trends

Paying for Peace of Mind

Stephen Yagielowicz
As online adult entertainment companies continue to struggle with decreasing revenues and increasingly obsolete business models, decision makers responsible for a company's financial health are taking many steps to remain competitive and to stay in business — and prominent among these steps are various cost-cutting measures aimed at increasing profitability by reducing expenses.

It's the old "a penny saved is a penny earned" thing — but sometimes the amounts that can be saved are not measured in pennies — but in tens or even hundreds of thousands of dollars or more.

One such example may be found in the wide range of discount rates offered by billing companies; the so-called Internet Service Payment Providers (IPSP); where the choice of one provider over another may mean a savings of 10 percent or more of an adult paysite's gross revenues. At least if you believe some of the marketing out there.

This example comes from a number of recent discussions that I've had along the lines of "Why should you still pay 15 percent to old school biller 'A' when new school biller 'B' will do 'the same thing' for only three percent?"

Of course, none of the folks I've discussed this with want to be named or quoted here, but the responses ranged from "you shouldn't" to "you'd be stupid not to…" — underscoring the diversity of opinion on the subject — as well as the various factors and priorities that different operators take into consideration.

While some of the newer generation billing companies offer innovative tools and enjoy excellent reputations — along with bargain basement discount rates that provide a surface level competitive advantage — the historic instability in this marketspace means that the more seasoned operators may want to seek out other factors; such as longevity, stability, reliability and experience.

It only takes a Dickinsonian vision of the 'Ghost of iBill Past' wandering the halls to realize the challenges and complexities of the billing space today. Countless dollars have been drained from adult operators by the unexpected closure of several billing companies — and by the "deals" that some of those who got paid even a percentage of what was owed to them, had to make in order to see some of their money returned.

This isn't to say that an IPSP that offers super attractive processing rates will skip town with all your cash as soon as the timing is right; but the marketspace is merciless in the way it deals with processors that have less-than-stellar credentials, capabilities and business plans; making longevity far from being a done deal. And, you never know — some of them may indeed be planning to run off to the Bahamas with all of your loot — of course, those sorts of plans don't need to be limited to discount rate IPSPs…

Savvy adult webmasters will rely on cascading billing systems to incorporate multiple processors into their revenue stream — increasing profitability while spreading the risk to the bottom line should one of those processors go down.

At the end of the day, you get what you pay for — and sometimes more. And then again, sometimes you get less; and then have to pay extra fees to add-on the features you want and need.

Sure, these days (or any other days), everyone would like to receive a 10 percent raise (which has the same net effect as cutting 10 percent of your expenses); but some things may be worth the added financial burden. Things like peace of mind.

Make sure you make the smart decisions that will maximize your site's revenues but also ensure that you diversify your processing chain, so that you don't have all your eggs in one basket. And remember, if an offer looks to good to be true, it just might be.