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Size Matters

Friday, June 27, 2014 Text size: 

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.

A working adult site webmaster since 1994 with experience in both mainstream Internet marketing and amateur-niche adult websites, Stephen Yagielowicz has a diverse background in photography, video production and communications. He has been part of XBIZ since its inception and is an active member of the adult entertainment industry today.
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Out with the Old…

Tuesday, April 08, 2014 Text size: 

April 8th marks the end-of-life for Windows XP, but what will happen to the millions of boxes still online — including my own, faithful and trustworthy 10 year old Dell XPS?

This isn’t an insignificant question, with an estimated 30 percent of desktop PCs still using this venerable operating system (OS), with third-world users the largest install base.

Without any further support from its creator, Microsoft, Windows XP, the company’s most successful OS, will soon become an even more attractive target for criminal hackers — and will slowly see dwindling support from third-party hard- and software vendors.

While Microsoft’s end-of-support announcement caused much concern among users, the situation is not as dire as some predict — at least not immediately. XP boxes will run just fine on April 9th — and for many years beyond that date.

They will not suddenly cease operating, and no one is being forced to upgrade.

Writing for the Trustwave Blog, Dan Kaplan notes that all good things must come to an end, including the 13 year old Windows XP, noting that vast publicity surrounding this shift in computing means it shouldn’t come as a big surprise to tech-savvy organizations — and indeed, it hasn’t.

“Of course, a number of companies currently running XP surely will be taken aback when the deadline arrives. But a much greater majority that hasn’t transitioned to a newer platform across their environment likely has done so on purpose,” Kaplan explains. “After all, such a migration is costly and complex, and runs the risk of breaking things due to incompatibility issues. Because of those reasons, and because XP is so widespread, expect to see it in use for many years to come.”

Most analysts agree that XP will live on for a large number of users.

“In truth, nothing will immediately change,” Matt Smith wrote for Digital Trends. “End-of-support does not negatively impact existing XP installations in any way. No features will be disabled, no upgrades will be forced, and even technical support will still be relatively easy to come across.”

Smith says that users shouldn’t plan to stick with Windows XP forever though.

“Eventually, you’ll need to upgrade or replace hardware with newer equipment which doesn’t support XP, or you’ll fall victim to a security flaw Microsoft never patched,” Smith concludes, adding that “You don’t have to jump to Windows 8 immediately. With some planning and perseverance, you can likely squeeze another year or two out of your existing setup.”

But is this practical reality “practical,” however, especially for adult webmasters that visit “questionable neighborhoods” when online as part of their work and play?

“Entities that fail to update are doing so at their own risk, both from a security and risk perspective, as well as a compliance standpoint,” Kaplan adds, citing the specific issue of Payment Card Industry Data Security Standard (PCI DSS), which will preclude users from relying on systems running XP. This is an important consideration for some paysite owners that may find themselves suddenly without a way to handle transactions…

All of this only reinforces the obvious need to upgrade — but what are the options?

The easiest option is to do nothing until sparks start flying out the back of my PC (this happened to my friend’s old ‘486 machine as it expired, making loud “backfires”), and relying on the skills of the Norton folks for my safety — but this isn’t the best option, as there are many other good reasons to upgrade at this point besides “having to.”

Clearly, Microsoft wants XP users to move to Windows 8.1, but this is a move that many will eschew due to the bad press surrounding Windows 8 — despite the fact that the 8.1 release addressed most of the early complaints about the new operating system.

Indeed, many on the upgrade path may opt for a Windows 7 installation, but that is only a temporary workaround at best, since you can soon expect a new Windows flavor that will leave 7 at least three generations behind the times, and such stagnation kind of renders the point of upgrading moot. And some PC pundits are already proclaiming the imminent demise of Windows 8.x — so the future may hold at least one OS upgrade for any new or soon-to-be purchased PC.

There are alternatives for continuing the use of legacy hardware, such as moving over to Linux or another OS, but that still leaves me running a 3.20GHz Pentium 4 with 3GB of ram and 320GB RAID, which cannot be considered a “performance platform” in 2014.

From an offline media server to a driver for a digital microscope (handy for my rock analysis and gardening), to use in video production with the aid of Black Magic tools or to drive a teleprompter, to even automate my model railroad — the variety of offline uses that these old machines will be put to is staggering.

This leaves me looking for a new “work” box and the choice isn’t an easy one, since changing operating systems leaves a learning curve and also means changing software — whether it involves a move from XP to 8.1, or to Mac or *nix platforms.

With the vast difference between XP and its newer brethren, learning one is the same as learning another, so going from XP to 8.1 “because you know Windows” won’t help as recourse for having to learn Linux or OSX.

Software is expensive and compatibility issues are very real, so for many XP users, the process of upgrading is not limited to hardware, but includes software and training — and while I am on the subject of “extras,” although my two digital 24” rotating flat panels (I love the portrait mode for articles and editing vertical photos) are still up to standards, you really need a fancy new touch screen to make the most of the new Windows OS — and this is a pricey option that eats up a lot of desk space (the 27” Dell is around $800).

