LAS VEGAS—Though it’s been an undeniably rough year for adult content producers, what with production moratoriums and the Measure B legal battle, the mood was upbeat at Internext Expo 2014, which attracted approximately 1,500 industry professionals from around the globe. The consensus seemed clear: Business in the online sector might not be booming, but it is beginning to pick up.
One tip-off? Attendees simply couldn’t wait to get this annual online adult industry gathering started. Many arrived at the Hard Rock Hotel & Casino Las Vegas the evening before the show began, perhaps lured by the promise of MojoHost’s annual party in their Pool Villa Suite. By the end of the night, the pool-blue walls of the suite were lined with familiar faces from shows past.
When registration finally opened at noon on Saturday, January 11, attendees queued up —some patiently, others not so patiently—at a registration line that snaked down the hallway all the way to the parking garage elevators. (Note to selves: Open registration an hour or two earlier next year!)
The branding this year was ubiquitous and creative. One of the first sights in the registration hallway was a pair of slot machines tricked out with logos of the sponsor, Pussycash. The next day, attendees learned, they’d have a chance to win a variety of prizes, including an Xbox, an iPad and cash prizes, if they came back to play the one-armed bandits.
Also in store for attendees were Internext’s familiar components: a seminar program, sponsored by Sex Goes Mobile; a series of workshops that afforded companies that chance to present information about their services; speed networking sessions, sponsored by StarEdition; and the annual Meet Market, during which exhibitors put their best swag (and pitches) forward.
This year also brought a new component: GAYVN Internext, offering a completely separate schedule of networking sessions, parties and seminars (sponsored by Next Door Buddy Profits) devoted to gay adult online companies. (For more, see page XX.)
The first order of business was an orientation session for Internext newbies on Saturday, with show veterans Brad Mitchell of MojoHost, Mitch Farber of Netbilling and Jo Merlone of Kiwi Sourcing dispensing advice on many topics, including how to mix business and pleasure. Other than a speed networking session, the schedule was clear for the Meet Market, which packed the huge meeting room in the afternoon.
Sponsored by Adult Webmaster Empire (AWE), the Meet Market was thronged the entire time as more than 75 companies—payment processors, content licensing experts, ad networks, mobile companies, affiliate programs and others—hawked their services as they handed out an array of some of the best swag seen in years. The go-to marketing gimmick this year was lip balm, but other notable giveaways included DatingGold’s mouse pads, PartnerCash’s survival kit (complete with Aleve and Emergen-C), lawyer Corey Silverstein’s microfiber lens cleaner, “rattlesnake egg” oval magnets from Mobius Payments, cookies from Traffic Haus, and a gadget from MojoHost that converts a car’s cigarette lighter into a USB charger. Clever marketing slogans abounded on hats from EroAdvertising, and T-shirts from Affil4U. And there was the military camouflage motif that set apart the exhibit space of presenting sponsor Bitter Strawberry—a play on the mobile company’s “go commando” campaign (illustrated by shapely legs slipping out of a pair of panties).
After a lull in the action (i.e. dinner), the first full evening of parties commenced, with a night of poker hosted by BitterStrawberry and “Boobs, Booze and Bowling” in the Real World Suite, sponsored by Affil4You and Juicy Ads. Internext’s poker parties are legendary, and a must-have component to the show, and a bash in the Hard Rock’s Real World Suite—with its retro glam décor, living room Jacuzzi, pool table and wooden bowling lane—offered something for everyone.
Buying Into Bitcoins and Traffic Jamming
Despite the late-night carousing, by 10 a.m. Sunday there was a full room ready for a morning workshop on issues related to regulating adult websites, conducted by attorneys Corey Silverstein and Larry Walters—and it turned out to be one of the most provocative sessions at this year’s show.
The two lawyers explained that while many adult entrepreneurs worry about arrests for obscenity or 2257 inspections, they should be as or more concerned about actions by the Federal Trade Commission, which has been more aggressively investigating online companies for “unfair or deceptive” trade practices, such as creating fake profiles on dating sites, violating CAN-Spam laws or offering “free trials” that become hard-to-cancel memberships.
During the 50-minute presentation, Silverstein and Walters explained, in frightening detail, how an FTC action can impact one’s business, beginning with the arrival of a civil investigative demand letter, or CID (“First advice: Don’t read it. Call your lawyer first, because if you read it, you are going to flip out.”) and continuing on through a process during which the investigators “will ask you to produce the most intimate details of your financial affairs.” In other words, explained the lawyers, if you ever get a CID letter, your life as you know it is over.
At the end of the line, Silverstein added, there’s even more bad news: The FTC can recoup all the expenses it incurs during an investigation from the company under scrutiny. In addition, the FTC can levy administrative fines. In addition to these fines and fees, which can be huge, Silverstein noted that the FTC has a “final bullet” called “disgorgement of revenue,” in which it can seize money earned in a way that has been deemed to be a violation—and “their baseline calculation of unjust gains is gross receipts.” Ouch!
