account closures appear to be motivated by none other than the U.S. Department of Justice (DOJ), which created a leaked program dubbed “Operation Choke Point” designed to pressure banks into denying service to certain disfavored industries including “pornography.” Vice News notes that megabanks and other financial institutions, like Chase, are responding to this pressure by closing adult performers’ accounts, and denying services to other adult businesses. The banking industry, itself, seems to be uncomfortable with this governmental overarch into the financial sector. American Bankers Association CEO Frank Keating wrote a Wall Street Journal op-ed noting that the banks may have no real say in the issue, since the choices are either to comply or get slammed with a penalty. William Isaac, the former chairman of the FDIC has even called Operation Choke Point “way out of control.”
The government’s efforts in applying thumb screws to federally-regulated banks in order to snuff out erotic businesses engaged in First Amendment-protected entertainment constitutes censorship - pure and simple. Instead of falling into the realm of discretionary private business decisions that would ordinarily be protected from legal liability, denial of banking to adult industry participants at the behest of the DOJ likely violates federal civil rights conspiracy laws, including 42 U.S.C. § 1985. This infrequently-invoked federal statute prohibits two or more individuals (or government actors) from conspiring to deprive a person’s civil rights or equal protection under the law. While the statute has primarily been used in the context of racial discrimination, it could well provide a legal vehicle for claims against banks and others who have conspired with the DOJ to discriminate against adult performers based solely on their participation in erotic expression. This sort of retaliation against citizens for participating in constitutionally-protected activity is intolerable, if not illegal. The idea that our government would use the full force and intimidation of the Department of Justice to pressure banks (who are now largely indebted to the feds for bailing them out in 2008) into terminating customers it finds politically advantageous, represents a new low in governmental censorship.
Restricting the ability to access fundamental banking services can spell disaster for any business, and the DOJ presumably knows this. In fact, the author predicted this sort of governmental interference in the financial system as a means to impose censorship of erotica as far back as 2002, in the article entitled “A Chokehold on the Gatekeepers.” Cut off the ability to move money, and the business dries up.
Far from achieving its perhaps original purpose of curbing money laundering and other illegal activities, Operation Choke Point has become a means for the federal government to use banks to do its own dirty work of censoring adult businesses – something it could not do directly, thanks to the First Amendment. While affected performers and businesses may suffer in the long term, the continued popularity of digital currencies like Bitcoin and Litecoin may prove to be an important alternative for the adult industry to stay in business. Already, it has been reported that the affected businesses are flocking to Bitcoin to avoid the banking problems. While accepting Bitcoin as a payment method has inherent risks, and no one alternative currency is the perfect solution, this is another example of the Internet routing around censorship. So long as creative solutions are considered by the affected industries, the banks will lose some of their ability to control the content of entertainment and free expression.
I'm not sure why it took so long, but on May 1, 2014, the State of Michigan joined a growing number of states in seeking to criminalize "revenge porn".
(1)(A) Post on the internet any sexually explicit photograph, drawing, or other visual image of another person with the intent to frighten, intimidate, or harass any person.
(1)(B) Having posted on the internet any sexually explicit photograph, drawing, or other visual image of another person, regardless of whether the posting was with the intent to frighten, intimidate, or harass any person, refuse or otherwise fail to remove that explicit photograph, drawing, or other visual image from the internet upon the written request of that other person. This subsection applies regardless of whether the other person consented to the posting of that photograph, drawing, or other visual image unless that other person knew or had reason to know the photograph, drawing, or other visual image was sexually explicit and signed a release knowingly allowing that photograph, drawing, or other visual image to be posted on the interney by that person.
The State of Michigan does propose the following affirmative defense:
(2) It is an affirmative defense in a prosecution for a violation of subseection (1) that the person took all reasonable steps to have the photograph, drawing, or other visual image removed from the internet immediately upon the written request of that other person under subsection (1)(B).
The State of Michigan also attempts to define "sexually explicit":
(3) As used in this section, "sexually explicit" means displaying a person's genitalia or anus or, if the person is a female, her nipples or areola.
As an attorney who regularly practice criminal defense in the State of Michigan, I'm a little surprised by the holes that the drafters of this proposed law left wide open. Couldn't the image of a girl in a sexually provocative position or wearing revealing clothing or lingerie be just as damaging to her as an image that fits within Michigan's definition of "sexually explicit"? Is there some reason why the drafters left out the words "video" or "videotape" or "film"?
Nonetheless, it's clear that as each week passes, another jurisdiction is either passing laws or writing laws that attempt to put an end to "revenge porn". In fact, Arizona Governor Jan Brewerm just signed one of the most aggressive "revenge porn" laws enacted thus far.
In June's edition of XBIZ World magazine, I will be discussing the potential impact of "revenge porn" laws and their potential impact on commercial adult websites.