How will lower payouts affect you?

[Evil Chris]

Considering that Visa's new acceptable chargeback ratio will be dropped from it's current 2.5% to a very low 1%, a lot of webmaster affiliate programs will probably lower their payouts to compensate.

Some say that this will change our industry in a radical way, and some are just fluffing this off. Personally I think that revshare programs will see more webmasters coming their way, but time will tell. I hope nobody's program goes under due to this.

How is this going to affect our industry in the short term or long term?
Will you be moving your traffic around because of it?

[Ounique]

Well, working in content, we are more indirectly affected by things like this. I mean, the better the webmasters do, the better we do. It will be interesting to see how this all pans out.

[Horg]

I'm not a sponsor guru, just a design guy, but I think it will be good for the new sponsors who can't offer 50$ per signup like the big boys do. Sponsors will have to get inventive to attract more webmasters.

[Danny_C]

I actually agree with you that partnerships are going to see an increase in affiliates sending traffic... at least for a period of time, while everybody is testing the water. Once they see who pays them more money, they may stick around, or they may be back to per-signup programs.

On the other hand, not all per-signup programs are lowering payouts (yet), and it's too early to predict whether all programs will be forced to do that. So it's hard to say whether this will be the boon to the partnership business model that most partnerships seem to think.

And if all per-signups rates are dropped, there's still an ongoing debate about which business model pays the webmaster more money in the end (even at $25/signup). My own feelings are mixed, and I wouldn't presume to have all the answers. I lean toward per-signup, but I believe each business model has its merits.

Again, time will tell.

[Jay[neX]]

I think some of the big programs will come up with clever ways to reduce their chargebacks while keeping a high payout.

ARS has already stated they would lower the payout around $30, but on the other hand some programs are raising or keeping the current payouts.

Bottom line is, it'll hurt every program using paycom's EzClicks and cross sells.

These new regs are rather good news for the small to medium programs, as large programs like ARS will lower payouts and be on par with smaller programs.

We won't lower our current $25-30/signup payouts, and we are nowhere near having a chargeback problem

[gregtx]

As of now.. SICCash... is "ok"... in the CB areas...but we are still evaluating our current numbers, and b/c of the loss of free trials and some xsells.. we will definetly loose some income channels...
so change is inevitable..

how much.. is not clear yet.. but as of now our current payouts are staying the same..

[Pidgin]

Possible effects:
1. Less newbies - and the ones that will give it a try - give up faster.
2. Some sponsors will indeed go under.
3. Less money for webmasters (lower payouts)
4. over time, less free porn. Maybe its kust my wishfull thinking but I think much of the free content comes from newbies.
5. Hopefully less shaving - now that the payout are lower and retention of the good webmasters is more crucial.
6. More friction between webmasters and sponsors.

Change is not always good - despite some strange "approach" expressed by some people. If you get cancer its not a good change for example. But we have to try to make the best and learn the most.
I personally think that it's the sponsors fault that this change came.
I say so because I have a feeling that if chargebacks were lower in the first place, all the Visa new regulation (the 1% as well as the previous $750) would not have occured.

What do you people think?

[Cyndalie]

I think "4 free" type of programs will see a rise in action, as it's often easier to do 35 free joins per day at a dollar each than it is one per signup sale. Most 4free programs have averaged 1/35 for me and memberships sales can be as bad as 1/2000, do the math.... If they could better track 4 free signups that convert to full memberships, a recurring model could be possible, however it's a long shot.

Sponsor programs may want to regain more control on the traffic they allow and ways they advertise. To survive, geofiltering traffic affiliates send my better help overall program conversions so that sponsors can still make money with the traffic they can convert via partnerships with related sponsor programs or expanded offerings.

Programs that offer mutliple types of sites and payouts I think will survive, because they have more internal structure to decide what traffic they allow to hit what type of payment forms as well as create more avenues for conversions without having to send the traffic away...

just some ideas...

[Toolz]

Sponsor's fault this change came? Not likely, this is a very cyclical industry, the webmasters are just as at fault. If the demand for higher and higher payouts hadn't been pressed we'd be charging $14.95 a month and paying the webmasters $8.00 like the good ole days.

