I’ve been offered the opportunity to buy a small network of websites which makes $350,000 a year for $750,000. That’s a great deal. Unfortunately I don’t have $750K right now and I don’t want to buy the sites for someone else. What I need is a loan, or a partner, who I can pay back over a couple of years, happy to take a very healthy return on a business which – lets be honest – is a bit shady.

You know where to find me (And you do. Often.) Let me know if a 100% return or a 25% slice sound good to you. I’d rather not do a deal, than wind up minority partner in a business I’d be running.

Otherwise I’m going to have sell something.

Anyone need a liver?

Popularity: 10% [?]

Ginger Jolie, a typical Penthouse employee.

The announcement that Penthouse has bought Various Inc, the home of Adult Friend Finder, has been comically miss-reported in the mainstream press.

Various isn’t an adult social networking site. It’s a dating engine and most importantly, it’s an affiliate program. As a scocial network the $500 million sales price is ridiculously low. That’s not close to 10 times earnings which, conservatively, would be $1 billion for Various given the numbers they claim (260 million users, 1.2 million of those being paying subscribers).

If Various was a social networking operation it’d be worth even more in the current climate. The price paid by Penthouse is based on how they’re value Various ability to deliver traffic to their other properties, and in recognition of their almost unassailable position in the adult dating market.

Various were happy to sell because the options for large adult company are limited, they have no debt to service (I assume) and $500 million is a very nice payday.

A big move in adult social networking? I don’t think so. Anyone care to correct me?

Popularity: 29% [?]

Porn.com has just sold for $9 million, $5 million less than Sex.com took during a similar sale in January 2006.

That’s a bargain as porn.com is the better domain.

While sex.com gets more type-in traffic than porn.com, ’sex’ is a keyword used for all manner of searches whereas people searching for ‘porn’ are highly likely to be in the right target audience for adult websites. Unless there’s a better way to monetize an adult domain that pornography, the domains which draw the best qualified porn traffic are those with the most value. Ergo, porn trumps sex.

Porn.com’s new owners have said they’re in no rush and are waiting to come up with a strong idea for the site. The idea they should be exploring is screamingly obvious, they need to build a content site. The alternative, using Porn.com to push traffic to other people’s sites, guarantees they’ll make less in the long term as even if they’re paid 50% of revenue, by choosing not to build a content library they’ll have no assets to exploit in future or other media.

Their real dilemma should be deciding what kind of pay-site to build and I’d hope they don’t make the mistake of producing just another me-too subscription destination. Announcing a desire to become an ‘adult portal’ (how quaint, portals are so 1999.) doesn’t seem very smart but hey, who said spending $9M had to make you cautious?

As traditional adult models make less and less thanks to competition and web-models (torrents, social networking) which didn’t exist in the late nineties, it’ll be interesting to see how such significant investments are turned to profit.

(N.B. Don’t you wish you’d been a little geekier in 1994 and bought some of those primo domains yourself?)

Popularity: 30% [?]

One of the least publicized aspects of the Adult Entertainment Expo was a live domain auction, in conjunction with Moniker. The results are in and I’m surprised.

I fully expected to write a piece explaining that domains are worth less than marketing and the days of big-money for URL’s was over.

I was wrong. Crap like ‘Clitoralpumps.com’ (they make those!?) made $600 and surreal-bad-sex-nightmare domain ‘Emergencyclinic.com’ went for $11,000.

The real shock was at the top end of the spectrum. Nine domains made over $50,000 and four broke the $100,000 mark. Amazing in a market where every professional I know would say that the idea’s more important than the name. You live and learn…

