There isn't as much money in the adult-entertainment industry as there once was - or at least there doesn't seem to be. After a massive shift to electronic distribution and an influx of new content producers and distributors, at the very least the money that remains is spread among far more individuals and companies than it used to be. In addition, with the U.S. economy heading south faster than a flock of birds in late fall, an industry once considered recession-proof may be staring in the face the first honest-to-goodness recession in its history.
Consequently, adult-entertainment impresarios have become ever more creative with their sales and marketing tactics. Some methods - like social networking, consolidation, micro-niching and investment in new technologies - have proven beneficial, at least moderately. Older, tried-and-true tactics have been discarded as they've become less relevant to modern consumers. Some old standbys, though - long since discarded as unworkable or potentially problematic - have been given facelifts and trotted out as innovations.
Once bitten
One of the old marketing methods that has experienced a resurgence in recent months is creating quite a stir among industry insiders: pre-checked cross-sales.
Cross-sales and up-sells are nothing new on the Web. Ever since money began changing hands online, entrepreneurs have offered their virtual customers add-ons and related products - their own or those that pay a sales commission - as a way to boost revenue. It's an age-old tactic that was pioneered in the brick-and-mortar world: "Would you like fries with that?" "You really should consider an extended-warranty plan." "Wouldn't these darling shoes be just divine with that new suit? And if you buy them today, they're only $69!"
Adult webmasters adopted the technique with gusto - so much so, in fact, that aggressive cross-sale and up-sell attempts eventually became counterproductive and were abandoned. It's rare today to see pop-up and -under windows suggesting that if surfers didn't find what they sought at HardcoreMidgetMudWrestling.com, they might enjoy BlondeAmazonVirginLesbians.com, BaldChicksWithHairyDicks.com or InterracialTransvestitesFromMars.com instead.
That is not to say cross-sales and up-sells disappeared. Many webmasters simply moved the sales messages inside their members' areas, relegated them to permission-based email lists or included additional offers on their join pages.
A clever, if possibly misguided, variation on the latter tactic is what has begun to irk some affiliates and affiliate program owners lately. Instead of offering new members the opportunity to opt in to additional memberships at the same time they sign up for hardcore sex site A, some webmasters have begun requiring the signers-up to opt out by un-checking permission boxes that already are ticked for them (no doubt by a thoughtful marketer who has only the new member's best interests at heart).
That's what's known as a pre-checked cross-sale, and on its face, the method is not at all unusual. It's very common in the mainstream, as a matter of fact: The next time you purchase something from a mainstream retailer's virtual storefront or sign up for a free subscription at a newspaper's website, you very well may notice anywhere from two to ten pre-checked options at the bottom of the page affirming that you give God only knows who permission to flood your inbox with God only knows what. Web-savvy surfers know to pay particular attention to the wording in these helpful special offers or pay the unholy price.
In the mainstream, pre-checked cross-sales and up-sells are used most aggressively by websites that offer something for free. That makes sense: Selling users' email addresses or allowing "partners" to rent email lists is one way those generous souls who make the free offers pay their bills.
The situation is different, however, when users already are signing up to pay for something. Generally, buyers don't expect to be obligated to pay for something else they may not want simply because they pressed the "submit" button to transmit their billing details.
Something wicked this way comes?
Not surprisingly, the pre-checked cross-sales matter embodies a somewhat polarizing issue. Webmasters are either strongly opposed to the practice or strongly in favor of not criticizing the for-it camp. The for-it camp is largely silent, which leads one to wonder why. None of the affiliate program owners AVN Online contacted to comment for this article responded. Even the one who got to us before we got to him suddenly disappeared after we emailed him a set of middle-of-the-road questions that sought to increase our understanding of how pre-checked cross-sales build revenue. (It seemed to us the practice might be fraught with the potential for chargebacks.)
The experience left us wondering, "Are pre-checked cross-sales legal?"
Probably, attorneys say, at least within certain constraints. "It's not illegal if [the webmaster] gives users the opportunity to un-check [the boxes]," Seattle-based attorney Robert Apgood said unequivocally. His Chicago-based colleague J.D. Obenberger concurred, but said that didn't make him feel any better when he became the unwitting victim of some clever pre-checked mainstream cross-sales. "I'm going to reserve judgment about it [in adult], because I really haven't studied exactly what they're doing," he added.
Both attorneys indicated webmasters probably are operating within the law if the pre-checked cross-sales are clearly visible on a join page. They may be above the submit button or below it, but users should not be required to engage in excessive scrolling to find them and they should be in a type color and font size that approximates the rest of the text on the page. However, accusations of "deceptive trade practices" could surface - and possibly stick - if even a vague impression of trying to trick users is given.
"Being below the submit button alone is not deceptive," Apgood said. "If there's lots of space [between the submit button and the additional obligations], that probably would be considered deceptive. If the type is obscured, that's deceptive. In some of these cases [currently being debated in webmaster forums], the [Federal Trade Commission] probably is interested."
Apgood knows the FTC. He has defended a number of clients against FTC claims, most recently besting the federal watchdog in a lawsuit accusing Impulse Media Group of violating the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003. If the FTC takes an interest in pre-checked cross-sales, the entire adult industry could come under scrutiny, he said. "Like in the CAN-SPAM cases, [the FTC] may go after a half-dozen of the big boys to encourage everybody else to get in line," he noted. "People who are intentionally hiding cross-sales are engaging in deceptive trade practices and the FTC will go after them."
FTC representatives declined to comment.