How is it going to affect the biz, well the main problem is that while the webmasters and programs can change payouts and per month prices you still don't get rid of the immediate cancellers, the surfers who never access the site, buy the membership and cancel immediately before even seeing what's inside. As far as programs being forced to a max of $29.95 on monthly signups, if this happens you can bet that payouts will be reduced across the board, $10 less in the program's pocket = probably around $10 less in the webmaster's pocket. Couple that with the removal of MULTIPLE free cross-sales, a problem brought on by one processor alone and you're going to see a rapid decline in payouts. They should land in the $25-30 range where they should have been all along. My guess is the programs continuing to pay $35-$45 will do it by a. shaving, b. agressive consoles, or c. continuing to bang the surfers card. The money has to be made up somewhere, consider that when you see programs paying out more than their monthly access fees are. One popular sponsor pays $35 currently and they charge $25 a month, caveat, surfer has to remain a member for 4 hours. Just remember folks, higher payout does not always mean more money in your pocket.

[Brad Mitchell]

As much as some of the sponsors want to downplay the new changes I think this will drastically change our industry in numerous ways.

The worst offenders with deceptive billing and bad customer service have their days numbered. They'll only be able to switch company names and merchant accounts so many more times before their time is up. I think it's obvious that the days of multiple cross sells are over for most companies. However, realize that we really won't see companies dropping like flies untill sometime 1st quarter of next year. That's when the new regs, if in effect, will take it's toll.

As we have already seen, some companies are decreasing their payouts. I don't think there is necessarily much correlation between those companies that are decreasing payouts and supposedly straightening out their billing practices and those that will ultimately survive. We'll see lots of businesses go under and I wouldn't be surprised if there was some more consolidation in this industry since it's matured quite a bit.

I think previous transaction history will doom some companies and 3rd party billers portfolios. Chargebacks are calculated on current month volume despite the back you can get chargebacks from up to 6+ months of previous activity. If companies are really getting rid of some trials and cross-billing then their transaction count will be greatly reduced. Undoubtedly most programs will come up with some super cheap billing option or product just to increase their transaction counts... with the idea that having a super low price point makes doing a chargeback a mute point. I think that ultimately it's not enough to dissuade 1 out of 100 purchases from charging back whether it's a $5 purchase or a $40 purchase.

For most companies I expect that we'll see a decrease in overall consumer pricing. No fucking website is worth $39.95 per month, we all know that the consumer pricing is less a derivitive of actual demand and 'value' and was more a reverse engineering of pricing that would allow affiliate programs to pay more for affiliate traffic. The affiliate program business is very competitive and those high stakes are what got the industry into this situation... aside from the obvious greed and fraud on some peoples parts.

I wouldn't be surprised if we ultimately saw PPS leveling off to $20-$25. More programs if they're smart will put a new emphasis on switching over to their recurring programs. I honestly don't think that an affiliate program has to do much of anything but survive to ultimately thrive. I know some people would disagree but in my opinion those that are around next fall will have more market share all to themselves.

People still need and want porn. So, one way or another the money will still get spent online. Ultimately we'll build some new mousetraps and those adult companies that are innovative will be around for the long haul. I'd expect that we'll see 1-2 more billing methods introduced in the next 6 months... all affiliate programs needs another billing option, even if it's not a magic bullet and it only ends up being 10% on their volume.

I think we're far from seeing the last 3rd party billing company go tits up. Aside from the big guys like CCBill, Epoch, PSW, Jettis and IBill there are still another half dozen or more 3rd party billers. We'll see, maybe we'll find out that some of the smaller third party billing companies have been doing a more conservative job managing their portfolio. On the bigger side of things, I wouldn't be surprised if we saw IBill pull out of adult and at least one large processor fall and take out alot of webmasters with them.

These are challenging times for everyone... For me, honestly, the changes don't really change anything. I've always had constant pressure to one-up everything I'm doing. To rest on laurels is always temporary, only innovation and perseverence will continue to pay big dividends in this industry as it completes it's transformation to the next part of it's life cycle.

That's my 3 cents.

Cheers!

Brad

P.S. - I'm launching a paysite affiliate program shortly

[Kenny B]

Since the news I looked at our chargeback ratio and we are at 0.40% so it’s not an issue for me in the respect of getting fined or losing my visa accounts. I think it’ll help those of us that have rev-share affiliate programs if the larger programs lower their payouts, if you run solid sites each sign up can and usually is worth at least $20 if not more.

