In continuing conversations with Lori Z from XBiz, Lensman talks about his business expansions, his views on the 1 percent chargebacks, the hot topic of Acacia, what's in store for the future, and why he feels content is key.
XBIZ: Who is your biggest inspiration?
LENS:My biggest inspiration, I'd say Fantasy Man. He's my biggest inspiration because a long time ago we chose a path of diversity as opposed to doing one thing and doing it really well.
XBIZ: Tell me a little about Jupiter Hosting.
LENS:Jupiter Hosting is an outgrowth of our acquisition of XFR Networks. They've been a hosting company now for years and years, hosting some of the biggest sites on the Internet. They're in Silicon Valley and we used to be there as well. We have a lot of commonality in that regard. When XFR Networks was acquired, we renamed it Jupiter Hosting. They have some amazing bandwidth connections and they're a really incredible hosting company. I could really only put all the great hosting companies on one hand, whether it's ISPrime, or a National Net, or Candid Hosting, or maybe Cavecreek, Jupiter Hosting is among them.
XBIZ: Your latest venture is Webmaster Access. How did that come about?
LENS:What we wanted to do is expand on GFY and its presence in the webmaster community. Part of the reason we launched the Webmaster Access convention is because I can't tell you how many times webmasters have come to me and said, "How come you're not doing something for webmasters who are more experienced in the industry?"
I can't tell you how many times I've been asked that question. This is why we did it. We thought it would be a good opportunity for everybody at GFY. I mean, 95 percent of the people on GFY are all friends and it's a great way for all of us to get together and either see each other again, or put a face to a name. It's definitely a great opportunity, as well as a way to figure out how to make money and cover our ass in this industry.
XBIZ: What makes Webmaster Access different from any other webmaster event out there right now?
LENS: It's a different dynamic. You don't have the show floor. I think it's really good for service businesses to get new customers. For example, if you're a content company or a hosting company, or whatever, it's a good way for you to get customers. It's a good forum for the big programs to be big and have a presence. Do you spend "X" amount of dollars and say, "Wow, I walked away with 'X' times whatever?" Not particularly. Virtually every one of the largest programs in the business, ARS, SilverCash, Traffic Cash Gold, PlatinumBucks, Hustler, Top Bucks, and Epoch, will be there. These guys are all major sponsors of the show and that tells you something. They're going to have a great presence. We're going to learn something now. This is a really important time in our industry. We're under fire in a million different directions. There are issues we want to cover in these shows. We want to do business. We want to make money. But we need to cover these important issues too.
XBIZ: So Webmaster Access is not going to have booths?
XBIZ: Will it have seminars?
XBIZ: Covering these topics?
LENS:Conference panels will cover a lot of things, like what's going on in processing right now. We all have this mandate to be under 1 percent. How do we go about it? How have some of us achieved it? I'm glad to say we're well under 1 percent. But how do we change our business models? There are profit pressures too. If there were no issues, we would certainly be looser than we are today.
If a guy is coming from the UK and he's using a Hotmail email address, one of the processors might look at that and say, "You know, those are two bad things. Foreign and Hotmail." And then you look at it and go, "He's also on a proxy." I don't know what their scoring algorithms are, but those things are going to score tighter now. If you send me a thousand surfers, I may convert four. But now we have to have higher fraud scrubbing and better thresholds, which means less money and lower price points. Certainly we all know lower price points result in more chargebacks.
So, I mean, there are more pressures out there. We have to worry about government intervention. We have to worry about all kinds of things. Believe it or not, most gallery posters are not in compliance with the law. These guys need to attend these panels to find out what they're doing wrong because it could keep their ass out of jail.
XBIZ: Webmaster Access is scheduled to take place in numerous cities on a pretty aggressive schedule. Is there a reason behind that?
