If there were a patron saint of pornography, it would have to be Edmund Curll, a publisher in London in the early 18th century who was famous for printing anything, including classic works like The Nun in her Smock and The Treatise of Flogging. When questioned about the morality of his publications, Curll replied with a defense that sounds almost like the disclaimer on some adult sites: "With relation to the publishing of these books," he wrote, "They cannot by the laws of nature and nations be termed bawdy books, since they treat only of matters of the greatest importance to society, conduce to the mutual happiness of the nuptial state, and are directly calculated for antidotes against debauchery and unnatural lewdness."
However, before we start celebrating the late and departed Mr. Curll, we should probably consider the fact that there's another reason he might be considered the patron saint of the business - he was utterly without principles. He was guilty, among other things, of including famous names on the title page even though the personages in question had contributed nothing to the text; of pirating and republishing the works of other booksellers; and of attaching sexy-sounding titles to written material that would put an insomniac to sleep. In short, Curll bore a striking resemblance, in terms of his business ethics, to the less savory members of the adult industry. Just as in Curll's time, the internals of today's erotica business are rife with rip-offs, frauds, and misrepresentation. In short, the concept of "business ethics" in online erotica sometimes seems as oxymoronic as the concept of "honest politician" or "happily married."
Ethics, according to the dictionary, has two meanings. The first is "a set of principles of right conduct or a theory or system of moral values." Somehow that definition doesn't seem appropriate for online erotica sites. Not to worry; there's another definition: "The rules or standards governing the conduct of a person or the members of a profession" - in other words, the sometimes abusive ways that some online erotica firms do business with one another.
While there have been a number of attempts to form trade associations and build a code of standards for adult Websites, none of these seem to have had much impact. The problem, according to one Webmaster, is that only the largest firms have the clout to create a viable trade organization and the smaller firms automatically distrust any organization founded by the larger firms. "The little guys are certain that the big guys are going to stack the deck against them." To make matters worse, adult Webmasters are often reluctant to report problems to law enforcement agencies, allowing some rip-offs to occur without much fear of punishment.
Because of this, many adult Webmasters feel they can't depend upon anyone but themselves to make certain that they don't get ripped off. This article describes the three most common ethical lapses in the online erotica business, along with some positive suggestions about how to deal with them.
Shaved Close to the Skin
By far the most pervasive kind of unethical behavior among adult Webmasters is the practice known as "shaving" - the under-reporting of the number of conversions that come from traffic that originated with a particular affiliate or partner. The advantage to the sponsoring site is obvious; every conversion that the sponsoring site doesn't report to the affiliate represents higher margin for the sponsor. It's a widespread industry practice, according to Max Hardcore of www.maxhardcore.com. "Most of the big sites have been caught with their hands in the cookie jar," he says. "Sometimes they plead ignorance, but you have to wonder whether it's their standard business practice."
"It's the 800 pound gorilla in the closet that nobody wants to talk about," says Colin Rowntree of Wasteland.com, referring to the massive abuse of affiliate and partnership programs. As originally conceived, such programs were a good idea, because there was an understanding that there would be an honest pay-out level. Today, however, there is an intense competition between affiliate programs, which has produced a price war that's thrown the equation out of whack. "Some programs are offering $70 for a conversion to a $10 site," Rowntree grumbles. "If you look at the numbers, there's no way in the world they can be making a profit - except if they're shaving."
The first level of defense against shaving, therefore, is to make certain that the affiliate deal makes sense financially to the sponsoring site. To figure this out, you need two data points.
The first data point is the average retention rate for the sponsoring site. Unfortunately, this number is often difficult to obtain because many Webmasters are so focused on acquisition and conversion that they don't bother to track to their retention rate. To make matters even more difficult, a site that might be guilty of shaving would probably hesitate to share retention data, even if the Webmaster was capturing that data. Luckily, there is a rule of thumb that you can use to estimate the retention rate. According to industry sources, the average retention rate for mainstream porno sites is a little over two months. Fetish sites, because they appeal to a more limited and targeted audience, generally have an average retention rate that's slightly higher; a good estimate would be three months. Some Webmasters have experienced average retention rates of six months and higher, but unless the Webmaster can provide you with hard data, it makes sense to remain skeptical and utilize the industry averages.
The second data point that an affiliate needs to know in order to find out the value of a conversion to a sponsoring site is the average per-month charge to a converted customer. In many cases, this is simply a matter of looking at the amount that the site is charging for a monthly membership. However, an increasing number of sites are offering various special deals, which means that that the stated price on the standard Website might not reflect what the majority of the sponsoring site's customers are actually paying. What's important here is the price that's charged on the Web pages to which the affiliate is linking during the period of time which the affiliate relationship is likely to be active. Note that many sites have a low-cost "try it" fee that can greatly lower the financial value of a conversion.