Until recently this has been the only business you could get into with virtually no capitol to invest, hence ridiculous amounts of competition, I think these changes will weed out those that are taking a little chunk of the pie and that extra % will get re-distributed among those with quality sites & good programs.

[Ronaldo]

Yikes, so much to say, so little time.

This industry has brought this upon itself, sorry to say.

The prechecked cross sales boxes, shitty content areas etc.

I purchased a membership to an independent site a few months ago. (What can I say, I like good porn and yes, I'll still pay to see it). The tour showed all of these sets of Kylie Wild that I wanted to check out. Well, I'll be damned if when I got in there, there were two or three sets. The OTHER sets were "In the archives" or something like that. But, the "archives" were not accesible. WTF??

They did however state that these sets would be viewable again "In the upcoming months". So, they wanted me to continue to pay to access their site, in the HOPE that these sets would be available next month. If not, then next month, and so on.

So, I contacted the webmaster and told him to refund my card or I'd charge it back.

They contacted me a few days later and refunded my card. No problem.

THAT was very professional. The whole thing could have been avoided however, if they didn't mislead potential members on their tour.

Things like this are why we're under attack. How many people wouldn't have contacted the webmaster, they would have just charged it back? My guess would be under 25% would ask for a refund because they'd be too embarrassed. For that matter, how many webmasters would say "Fuck you, charge it back". Ah yes, that was then, this is now.

Now, how do I think this is going to affect our industry? Too soon to say.

I think there will be two very different reactions.

The first reaction will be to cut back costs (staff, affiliate payouts, content etc.) and lower their prices.

The other reaction will be to increase staff for better customer service. Pay more for content that will better satisfy their members. Perhaps a decrease in payouts WILL be necessary to maintain a healthy bottom line.

As an affiliate, I already promote sites with a lower payout. They have exclusive content, but they convert like a motherfucker. Their chargebacks are next to nothing because everything their affiliates AND THEIR TOUR promise, are on the inside for all to see.

My belief is that those reacting with cutbacks will soon find out that spending money is the way to go. This is like any business. Spend money to make money.

P.S. I had CNN on while I was working the other day and they were babbling on about this very issue. I didn't realize this but there are ONLY 3 banks in North America that process ALL of the internet adult charges. The fellow was talking that it's possible that even these 3 might find that the hassles might outweigh the benefits and these 3 banks might stop processing as well. THAT is a scary thought.

Oh, and blame the lawyers.

[roger]

I don't think the 1% will affect anything since you have to have 100 chargebacks in a month to even be put on the watch list.

what i do think will affect the payouts is the processors dropping the number of cross sells and if paysites lower there monthly subscriptions.

If others drop there payouts and I make less off our exits and sponsors pay us less on cross sells. etc. then it will affect everyone

I see sponsors saying they won't lower payouts but when they start making less off exits, reacurring, cross sells etc. they will have to also lower there payouts.

But who really knows just my opinion

[roger]

Originally posted by Danny_C
I actually agree with you that partnerships are going to see an increase in affiliates sending traffic... at least for a period of time, while everybody is testing the water. Once they see who pays them more money, they may stick around, or they may be back to per-signup programs.

On the other hand, not all per-signup programs are lowering payouts (yet), and it's too early to predict whether all programs will be forced to do that. So it's hard to say whether this will be the boon to the partnership business model that most partnerships seem to think.

And if all per-signups rates are dropped, there's still an ongoing debate about which business model pays the webmaster more money in the end (even at $25/signup). My own feelings are mixed, and I wouldn't presume to have all the answers. I lean toward per-signup, but I believe each business model has its merits.

Again, time will tell.

I totally agree with you. payouts don't mean much pic a sponsor who makes you the most it could be off emails for a $1 or PPS for $30 it all depends what makes you more.

Porn4abuck was built for the new visa regs to keep our chargebacks down so it will remain the same. and since this program is our bread and butter at Pornkings. We hope you try it out since it converts amazing even with the $25 payout you will still make the most possible.

It converted better then our free trial program.

because "All sites are a $1 trial for a month".
super easy to convert. our model is differant then everyone elses
we pay less but convert alot more because of our business model.

who gives a shit what the payout is its how much you make with a sponsor off your traffic.
it could be 15 cents an install to a $40 payout. its what makes you the most off your traffic.