LENS:Actually, right now we've recently cancelled the Philadelphia show because the L.A. show has been so overwhelmingly popular. In the next nine months there will be one in Montreal, and I know it will be a great show next June down in San Diego. We're going to have a show in Atlanta because the South is a big hot-bed for webmasters right now. But these are not regional shows. That's part of the reason we got rid of the Philadelphia show. We didn't want people to think it was a regional show. Webmaster Access is a national show because the industry is changing so fast. We think people should be in constant contact with each other. We think that if I go in and make a deal, a traffic trade deal with another webmaster program, or I get some content for a webmaster that has free traffic and galleries, I want to see him again in a couple of months and say, "Hey, how's it working, or how come that deal didn't come through?"
It's about getting affiliates and keeping them. How to make the most money and how to cover your ass legally and with the processing. These are things you can't bring up twice a year. These are things we need to be constantly on top of through Webmaster Access, so we can do it in a good, compressed fashion. We're also doing a spring break retreat down in Cancun just to have some fun. So that's going to be more monkey business then serious business.
XBIZ: Are the legal seminars associated with the Greg Piccionelli Sex Biz seminars?
LENS:He's going to be on the panel at the show talking about that stuff. Greg is a top-notch guy. J.D. Obenberger is another top-notch guy who is going be at Webmaster Access discussing important issues. Some people think that because they don't run a webmaster program that they don't have to worry about this sort of stuff. That's not true. Not true at all. In fact, you probably need to worry about it more because those of us who are in the programs have gotten our legal advice. We've had our sites reviewed by attorneys. The guys that just operate small businesses or have a partner, or whatever, these are the guys that need to be paying attention to this stuff.
XBIZ: You have boards. You have hosting. And now you're going to have conventions…
LENS:We also have content too. We have Ultimate Feeds, which is a members' plug-in product. One hundred percent original content. Great price with no bandwidth limits.
XBIZ: So you have definitely diversified.
XBIZ: Is there anywhere left to go?
LENS:Well, we're never going to touch the processing business for example. That's not where we want to go. The guys that do it, that are left, do a great job. I mean, hats off to the guys at Epoch. Those guys do their job really well. We've been with CCBill for a long time. You know, everybody knows those guys are great. I've been with iBill since the first day I've been in business. Unfortunately, they've had to take heat from some webmasters. But you have to realize they're a public company, so they can't just come out and make all these statements that will get interpreted by Wall Street. So they get a reputation that they don't deserve. But we've been with iBill for a really long time.
We're also moving into the retail DVD market as well.
XBIZ: You are?
XBIZ: Can you tell me a little about that?
LENS:We've got a bunch of new products coming out. We're going through traditional distribution on that so they will be sold in adult video stores, things like Junior College Girls, European Mail Order Brides, and Slut Seeker. We definitely don't want to leave that market untapped and we've certainly got the content for it.
XBIZ: There's a lot of buzz about moving into DVD...
LENS:Yes. The guys on the Internet are so original too. I mean, they have such original content. There's some great content on DVDs now too, but some of it is pretty formula. So the guys that come out with all their content and reality sites are really great. Whatever the case might be, it's a totally different market. It's a mature market. And it's not the sort of thing you go, "Oh well, I'm going to hang on a shingle and everybody's going to come to me." It doesn’t work that way. So if we've got content and connections, it's going work really well.
XBIZ: Do you have any thoughts on the international sector of adult online?
LENS:Well, I think that a lot of us have focused on the U.S and Canada, in particular for traffic and payment solutions. Some of the new payment gateways that are coming online for various traffic are really exciting, even Chinese traffic. I think we'll be able to have more of a global reach as we mature and seek new markets and growth. You're going to see more products and sites come out that are more content-sensitive to various other parts of the world and what they like. So I think that there is definitely a great push internationally. I know, for example, Jupiter is making great international connections, so if you host there, your content will be delivered faster to, say, the Pacific Rim, or whatever the case may be. Fewer hops, that sort of thing. There's definitely a big push in those areas.
XBIZ: Do you have any thoughts on wireless and PDAs?
LENS:Well, a lot of people are trying to adopt that sort of stuff early. I can't imagine getting excited about pictures on my cell phone. Wireless is great and what is going on in wireless LAN. My whole house is wireless, so I can use my laptop in any room, even the can. We're going to see more of that, the move toward broadband and more bandwidth requirements.
