Discussion: Is the Adult Paysite Model Dead?

It is a question that most adult entertainment website operators have asked themselves and their peers over the past few years: “is the paysite business model dead?”

XBIZ.net adult entertainment industry social network member Luckey Starr (www.theluckeystar.com) recently renewed the timely topic while converting his blog into a membership site, with a post entitled “Adult Membership Sites ... Are They Dead?”

Are membership sites dead? No. They really aren’t and a well done and actively maintained site can still make a decent amount of money if it has the traffic. —Kelli Roberts of Kelli Internet Services

“My core niche is amateur gay (people of color) content,” Luckey Starr told XBIZ. “I have a pretty decent following, but affiliate programs and direct advertisements don’t pay enough.”

Starr says his site has traffic and a core audience, but finding a balance between the traffic generated by free content and revenues from premium fare is proving elusive.

“Originally I decided to make it a membership site and members would pay a small fee per month for access to the entire site,” Starr said. “Membership itself is free but certain content would be for paid members only.”

These are common issues faced by many adult website operators seeking alternative ways of monetizing visitors, so Luckey Starr asked the community for ideas and advice on what consumers are willing to pay for, and what it takes to convince them to do so.

Among the comments voiced by XBIZ.net members was an insightfully anecdotal rhetorical remark by Jeff “Dillonaire” Dillon from GameLink.com.

“Do you think Manwin would be buying membership sites (i.e. Nasty Dollars/Reality Kings and Twistys) if membership sites were dead?” Dillon asked. “Most people don’t buy businesses that are not cash flow positive.”

A dominant force within the adult entertainment industry today, Manwin has been on a multi-year-long buying spree, purchasing a broad portfolio of companies and websites.

“Now with that said,” Dillon added, “I would say shitty or poorly done membership sites without original quality content are pretty much dead and those years have gone.”

Thus, it is impossible to generalize the adult paysite market. It is not a question of if it is alive or dead, but of who is succeeding in it, and how.

“Are membership sites dead? No,” Kelli Roberts of Kelli Internet Services offered. “They really aren’t and a well done and actively maintained site can still make a decent amount of money if it has the traffic.”

“Traffic is the key to everything,” Roberts explained. “The more you have the more money you’ll make. It really is that simple.”

Adult website designer EAC reinforced a current interest in bringing sites to market by noting that he is working on new paysite tours, but says that the endeavor is best left to the established networks; while TisMe of NotReally agrees that paysites continue to grow, so he keeps building more.

Another web designer, Alyx from Cardinal Vices, echoed Dillon’s sentiments.

“Crap sites do not work these days,” Alyx told XBIZ. “Something original with a sense of reality might.”

“You can still make money with paysites,” Alyx explained. “Only this time they are going to cost a bit higher than before. That is if you want them to work.”

Proven properties still have traction, however. Danny Cox from Wild Rose Productions is an industry veteran that launched his first website in 1994, followed by his first paysite in January, 1996.

The company has seen a considerable degree of success and been witness to the evolution of the paysite business.

“While we aren’t making the money we did ‘back in the day,’ we are still making more than just a comfortable living,” Cox stated.

There are many adult paysites successfully running more or less on autopilot today, providing a long term return on the operator’s initial investment. Others can maximize their market appeal by being responsive to customer needs, tweaking the site over time.

“Understand your audience, listen to them, give them what they want, and you can still make money,” Cox concluded, underscoring the group’s consensus that many adult paysites remain profitable today.

Those same principals that worked so effectively for established operators are also being used by a new generation of adult entertainment entrepreneurs.

As a newer player, Donovan W from RRR Entertainment told XBIZ that the days of adult membership sites are definitely not over.

“Being a newbie in the urban niche and getting ready to expand into other niches I can tell you that with strong unique promotion and new envelop-pushing ideas you can immediately make traction,” Donovan W stated, emphasizing the need for operators to try new things and to research their craft diligently.

“It took me two full years to learn how to pull stable profits but it’s worth the wait,” he added, advising other adult promoters to “try and expand your niche and find new unique niches to capitalize on.”

James Slater offers the viewpoint of someone one who works as an affiliate marketer, saying that adult paysites are not dead, as evidenced by the fact that he still makes sales — and those sales are on the increase for him this year — but he acknowledges that sales volumes are down from “the good old days.”

“If you build a paysite that comes with a built-in following, such as a solo site for a model that has been selling clips on Clips4Sale.com, paysites work great,” Vendzilla of Glas Werx told XBIZ. “Webcam models are prime candidates for solo sites as well.”