As a final point, both lawyers emphasized this: Just because something is an industry standard doesn’t make it legal. “If there’s anything to take away from this seminar,” Walters said, “don’t judge your compliance level by what’s happening in the industry.”
Another workshop was presented immediately following Silverstein and Walters’ talk—an arcane look at Hypertable, a high-performance open-source scalable database modeled after Google’s Bigtable database. This presentation was one of the many individual workshops that delved into technical minutiae of the online trade. Other workshop topics included creating webcam white label sites, affiliate media buying, live cam advertising on mobile, and TV and console traffic.
Fortified by a free lunch sponsored by CE Cash, attendees flocked to the official Internext seminars on billing and payment issues and opportunities, and the mobile sector. “Billing Bada Bing: Developments in Processing” brought together representatives from many of the industry’s biggest companies: Karen Campbell of Orbitalpay, Mitch Farber of Netbilling, Frank Gannon of Epoch, Gary Jackson of CCBill, Bjorn Skarlen of CommerceGate, and Vinny Lipari of WTS. Chris Rodger of Payze moderated his first-ever panel, and did a great job steering the conversation toward issues of practical help to the audience.
Immediately following “Billing Bada Bing” was a seminar on an emerging payment issue: “Bitcoin: Legit Currency or Bogus Boondoggle?” Addressing this provocative point were CommerceGate’s Skarlen along with Tony Gallippi of BitPay, Marcel Trik of Verotel Payment Institutes and Steve Ranieri from SNR Productions, with Colin Rowntree of Wasteland.com presiding.
Right after the discussion on the intricacies of Bitcoin, Rowntree segued into moderating the “The Mobile Merry-Go-Round: Are You Making Money or Getting Dizzy?” seminar. There to provide answers was an army of mobile experts, including Christoph Hermes of Gold Kiwi, Gian Carlo Scalisi of BitterStrawberry, Joey Gabra of Wister, Andy Wullmer of SexGoesMobile, Reto Moser of BrokerBabe and Alex LeComte of Star Edition.
For the next event, attendees headed down the hallway to Vinyl nightclub, where newly reinstated FriendFinder Networks CEO Andrew Conru gave the keynote address (see page XX).
The big event of the night was the official Traffic Dinner, sponsored by DatingGold, EroAdvertising, Humboldt Merchant Services and Sextronix. Guests made their way through the Hard Rock Hotel’s multi-level outdoor pool areas to the Breathe Pool, the only water feature at the hotel heated during the winter, where a buffet dinner was served under the stars (and the heat lamps—still welcome though the weather was relatively balmy for January). Food and drink flowed freely and guests stayed put well into the evening, nibbling on miniature desserts by candlelight as they networked the night away.
For the more intrepid partygoers, there were also private affairs on the agenda, thrown by Flirt4Free, Affil4You and Juicy Ads, and probably others we never heard about, and never will.
Future Cams and Present Legal Threats
Monday featured another full day of education workshops, in addition to seminar panels on three of the most active sectors of the adult market: dating, live cams and traffic. Kicking off the day was a seminar titled “Technical Innovations in Adult Dating”—an apropos start after yesterday’s keynote and the questions raised in Silverstein and Walters’ legal presentation. Moderated by AVN Senior Editor Tom Hymes, the panel included Matthew Pitt of WhiteLabelDating, Tanya Fathers of Dating Factory, Ed Kunkel from the Dating Network and AK from DatingGold.
For “Tomorrow’s Trends in Traffic and Tubes,” seasoned Internext moderator Rowntree filled in at the last minute for a sick Wizzo to lead a panel of traffic heavyweights that included Nigel of AdExpansion; Judy Shalom of Affil4U, Axel Vezina of CrakMedia, Alex Lecomte of Star Edition, Nick Pavlakos of MindGeek and Brad Mitchell of Mojohost. The main focus over the hour was how to maximize revenue from putting content on tube sites—because, as Rowntree said, “There’s substantial revenue to be made for people who have deep wells of content.”
Among the bits of advice offered:
MindGeek’s Pavlakos: ” Just put the best. You don’t want tens of millions of people to see crappy stuff.”
Vezina of CrakMedia: “Be systematic and put effort into posting. Also pay a lot of attention to tracking your traffic from the tubes.”
In answer to a question from an audience member about ROI on putting up content, panelists concurred that for those with legitimate content partner status—using a banner and links—sales should start immediately.
According to Nigel of AdExpansion, when buying ads to promote content, one can expect to see a boost in three months. He noted that one measure is whether direct type-ins and organic sales increase.
The second-to-last seminar of the show posed the question, “Are Live Cams the Tip of the Iceberg?” Jay Kopita of YNOT took charge and led the panelists over a wide-ranging discussion that tackled where the cam industry is now and where it’s headed. Adding their perspectives were Oren from ImLive.com/PussyCash (who noted ImLive boasts more than 40 million members); Jeff Wilson of Flirt4Free (affiliate manager for Video Secrets, which has been doing live cams since 1996); Shirley from Chaturbate.com, who called her company the “new kids on the block”; Inez Peterson, better known from her role at Webbilling but here representing AmateurCommunity.com, a European cam site that launched in the U.S. last September; and Bob Raley, from M Group Management, who has been in adult since 2000 and specializes in opening new live cam sites.
