People love to talk about what they know. So we thought it would be a good idea to put together a free-form Q&A, otherwise known as a Webmaster Roundtable. We chose "Webmaster Fraud" as a topic to jump-start the discussion because it has been a recurring theme in recent interviews, and used the occasion of the West Coast Webmaster Conference in Vancouver as an opportunity to invite several experienced, knowledgeable, and influential Webmasters to participate.
The following is a continuation of the Webmaster roundtable that was held in Vancouver, British Columbia, April 14, 2001. The session was moderated by AVN Online Associate Editor Tom Hymes and videotaped by AVN Live producer Nikki Fritz.
Part One can be found in the July show issue of AVN Online. Video highlights of this Roundtable will be available for viewing at AVNOnline.com.
Participants:
DS - David Schlesinger - Vivid
SS - Scott Schalin - iGallery
HM - Holly Moss - iGallery
LN - Lee Noga - Cybererotica
JS - Jonathan Silverstein - Marketingfirm.com
DB - Darren Blatt - aka D-Money, The D-Money Show
CR - Chris Rodger - aka Evil Chris, Wild Rose Productions
FB - Fabian Buys - Online casinos
NF - Nikki Fritz - AVN Live, producer
TH - Tom Hymes- AVN Online, moderator
We take up with the participants beginning a discussion of the future of affiliate programs.
SS: I do think that ultimately the goal could be to not be beholden to the Webmaster to get your traffic. So, whether it's something as simple as working the search engines, which is being taught at this seminar...
LN: Cybererotica ... or what else?
SS: ... obviously, doing some business with portals.
LN: Or ten thousand feeder sites that you may own to harvest.
SS: That's not a bad one. It's all the hit generation that's for free. But unfortunately, the hits that are generated are usually crappy, so getting free hits is one thing, but does it convert like the Webmaster traffic does? So there's always going to be that situation where you're involved with a Webmaster.
LN: But have you ever thought about what happens in the event that having affiliates is too high of a liability? I mean, what do you do? Do you start charging them a hundred dollars to be your affiliate? Is there a screening mechanism? Do you guys have a Plan B in the event you don't have affiliates, in the event this AOL-CEN thing comes down too hard? Do you have a Plan B?
DB: How realistic is it that that could happen?
LN: I don't know, but I think paranoia is awareness.
NF: Explain exactly what that is.
LN: What?
FB: It is very realistic, because again, if I look at the casino industry, there is not one casino out there that runs its own affiliate program. They all work within [the] business-to-business concept. And the business-to-business that they have, they simply close the deal with an advertising agency that works with affiliates, so it becomes business-to-business.
CR: But that's not sex either, so it's easier to do that, isn't it?
JS: But it's still an affiliate program.
HM: Right.
FB: It's still an affiliate program.
JS: If you have an advertising agency that has people sending traffic, who are they having send traffic?
DS: They're paying for advertising of all kinds.
JS: But in essence, that's what we're doing too.
HM: I know.
SS: (to FB): I'd like to get your take on the CEN situation with AOL, if you have a take.
FB: I have no takes.
SS: Okay.
FB: I cannot speak about CEN.
HM: I think us, with buying the vanity domain names - that's why we bought them...
SS: ... we're buying good real estate...
HM: ... pussy.com and blowjob.com...
JS: (indicates HM): Look, she smiles. (laughter)
LN: Cha-ching in the bank, cha-ching, cha-ching...
HM: Because they get a lot of type-in traffic by themselves, so we don't have to...
SS: ... we'll always have two hundred signups a day...
HM: ... right, and it grows; it makes sense.
DS: There's a lot of porn stuff that you can convert sometimes on the type-in, no?
SS: Sometimes, yeah.
JS: It depends on how specific the type-in name actually is...
DS: Pussy.
HM: But that's just one of them.
SS: Like we've got sex, s-e-x-e...
HM: Dot U.K.
SS: No; that's for France, so if we get a lot of French people typing in... So the idea is to find the language of specific key words as well that become site names. That's a good way. But not everybody can do that, because "pussy" cost us so goddamn much money.