My desk is 10 feet (3 meters) wide, so space isn’t a major issue; but every “option” raises the bar for acquiring and deploying a new system.

So what’s a boy to do?

The first thing I did was to install the latest version of Norton Internet Security and ran a full Windows Update (and drivers too) to make sure that everything is kosher on my XP box, with Norton promising continued antivirus support.

After much deliberation on this thorny topic, I have decided to go with Windows 8.1.

I started using Windows 3.1 when I moved over from IBM’s OS/2 (which I loved, but the writing was on the wall), and 8.1 marks perhaps the last milestone for me with the OS — I was damn close to going Mac, as I love my iPad 3 and iPhone 5S — but my two Dell workstations and one Dell laptop have been reliable performers, so the company will find another repeat sale to a loyal customer.

Perhaps staying in the Windows fold is psychologically comforting to me, as it lends a small degree of consistency to a rapidly evolving workflow and business environment — I’m not afraid of or resistant to change, I just like it in small doses that I can “control.”

For the technically curious, the box I ordered (my third Dell XPS) has a 4th Gen Intel Core i7-4770 Processor (8M Cache, 3.4 GHz); 32GB of Dual Channel DDR3 memory at 1600MHz; a 3TB 7200 RPM SATA Hard Drive (6.0 Gb/s); plus a 256GB SSD that’ll be great for video captures; and graphics from an AMD Radeon HD R9 270, 2GB GDDR5.

I should have it up and running before the XBIZ Summit in Miami and will keep you all posted on how this little adventure turns out — and if you are also looking to upgrade an XP system, I hope my story helps you to make the best choice…

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Your New Competition

Tuesday, February 04, 2014 Text size: 

If you don’t know who Hannah Montana is and what she has to do with the outrage over Miley Cyrus’ foam finger, then you are out of touch with the world around you.

Although I’m quoting yesterday’s old news as an example of being dated in a fast-paced world, any other example would likely be equally irrelevant by the time you get to read this post, so fickle and fast-changing are the tides of fashion.

There’s a brief line in one of my favorite songs, “A Merman I Should Turn to Be,” by Jimi Hendrix, echoing “We take our last look at the killing noise — of the out of style...”

Back then, a half century ago, the need to keep up with the latest style was paramount just as it is today; but to do so requires a youthful view of what is cool and what is not, influenced by a set of factors that changes with each passing generation.

While Jimi was no doubt cool in his day, he was the artist that today’s consumers’ grandparents rocked out to — and few kids will admit to digging gram-gram’s jams.

Let’s face it; if you’re old, then you just don’t “get it” — or so the kids think.

I’m sure that many of us can relate to having this feeling in our youth — while those of you that are still young may live long enough to understand the feeling of being on the other side of the equation.

It is with such cheerful thoughts that I viewed the family sitting at the next table while out to dinner the other night. Well, it wasn’t the family per se, it was the youngest girl at their table — a child who did not look quite old enough to be attending school yet.

She was feverishly typing, swiping and scrolling on a tablet, while waiting for her food to arrive. Once dinner was served and her mother made her put her tablet away the young lass continued on the sly — nimbly texting on an iPhone hidden under the table.

I felt terribly obsolete as I surveyed this scene.

Not only was this child beginning a life that I can’t relate to (and thus will have a hard time marketing to), but at some point, her and her peers will become my much more tech-savvy competition, immersed from birth in digital technology.

I know that I am not alone in feeling this — and that she is not alone, either. Indeed, a new generation of kid-friendly tablets and other devices are changing the way that future customers perceive media and the value of information — and marketers who are unable to keep pace with these changing expectations are certainly doomed to failure in today’s increasingly competitive marketplace.

Check out Wal-Mart (www.walmart.com/tp/tablets-for-kids) for an example of what I’m on about and how what we see as hi-tech today will be quaintly nostalgic tomorrow.

Keeping ahead of (or at least abreast of) the curve becomes vital.

There are many available barometers of pop culture, and in fact, a whole subset of the mainstream marketing world is devoted to this never-ending study of art becoming life.

For a crash course in what’s hot today, I’ll point to one of my lovely wife Dawn’s favorite media outlets, E! The company’s E! Online site (www.eonline.com/trends) offers a section devoted to the latest trends in beauty, fashion, food and living, which can point you in the right direction, whichever way the winds blow.

More useful from a strategic marketing standpoint is sites such as TrendHunter.com, which according to the site is “the world’s largest, most popular collection of cutting edge ideas [that] help creative people Find Better Ideas, Faster.”

There are many other outlets for helping you to keep in touch with the pulse of the modern marketplace and its changing demands. If you prefer to stagnate, however, then perhaps instead of Jimi Hendrix I might have earlier quoted The Who’s Roger Daltry, as he exclaimed, “Meet the new boss…”

Hopefully we’ll stay ahead of the game, instead of uttering that prophetic statement while wandering dazed through a maze of cubicles and wondering “what just happened?”

