educational

A Global Business: Part 1

Ed Palomar
The Internet came on the scene at the same time that globalization became the world's dominant economic trend. Globalization can be defined as the integration of national economies and the lowering of trade barriers between states. The process has given rise to high level negotiating bodies such as the World Trade Organization and treaties such as the North American Free Trade Agreement.

Ruth Blair, of the Canadian company XtremePay.com, which sells penis and breast enlargement pills online, told XBiz that NAFTA's lower tariffs have benefited her company greatly and have enabled Americans to conduct business with people and companies located in other countries more than any other time in history — and vice versa — especially when it comes to e-commerce.

In the blink of an eye a webmaster located in the San Fernando Valley can transmit content produced in Prague to a user in Tokyo.

Online adult companies have unprecedented opportunities in today's economy and yet face many pitfalls when doing business abroad. In this brave new wired world, adult webmasters need to learn how to negotiate customs, laws, and cultural mores.

According to Scott Rabinowitz, co-founder and president of the TrafficDude.com and parent company Innovative Ideas International Ltd., in order to minimize misfortune and maximize good fortune, it is essential that webmasters doing business on a global level do their homework. That homework assignment can begin with the law, Rabinowitz added.

Law And Orders
A number of companies that utilize third-party billing solutions for their non-North American traffic freely send their traffic off without regards to whether or not the other company displaying the content on their behalf is actually compliant around the globe.

"To protect yourself and your company from liability in the civil or criminal context, if you are going to transact business in multiple countries, you need to have a fair sense of what the restrictions are," he said. "That can get pretty dicey considering the fact that there about 200 different countries around the planet, which theoretically means there are 200 separate sets of laws and customs with regards to obscenity and other hot button liability and management issues."

On the consumer side, website operators also need to know where their customers are coming from.

"You need the technical means to be able to identify where in the world your customers are based," Rabinowitz said, referencing a process called geo-targeting or geographic sorting that enables webmasters to tailor web pages according to specific cultural norms based on laws specific to certain areas of the world.

"Doing the due diligence portion of global business is much more involved than just determining if the user is from North America or somewhere else," Rabinowitz said. "If you really want to be on top of the gamut of customer acquisition that is possible in the world, it's worth finding out how people pay for shoes online in just about any country where you want to do business. There are laws and regulations that can prohibit or allow merchants from certain parts of the world to interact with consumers from different nations."

Playboy TV International faced this problem when it introduced its branded programming to two digital services in Australia in August. PTVI operates branded networks in France, Greece, Hong Kong, Israel, South Korea, New Zealand, Philippines, Poland, Japan, Scandinavia, Taiwan and Turkey.

PTVI Networks Director of Scheduling and Operations Luigi Bordonaro told XBiz that screening American content for foreign audiences requires fine-tuning, noting that it is easier to program for Australia than most nations because it is an English-speaking country.

"However, the 'heat' level is where we readjust our content first," Bordonaro said. "Australia is a bit softer than typical U.S. adult programming. We don't want to break government regulations. If [the sexual activity] is too hot, we'll bring it down to an acceptable level through editing."

Foreigners doing business in America can encounter similar problems. NaughtyNiche.com is a fetish site headquartered in Montreal, Quebec. The site's owner, Emmanuelle, finds it troubling that the standards regarding adult content vary from state-to-state.

"In Canada, the obscenity laws are black and white," Emmanuelle said. "Whereas in the U.S., they are grey. It is clear here what you can and cannot do. Canadian laws are nationwide, not province-to-province."

Blair of XtremePay, which is based at Vancouver Island, British Columbia, said, "There are different protocols with different countries. Something that's acceptable in Canada is not acceptable in Europe."

Doing business internationally often requires legal expertise. J.D. Obenberger of the Chicago-based law firm J.D. Obenberger and Associates represents adult industry firms in Australia, Bosnia, Canada, the U.K., Holland and Los Angeles. "Overseas clients use me to make sure they comply with U.S. laws," Obenberger said. "And I advise Americans on doing business offshore as well."

Stay tuned for Part 2, where we'll examine security and fraud issues, as well as how local customs affect business matters, and more.

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