Adult Websites and Evolving Sources of Revenue

Alex Henderson
2008 and 2009 were challenging years for adult membership websites. Many webmasters experienced declining sales, and the belief that the adult entertainment industry is recession-proof was finally put to rest. But adult entrepreneurs have persevered, often asking themselves what steps need to be taken in order to be profitable when facing a long list of challenges that includes digital piracy, the growth of adult tube sites, an abundance of free erotica and a painfully deep recession. Webmasters who have specialized in membership sites are wondering if they will need to diversify and aggressively pursue revenue sources other than selling content. But exactly how webmasters should — or shouldn't — diversify is the thing they are trying to determine.

Possible ways for webmasters who have been membership-oriented to diversify include selling more sex toys online, getting into adult online dating, or looking for more advertisers (either adult or mainstream). One theory says that on the adult Internet of the future, webmasters won't be able to survive from memberships alone and that content may have to take a back seat to other revenue sources. But Harlan Yaffe, president of the gay-oriented, Miami-based, vehemently disagrees. In fact, Yaffe stressed that webmasters who have been membership-oriented need to be putting even more energy into producing and marketing quality content — not less. Turning their energies from content creation to pursuing advertising revenue or selling sex toys is the last thing that membership sites should be doing in this recession, Yaffe said.

"Content is still king, and I don't think that has changed at all," Yaffe emphasized. "That isn't to say the typical membership-based revenue model doesn't need some tweaking, but our philosophy at PrideBucks over the last year has been to really concentrate on our core product — which is content. As times have gotten tougher, a lot of people are trying to do content on the cheap. They're slipping in licensed content with their exclusive stuff, and the licensed content is less than state-of-the-art. Or they're running after every possible upsell in the world. But my philosophy is that in order to survive in tough economic times, you need to absolutely dazzle the consumer with your content and really hammer home the value that they're getting for their money every time you give them an update."

Moe Styles, founder of the BDSM-oriented membership site, remains very content-focused and hasn't dramatically altered his business model in the current recession. The New York City-based Styles, who founded in 1999, said that after a long period of steady membership growth, his membership profits have been down by "by about 30 percent" in this recession. But content creation, Styles said, remains his primary focus — and he believes that his obsession with strong customer service is what has enabled him to keep the other 70 percent of his membership-related profits. Styles said that in the future, he may or may not need to seriously pursue new or additional sources of revenue. But for now, he doesn't want to make any major changes.

"You have to realize that in this industry, everybody panics," Styles said. "People in the porn industry got spoiled; they were making all this great money for a long time, and now, the economy is bad and they aren't making as much as they were before. They're panicking because they want to continue living the lifestyle that they're used to living. I'm still making good money, although not great money like I was making before this recession. But it might be that this downturn in the industry is a temporary situation, and things are going to come back when the economy gets better. That's why my thing is to wait and see and not make any hasty decisions. If the economy gets a lot better and I'm still not happy with the way Amateur Bound is doing, then maybe I'll make some kind of major decisions or major changes."

Styles said that presently, he is only dabbling in sources of revenue other than selling content. "I've been dabbling in sex toys for additional revenue, although not on my main site, Amateur Bound," Styles explained. "When people come to Amateur Bound, I don't want to sell anything but Amateur Bound. But I have little feeder sites that send Amateur Bound some traffic — and on those sites, I do have links to affiliate programs for bondage equipment, DVDs and tangible goods in general."

One thing that remains to be seen is how much advertising adult sites will be able to get from mainstream businesses in the future. Styles has thought about ways to profit from mainstream businesses, but when he approached Guard Dog (a mainstream company specializing in protection from identity theft), they declined to do business with an adult company. "Guard Dog announced that they were opening an affiliate program," Styles recalled. "So I wrote to Guard Dog and said, 'Listen, I have an adult site. If I sign up for your affiliate program, are you going to accept me?' And they wrote back and said, 'No, we don't want adult sites because of the chargeback ratio.' But they were nice about it."

Yaffe cautioned that if owners of adult membership sites are hoping to seriously branch out into sex toys or online adult dating, they will be facing a lot of competition from companies that are already well-established in those areas; their time and energy, Yaffe said, would be better spent making their content as marketable as possible. Yaffe added that if consumers are distracted from a webmaster's content, they are less likely to become long-time members — and an abundance of upsells, he said, can be a big distraction.

"I personally do not believe that the notoriously small commission you make on upsells — which is 15, 20 or 30 percent, if you're lucky — is going to make up for the money you lose when members cancel," Yaffe said. "Porn is an impulse purchase, and when consumers have taken out their credit cards, you want them to be dazzled by what they find in the members' area. If they joined your site because of that hot model they saw on the tour, the worst thing you can do is take them into a members' area and bury your content with a sea of upsells."

Where the adult membership website model will be five or ten years from now is open to speculation. Styles observed that some webmasters have become frustrated because membership sales are down and have decided that it's time to quit producing content altogether, but the founder thinks it is much too soon to conclude that selling content is a lost cause on the adult Internet. Styles said that while he is open to trying different things on sites other than, he isn't ready to give up the thing that made him prosperous for so long: producing and selling original BDSM content.

"I think at this point, getting out of content would be a big mistake," Styles asserted. "I think that's panic. Webmasters need to evolve, but they don't need to panic."