Once you have the average retention rate and the average monthly charge, you can calculate the financial value of a conversion by multiplying the two numbers together. Now you have a metric that allows you to determine whether the sponsoring site can actually make money on a conversion and thus is less likely to be shaving on a regular basis. Here's the rule of thumb - the sponsoring site should be giving the affiliate site somewhere between 40 to 50 percent of the expected value of the conversion. If the affiliate deal is much better than this, you're probably going to get shaved because the Webmaster of the sponsoring site probably wouldn't be able to make money if he paid the full amount for each conversion.
Even if the deal makes sense for the sponsoring site, that's no guarantee that shaving won't take place. "You've got to keep a close eye on where your money is going," says Hardcore. "You'd have to be a fool to sign up for an affiliate program where you didn't have access to the raw data." While it's true that a cheating sponsor could theoretically produce false data, the effort in making it look like the real data would probably consume more money than the shaving would generate.
However, even if you have access to raw data, you still have to be careful. Some sites have been known to shave in a particularly subtle manner - by artificially jacking up their conversion rates in order to make their sites look more attractive to the affiliates. These sites count the conversion rate based not upon the unique users hitting the first page, but the unique users clicking over to the second page. A great deal of traffic, of course, never gets past the first page. Counting conversions based on page two makes certain that the sponsoring site has a higher conversion rate, because the second page traffic has already exhibited an interest in the material on the site. This could cause the affiliate to wrongly conclude that sending traffic to that sponsoring site was a good deal (because of the apparently high conversion rate), when in fact much of the traffic may actually be exiting before being counted on the second page. The easiest way to avoid this situation is for the affiliate site to monitor the traffic that's sent to the sponsoring site and monitor the money that's paid by the sponsoring site in order to determine the actual conversion rate. This is essentially the only way to have valid data that will help you find the most profitable place to send your traffic.
Stuck in Bad Traffic
Speaking of traffic, another big ethical lapse in the online erotica business is the over-promising of traffic in return for a fixed fee. It turns out that there are some very good traffic brokers out there who are representing established sites and are capable of sending an erotica site qualified, useful traffic with a high potential for conversion into a paying customer. However, over the past two years or so, there has been a definite upswing in traffic fraud, where a person or business will promise large amounts of traffic for a fixed fee, but never delivers anything useful.
"Yeah, we've been burned," said one Webmaster who declined to be named. "There was this guy who was working for a reputable traffic broker, but had gotten desperate for money, apparently due to some kind of family problem. So he began contacting people from his employer's list and offering them special deals. He claimed that the company that he worked for planned to do hundreds of thousands of highly targeted mailings for a fraction of what it would normally cost.
"Anyway, it sounded legitimate and when I went to his employer's Website it all looked very business-like. The guy made it very clear that this was a one-shot opportunity and that I'd have to make a decision quickly. When I decided to pay him the up-front fee, he had me wire the money via Western Union rather than send it through the mail. I wired him a couple of thousand dollars, and so did several dozen other Webmasters. The mailing supposedly went out, but no traffic. Nada. So I called the company and they told me that the guy had been fired for misusing the company's contact list. In the end, the guy split the country with all the money that he got from us Webmasters. And now I feel like a chump."
The Webmaster has every reason to feel foolish, because he missed three gigantic red flags that should have told him that this was a fraud. The first red flag was that the deal being offered was too good to be true. A good general rule for dealing with people in a business context is that "if it's too good to be true, it probably isn't true." The second red flag was the pressure to close the deal quickly. If you're dealing with somebody who's saying "you gotta do this right now," that's a sign that you'd better sleep on the deal for a while. Con artists always want people to make a quick decision because then they're not as likely to figure out that there's something fishy going on.
Finally, the fact that the money was to be sent Western Union rather than through the U.S. mail is an enormous red flag. Con artists always avoid using the U.S. mail because mail fraud is a federal crime, which means hard time in a penitentiary if the con artist is caught. If the fraud is conducted using UPS or FEDEX, it's considered far less serious. But in this case, the con artist managed to get the Webmaster to send cash via Western Union. Western Union!? A cardinal rule of doing business is that you should always use payment mechanisms that leave an audit trail. And never do business with anyone who insists that deals be paid in cash.