Enjoy 2014 but keep a close eye on the competition that is fast rearing up behind you — those kids are smarter than you think — and will want something you don’t yet have.

Learn what that is, and your future success will be assured.

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Online Privacy Problems Persist

Sunday, December 15, 2013 Text size: 

If you are an average consumer, watch the news, or are involved in the tech field, you no doubt are aware of the growing concerns about today’s technology increasingly encroaching on personal privacy.

We often think about online privacy in terms of the web forms we fill out, and the marketable data that we reveal about ourselves, but the issue of online privacy protection is becoming “internal.”

Having turned 50 this year, my doctor advised me that it was time for a colonoscopy, as a means of preventative screening. We all hear about the “Pink Ribbon” campaign against breast cancer, which has an excellent record of accomplishment in encouraging women to have breast exams and mammograms, because early detection results in higher survivability.

Consider this post to be the start of my informal “Brown Ribbon” campaign to encourage men to do likewise and have a colonoscopy when they hit 50, as it could save their life — but I digress, as this is not about how I lost my anal virginity, but of the privacy implications presented by the process.

You see, prior to my procedure, there was a lot of paperwork involved, including my having to read and acknowledge official privacy policy statements from two doctors and their respective facilities, with multiple forms totaling perhaps a dozen pages — all explaining in detail how my personal information is to be gathered, shared, stored and used.

When I arrived at the endoscopy center for the procedure, the cute young girl at the counter asked if I had read and understood their privacy practices, despite seeing my signature and initials in the spots where they were required.

“Miss, I came here to have a camera shoved up my ass,” I told her. “I didn’t expect much ‘privacy.’”

She blushed and had to leave the counter to go giggle with her co-worker over that one, while my lovely wife stood there rolling her eyes and telling me to behave.

The whole situation is absurd and shows just how far (especially in California) the push for privacy is going to extreme lengths. Are the steps making consumers safer by protecting their privacy? I doubt it.

Now, there is a small collection of images revealing a far more detailed view of the inside of my ass than I ever hoped to see. They are accompanied by a map of my plumbing, with little “X’s” to mark the spots where each photo was taken, and I now assume that this document is stored online somewhere, which means that security systems nonetheless, it is “available” to others.

I cannot think of a more invasive technology or a more insecure media to store the results.

Well, maybe I can, since these images were at one time and place; but another medical technology may be even more intrusive and less secure: the UP24.

According to its maker, the UP wristband communicates with the UP app on a user’s smartphone to reveal personal performance metrics, helping you “understand how you sleep, move and eat so you can make smarter choices.”

Think of it as a “black box” recorder for your body — one that lets others know when you are awake and available to receive their advertisements, for example.

Given these developments, it is clear that the issue of online privacy will persist into the near future, bringing with it evolving legislation and consumer attitudes. When dealing with something as personal as porn consumption, privacy protection will become an ever more important factor to sales, making it an action item in any adult website’s business and marketing plan.

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A Stop to Stopping File Lockers?

Wednesday, October 23, 2013 Text size: 

I’ve written before about the importance of supporting the industry organizations that support the industry, as without your financial and other material aid, they simply cannot carry on with their missions — regardless of the nobility of their goal or the dedication of the staff and volunteers that make it all happen.

The latest example of the threat to representation resulting from a lack of capital can be found in the Stop File Lockers project — an antipiracy initiative targeting file lockers and the stolen adult content that they thrive upon.

With so many observers blaming piracy as a main factor in the ongoing demise of the adult entertainment industry, one might think that there would be widespread support for any program boasting the track record of success that Stop File Lockers has earned by not only pursuing pirates, but the billing companies, hosting providers and other enablers that profit from this trade in stolen goods — but one would be mistaken for thinking so…

On October 1, Stop File Lockers chief “AdultKing” announced that this antipiracy campaign would close due to a lack of industry support. Not the kind of “support” gained from virtual high-fives on a message board, but the kind of real support that stakeholders within the industry could have provided.

According to AdultKing, since the Stop File Lockers project began in June of 2012, it has played a role in the shutting down of hundreds of file lockers and other piracy sites, with more than a thousand Paypal, Pazya, Moneybookers and other third party accounts shut down in addition to the closure of around 100 merchant accounts (and more than 60 more shut down with third party co-operation). Three third party billers lost their ability to accept Paypal, while hundreds of file locker resellers on eBay had their listings of file locker vouchers and memberships terminated, adding to the campaign’s success. Various blogs, forums, image hosts and link sharing sites have also been shuttered by the project.

Despite these tangible successes, the project’s primary sponsor pulled its funding, while promises from other firms never materialized; leaving Stop File Lockers a reported $15,000 in the hole, and needing a new source of financing to continue operating.