DB: Also, a lot of people get misspells and they harvest it in other ways. You can always misspell bukkake.com, but most people don't even know what bukkake is, so I go niche, you know.
CR: Let me ask you people something. Putting misleading words in your metatag description; is that fraud to you? Do you consider that fraud?
SS: Defraud the engines? Those scummy...
CR: No. You're defrauding possibly the engines, the surfers...
DS: ... and your competitors... friendly competitors.
HM: I guess it depends if you're putting Britney Spears or something like...
DS: ... like using Vivid in your metatags, something ridiculous.
HM: (to DS) Do you do anything about that? Do you go after them?
DS: Half the time they're my Webmasters, and if they're sending me traffic... well, you know...
SS: Playboy will go after you every time.
DS: There's an extent that I won't really tolerate, but if it's someone who's working for me, that's my sales guy!
LN: See, AgeCheck also allows that. They're okay with that, so what you have is, unless we have total uniformity people assume, "well, if AgeCheck will let me do it, then it would be okay too."
CR: I'm not talking about that level. The example I was thinking of was, a few years ago The Academy Awards were coming up and there was a movie - there were a couple of movies that were big movies - I think it was The English Patient. And people started putting "The English Patient" and some of the stars names in their metatags, things like that...
DS: That's the stutter market.
CR: ... creating a special doorway. It kind of looked like it was for that movie, but not. Obviously you ended up at...
JS: ... a sex page.
SS: But you've fucked yourself because someone was looking for other...
DB: I consider that fraudulent.
DS: I like that. I think that's just clever.
HM: Yeah, but the quality of the traffic won't be good...
SS: ...they're not going to sign up at your site...
HM: ... you know what I mean? It's not going to be qualified traffic...
LN: ... because they don't want to be there.
HM: What you want is someone that you're going to say to, "This is what you're going to get when you click on this banner; you're going to get this."
CR: But fraud means defraud in this case. Let's say I'm a devious Webmaster doing this and I'm doing it on a grand scale, not just for one movie or one site but a lot of them. Movies, sports, everything...
HM: ... Titanic...
CR: And in it comes; it comes in a lot. And suddenly I have a lot of exit traffic, and it's crap, and I'm selling it and I'm making a lot of money there. And people are buying this traffic, thinking this is great for them, and it doesn't convert for shit for them.
HM: Right. Well, since we pay per sign up...
DS: ... and that's why we're moving away from pay-per-click...
HM: ... not until they actually put their credit card down, so it qualifies it...
DS: Ninety percent of the guys that are selling you clicks are not going to sell you... I mean, or they'd be putting them somewhere that it'd be making them real money; you wouldn't sell clicks for an eighth of a cent.
HM: That person with the exit traffic would not send their traffic to somebody like us, because we're paying per-sign-up.
CR: You'd probably know better anyway.
HM: Right.
CR: But a lot of people wouldn't.
FB: None of these people; they don't know.
DS: They don't know.
FB: They don't know, and they get crushed by it; the new people.
HM: That's because they're new. They haven't had the learning curve that we've had.
FB: No.
DS: They don't have robust tracking really. They don't know how to map it.
FB: No, there's no tracking at all.
HM: Four years ago we didn't know, but we learned after a while.
DS: That's right.
NF: Okay, I have a question. Could you guys make a good enough living, or could even a small Webmaster make a good enough living, if you had your affiliate programs open to qualified members only, people you know, each other, as friends?
JS: There's a lot of that going on.
DS: The guys that are scrubbing out our programs are the hooligans and the rogues, the guys that are in our program. I would rather have a thousand hard-working bread and butter Webmasters than 20,000 guys that are just...
LN: I think what you're saying is that you have... would you ever openly voice a performance standard? For example, if this Webmaster doesn't do this kind of expectation, I have to let them go. Are you going to set a stress tolerance level on your affiliate program?
