LOS ANGELES — The 2013 XBIZ Summit brought the latest installment of its popular educational seminar series to Miami for a second day, featuring an adult entertainment industry insider’s look at the path to porn profits today and the potholes along the way.
For photo coverage of XBIZ Summit 2013, click here.
Presented by AWEmpire from May 14-17, the 2013 XBIZ Summit at the Coconut Grove, Fla.-based Mayfair Hotel & Spa is one of the year’s most talked about events, bringing a range of deal-making, educational and networking opportunities to an audience of adult entertainment professionals.
As part of these knowledge-building offerings, XBIZ Summit presents seminars generously sponsored by NETbilling.com, featuring experienced panelists offering expert insights on vital topics facing the industry today.
Thursday’s seminar series began with a discussion of Progressive Strategies for Maximizing Competitive Advantages, featuring panelists Jeff Wilson of Video Secrets, Utherverse’s Anna Lee and Amy Starr of SexyDeliciousThings.com, on behalf of porn powerhouse Sssh.com, with moderation by XBIZ’ Stephen Yagielowicz.
The session explored the strategies that these companies used to get to their leadership position, as well as the techniques they are focusing on to continue that success forward, including the most important factors influencing their business’ growth for the next year.
“[Sssh.com founder Angie Rowntree] saw a market hole and realized that women’s porn consumption habits are different than men’s,” Starr said. “Angie handles everything from focus groups to customer service for a very hands-on approach.”
Starr says that Sssh.com is extending its brand into real world events and focusing on the issues facing women for a more mainstream appeal. The site is also heavily community driven — with monthly charity donations to a group selected by members, as an example.
“Webcams are growing,” Wilson told attendees. “With increased piracy and easy access to prerecorded content, the live experience is becoming a main revenue source for many companies and we remain focused on helping these companies capitalize on our success by integrating our cams into their current platforms.”
Creating new platforms, and monetizing existing ones in a creative manner, is what Utherverse is all about.
“We entered the virtual world space to create a 3D Internet,” Lee told attendees, saying the 12 million-member Red Light Center utilizes a business model based on traditional recurring subscriptions.
“Access to the virtual world is free,” Lee said. “But if you want to have sex online, it is $20 per month.”
Lee says the company has also diversified its holdings by moving into a variety of markets, including the meeting arena, with the Adult Entertainment Virtual Convention as one groundbreaking example, while offering a new digital Bitcoin mining option tied to its own virtual currency, known as Rays, which are exchangeable for Dollars.
“Rays Harvester is a shared computing program that pays out in Rays,” Lee explained. “For some people, Rays will pay their membership fee; for others, it’s a way to make extra money.”
It is the kind of innovation needed to succeed.
Yagielowicz asked the panelists if technology was the only important consideration, or if a more human approach is required in order to succeed.
“If you rely on technology alone,” Wilson says, “nobody will want to work with you.”
“While technology drives a lot of Wasteland.com,” Starr said, “Sssh.com is driven more by personality and connection.”
Next, XBIZ Summit took a special look at the gay side of the business today, with perspectives by CitiBoyz’ Steve Shay, AWEmpire consultant Douglas Richter, Mitch Farber from NETbilling and Frank Gannon from Epoch, along with CCBill’s Gary Jackson and panel moderation by CyberSocket’s Morgan Sommer.
Farber explained that regardless of whether you are straight or gay, attending shows is a vital tool for merchant education and networking, helping to forge relationships.
Richter agreed, saying that strategies that work for gay companies can also work for many straight and tranny content marketers.
Jackson highlighted CCBill’s commitment to the gay market through its sponsorship of the Gay Phoenix Forum as a way of reaching out to the community.
“The gay market is notoriously affluent and has a more focused commitment to their purchasing habits,” Jackson said. “They are more willing to try new things and new sites, are more loyal and more likely to bite on an upsell.”
Jackson noted that while straight sites have an average retention rate of three to four months, gay sites average five to six months.
Farber concurred, adding that gay sites also sell longer memberships, such as six month and yearlong subscriptions.
Conversions are also better on gay sites, even as their volume is lower, with Richter sharing that while the company’s flagship LiveJasmin.com converts at 1:1,200, its gay site, CameraBoys.com, converts at 1:200, but in either case, customers engage and spend time with the models at an addictive pace.
Shay says that loyalty is huge in the gay market but you have to narrow it down to niches.
“You have to know your demographics,” Shay said, “and the type of product they want.”