“My commitment to the project has never waned, however the harsh reality is that what we did cost money. Resources used included distributed cloud server time for detection and verification systems, legal costs, back end systems, international couriers for paper based evidence, technical services such as programming and scripting of tools, conference call facilities, travel and accommodation for meetings, video conferencing, lease on office space and so on,” AdultKing confided. “Without ongoing financial support it’s impossible for any one person to mount an operation as extensive as the one we were running. As it is we ran on the bare necessities to get the job done and not one single participant in the project (other than professional service providers) was paid. All the collaboration was done by volunteers including myself.”

“The issue basically boils down to flogging a dead horse. The funding has dried up [and] there are expenses that need to be met in order to keep going. Those expenses cannot be met, therefore we close,” AdultKing explained. “There has to come a point at which one asks why they should continue to prop up such a project when the majority of the online adult industry couldn’t care less if there was piracy or not.”

The proclamation was met with a renewed wave of public support, with AdultKing committing another year of his time for free, if a reliable source of funding can be found to the tune of around AUD $10,000 monthly. In the meantime, he covered the immediate costs with a contribution from one of his non-adult businesses, to provide a month long respite during which new sponsors, including small companies with recurring payments, could be obtained.

“I need to make it clear that this project lives and dies by the support it receives,” AdultKing concluded. “So if you want to see us continue then now will be the time to show your support.”

The CopyControl.org site lists a dozen current contributions to the Stop File Lockers campaign, totaling $1,180 to date (not including an undisclosed amount that was given by an anonymous donor) — with half of the listed donations occurring at the $30 level.

None noted a status of “recurring,” so it’s unclear how much ongoing support the effort will receive beyond this first round of renewed funding. It is also important to note that while this latest round of fundraising has been underway since around October 6, that the donation record only lists those contributions received from October 21-24.

If others were made prior to that date, they are not listed.

Those who wish to do so can contribute to the Stop File Lockers project by visiting https://copycontrol.org/contribute or via Paxum at donations@stopfilelockers.com.

Before writing off the request, consider that piracy affects everyone in this business, whether they are content producers and rights owners or not.

“There are people in this industry that are being affected by the outcome of piracy that don’t own websites or own the content that is produced, but are feeling the loss of industry income by not having regular work because profits have declined so far [that] producers are cutting back,” BlackandBlueMedia commented. “Those people include performers, sales people, camera men, makeup artists, publicists, Production Assistants, retailers and location managers among many others. Those people have never made the big bucks that a content producer/owner does, so having a way to help support the fight against piracy that can be worked into their personal budgets is very cool.”

“Beaner” was a bit blunter; noting that if 233 people cannot pay $30/month for the cause of fighting piracy (the amount the initiative needs), then “adult is dead.”

Of course, we could easily substitute “for the cause of protecting children from porn” or “for the cause of protecting free speech,” in the cases of the Association of Sites Advocating Child Protection (ASACP) or the Free Speech Coalition (FSC) respectively — the point remains the same: without your support, the organizations working to help you do business cannot survive; making the long term fate of these valuable institutions the ultimate barometer of the adult entertainment industry’s health and vitality.

Sink or swim, it’s in YOUR hands now…

 
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XBIZ Comes Under Attack

Monday, September 16, 2013 Text size: 

Well our good friends at Morality In Media (MIM) are at it again, with a recent email plea from chief muckraker Dawn Hawkins, who asks supporters and the general public to help the group of book burning zealots pressure the Radisson Hotel to cancel its generous hosting of the upcoming XBIZ EU digital media industry trade event.

“Radisson is set to host the XBIZ porn conference in London on September 22-25th,” Hawkins states. “We are outraged that they will provide space to an industry that is based on making a profit from brutalizing women.”

This authoritarian foe of free speech encourages corporate censorship by asking folks to visit a web page where they can then email a form letter filled with misinformation and blatant misrepresentations to the Radisson board, entitled, “Stop Exploiting Women at Your Hotel!” as a way to “show your outrage” over this lawfully conducted commerce.

The form letter’s silly stereotypes seem more at home in a “B” grade exploitation film from the 1950’s then they do in a missive from supposedly educated observers — but the toxic allure of power, payment and pedantry has always drawn petty prohibitionists who love (and live) to point out the splinter in their brother’s eye… The lie filled letter reads:

“Dear Radisson Board Members,

I am writing to protest your hotel hosting the XBIZ porn conference in London on 22-25th September. I am outraged that you would provide space to an industry that is based on making a profit from brutalizing women.

Moreover, pornography puts all women at risk by teaching men that women only have value as sexual objects, are always available as willing participants, and are thus legitimate targets of sexual harassment, abuse and rape.

You are [especially] putting at risk all the female employees who work at your hotel during the XBIZ conference because men who sexually abuse women for profit will be staying in your hotel, eating in your hotel, and will be in close proximity to women employees who work at your hotel so they can feed themselves and their families.

Please take this letter as a warning notice regarding these risks. Should a female employee be the victim of sexual harassment or assault, then your knowledge of these risks will increase your negligence and liability. Should you ignore this letter, our campaign could cause serious damage to your reputation and revenue. Please consider this before you provide a venue to an industry that does serious damage to the health and well-being of women and children.”