These seasoned pros covered a wide range of issues: adding white-label cams to an existing site, managing models, coming up with new ways to bill, and improving the user experience.
Chaturbate’s Shirley said it’s the personal touch that makes cams so appealing: “The consumer is now the director and the casting department … Anyone can play,” and also noted that most cam girls do not favor HD technology, because they feel it shows too many physical imperfections.
HD and other high-tech gadgetry, in fact, were generally deemed to be a lower priority than integrating better forms of billing. Flirt4Free’s Wilson offered his vision of the future: “I always say the best user experience is a guy sitting on the couch and he whips out his iPad and all he has to do is push one button and he’s interacting on a cam-to-cam basis.” The scenario is not a reality now due to Apple restrictions, but Wilson believes it will come.
Oren from ImLive/Pussycash wondered, “Who knows what Google Glass will do?” But ultimately he agreed: “The biggest challenge the next five to seven years is the billing solution—to eliminate the need for credit cards. … That would change the market.”
Whether it’s billing innovations or new technology, Amateur Community’s Petersen noted, “It’s really about getting the programming resources. … People have ideas but may not have the resources.”
Raley of M Group Management certainly had ideas. He postulated that within two years there will be more spoken word on mobile devices and models will be able to converse in more languages. “You used to have to sit in a bedroom in front of a webcam; now you can be on the subway,” he said. “I believe before I die … there will be holographic live webcam chats.”
The last official seminar of Internext 2014 was the legal panel, featuring four industry veterans assembled to provide varying perspectives on the current legal challenges. Las Vegas-based attorney Clyde DeWitt briefly discussed the prospects of setting up shop in Las Vegas, noting the tax advantages and the complications created by Measure B back in California. He then shared his main points, beating the drum about the importance of taking care of the legal nuts and bolts when setting up a company of any sort—let alone an adult business—and preparing for possible problems in the future with good, professionally produced contracts reviewed by an attorney.
Los Angeles-based Michael Fattorosi had plenty to say about what is going on with the enforcement of Measure B in the city. “This is a political issue coming down from the mayor’s office as well as the city council,” he said. But Fattorosi also noted that what many people don’t realize is that the health and safety laws covering adult productions are not city laws or state laws—they are ultimately federal law. He averred, “What’s going to happen at some point is that Cal-OHSA will seek approval for a statewide condom law at the federal level. Then any state can pass the same law without much trouble.” Given how hard AIDS Healthcare Foundation pushed to get Measure B voted into law—and is now acting much more aggressively to push enforcement than the county or Cal/OSHA—he added that it is probable that the organization will be willing to push for passage of similar laws in other states.
Joe Obenberger, who works out of Chicago, peered at the big picture nationally, describing the two main legal forces that impact adult business owners: “You can divide them up into conflict with the government and conflict between individuals.” Obenberger made the additional point that the spread of legalized gay marriage is liberalizing people’s attitudes about sexuality, making it “increasingly difficult to empanel a jury that will criminalize boy/girl sex as obscenity.”
Obenberger then brought up the specter of 2257, arguing that from his point of view the major issue of the case (the recent ruling for which is currently being appealed to the United States Court of Appeals for the Third Circuit) is the impact that the onerous 2257 requirements have on individuals with their own private cameras—and he expects that inevitably 2257 will die. However, he advised the audience “to continue to follow the law punctiliously.”
Michigan-based attorney Corey Silverstein mined the same fascinating vein as in his Sunday workshop, imparting to this larger crowd the sobering news that in addition to worrying about obscenity prosecutions, 2257 recordkeeping, zoning hassles and other more mundane legal issues, they also need to stay out of the crosshairs of the Federal Trade Commission. As he stressed earlier in the show, the best defense is not a good offense, but rather an iron-clad set of terms and conditions that clearly define customer expectations. And as every attorney on the panel would agree, those terms and conditions should not be lifted from another site—they need to be customized and reviewed by one’s own attorney.
Once the legal panel adjourned, Internext attendees still had the evening’s entertainment to look forward to, beginning with the highly anticipated GFY Awards and after party (see page X), presented by PussyCash, with red carpet sponsor BitterStrawberry and supporting sponsors CE Cash, SexGoesMobile, CrakRevenue and Sextronix. There would be no other official business to take care of—aside from Bloody Marys and mimosas at the next day’s Hangover Brunch.
Of course, there was the CEO Dinner on Tuesday—sponsored by AWE, CommerceGate and UpForIt Networks—where online executives mingled with their video and novelty colleagues as Internext gave way to the Adult Entertainment Expo and the Adult Novelty Expo. The reporting on those shows will come in next month’s issue of AVN.
This article originally ran in the February 2014 issue of AVN magazine.
