A Simple Plan: Dreamzotic's 30 Percent Solution

There's something recklessly "video game" about the business models of a lot of adult Internet companies. You find yourself traversing dark caverns in a futile attempt to understand how they work only to encounter evil-doing armies of incomprehension. The resulting confusion can easily breed ill-gained profits.

But even if it's just the very fact of a Web-based-B2B-ecommerce-traffic-managed-affiliate-structured industry that creates such fertile ground for bafflement, it still shouldn't take a doctorate in Theoretical Inarticulation to understand any company's business model.

Which brings us to New Jersey-based Dreamzotic Video (www.dreamzotic.com), a content provider that's been streaming video products to adult Webmasters since 1996. Rather than offer everything to everyone by sticking gluey fingers into every profit-making crevice the adult Net has to offer, Dreamzotic, which is owned and operated by Robert and Shantale Pipkins, decided from the beginning to keep it simple by doing one thing well. That one thing is studio-produced video-on-demand delivered on a pay-per-view basis through broadband and 56k connections.

For end users, pay-per-view (PPV) video-on-demand (VoD) is mostly a convenience. Instead of going to a video store, with the attendant hassle and potential embarrassment, they can watch a virtually unlimited selection of their favorite adult movies online. Of course, there's nothing terribly novel about that. AVN Online has been literally inundated of late by companies developing either technologies or services that support PPV VoD. It's Dreamzotic's business model that truly sets it apart, and about which they are particularly proud, according to vice president of operations Ashok Surapaneni.

"The unique part of [our model]," says Surapaneni, "is that any site can access our entire member area for free and take 30 percent of all the sales. There is no monthly membership; it's all pay-per-view video-on-demand. The [affiliate] Webmaster makes 30 percent while we're taking care of the hosting, the coding, the credit card processing, and the bandwidth. In other words, they're able to use our product and maintain no risk and no cost."

The studios also get 30 percent for the use of their product, without giving up exclusive rights, an arrangement that works well for both parties, according to Surapaneni. "When I come in and say, listen, you're getting 30 percent of all movie sales and you can still do business with anyone you want, it's low pressure for them and for me," he says. "I want everyone to be happy, and this business model has worked very well for us. We've gotten a lot more studios lately, and we have a lot of content in here that we're tripping over trying to find additional storage for."

The plan, he says, is to add six new movies per day, some of which have already been released in the stores, and some that are hot off the set. "It depends on the owner's theory," says Surapaneni. "I don't get into their heads; I let them do what they want. But everyone at one time or another has sent me their newest movies, because they know that they make more money the sooner the product gets out."

Because the revenue sharing model is only appropriate for pay site owners who need to add content to their member areas, free site Webmasters are taken care of with an affiliate program that pays $40 per sale. In addition, Dreamzotic was scheduled to release a new product at January's Internext Convention that they claim is an industry first: an $80 double-conversion payout in their cash affiliate program.

"This is where we're pushing the envelope a bit," says Surapaneni, "and where we're differentiating ourselves. We're paying $40 on the initial sale, which is on par better than the highest payouts in the industry, and we're rewarding the owner who sent that customer to our site with $40 on their second sale as well. Our hope is to keep that customer longer and to entice that Webmaster to send us their best traffic and not just their junk, because they'll know that they've got a second shot with that customer."

For the end user, Dreamzotic has tried to emulate the offline video rental experience. "Renting with us is just like renting at a video store," says Surapaneni. "If you went to Blockbuster and got two movies, you'd pay the rental fee for the two movies and you have them for 48 hours. So from the time you call action on a movie, your 48-hour clock starts running. You can see it as many times as you want or you can sit there and watch it for 48 hours. We really don't want to stick it to the customer and say, here, you've got 90 minutes to watch as much of it as you can. I want to keep it on par with how it works in the rest of the world. Go rent your movie and have it back in two days."

Individual rentals range from $3.95 to $7.95, and purchases - which provide lifetime access - from $29.95 to $39.95. They are packaged in bulk options, however, with the cheapest in the affiliate program running about $40 to cover the payout, and in a somewhat cheaper package in the revenue share program, where there is no payout to cover. Either way, individual films cost the same.

With only six full-time and five part-time employees, Dreamzotic has a streamlined operation to go along with its sleek business model, a setup that they believe leaves them well situated for a belt-tightening future. "I see people reducing payouts on their affiliate programs and I see people canceling content because they don't want to pay for it anymore," says Surapaneni. "But with our model, Webmasters are not going to cut back on something that doesn't cost them anything and is in fact making them money. I'm just glad we were fortunate enough to listen to what people wanted."

So that's it. A simple plan that's also a small breath of fresh air, because with all the convoluted video games out there, the last thing anyone needs is another adult business model confusing the hell out of everyone.