I’ll note that not only are the attendees of XBIZ EU there to “feed themselves and their families” (a right that Hawkins would deny them), but that the legitimate adult entertainment industry is not in the business of sexually exploiting anyone — female or otherwise.

On that last point, presumably, the hotel’s male staff will not be at risk from the large contingent of gay porn purveyors and practitioners that will be in attendance at XBIZ EU — or perhaps Hawkins cares little about “protecting” gays?

Furthermore, 2013 does not mark the first time that XBIZ EU has been hosted at the luxurious Radisson Edwardian Bloomsbury Street Hotel — surely, had any of the hotel’s staff (female or male) been “the victim of sexual harassment or assault” at any previous XBIZ EU event, this gathering of professionals would no longer be welcome in London.

Clearly the hotel’s real world experiences with the adult entertainment industry have been markedly different than the fantasy land fears proffered by Hawkins to her flock of facile followers.

Hawkins’ misguided efforts bring to mind the hate-filled spinsters depicted by master filmmaker D.W. Griffith in his epic film from 1916, “Intolerance,” as they meddled in the personal lives of others — with pious self-righteousness, and the mistaken belief that they were right, and doing good — oblivious to the damage they caused to those around them. 

In an enlightened society, tolerance for all viewpoints is not to be feared, but Hawkins and company would impose their superstitions and will upon the rest of us — with a level of “casting the first stone” that would make The Spanish Inquisition proud.

One would hope that humanity had learned something from history, but MIM and the Dark Ages thinking they represent remain a danger, ready to drag society into the past — with the sort of self-assured religious indignation usually reserved for the Taliban.

Of course, MIM is not alone in its carnal crusade, as any number of politicians seeking to distract voters from governmental policy failures and the day to day pressing problems of society are happy to jump on the anti-porn bandwagon, despite the feelings of their constituents — feelings which are rarely expressed publicly.

That situation may be changing, however, as a growing public backlash against the EU’s Internet censorship initiatives is seeing an up-swell in outcry by consumers over being told what they can and cannot view in the privacy of their own home, or of having to gain “approval” beforehand.

Calling itself a grassroots movement of people working hard to defend privacy, freedom of expression, consumer rights and creativity, the Open Rights Group (www.openrightsgroup.org) says that adult filtering and Internet monitoring and surveillance will affect everyone. The group recently circulated a petition calling for U.K. Prime Minister David Cameron to drop his efforts to switch on adult filtering of Internet content by default.

At XBIZ EU, another grassroots effort, the U.K.-based Sex & Censorship campaign, will hold a public meeting, entitled, “Keep Britain’s Internet Uncensored,” to discuss its opposition to media censorship, and the need to counter moral panic with next-step ideas.

XBIZ EU will also devote its “State of the Industry” panel to the U.K.’s War on Porn, where regulatory architect, ATVOD CEO Pete Johnson, will host a special Q&A, in what will doubtlessly be an intellectually invigorating discussion.

Also on the agenda is a look at a controversial new academic research project, where a representative of the Porn Studies Forum will deliver a presentation revealing details of its peer-reviewed journal “devoted to the study of pornography in its cultural, economic, historical, institutional, legal and social contexts,” and which provides a venue for debate that will guide global stakeholders.

If it all sounds a bit heady, well, it is — with nary any fare to cause even the likes of Ms. Hawkins to blush. Heck, I wish she’d attend. She’d look around the room, talk to a few of the folks, and after realizing “THIS is what all the fuss is about?!!?” would take up knitting or some such instead — or would pursue real sources of trafficking and abuse — such as in the restaurant trade. Either way, it would beat minding other people’s business when it comes to the entertainment, ideas and political thought they seek out, or spread.

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The Eye of the Beholder

Monday, September 09, 2013 Text size: 

I was recently summoned to the county courthouse, where after a brief period of examination, I was selected to participate as a juror in a week-long civil trial that pit a young woman against her former employer.

The upshot of the case was that the plaintiff claimed her layoff was due to her being pregnant, rather than due to the slowdown in business claimed by her former employer.

Without rehashing the details, the employer may have been sloppy in its practices but not malicious in the woman’s termination, so no fault was found against them, under the evidence shown and the specific instructions that the jury was provided with.

There are lessons from this experience that I want to share, besides warning against the waistline bursting bulge that can arise from a week of eating four county-supplied jelly donuts and maple bars per day!

See, I’ve been pretty good about staying out of trouble. Apart from a few youthful indiscretions (usually related to how insanely fast I was driving or my lack of control at the time I was noticed), my experience of the legal system has been limited to showing moral support as an audience member during local mining law cases, and to being a fan of classic courtroom dramas, such as Billy Wilder’s 1957 “Witness for the Prosecution,” 1960’s “Inherit the Wind,” and 1961’s “Judgment at Nuremberg,” all coming to mind.

The real thing is not like these movies, where editing compresses the monotony.