XBIZ: Do you have any views on Acacia?
LENS:I find it interesting that Acacia is not suing the major media companies like ESPN, NBC, CNN, and those sorts of companies. The fact that they claim to own the technology of streaming media over the Internet is something that other people claim as well. It's a long road in the patent fight ahead. Some people have chosen to settle with them. I don't think webmasters should hold it against those companies that do, but it remains to be seen what comes of this thing. I prefer to run my business and move forward. Typically, I'm more of a fighter then a settler though.
XBIZ: Were you surprised when you first heard that GFY had won the People's Choice Award at the XBiz Awards?
LENS:Yes, because it proved it wasn't rigged. (Laugh)
XBIZ: What do you think of the online adult business as it stands today?
LENS:It's really different. It's really challenging. I think a lot of it has to do with the fact that we are in a mature industry. Adult Internet material is mainstream America. If you go into a bar and start talking about Amateur Pages, or Bang Bus, or whatever, people are like, "Yeah, I know that site. It's great. Did you see the new chick on there, or whatever."
They know those sites, okay? It's mainstream America. What's interesting is there was a thread posted on GFY and it quoted a news article from some women's Christian magazine. You would pretty much figure that those would be the opposite of our customers. The magazine polled its readers and said, "How many of you have deliberately gone to an adult site on the Internet?" Thirty-four percent of their readers said 'yes.'
Now if that doesn't tell you that what we do is mainstream America and that customers want this material, then nothing will. We're in business to follow rules. The greatest case in point is Visa. They came out last summer and they said, "You know, we've told you that 2 1/2 percent chargebacks are okay, but now we're going to lower that number by 60 percent. We're only going to allow 1 percent chargebacks, and you have to be compliant in the three-month period."
But we've turned around and done it. You just tell us what the rules are and we'll follow them. In our industry, there are a lot of people making a hub that 'you can't do this,' and 'you can't do that,' or 'you're going to get in trouble for this.' All you've got to do is tell us what the rules are and we'll follow them. But if you're trying to enforce unwritten rules, if you try and add this vague thing, then the courts will decide what the rules are, and then it's a really slippery slope for people.
This industry is mature and with any mature industry there is pressure in profits. It's tougher to make a buck. You guys that are paying for hosting, for example, if you're paying more then $60.00 for a megabit of hosting, wherever you are, you should leave, okay, because the second biggest expense for webmasters is their hosting bill. You need to be efficient.
XBIZ: Do you think there is room for people to get into the business still?
LENS:Emphatically yes. I would have told you this five years ago. There's room for people to get into the business, but don't do what other people do. There are a lot of ways to make money in this business, a ton of ways. I mean, anything from buying Google ad words and sending them to sponsors. You know, there are guys that start searching Kazaa for porn and videos and see what comes up. There are still ways for people to make money.
XBIZ: Where do you see in the future for this industry in two years, five years, ten years?
LENS:Obviously the merging of the Internet and home entertainment is going to be huge. Content is going to drive it. Obviously content is key. You know, without the ladies we would not be where we are today. I think that some people feel those people aren't important, but hardly.
We're going to end up delivering on-demand content to people's homes, set-top boxes, whatever the case might be, pay-per-view, these sort of things. There's going to be a merger of this sort of stuff. The barriers to entry will be fairly low. So it's not like people have to say, "Today I need to start planning for all that stuff." These things are going to happen. We've already seen the merge of computers and television. Microsoft has their media PC where you can record TV, and we all have Tivo at home. Eventually you'll have these big LCD TVs that you can use for the Internet, or television watching, or whatever the case might be. There are some interesting virtual things that are going to be coming out.
You know, one thing you've got to remember is that we're in the oldest profession in the world, so there's always going to be a demand for it. As long as people are still built the same way, [adult entertainment] is going to be very, very popular. We just want to deliver it in a way that generates revenue and gives people what they want.
XBIZ: Is there anything else you would like to add or tell the community?
LENS:Going skiing in Tahoe this weekend. That's about all I can say. Snow's up.
XBIZ: Thank you for your time.