DS: I do so much as even call up a guy who's sending maybe 1,500 uniques a day and just never getting a sale, but for some reason keeps a link up for weeks after... Hey, what's going on? "Oh, I've got this traffic, it's going there, I'd really like for it to work." I'm like, well, it's not. Leave your link up, I'll put it somewhere for you, help you make some money with it. I want to keep him in my program. I don't want to necessarily recommend "try my friendly competitor" if I can maybe help him make money with his traffic. So if I only make a penny on the dollar, it's still someone that I'm working with and they're going to find that loyalty, and they're going to say, "this guy's going above and beyond."
HM: But I think the programs that we have even currently kind of lead toward that anyway, because we pay for performance, so...
TH: Does that do anything about the general scenario where there's more and more Webmasters and it's getting more and more difficult for them to attract traffic, which leads to more desperate measures to get that traffic, which is what would lead to fraud? That's why they do that, because they're desperate for traffic to send to you guys.
SS: But are they really desperate for traffic? I mean, the Internet is growing at such an amazing rate, there are always new users. The first thing that they're always looking for: S-E-X dot com. So you're always going to have an influx of traffic.
TH: So why then do Webmasters spam? Why do they send out massive amounts of spam to ICQ or to AOL or to...
JS: Because it's a numbers game.
DB: It's cheap; it's easy.
TH: It's lazy marketing.
DB: Too easy and too cheap; too easy and too cheap, so they get away with it.
LN: Because by the time you catch them, they're gone. They spoof the headers on their email; you have no way to track them. They know this; they make use of the Hotmails, the Junos, the Yahoos, the Earthlinks. They spoof their headers and by the time you catch them, they're already generating another spam account. As soon as we kick them out of the affiliate program, they come back as somebody else.
HM: Their brother's friend.
LN: Exactly.
TH: Are they a threat to the industry?
LN: Yes.
HM: Yes.
DS: Absolutely. What do you guys think about using free hosts, then? Do you guys allow free hosts in your programs?
HM: I think it's hard to police every person that comes in.
CR: I do.
DS: Do you have a GeoCities page on your program? Do you ever pick apart your hosting company and see how...
CR: I'll look at what their doing, if I see one come in that's hosting from Angelfire or GeoCities or something like that. I'll look at what their doing and I'll decide if it's good or bad.
DS: Wouldn't you say that 90 percent of it is spam every day? Do you know?
CR: I don't think they're spamming signups. One of the things that I do look a lot at is that if somebody's getting a lot of signups that don't quite look normal to me, I'll go and have a very close look at what they're doing. And their practices might be something that I might not approve of on a grand level for the entire program, but if it's only one or two people doing it and it's not cheating, it's not outright fraud, I'll let it go. I won't tell any other Webmasters to do it, but I'll say, well, it's working for them, it's fine.
SS: You'll see sometimes that if your program has certain levels or goals to get to, and all of a sudden you'll see that a Webmaster might turn on the signups on that last day before the period ends, to get to that next level. It's like, did he just plug in some new links or something? So we took people off the programs like that, and we don't have the bonus programs any more, because it's too hard to police.
LN: What about the Friday thing you were doing?
SS: Six hundred Fridays?
HM: That wasn't too bad.
SS: That didn't seem to be fraudulent, to be honest with you, but it didn't really increase - we got a few new Webmasters in the program, some people switched banners for the weekend, but we're not doing that anymore for a reason.
HM: But having good management, knowing who your top 20 guys are, I think that helps; knowing where your traffic is coming from. Someone doesn't just send 50 new members a day overnight.
LN: Let me ask you; given that, have you had to hire additional staff?
HM: Sure.
LN: That's what I'm saying. As part of those hidden costs that I was speaking about with Cybererotica. Having to resource those divisions so that you can look at these patterns and analyze it, this is overhead.
DS: Every business needs to manage fraud; it's always going to be a big part.
LN: It's just that as soon as you think you get that door shut, there's another one opened; it's endless.
HM: You need different levels of management; people calling people who do sign ups for the affiliate programs, people monitoring them.
LN: Right.
TH: So that's the industry regulating itself.
HM: Oh, yeah.
LN: I don't know if it's the industry regulating. I think it's just good business inside each company. I think it just comes down to how they run their companies.