The devil went down to Pornville
The specter of federal scrutiny is only one reason some webmasters decry the use of pre-checked cross-sales. A bigger problem for many is that tricking surfers gives the entire adult industry a black eye and - because human nature tends to paint all similar businesses with the same broad brush - lessens the pool of potential customers for everyone. Massive per-sale payouts often offered by the programs that employ pre-checked cross-sales also make it difficult for programs that offer revenue shares to attract new affiliates. In the mind of affiliate program owners like BVBucks founder BV, that's downright sinful.
"It's hard for a revshare program to compete with a pay-per-sale program [among new affiliates] who don't know any better," he said. "The small guys, the new guys always will pick the program that's going to pay the most up-front. What they don't realize is that good sites that cater to members' desires retain, and in the long run that means more money for the affiliate. On these cross-sale sites, the affiliates don't get credit for the entire sale. They're getting credit for the first sale, but they don't see anything from the cross-sales and up-sells."
Even affiliates disparage the practice. "That is pure bullshit," a webmaster named Halfpint posted to chat forum GFY. "If I was a surfer and got stung for that, I would never trust another adult website again. This is fucking both the affiliates and the surfers."
One particularly outspoken German webmaster who straddles the pay site/affiliate fence, said he understands the practice, but he still can't support it. "Margins are getting lower and lower for the adult business lately," Jens Van Assterdam said. "Most of them will blame it on the tube-site movement, but a clear fact is that most of these self-crowned ‘cross-sale kings' don't even know how tube sites really work. Most of them still stick to marketing techniques from years gone by.
"Misleading pre-checked cross-sales are simply a bad tactic," he continued. "They won't bring any benefits to your company other than quick cash for a very short term. I received a couple of emails from customers who signed up to a site and felt defrauded. The actual trial for $1 turned out to be $120 on their credit card statement [because they didn't realize they needed to cancel within 24 hours or the fee, in U.S. dollars equivalent to euros, would be charged automatically]. That's like walking into a Wal-Mart, buying a bottle of milk and getting charged $120 for it because you agreed to their terms, which included a $119 charity donation. Just because you didn't expressly state that you didn't want to donate, you're considered in agreement."
Devil's advocate
Not all affiliates and program owners see evil in pre-checked cross-sales, though. "There are [thousands], if not [tens] of [thousands] of webmasters who disagree with the handful who think this is wrong and have no problem cashing their big checks from these companies," DirtyWhiteBoy posted at GFY. "My small little program, Digital Dope, does not use this business model, but that doesn't mean we won't someday in the future. Or maybe we never will. But even if we don't, I do not have a problem with those who do.
"This is porn," he emphasized. "We do not sell bibles. We do not help people build better lives. We do not babysit people. We do not hold anyone's hands and walk them through anything. As a general rule we do not follow any rules. We are all in this to make as much money as we can. That's just the cold hard facts."
Sharphead chimed in supporting cross-salers, too. "I personally don't like cross sales, but that's from my point of view as being an affiliate," he posted. "I'm sure if I was a program owner, I'd be on the other side of the fence. Financially, it just makes sense.
"You think this same surfer would give a shit about you educating them about cross-sales or only promoting sites that don't have them?" his post continued. "They are clicking around like crazy, not reading anything to begin with, so it seems like ... [there's] no real benefit [to educating surfers about cross-sales or refusing to support programs that employ them] other than you being able to take the moral high ground on something the market is willing to bear."
Due from Global Accés S.L. was a bit more philosophical in his evaluation. "This is nothing new," he said. "This is the result from webmasters wanting $40-$75 per sale. It will not change as long as webmasters avoid promoting sites that pay ‘just' $15-$25 per trial sale. In the end it's the webmaster's choice. The program owners need to compete and be as creative as they can within the legal limits in order to stay in business."
That's all well and good, Obenberger observed, but when programs and webmasters cross the line - or even skate along its edge - "they're pissing in the well from which we all drink," he said. "In general, deceptive practices indicate the worst spirit of business. Subscriptions from young people - the future of any business - are down because of things like this. It is vitally necessary that all adult site operators operate with the highest standards, not in a way that allows them to write down all of their business ethics on the back of a three-by-five card."
Dancing on the edge
The industry discussion so far has centered primarily on legal and ethical aspects of pre-checked cross-sales, not on how cross-salers make money and pay huge sums to their affiliates. Partially that's because no one seems to have the revenue system entirely figured out. Some suggest that in order to avoid excessive chargebacks, programs that employ pre-checked cross-sales don't actually charge surfers until the cross-sale sites' trial period expires. At that point, the surfer already has agreed to pay a recurring monthly fee, and many won't challenge the charges because they're afraid of repercussions if they're outed as porn consumers. "Most surfers will not contest it or charge back for embarrassment reasons," BV said. That always taints the entire industry, though, because "then [consumers] are afraid of being screwed over again," so they won't buy porn online in the future. "Everyone loses," he noted.
So what are earnest affiliates and program owners to do? "I think all affiliates should take a closer look at the companies they are dealing with," Van Assterdam said. "In general, affiliates should start to think more about long-term business than just quick cash. The quick cash flow might last a few weeks until the first chargebacks roll in and the members start to complain." Chargebacks, he noted, often are withdrawn from an affiliate's account the moment they're withdrawn from the sponsor program by the consumer's bank. "A shady sponsor could easily kill your traffic and cut your income.
"I'd recommend that affiliates cancel their relationships with sponsors that use shady cross-sale tactics," he continued. "A defrauded customer won't be joining any membership sites anytime soon, if ever."
On the other hand, "If a surfer is able to check those boxes on his own and is easily able to see what he is getting into, then I'd say it's absolutely of great benefit to the website," Van Assterdam added. "Offering extras or up-sells to the surfer never hurts if the price is stated clearly and the surfers are aware of what they're getting into."
This story originally appeared in the November 2008 issue of AVN Online. To subscribe, visit AVNMediaNetwork.com/subscribe.