But the real thing may indeed be like “12 Angry Men” with Henry Fonda, since it is easy to see how a disinterested jury could gloss over relevant material and make a quick decision in its own self-interest, rather than spend time reviewing already seen material.

If it’s ever your turn to face the judge, the best thing you can do is to be sympathetic to the jury, so that at least one juror takes a personal interest in your welfare and at least gives you a fair chance — instead of wanting to rush off, back to his or her daily life.

One thing that became evident during the trial is that employment law (especially in California) is not something to take lightly. In this case, a small “family” company faced with rapid expansion, relied upon an existing staff member; adding “HR Manager” to her already long list of responsibilities.

A capable person, the new HR chief used attorney provided employee manuals, forms for hiring and firing, a wide range of required legal documents and laminated signage in the workplace — updated annually — to carry out her responsibilities in good faith; but every paper clip she ever twisted was called into question by the slick lawyer from L.A. that came up to the mountains to set some hicks straight about labor laws.

I suspect that many adult entertainment firms that have been more focused on keeping up with the Internet may be similarly vulnerable from a labor law compliance standpoint; and not even realize that they could lose their company to a disgruntled ex-employee that can prove they didn’t follow the letter of an extremely complicated set of laws — with a liability for sexual harassment in the workplace something for porn mongers to consider.

Perhaps the biggest takeaway I had that might benefit some of you is to be careful of the statements that you make, not only in the real world, but online in social media and in venues such as message boards, site comments and reviews, and other public forums.

During the trial, screenshots of the plaintiff’s Facebook posts were displayed on the big screen, in which she boasted of how her plans were now coming to fruition and how she was going to make her former employer pay and really take it to them.

You can’t post on Facebook about how much fun you’re having, relaxing around the house and spending time with your children; and then expect to win a lawsuit where you claim that you’re stressed and miserable without a job, and can no longer enjoy your life — and that it will take half a million bucks to make you stop crying and smile again.

None of the statements she made would have helped the plaintiff had we progressed to awarding any damages. She wanted a house out of the deal, but what she got was a bill from her attorney — and in this case, the plaintiff’s use of social media may have cost her everything, since even her “shouting” in all capital letters was pointed out — a valuable lesson to consider before passionately hitting that “post” button.

At the end of this case, neither party had moved the ball: the ratio was not even 49/51 — it was a clear 50/50 shot at who to believe. So Lady Justice, her eyes still blindfolded and her scales in balance, moved on to her next case — and I got $157 from the county plus this story to tell, which hopefully will help you out some day.

 
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A .XXX Reversal?

Monday, June 24, 2013 Text size: 

In a move that made headlines this year, ICM Registry slashed the wholesale cost of .XXX domain names for a limited time, because of a legal settlement with adult entertainment powerhouse Manwin, fueling an upsurge in adoption of the controversial top-level domain. While the discounted price was a primary motivator for many new customers, a growing perception that following the Manwin decision the use of .XXX may now be “OK” from a rank and file viewpoint, also helped sales — as did a renewed offer of industry support funded by a percentage of domain name sales revenues.

According to ICM Registry CEO Stuart Lawley, most of the 12,000+ discounted .XXX domain names recently registered were for a two-year period. This may reflect a wait-and-see attitude on the part of adult operators, but one that is still willing to give the upstart TLD a chance. Recent company reports put the number of registered names in the neighborhood of 206,000; with an estimated 85,000 defensive registrations performed for brand protection, and more than 120,000 active, recurring domain names.

As for the current interest in .XXX, Lawley cites a decent volume of sales at the recent XBIZ Summit in Miami, where some high-profile premium names sold for substantial prices.

As for the TLD’s future, ICM Registry is moving forward with its plans to acquire related extensions such as .adult, .porn and .sex, which in addition to their own value, will be grandfathered to holders of .xxx domains for no additional cost. This will provide an excellent brand-building opportunity, with a high level of protection from cyber squatters seeking to hold one or another extension hostage to the legitimate rights holders.

You have probably heard all of this before, however, but it is not the end of the story.

Last week I had the opportunity to go to dinner with two of my oldest friends in the adult industry — folks that are on the leading edge of all things web/tech related — and the subject of .XXX came up.

In a previous discussion prior to the launch of .XXX’s “Sunrise” period, one of these folks mentioned that it would be cost-prohibitive to obtain the .xxx version of his ten thousand .com domains (or some such stratospheric amount), and that this, coupled with the anti-xxx sentiments expressed by the adult industry, kept him from jumping in.

I explained then that while he had these countless sites, they are all feeders to two flagship domains and that the $260 or so “Sunrise A” registration fee was a small price to pay to protect each of these two major websites and could in fact provide new branding and traffic opportunities. Besides, his site’s name was simply badass when followed by “.xxx.” Likewise, their other premium site would benefit from the protection and branding benefits that this controversial domain extension would provide.

It is not a matter of me being in the tank for ICM, but of seeing beyond the irrational hatred fueled by shills directed by entities upset that their demands for free and discounted domains were not being met by ICM. For those who are interested, a casual reading of the relevant court documents will tell you who your friends really are — along with what was really behind the notion that “adult is against .XXX.”