Live Auction Results

Domain Name – Sold Price
shemale.com $520,000
BDSM.com $295,000
interracialsex.com $150,000
opportunity.com $150,000
handjob.com $90,000
kinkysex.com $88,500
Teenmodels.com $80,000
gaypride.com $60,000
censored.com $58,500
submission.com $42,000
xxxcams.com $30,000
asianteensex.com $17,500
violated.com $15,500
behind.com $13,000
hotlips.com $12,000
Sucked.com $12,000
AmateurPictures.com $12,000
sexyunderwear.com $11,500
blowjob.net $11,000
EmergencyClinic.com $11,000
bondage.net $11,000
pornclub.com $11,000
SEXFINDERS.COM $8,500
CelebrityMovie.com $8,500
nudefriends.com $7,500
FuneralParlor.com $7,000
bondagepics.com $6,750
upskirtpics.com $6,500
analsex.net $6,500
inherited.com $6,100
voyeurpictures.com $6,000
MaritalAids.com $6,000
Opposites.com $6,000
Boned.com $6,000
pube.com $6,000
gayamateur.com $6,000
adultbusiness.com $6,000
anal.org $5,500
handjob.net $5,500
blondes.org $5,500
OralSex.org $5,500
MILITARYDRAFT.COM $5,200
restraint.com $5,000
niceass.net $5,000
nakedfriends.com $5,000
prescriptiondrugplans.com $5,000
slavegirls.com $4,750
asianmales.com $4,500
asianhookers.com $4,250
lonelyhousewife.com $4,250
hornygals.com $4,000
Cuffed.com $3,750
Jizz.net $3,600
lickmynuts.com $3,250
PROFESSIONALATHLETES.COM $3,100
WASHBOARDABS.COM $3,000
sexcamp.com $3,000
bustylesbians.com $2,750
freeamateurpics.com $2,500
fullofcum.com $2,500
straponfemdom.com $2,500
sexualfantasy.com $2,500
hollywoodescortservice.com $2,250
businesspermits.com $2,250
networkingdevices.com $2,250
PUBLICSERVICEANNOUNCEMENTS.COM $2,100
Sodomy.net $2,000
mobileprinters.com $2,000
brokerageaccounts.com $2,000
onlinecheckingaccount.com $1,800
picturegalleries.com $1,750
SubmissiveMen.com $1,750
cocksuckingwhore.com $1,500
Bartab.com $1,500
ONLINESEXDATING.COM $1,250
THENATIONALDEBT.COM $1,200
SPACESHUTTLELAUNCH.COM $1,100
gaymen.org $1,000
SexCartoons.mobi $1,000
sexphotographs.com $1,000
SoccerMilf.com $800
promiscuity.com $750
CLITORALPUMPS.COM $600
FreeSexClips.mobi $600
dickhead.net $500
RentAPornMovie.com $500
sexsites.org $500
XXXAdultBookStore.com $200

Popularity: 72% [?]

The debate about revenues in the adult industry is everywhere and Christ-on-a-dildo is it wrong. Too many smart people with too little experience of major adult websites are dismissing the value of the internet.

Newspaper hacks can’t do much better. Websites, as private concerns, don’t publish books and are thus impervious to journalist driven forensic accounting. Given the big companies aversion to being investigated by the tax authorities (though I’ve watched it happen to zero effect – my porn guys are the good guys) the only people able to honestly discuss the income of the web-industry are insiders who’ve seen the books and even one of those isn’t enough.

To asses the web business you have to know about the workings of more than one company, and the only people fitting that description have been inside the handful of billing companies which handle transaction processing for the big websites. Your ideal informant has worked within a major billing company and has had board level access to companies on every side of the online adult industry, content sites, TGP and video-chat.

That’d be me then.

Forbes are quoting Playboy (which is like interviewing Huell Howser for a piece on ‘The best paid people on TV’) and everyone else has assumed the video retail industry is the bulk of modern porn because they don’t know any better. I do. As someone who’s seen the subscriber and revenue numbers for more of the major adult companies than any-one else writing on the subject, I can tell you that there are billions missing from the current debate.

Allow me to break it down:

