opinion

The Three R's

Stephen Yagielowicz
No, I'm not talking about "Reading, 'Righting and 'Rithmetic" – but about "Reputation, Repentance and Responsibility."

Unless you've been hiding in a cave somewhere, or have just joined the industry yesterday, you know that Deerfield Beach, Florida-based Internet Payment Processing Provider (IPSP) iBill has been suffering through a series of financial woes – and dragging its webmaster clients along for the ride. Heck, this is such a big deal that even if you did join the online adult entertainment industry yesterday, you might already be aware of the iBill saga due to the large amount of "board talk" surrounding the issue. And speaking as a person who spends a lot of time in caves, I can assure you that subterranean exclusion will not insulate one from the chaos that trouble at one of "the big three" IPSPs causes.

While I do not want this to be seen an iBill-bashing editorial, and in fact I am primarily using them as an easy example of the points that I wish to make, I will have to kick the company on one issue – and judging by the rumblings spreading across the industry message boards, I am not alone in my concern over one of the company's latest moves.

The move in question came to light yesterday in an XBiz News article where Martin Murphy wrote:

"Responding to criticism that it has not paid affiliates in its latest round of payment settlements, Internet payment services provider iBill admitted that a temporary accounting glitch had left revshare payments undistributed to webmasters. 'We admit the mistake, and starting with May 15 payments, we will reconcile it,' iBill President Gary Spaniak told XBiz, claiming that all affiliate monies, or revshares, will be paid directly to the webmasters who maintained affiliate programs, rather than to the affiliates themselves."

"Now the webmaster is responsible for getting money to the affiliates," he said.

I have no doubt that this bombshell of a statement has yet to reach all of those concerned, and that when it does, howls of dismay will be heard all over cyberspace.

While I make no claims of being an expert on iBill's revshare program, I do realize that some of the primary reasons that such a program is seen as "attractive" include the facts that smaller companies can use the program as a quick and easy affiliate program solution that requires little workload on their part since the IPSP handles revenue tracking and affiliate payouts.

Likewise, affiliates find comfort in the fact that a large, well-known and independent organization is handling revenue tracking and affiliate payouts, rather than an "unknown" company. The importance of this cannot be overstated, as many webmasters have been burned by affiliate programs with shady stats and questionable payout histories. Using the affiliate payout mechanisms of an IPSP is supposed to mitigate these concerns, and indeed, similar programs offered by other IPSPs (such as CCBill) have proven quite popular in this regard.

The problem comes when late in the game an IPSP suddenly dumps the responsibility for paying a webmaster's affiliates upon the webmaster himself – a webmaster who is not likely prepared, or readily capable of, dealing with this mess. And pardon my ignorance, but I was not aware that webmaster's who used iBill's revshare program were provided with the affiliate's payout information, which could, in the case of those who opt for wire transfers, include sensitive banking information, among other things like physical addresses.

The webmaster's new liability for record keeping and tax burdens such as the issuance of "1099" forms for domestic affiliates is also a serious concern.

It also remains to be seen whether the webmasters that iBill claims to be paying the affiliate's share of the commission will actually receive these payouts – and when.

But beyond all of the controversy iBill's latest move will cause, lies the issue of the processor's reputation, and whether it can be recovered within this market segment. While the company says that they are in the midst of a turnaround, I can't imagine that they will retain, or regain, much support within this industry – with its latest move eroding further what little support may have remained.

In the end, this observer can only look at the current situation and the "passing off" of affiliate payout responsibilities to webmasters and ask "What the fuck are they thinking?"

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