TH: But whatever the semantics, rather than someone coming in and saying you can not control your affiliates, they're out of control, and we're going to do it for you.
LN: That would only hold true if all the companies were consistent. I mean, iGallery might catch somebody and we may not. We may catch somebody and RoseCash does not.
DS: But we have to share that information.
JS: People do though.
DS: Absolutely, they share negative databases like crazy.
LN: But that's not enough sometimes.
DS: I know, but at least it goes to show that we're working together.
CR: Maybe that's the idea, to create a shared blacklist or something.
TH: My question is, how bad is it? Is it under control, is it getting better, or is it... is there a crisis going on?
LN: I think we're dog paddling. I think right when we make strides, it just keeps us neutral. I really don't think there's a digression or a progression. I think all the efforts, the costs expenditures, it's just keeping us right where we were a year ago. But we're not backsliding and we're not making progress.
CR: What do you think of that idea, to create a shared blacklist.
HM: Well, there've been plenty of them, but no one wants to take the responsibility.
CR: No, just amongst ourselves.
HM: Well, we do. If it's somebody that is fraudulent and I'll see CEN's banner or Cybererotica, I will communicate with them.
FB: It needs to be totally independent; it needs to be funded by the company. Again, if I look at the casino business, there are several organizations that pay like $5,000 a year for that, and we feed them our negative information. And even the big casinos, they do the same thing. So the chargeback today is finished in almost all casinos, except for the small casinos, so that keeps it kind of clean.
HM: That's good.
DB: I think this industry used to have a lot of blackball lists back maybe three and a half to four years ago. It used to be very common, but I think people went away from it because people started playing the political game. Somebody would know someone who knows this guy, and then suddenly their name disappeared off the blacklist, and then people said it's not credible anymore. So I think we tried it once before and I don't think it really worked out that well.
HM: I guess for political reasons.
DB: Political reasons, somebody knows someone, or they're playing favorites.
HM: And sometimes people make a mistake where they think someone's doing, and they write a big e-mail like, "don't accept this guy to your program."
DB: Exactly. And you need to moderate a blackball list, as a community.
HM: You have to be unbiased.
DB: Yeah, but who's going to do it and who is going to set it up...
DS: ...marketingfirm.com...
DB: ...maybe marketingfirm.com!
SS: The problem is, you have a Webmaster who maybe has a vendetta against another Webmaster. He's going to talk fucking smack that doesn't have a basis in reality, so you gotta watch out for that.
HM: To get anyone to do this for a living - there's no money in it really, so why would someone do it?
DB: And who would be credible enough? Who would be God?
JS: All the companies could subscribe to a service...
HM: It's a nice thought, but I've been in this business for many, many years, and somebody will come out with one and it will get political, and they'll say, 'why didn't you have my banners on there or something', and then it'll disappear. So, in theory, it's a nice thought, but it just doesn't happen.
SS: As much as we all love each other, we all hate each other. Friends close; enemies closer.
DB: I guess word of mouth is how we do it.
SS: I think so, for sure.
BD: We're more well networked I think these days.
CR: The worst cases always hit the boards anyway, and the word gets passed. And there are a few independent people out there who actually look at all of us - if we mess up - and say, "Evil Chris from RoseCash cheated Webmaster X out of $5,000" - and hypothetically I use my own name - but there are people out there doing that now. So you can either look at it and trust it, or not.
DB: And then you have the anonymous posters nowadays on the chat boards; people out there taking stabs at you.
SS: (to DB) They love your brother. [Darren's brother is Kevin Blatt, aka KB.]
DB: They love my brother.
HM: But that goes back to fraud, I think - the posting boards not qualifying who you are. That was the whole of YNOT, just going in there and chatting. Now I don't even go there...
JS: I wonder how much pull these Webmaster chat boards really have in the scope of the entire industry. How many people are really at this stage reading the boards.
HM: You know what? I think that you might not say that you look at them, but I think everybody reads the boards.
JS: I'm not saying that I don't...
DS: Every industry has its little gossip column and that's ours.
JS: But there're 50,000 out there and you see the same 20 people posting all the time. Maybe there are 3,000 people lurking; where are the other 47,000 Webmasters?