• The average tier-1 adult website charges $20 a month and has 20-40K subscribers. That’s $400k a month per site, or $4.8M a year, and a conservative estimate puts the number of sites on that level world wide at 100. That’s $500M a year of business without looking at the talented amateurs, the top tier of whom are also clearing $1M per anum and who number in the hundreds.
• Video-chat sites (iFriends, IMLive, CamContacts, LiveJasmin etc) charge an average of $1.50 a minute and the biggest players have an an average total take of about $150 a minute. That’s $216K a day which, even when split 50/50 with chat-hosts and minus running costs provide $100K a day, or $3M a month (yes, there are the costs of running an affiliate program to factor in, but I’m being conservative in my other assumptions and accounting for that expense by underestimating in other areas. E.g. Most companies don’t split 50/50 with chathosts, and 100 active conversations at $1.50 a minute is less than the big guys are averaging – most of them handling fewer chats but at significantly greater average revenue). There are roughly 10 sites of that size and, though the drop-off is sharp, the top 3 are all making over $100M a year and the #1 player is bringing in well over $300M. These figures are not guesses and the top 10 live video-chat sites thus represent over $1B in revenue.
• More philosophically, can our definition of ‘porn’ remain rational while including Playboy and excluding Nuts and Loaded, while all three publish identical photos with identical intentions. If porn is defined by content, not the press releases put out by fearful publishers, we should include everything that’s designed as sexual entertainment and include NN (nearly nude) sites too (tell me this nudity-free site isn’t porn). ‘Demi-porn’ is a growing sector which isn’t being counted by anyone but which can only be left out of industry discussions using the same blinkers the video guys use to ignore the web.

Jenna Jameson doesn’t make as much hard-cash as some of the biggest amateurs in Canada and she’s at the top of the performer tree (though she performs so little it’s get-ting hard to put her in that category). Though the average porn-performer makes more than the average adult webmaster, there are just a few hundred working adult performers on the planet, there are tens of thousands of webmasters. Sites you’ve never heard of are making $1M a month and many more in the $10-$100K range operate completely under the radar. No one who understands the difference between gross and net would rather own Vivid Pictures than The Hun because in porn a sole-trader with a PC and a basement can easily out-perform a corporation with product in every adult store in America.

Yes, the porn industry’s smaller than the $10-12B so often bandied about and enthusiastically swatted down, but video, TV and cable are just the public face of a very private enterprise. The global internet business is worth billions, even if estimates are limited to the conservative back-of-the-envelope sketches presented here. Factoring in the long-tail and demi-porn you’d have to double those estimates. Suddenly those ridiculous numbers don’t look as off as some are suggesting – and the web looks a hell of a lot bigger than the video market. Amazingly, in 2006, this seems to be news.

Popularity: 75% [?]

A while ago I reported hearing from people who should know that Playboy was making plans to buy AVN. As I heard it the deal was effectively done.

Now the same people who seemed so sure are backing off the story and Luke Ford (who’s listened to by the movie folks – despite their often genuine claims to hate his guts) has published an apology.

I won’t apologize, it goes against my Klingon upbringing, but I will say I have less confidence in the deal going down than I did. It’s not going to happen.

My guess is that after some initial interest Playboy discovered AVN’s not the cash-cow they imagined, or perhaps wiser heads prevailed and realized magazine publishing’s not the future.

Know any different? Talk to me.

Popularity: 38% [?]

Google now owns YouTube and is the new undisputed leader in the have-you-seen-this-clip market. Way to spend $1.65B – a ludicrous amount given YouTube’s inability to make any money.

Right?

As an advertising company Google has to see appending video ads to web video as a way of eating into the massive TV advertising market. Viral videos used to be found in a range of places and websites but now are almost exclusively on YouTube (and if not are quickly mirrored there). If Google can build a system to append ads to content automatically, and they can, and devise a way of paying content owners a share of any profit made on their clips with Google wallet, they can earn back their billions fast.

With millions of downloads a day, charging advertisers fractional amounts adds up fast. By tracking the most popular and enduring content – their ‘hit shows’ – they can increase prices for clips in the way they do for keywords and all that technology and experience is already in place.

Assuming I’m right, and I think we’ll all be more comfortable if we do, in a years time every guy-sticks-knob-in-blender funny will come stuck between ads for ‘Coors Lite’ and ‘Band Aids’. For the first time it’ll make more sense to upload your funny videos to the web than send them to a cheesy TV show for a 1 in 3 chance to win $500. Really popular videos will make hundreds of thousands of dollars for their authors and instead of using the web to launch a career in TV, podcasters can enjoy a career online funded by ads they rely on GooTube to sell.

In working out a way to sell more ads, Google will have inadvertently provided the web with the micro-payment system it’s long been crying out for. With each ad impression generating a few cents for each video publisher it’s precisely the payment model best suited to digital content. The clever bit is that consumers pay nothing themselves, which increases the reach of content and with it the profits to be earned. There’s no signing-up, no exchange of personal information and no barrier to entry. Consumers get ‘free’ content, advertisers get eyeballs and performers get paid. Smart.