One crossover technique Shay suggests is to use more “hot guys” in straight porn as a way of gaining gay viewers.
Gannon told the audience that one reason the gay market is so profitable is that gays are not hiding their porn purchases from their wives.
Richter agreed, saying, “I don’t have to save for my children’s college.”
“They will tithe to that like church,” Gannon stated, adding that some gay consumers will support certain sites even if they do not actively login; and if they do login, they love to get upgrades and other benefits.
“One thing we are evolving out of,” Gannon added, “is seeing websites as online porn magazines where you pay a subscription fee to access the content.”
Richter also noted a serious dilution in the quality of pre-recorded gay content as many straight producers sought profits in this arena without understanding the marketplace, further fueling the market for live gay cams.
“Gay cam customers are looking for a specific connection,” Jackson stated. “There has to be a direct link to the consumer’s wants and needs.”
The latest online billing phenomenon made a splash in a popular XBIZ Summit session that asked, “Is Bitcoin the Next Big Thing for Adult?”
Panelists included Avi Bitton from Wicked Pictures, Douglas Richter from AWEmpire and BitPay CEO Tony Galippi, with moderation by XBIZ’ Stephen Yagielowicz, who asked the panelists what they saw as Bitcoin’s biggest strengths and weaknesses, as well as how their company is approaching it: by implementing Bitcoin, ignoring it, or taking a wait and see attitude?
“The completely decentralized P2P nature of the payment system is Bitcoin’s biggest strength,” Bitton told XBIZ. “We have anonymity, transaction fees are lower, there are no chargebacks, the type of fraud we see with credit cards is impossible, and nobody’s Bitcoin can get frozen and/or given a ‘haircut’ to make up for bad bank investments.”
Bitton also sees the completely decentralized P2P nature of the Bitcoin payment system as its biggest weakness.
“It’s a double-edged sword,” Bitton said. “Working in the system is still a bit geeky and not for everyone. As a user, you need to [read the manual] in order to stay clear of wonky wallets, service providers, and to understand the extreme volatility of Bitcoin.”
While Bitton explained that Wicked’s flagship consumer domains are now managed by Manwin and should be accepting Bitcoin soon, he noted that excellent user experiences were what the company wants, which could hinder Bitcoin adoption.
Gallippi believes that Bitcoin’s biggest strength is its borderless Internet payments.
“The ability to receive money from any country on earth, with no risk of fraud, is not even closely possible with any other payment network used today,” Gallippi stated, adding that Bitcoin’s biggest weakness is the exchange. “Getting other currencies in and out of Bitcoin is more difficult today than it is to sign up for an email account, and in the future it should be that easy.”
As for implementation, Gallippi says that BitPay is making it easy for businesses to accept Bitcoin as a form of payment.
“Bitcoin is still beta software with many challenging edge conditions,” Gallippi added. “But we are by far the leaders in the space of Bitcoin payment processing.”
With breaking news that the U.S. government had acted against Bitcoin the night before, reportedly seizing bank accounts and closing the Dwolla processor, the conversation was most lively and touched on mining, investing in and trading Bitcoins — as well as other forms of monetizing consumer data processing.
Next up was the legal panel as it examined Pressing Issues for Industry Entrepreneurs, from the perspectives of distinguished attorneys including Larry Walters, Marc Randazza and Corey Silverstein, along with ASACP Executive Director Tim Henning and the able moderation of Wasteland’s Colin Rowntree.
It was perhaps the lightest hearted and most fun legal panel in the history of adult events, despite the dire warnings of impending doom from this panel of experts, which played on years of camaraderie for some judicial jostling and humor.
Among the warnings are renewed threats from Polk County, a danger from bundling cams and dating, lawsuits over pop-under ads, legislative moves for online child safety and a need for the industry to organize an effective trade representation body.
Walters relayed the latest antics of the Polk County, Florida Sheriff’s Department, which has a long history of intolerance towards freedom of speech; including the recent arrest of a woman who sold adult DVDs at her local gas station. Walters noted it is an important case as a win by the county here is usable in other jurisdictions, if the content in question is deemed obscene. He also cited last week’s arrest of 90 local residents on prostitution charges related to use of Backpage.com, which the Sheriff intends to prosecute.
“Trying to predict where an obscenity prosecution will take place is like trying to predict a lightning strike,” Silverstein offered, underscoring the need for adult website operators to defend their peers regardless of the prosecutorial venue.