DB: But then for that one Webmaster who does read the chat board, he probably tells five people that don't read the chat board; so now the word it out, "I read it on the boards."
HM: It's breaking news...
DS: One way to get your business out, it's definitely the place to do it.
TH: So overall, how responsible should the sponsors be for the affiliates, for their conduct?
LN: Let me go back to you: When does our responsibility end and yours begin? I mean, we can chase the smoke or we can get to the fire. And that's the million-dollar question, and I can't answer it.
DB: You have to try your best. It's up to the company to set their own policies and see how they can get rid of [fraud]. If you do a bad job, people will know, and they won't work your programs. So I think you set you own standards and then everyone follows your example.
LN: Or, what you do is, instead of making an adjustment here, you just - knowing that there's going to be a percentage of abuse that you can't get a handle on, because you can't identify or quantify it - well, then it's reflected in lower pay outs. It's the glass half-full, half-empty syndrome. These are great questions, but there will never be any answers because this business is so dynamic that I'll say, "hey, guys, I got the answers today but guess what, we don't have them next Monday." That's the problem. So what are you going to do, a one-year study on something that is dynamic? You can't; it's the Internet. Take copyright/trademark law - it's dumped everybody on their heads.
SS: This is an exciting time, though, because we're still learning about this thing. We're just really starting to get our hands around what that means, and how it's going to evolve. It's going to be easy in 20 years to be a Webmaster in this business.
TH: Well, there won't be a chargeback in sight 20 years form now. Nobody will get away with that.
JS: No, come on. Whenever there's anything, somebody's going to try to find a way to get around it, so you're never going to eliminate anything.
LN: No, e-processing will - I don't know the year span - but they're going to go with this thumbprint thing...
JS: ... Biometrics...
LN: Yeah. I believe that's what's going to be happening for a lot of thumbs. Buy the stock now.
DS: But everybody's got to get that little thumbprint machine, you know.
DB: They'll give it away for free, if you have an account.
LN: That would help. We just have to weather it. We're so advanced, yet we're so young that to say that we can solve this thing on our own; I don't believe we can. We need outside technology. The technology is not available now. We can't over-resource our problem. That still isn't going to solve our problem, because of the dynamics.
JS: I think it's going to be somebody in this business who helps do it. You say outside, or outsource...
LN: The technology, thumb printing, something; we need something other than the tools that are available now. Because what we have available now, and how we've used it, has not solved the problem. It might have capped it, but it's still there.
NF: I have a question. You guys are the leading powers. Why can't you do something like a fundraiser to get the money together to hire attorneys to fight the policies of the credit card companies, or to develop the technology? Why wait for somebody else to do what you should be doing for your own companies?
SS: Who's going to take the money and solve the problems?
NF: Somebody neutral.
SS: And how many years would you tolerate that?
NF: It wouldn't be easy.
SS: I think Visa would just tell us to go fuck ourselves. I don't think they're in the mood for a fight. I mean, we make a lot of money but it's still a small percentage of their overall.
FB: Very often it's not Visa; very often it's the banks. Again, if I look at the casino business, two months ago Chase Manhattan decided that their customers couldn't gamble. All of a sudden I saw in my backend the code "1005," and "1005" meant that Chase Manhattan was making the decision, "we don't allow our customers to gamble in all those casinos," and it's purely based on the CSE code from the merchant code. So, if they get some pressure from the U.S. government and they say you're not allowed to do any selling of hardcore anymore, they can technically block those transactions based on the CSE code. So very often it's not Visa, because Visa loves those transactions. There's a lot of money in it, chargebacks are way below 1 percent and it is a very high volume business. It's the banks.
TH: How much is the government really behind all this? How much pressure do they put on the banks?
FB: I think a lot. With the casinos there were six major banks that blocked all these transactions. For about six weeks about 7 percent of the gaming transactions were dead.
Nikki Fritz ran out of tape at this time, and even though she reloaded quickly, the wind had gone out of our sails and everyone was talked-out, so we quit and went to a party.