That is all water under the bridge however; and today is a new day. A new adult industry is emerging and accompanied by a more mature, business like attitude, where being nimble may involve acquiring a couple of new domains, regardless of their extension.

For those who still do not see a need to buy any .xxx names to match their existing .com names, my other dinner companion provided a great reason; but still had not yet come to a place where going that route was “acceptable.”

This operator runs a porn site that is not a porn site and as such garners tremendous exposure and traffic from mainstream sources — including major mainstream advertising partners that would pull the plug at the mere mention of porn on the site’s home page. This had not been a problem, however, until the good folks at Google decided to increase their AdWords rate because the key phrases my friend was buying did not appear on the site’s home page, causing a promotional dilemma: add the required words to the site to please the search giant, but do so at the cost of mainstream support.

While their programming team is working on a redirect strategy that will serve a different landing page to Google — something the search giant hates and which could negatively affect organic search — your humble correspondent offered a simpler approach: grab the .xxx version for a porn flavored page. This would not only save money on their AdWords campaigns, but also allow them to obtain Search.xxx and other traffic sources as well — without tarnishing the great mainstream acceptability of their brand.

It is a tactic with multiple benefits and little downside, which may cause a bit of a reversal in a camp that has long been opposed to the adults only TLD — or maybe not.

Regardless of how these operators choose to approach the future of .XXX, one thing is clear and that is that the playing field and relevant factors are shifting, and there is more than one reason to go .XXX — the choice is up to you if there is a place in your operation for this alternative.

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XBIZ Summit Sets New Standards

Monday, May 20, 2013 Text size: 

The scent of muddled mint filled the air as Mojitos mixed with marketing in the Miami moonlight — accompanied by strains of hard rock guitar, wailing in wanton abandonment. But this was only one small scene from a week of wining, dining and workshops, highlighting this year’s XBIZ Summit event — the annual east coast get together for the adult entertainment industry’s power players.

Held from May 14-17, the event saw early arrivals and late departures as attendees extended their partying and professional time to make the most of this elite event — staged for the first time in the comfort and class of the Mayfair Hotel & Spa in Coconut Grove, Florida — mere moments away from the sandy shore of beautiful Biscayne Bay.

From the opening golf tournament to the closing farewell toast and awarding of prizes in the adult industry’s first gamified event, to the range of private events beyond, the XBIZ Summit brought barons of bawdiness to the peak of networking and information sharing, in order to better their businesses.

Although some observers may have felt the attendance to be a bit sparse in comparison to their expectations, the people you wanted to talk to as well as the people you needed to talk to were all there — it is just a tale of the times: the players are still playing and the posers have moved on.

Do not take that as a sign of industrial stagnation, however, when it is a sign of market maturity. Indeed, a number of new companies and new entrepreneurs attended the 2013 XBIZ Summit event — mixing, meeting and taking notes in preparation for their turn at the wheel.

In the latter case, these were not yesteryear’s newbies: simple, star struck and suckered into dreams of easy riches in the porn biz. These were obviously educated and responsible professionals performing due diligence while working on their business plans — seeking sourcing and insider information needed to succeed, rather than just jumping in blindly and hoping for the best...

It is the way business is done in the real world, but a way that has not always been seen in adult, and not necessarily indicative of the practices of most porn purveyors.

Things are changing, however, as the strong grow incrementally stronger in a renaissance of profitability — albeit on a smaller scale for many organizations, reflective of the current marketplace. This is seen at today’s trade shows, where many of the same companies are represented as in years past — but often by a smaller staff presence — with more owners, but fewer mid-level reps in attendance.

In this regard, I like to think of the XBIZ Summit show as an example of having quality over quantity.

Consider the name and nature of the event itself: a summit is the top point or pinnacle of a triangle, with a wide base supporting it. It is not an upside down triangle, where the emphasis is on the common masses, but a proper triangle where the cream has risen to the top — so of course there are far fewer examples of participants in this exclusive arena than are found at the bottom of the heap.

It’s a matter of the position you want to occupy in this pyramid of success: the top or the bottom.

Consider an example from AWE’s Douglas Richter at the workshop he held on profiting from the live interactive sex arena. In it he described the extent to which some top white label promoters customize their sites to avoid a “me too” appearance — including hand selecting the individual models allowed to appear in the cam site’s performer listings. This involves manually reviewing thousands upon thousands of live cam previews and pre-recorded sex shows in order to find just the right material for their content conscious customers.

It is a lot of work but the rewards can be substantial. Despite the benefits, however, it is a process that few affiliates bother to engage in, as most white label operators rely on default displays, models and meta data, then cry about the poor performance they reap as a reward.

Think back to our pyramid of success, where the masses take the easy route and struggle with a lack of sales, while the successful sit at the summit, working for the riches they want to achieve and rising to the top of the heap.