Not everyone has such a positive outlook, however — although some have a sense of humor that belies the often grim reality of the adult entertainment industry today.

Although Roald from FreeOnes was pithy with his analysis that the paysite market is “all dead,” and that “there is no money in adult,” while International Media Company’s Siep Kuppens agreed, saying the business is “stone dead,” the comments of these highly successful operators may be more sarcastic than succinct; with Roald noting his company employs around 20 staff members inhouse, along with a hand full of remote workers — hardly an indicator of a dead industry; with some companies having a far greater number of employees and contractors. Size can color your perspective.

Alien shared a missive that approaches the issue from “the little guy’s” view point, which notes that while paysites are not dead, for sole proprietors and small companies with a minimal budget, one is better off assuming that the paysite era is indeed over, due to it becoming cost- and time-prohibitive for smaller shops to get membership sites going and then seen by potential members — this latter point echoing the traffic requirement that Kelli Roberts had alluded to.

Alien pointed out the need for networking and making business connections, as well as enduring challenges from scammers and more — including the overall effort required, which may be beyond what poorly capitalized entrepreneurs and inexperienced wannabes can manage in today’s ultra-competitive marketplace.

“If you are thinking ‘Lamborghini wealth’ in this business as a new guy, you had better just change that to ‘a small used Pinto hatchback and a burger from the McDonalds drive-through’ for a lifestyle,” Alien opined, adding, “but the Internet is not absolute.”

“There will always be some sort of site worth subscribing to,” Alien explains, but adds that “Your [site’s] chances of being one of them are nothing more than the chances of winning a decent sized lottery and those winnings are going to be nearly equal to what you put in as costs, to break out with a gem of a site worth customers’ time and money to subscribe to.”

On that last point hinges the complicated issue of paysite pricing.

“I think people are willing to pay $10 per month,” HotHeap offered. “There is way too much high-quality free stuff. Not just on the tubes, but on Usenet.”

It is not simply a matter of piracy, but of over-aggressive promotion by site owners and their affiliates, as well as oversaturation of content with supposedly limited licensing, that contributes to the glut of free porn — but many consumers will still pay to play at the right price.

Angel from Xes Network says that pricing always seems to be a toss up with adult membership sites. “I’ve noticed some of the larger sites lowering their multi-pass pricing to $29.99 [from charging] around $34.99,” Angel stated, asking, “Will the evolution of paysites in the future include lower pricing, similar to Netflix?”

Angel cautions that pricing paysite memberships at too low a rate may raise warning flags in customer’s eyes, causing them to fear an inferior product — and advises a tiered approach including loyalty pricing and retention testing, while trying to find a sweet spot where the site is priced correctly.

LeRoy from DTI Cash provided encouragement by revealing that the company has sites with monthly membership prices in the $55 to $85 range that are still converting and rebilling thousands of members.

Personally, this author believes that pricing is an over rated factor in the equation — if you could actually get me to pull out my credit card, anywhere up to $39.99 per month might work — but I would eye lower-priced offers as not being worth it.

Having said this, my $7.99 per month Hulu Plus membership could recur forever, because the price is too low to motivate me to cancel it and the convenience and quality of this video service makes it worth keeping.

Countless other consumers agree, illustrating how Hulu and Netflix have redefined the online video value proposition, giving new life to cut-rate membership site pricing.

Looking to a different set of numbers for an alternative perspective, we turn to the most popular adult websites to gauge underlying consumer acceptance of premium offers in an arena where free is reputedly king.

While I won’t rehash the validity of the figures presented by Internet traffic analysis firm Alexa, I will rely upon them for comparative and illustrative purposes, by examining the company’s listing of the 25 top-ranked adult websites, to find a representative sample.

Of these top 25 adult websites, which include everything from live cam and dating sites to ‘tube-style’ video and DVD-on-demand sites, erotic story and photo gallery sites, blogs and traditional paysite programs — all have a “premium” section in addition to any free content they provide — illustrating that the pay-for-porn model is far from dead, although the variety of forms it now takes has definitely increased.

Is the paysite model dead?

Perhaps DrTim from Doc Johnson Enterprises best summed up the perennial appeal of premium porn and the permanent opportunities it presents:

“Are paysites dead? No. Heck, I’ve joined two or three paysites myself,” DrTim exclaimed, adding, “Although I am about to drop them and switch over to new ones.”

It may be like winning the lottery, but perhaps your adult website is the next one he, or any of the multitudes of countless consumers like him, will pay to join — proving that the adult paysite business model is still very much alive.


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