So where does that leave porn? The short answer is nowhere. Mainstream advertisers are not going to embrace nudity and pay for ads on trailers for ‘Island Fever 27 – Milking It’, but who said sex had to be pornographic or, perhaps more accurately, that porn had to be explicit?

There’s more than one way to skin a mushroom (think about it, I’ll wait…) and Nuts/Maxim style softcore, which which can be shared via GooTube (Yougle? It’s for sale here), will be worth worth more than hardcore material which isn’t.

Could a new golden age of sexually stimulating, non-explicit naughtiness be around the corner? If Micro-payments via ads arrive as I predict, Maxim/Nuts style demi-porn may be the future.

Popularity: 58% [?]

The word on the wires is that Playboy has extended it’s buying spree and added the AVN organization to it’s portfolio. The news isn’t new but I’ve now heard it confirmed by a person I trust who’s in a position to know so I’ll nail my colors to the mast and say though not officially confirmed – I believe it.

The effects of the buyout aren’t yet clear. Playboy is a company that owes its continued existence to hardcore porn, run by a man who doesn’t think he’s in the porn business and his daughter, who knows she is but would rather not be. They’re surrounded by executives with an appalling reputation for treating models like prostitutes and some very smart unappreciated worker bees. Playboy’s a company with internal politics that make Nero’s Rome look sane and composed by comparison.

AVN makes its money selling ads, and trade-show floor space, to hardcore pornographers who are in direct competition which, er… Playboy. It’s not going to make the industry happy knowing they have to give a portion of their ad budget to a direct competitor. It’s like Toyota buying ‘Motor Trend’ and then expecting GM to keep buying ads and if it wasn’t the jizz-bizz we’d be talking about potential anti-trust issues.

Does this mean a huge opportunity for an AVN magazine competitor? Probably not. AVN’s at the end of it’s natural life. Distribution is going digital which means the challenges of shipping discs are about to become a historic problem and the people with the keys to success for movie producers will be websites. As that happens the money being spent on ads in AVN will go online and, though AVN’s got writing talent and expertise on hand, their website isn’t the force it should be. Unless they fix it, there’s ample opportunity for another company to take their place and for AVN to shrink as magazine’s sales decline.

As a private company the wisdom in buying AVN depends on how transparent their books are. They should be making millions but what’s really happening behind the scenes depends on how well the company’s being run. For Playboy, who’ve never managed to consistently profit from their brand, any upside is worth pursuing so even small profits must look good to them.

When Playboy do announce the buyout (which they might not because I could be wrong) it’ll be interesting to see if they announce immediate changes. The AVN awards on the Playboy channel – of course. Jenna as managing editor? Possibly. The AVN awards becoming The Bunnies – it’d be mad not to…

Popularity: 35% [?]

Though I won’t meet the majority of the people who read SugarBank, many of you are strangers I consider friends. I’m acutely aware (I’m ‘a-cute’ too but that’s a different conversation) this blog is my face, action, and every word I say to a large group of you. By necessity this blog is me and I try to make sure it presents a persona people have fun hanging out with.

So blogs are avatars.

Without a handshake or a face, bloggers survive purely via a reputation for being honest, entertaining or erudite (I don’t actually know what erudite means). Even the most corporate blogs, gathering their material from press-releases, know the only way they can maintain their readers respect is by commenting on and criticizing PR hackery instead of rubber-stamping it.

Blogs are not:

• Direct mail – “ON SALE TODAY! The Floppytronic 40,000 is now available for just 3 low monthly payments…”
• Clumsy sales pitches – “Driving my Ford F150 into work today I was struck by how the Premium Vortex air-conditioning is able to keep me cool in the worst LA traffic has to offer…”
• PR or crisis management – “Despite this weekend’s sever troubles and some unfortunate lost orders, we at Amazon are proud to still deliver over 98% of packages on-time…” (there’s a better, more honest and open way to say sorry)

So when a handful of business and people recently approached me with an interest in buying SugarBank the question at the bottom of the pile, after all the above had been explained by me was, “How can we make money from your blog?”

The answer is simple. Business blogs are corporate avatars.