At least the Webmaster did try to do a little due diligence - he checked to see whether the guy's company had a Website. But that was also extraordinarily na�ve. While it was true in this case that the guy did work for a reputable firm, the con artist could just as easily have built a Website that looked as if it were a real business. Anyone who builds and maintains a Website for a living should be all too aware that anyone with a modicum of talent can throw together a reasonably good "brochure-ware" site in a less than a day. Before doing business with any company, it makes sense to confirm whether the firm actually exists. Better yet, ask for some reference accounts and then call the references.
Of course, the above is only a particularly egregious example of a deal to obtain traffic that didn't pay off. In many, many other cases, a Webmaster will pay for traffic and then find out that the traffic being routed to the site isn't high quality or appropriate for the site, according to Nina Marachino, the owner of www.thesmartestpornstar.com. "A Webmaster must constantly monitor the traffic coming from any paid traffic site to determine whether there's a reasonable cost/benefit ratio," she explains. "In other words, if the cost of obtaining the traffic is greater than the profit from the conversions from that traffic, the deal doesn't make any sense and should be terminated."
Copyrights and Copywrongs
Another persistent problem for many Webmasters is the appearance of their copyrighted content on other sites. This "borrowing" of content, once common even on large sites, is now generally restricted to smaller sites, often started by beginners in the marketplace. It's not unusual for beginning webmasters to troll through user groups and other "free" sources of information in order to obtain inexpensive content. And though the amount of money lost in that way may not be significant, it's obviously annoying to see the product of your own creativity and intelligence distributed with absolutely no benefit for you or for your site.
"There's always been a problem with bootlegging," says Hardcore, who believes that the situation seems to have gotten worse now that there are so many different mechanisms by which porn consumers trade content. "It goes back to the old BBS days," he explains. "As soon as content is available in electronic form, the bunny is out of the hat and off she goes."
Locating stolen content can be a problem for adult Webmasters. However, one of the best resources for locating stolen content can be your core customers. Customers who enjoy your content are likely to seek out similar content elsewhere. If you offer a reward (e.g. a special MPEG file) to any user who e-mails you with the location of stolen content, you might be surprised to find how much of your content is floating around on the Web. To make this method effective, every piece of content must be stamped with your logo, preferably on a place where editing out the logo would ruin the picture. Many sites are now putting semi-transparent logo stamps close to the action (as it were). Such logos are not particularly intrusive, they act as an immediate warning against theft, and they serve to identify the unique content to your loyal base of customers.
Another technique to locate stolen content is to use a spider - a program that searches for specific file names on the Web. Chances are that the stolen files have the same file names as the ones on your site, in which case the spider should have no problem flushing them out. To make this method work, however, you need to make certain that all your file names have some kind of identifiable naming convention. Many sites don't do this, and name files things like "001," "002," etc. - making them more difficult to locate with a spider.
Max Hardcore's MPEG file names, by contrast, have a two-character mnemonic for the video series from whence the clip originated, a two-number code for the issue of the video in that series, a two character mnemonic for the actress in the scene, and the number of the MPEG clip within the scene. To a copyright violator, this series of numbers and letters is likely to mean nothing and will probably remain unchanged when the violator posts the clip. However, the sequence is easily unique enough for a spider to locate and - presto - Mr. Hardcore knows that there's unauthorized content - and a copyright violator - that must be dealt with.
Once you've located stolen content, you should undertake a two-step process. First, you should contact the Webmaster of the site and inform him or her that you own the content in question. Be nice at this point; the Webmaster in question might just be clueless about copyright. Rather than demanding that the Webmaster take the content down, offer to supply the Webmaster with some free content (a hundred pictures would probably do nicely) if the Webmaster will create a link to your site. "This works three out of four times," says Colin Rowntree of Wasteland.com, who points out that "while it take a little time to ZIP up some files and check on the site, you'll get a few hundred extra unique visitors on your pay site - without having to pay a commission to obtain them." If that method doesn't work, however, it's time to take out the big guns. Because it's illegal to post stolen content, ISPs are now more than willing to remove sites that violate the law. In most cases, it's sufficient to e-mail the ISP with the location of the offending content and the site will simply disappear.
When dealing with business ethics, it's important to remember that the vast majority of adult Webmasters are essentially honest folk, and are trying to do their best to make money by showing partners screwing, rather than screwing their partners. From a marketing perspective, behavior such as shaving, promising non-existent traffic, and stealing content is incredibly stupid, because there is always the danger of a loss of reputation - the online erotica business remains a relatively small community, and opportunities for growth and revenue are often spawned from other Websites and, by extension, from other businesses. In this industry, a bad reputation, once acquired, is very difficult to lose.
Jack Morrison can be reached at [email protected].