Walters also warned of cam sites that use an automated ID upload system for ‘2257 compliance efforts, when there is not a reasonable degree of human review and explained that the sexual nature of cam shows can hurt operators that also offer dating and hookup products, due to an erosion of protections when these media combine.
Henning discussed ASACP’s mission, including its CP Reporting Hotline, which receives 10,000 to 20,000 raw reports monthly, as well as the association’s Restricted To Adults (RTA) website labeling system, which is available free for websites and mobile devices, and includes a WordPress plugin.
Henning also commented on recent moves by world governments, including Germany’s new content evaluation schemes and Iceland’s banning of porn: the first such restriction in the free world. The U.K.’s fining of companies for having inadequate age verification mechanisms and seeking out an opt-in porn access regimen was also discussed.
Another hot topic was the legal maneuvering of Exit Exchange, which is suing players for using pop-under ads, similar to the attack Acacia launched several years ago against adult and mainstream companies using streaming video — with many companies paying the licensing fees — and others coming together to fight them. While the industry won in this case, the pop-under challenge is another story, as the patent holders are pursuing the deeper pockets of ISPs claiming contributory patent infringement since they “allow” their hosting clients to use pop-under ads on their sites.
“This is a patent that is valid. It has been challenged before and upheld,” Silverstein warned. “Anyone using this technology today has a problem.”
Silverstein also emphasized the importance of developing good rapport during initial contacts with law enforcement agencies and warned against being involved in Bitcoin, calling it “a stupid idea,” and saying that “the folks behind it made a lot of money, but they’ll be going to jail.”
Randazza rocked the session with an impassioned plea for adult industry unity as a way to conquer major obstacles set against it, saying, “We are all small businesses that are easy to pick off, one by one.”
Randazza cites issues such as condom laws, patent trolls, and politicians picking on porn, as battles the industry would better wage with more support.
“The argument against porn is very easy to make, so politicians love to slap the industry around,” Randazza stated, concluding, “I don’t want to see this industry bled to death by 1,000 little cuts.”
Finally, XBIZ Summit helped pave the way for XBIZ EU, with a look at International Business and Establishing Cross-Atlantic Relations, with AdultCentro’s Alex Kudinov, Chi Lee from Reporo, Sascha Winkler of PAY4, Christian Kreul from Visit-X.tv, Michael Plante from the Qwebec Expo, and session moderation by Actually Helping’s Mike Ackerman.
Ackerman asked the panel about the various acceptable content ratings, based on the laws, regulations and delivery methods where the company is operating and distributing adult content.
“Different countries have different requirements on the mobile and TV side,” said Kreul, who worked for seven years in the mobile industry before moving to his current position. “… In Germany, softcore has a different meaning than in the states. Topless is OK for softcore, and you can have a naked girl. But you can’t show penetration.”
The panel also discussed methods for attracting foreign audiences to North American content and ways to optimize sales and conversions for the European market.
Reporo’s Lee said his company is headquartered in London, but has offices in San Francisco, Mumbai, Phillippines, Brazil and Japan, among other countries. He said that Reporo also employs dozens of professionals who speak different languages in an effort to specifically tailor its services to that region.
“At the end of the day the reason we have all that global coverage is because Indian traffic and advertising is infinitely different than traffic and advertising in Japan and the U.S,” Lee noted. "The way of doing things is different, so you do your research."
The panel pointed out that details such as changing landing pages to fit the voice and aesthetic of a country were key elements for successful market penetration.
"It’s not just about the language, that’s not good enough," Kreul said. "It’s also about the content. In Germany, we don’t like the glossy porn star look. We in Germany like amateurs, the girl next door.
"The easiest way is to look for a local partner and try to work something out with them. They have the experience. I don’t know any big international company who is successful in Germany doing it on their own.”
And with that, the diverse educational component of the Summit concluded. But the week was far from over, as the night of a festivities began with the Sunset Soiree at nearby Scotty's Landing, sponsored by Online IPS. The secluded waterfront destination gave attendees a chance to unwind after two full days of seminars and networking sessions.
That set the stage for Havana Nights, the closing party of the Summit conveniently happening across the street from the Mayfair Hotel. The Cuban-themed bash included a DJ spinning everything from house music to salsa, delicious snacks, go-go dancers and shot girls prancing around in tutus.
Party-goers donned colorful fedora hats and mustaches on a stick while sipping complimentary cocktails courtesy of event sponsors Affil4you and JuicyAds. The revelry continued well into the wee hours of Friday morning, when a mimosa-fueled Farewell Toast was set to send attendees off in style.