The first attempts by companies to build avatars was called branding. Branding experts hoped you’d believe the people and things in ads were somehow like the companies they cavorted with. Marlboro wanted you to feel like a smoking cowboy, not a oxygen-bottle dragging invalid. Budweiser wanted you to think about tanned girls in Daisy Dukes, not fat men fighting in bars. Branding meant seeping into peoples mind’s by constant repetition and that meant advertising, which meant messages had to be short and simple. Sometimes it worked, more often it didn’t and only companies with deep pockets could afford to try and pound their way into our collective subconscious.

Blogs give branding to everyone. Instead of forcing a company to build a personality 30 seconds at a time on TV, they allow business to use real people, with real personality, to become the talkative embodiment of their brand.

Thought of in that light, covering a corporate blog in ads and judging its performance by how many boxes it shifts is ridiculous. You don’t hire a celebrity to represent your company and then require them to sell memberships on TV. You’re buying their glamour, character and influence. Bogs work the same way.

Some companies have had avatars for years, Apple’s Steve Jobs and Walt Disney, being famous examples. When Steve Jobs spends five minutes every six months telling a room full of people about the new iPod, he sells more of them than all of Apple’s other advertising combined. He’s not selling anything directly, just telling his friends (the Apple faithful) how cool he thinks they are. That’s what blogs can do for companies.

The question is, can your organization endure the detergent sunshine a blog will bring to bear, knowing that means they’ll have to deal with some mistakes in public? Understanding that means discussing your competitors honestly as well as yourself? Realizing that your most earnest critics are often your most passionate customers.

‘Yes’ is the only sane answer to that question. There are only two types of problem, real ones worth fixing and misunderstandings to be explained. A blogger can help with both, not only bringing a company an endless stream of attention, but also via the informal focus group its readers represent.

(When Apple announce their plan to ‘fix’ the scandal of their iPod factories they’ll be the only ‘cruelty free’ MP3 player people feel confident to buy and Steve Jobs will have earned respect as a compassionate capitalist.)

Of course, that makes blogs useless for selling the kind of junk which can only survive in the controlled environment of a late-night infomercial, where even unhappy customers feel too ashamed to tell their friends about the mistakes they’ve made, but why invest in marketing when you could be fixing your product?

To anyone who’s thinking of building a blog for your company that’s how I believe you should do it. Make sure the companies something to be proud of, then make your blog the person that company would be. That way you’ll command an audience of friends who will listen to what you say – advertising that can’t be bought.

Popularity: 57% [?]

Jason Kottke.

It’s a little sad, and a lot inevitable, to hear that Jason Kottke of kottke.org (an old-school super-blogger with a lot of readers) has stopped taking donations in a bid to make his site his sole source of income.

A lot of bloggers are living in the hope that at some point enough people will want to give them money to make pro-blogging viable. Kottke, who according to Technorati has the most popular blog being published, raised a total of $39K in the last year. Better than minimum wage but not enough to justify a 12hr a day blogging habit.

Can sex blogs, who’ll always have smaller audiences than the largest of the mainstream blogs, ever hope to profit from good-will if Kottke can’t? When is (sex-)blogging going to get a business model that doesn’t rely on having enough readers to make ad sales viable? Is the very idea of free-content without a revenue-driven agenda a little quaint?

Popularity: 33% [?]

As I’ve been reminded this week, making the most of a trip to Las Vegas is about more than pure cocaine and deniability. The merits of trade-shows are debateable, but if you’re making money in the sex industry you will eventually find yourself in a convention centre, hopefully glad you read this.

• Empty your bag. On your first day you’ll pick up a thousand free magazines, leaflets, business cards and, if you’re lucky, female booth models. They’re heavy and you’ll regret carrying much else.
• Wear comfortable shoes. You’ll walk a couple of miles on the show floor, if your shoes hurt you’ll get pissed off, act like a prick and people will hate you.
• Pack water. Unless $5 bottles of water and $7 hot dogs float your boat, you’ll be glad of having something to eat and drink in your bag.
• Ignore the first hour. The start of the show is about long lines and trying to find people who haven’t yet got out of bed. Pretend it’s not there.
• Ignore the last hour. The last hour is about people going home, packing up shop and getting pissed off that you’re trying to talk to them when they just want to go home. Forget about it.

Popularity: 61% [?]