As Richter pointed out, “you get out of it what you put into it.”

It is not just a sentiment applicable to white label websites, but to the adult industry as a whole and to life in general — sit on the sidelines or sweat your way to the summit, where the view is much nicer…

There are many events in many locations, but only one where you are really at the top of the game, and that is the annual XBIZ Summit — I hope to see you at next year’s event. In the meantime, join your fellow XBIZ.net members at XBIZ’ other industry gatherings, such as the upcoming XBIZ EU and XBIZ LA events as well as our regional networking gatherings — and you could be on your way to the Summit, too!

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Building A Strong Foundation

Thursday, April 18, 2013 Text size: 

Porn’s perennial appeal means that there is a never ending flow of entrepreneurs that enter the business seeking their slice of the pie — but knowing where to start isn’t always easy and many prospective operators lack a cohesive business plan, or the industry savvy needed to come up with one. This however, doesn’t mean that you shouldn’t give it a go; since taking a small bite and learning as you progress may mean the difference between success and failure in the long run.

Starting a profitable adult website can be quick and easy and doesn’t have to cost more than a few bucks for a relevant domain name, scalable cloud hosting, a free copy of WordPress, a good idea and some time to implement it — of course at this basic level, nearly any “good idea” you will come up with may be 10 years too late — but miracles can and do happen…

At this juncture, acquiring content and traffic are the biggest concerns you will face regardless of the type of website you choose to build.

Although in many cases the cost of adult content has dropped considerably over the past few years (impacted by economic doldrums, market saturation, piracy and surfer indifference as to what constitutes “quality,” which can squelch the need for HD videos), without content you have no product, and there remains a tangible cost associated with it, even when your business plan relies on “free” or “user submitted” material.

For example, if you start a blog, where will the content come from and what will you hope to sell? If a TGP/MGP/Tube or other site featuring user uploaded material how will you prevent stolen or otherwise illegal content from appearing on it?

Your content has to come from somewhere…

As a result, you must either buy content or have it given to you, such as through an often legally questionable tube site video upload process — or by a sponsor for affiliate promotional purposes — such as through a private “white label” or co-branded website.

White label websites are a very popular alternative, with cams, casual dating, and tube and video-on-demand sites all available in co-brand configurations that provide a fast and easy path to market, with a low barrier to entry — all that’s needed is a decent domain name, a little knowledge (and time to learn) and a reasonable budget for traffic.

Building your home on another man’s land is rarely ever a really good idea, however; with some sponsor’s fine print making it as likely for you to collect a payment as you are to be struck by lightning on your way to cash in that winning lottery ticket — which is sad when they have products that would be profitable to push for a true “25 percent of everything everyone spends on your site,” regardless of how many times that white label customer had visited (or been a customer of) the white label’s parent website or any other site’s in the sponsor’s portfolio, where a previous referral prevents you from getting paid.

While many prospective adult webmasters view white label sites as a traffic building opportunity to feed other properties in their network, relying on the white label’s “SEO” features to deliver profitable search engine traffic, recent moves by Google show that the company is serious about penalizing “thin affiliate and doorway pages,” with no amount of custom category headings able to obfuscate the fact that “your” white label website is essentially identical to many thousands of similar sites.

I’m not hating on white labels, it’s just that the common notion that you can build one in five minutes flat and immediately have a ton of search engine traffic fall from the sky to make you a boat load of sales (earning you a new Ferrari every week), is a pipe dream — and not a good approach to building a strong foundation.

But if traffic generation isn’t their strong suit and content is, can white labels be used as a profitable destination for traffic acquired from other venues — without relying upon any search engines as a traffic source — reversing the flow that many operators embrace?

The answer is “yes,” and while you do want to take every opportunity to optimize the white label for search engine marketing (SEM), a two-step site approach where, say, that cloud hosted WordPress blog is used to market the white label, which is on a sub domain, or associated domain, to carry across your branding, may be the best approach.

For example, a video-on-demand white label could be part of a blog of video reviews, where social media can be leveraged by allowing website visitors to comment and vote — with the blog using free clips and screencaps from the white label as its main content.

This is also an easy avenue for testing white label sales against straight affiliate sales. For example, a blog feeding a white label dating site could readily make use of A/B split testing to send half of its traffic to the white label and the other half to the parent website, to see which one the sponsor is really paying more on. The same process works for cam, tube and other white label sites.

Once you know which of a sponsor’s offers earns you the most, split test that sponsor against other sponsors until you find the winning combination. All this testing takes a lot of traffic, but there’s a better chance of generating traffic through your blog than through a white label site, and you also have to measure its profitability, making testing essential.

It sounds complicated and there’s a lot to it, but in practice, the day-to-day operation of such a setup is simple (and even mundane) and makes a great starting point for those who are just entering the business — or those seeking a new approach. Of course, many other options exist for starting an adult website in 2013 and your budget and skills should guide you along the right path to profits — but for getting the biggest bang for your buck, a WordPress integrated white label website is a tough combination to beat for porn today.

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