I don't think so... if that is the problem why does mainstream have such a problem.
I think alot of programs need to clamp down on the fraudulant webmasters. i bet most of the chargebacks are from people running stolen cards then the surfer gets there bill and charges back.

Report: E-commerce will bleed $285M in fraud
Nearly $300 million in e-commerce will be lost to holiday fraud scams this year, says a new report from the CyberSource Fraud Survey. About $285 million, or 3 percent of the overall online earnings for 2002, will be siphoned off by credit card hoaxes and the like, even though retail respondents said that they are taking more precautions than they did last year. About one-third of the respondents think credit card fraud will increase this year over last. E-commerce has grown at a tremendous rate this year. Sixty percent of the online companies surveyed by Shop.org and Bizrate.com reported revenue increases of more than a quarter during the first two weeks of November compared to 2001. The fraud problem haunts big companies as well as small. Amazon estimates its fraud rate at about 2.5 percent so far in 2002. More retailers are thus taking precautionary measures. The number of companies using AVS, a credit card verification system, has increased by nearly two-thirds this year to 71 percent. And 59 percent of sites plan to encrypt stored credit card numbers.

[baddog]

well, we decided to raise our payouts from $20 per signup to a maximum of $30 per signup.

Damn the torpedoes, full steam ahead

[Magnus3x]

Rev share all the way baby!!!

[Brad Mitchell]

It still amazes me that Amazon can announce publicly that they get 2.5% fraud even with delivering items and obtaining a signature... and they still expect ours to be 60% lower. That's politics for you... as far as I'm concerned this is still a right wing conservative christian conspiracy.

Brad

[SykkBoy]

It will have a ripple effect to some degree.

If paysites are seeing evershrinking margins, they either shave more or lower payouts. This effects exit trades, content providers (less money to spend on content), affiliates, hosting companies (with a lot of their customers going out of business), etc.

It's interesting that the smaller sites who have less chargeback problems were having problems paying the $750 Visa fee. We'll probably see more consolidation with larger companies picking up these smaller "independent" sites.

I think we'll see a change in how members areas are setup. We'll see more upsells and other content besides porn. The "mega sites" will start resembling entertainment sites.

I also see a lot of content providers ending up just shooting their own shit and opening their own sites.

It will be an interesting time indeed.

[Yo Adrian]

Originally posted by XXXManager
Possible effects:
1. Less newbies - and the ones that will give it a try - give up faster.
2. Some sponsors will indeed go under.
3. Less money for webmasters (lower payouts)
4. over time, less free porn. Maybe its kust my wishfull thinking but I think much of the free content comes from newbies.
5. Hopefully less shaving - now that the payout are lower and retention of the good webmasters is more crucial.
6. More friction between webmasters and sponsors.

Can I jump in?

As for the newbies, I don't think there will be much change in newbie count. Even with lowered payouts this industry will still be viewed as a get rich quick opportunity. However I'm sure that the changes will cause some current webmasters to find other means of earning a living.

As for an increase in traffic to revshare programs, I do believe this will happen, in the beginning at least. Fears of lower earnings will drive webmasters to try revshare programs, but as Toolz mentioned, it's all about what you make at the end of the month. Webmasters won't necessarily stick with revshare programs...if they're not happy with their earnings they're going to start shopping for another sponsor, some will find that $25 joins may earn them more $$ than a 50/50.

As for the industry, I think it will be healthy for it overall.. it will push programs to offer higher quality content as well as customer service and webmaster support. Once all the dust from this settles we'll probably see more dishonest webmasters out of business and more surfers happy, meaning less fearful, to buy memberships.

[LAJ]

This will undoubtedly affect everyone in the industry directly or indirectly. Everything has a chain reaction in the adult Internet.

Affiliates will continue to get squeezed harder and harder whether it be by Visa or legal issues, etc. It will continue to get more difficult for affiliate programs to remain in the business. Sponsors will most likely start relying less and less on affiliate traffic and instead will be buying more and more traffic from the search engines.

[Crak_JMan]

My 2 cents...

First of all let not act surprise about this. Everyone new time was coming.

I am not here to name anyone or finger point but it's abvious that all of this is a result of scams, cheating an non proper clean business practice.

Many factors gors into this.

Fraudulent webmasters with stolen cc. Easy to get attracted when big hungry sponsors offer weekends at 70$ per joins.

Shaving... You make out huge payouts... You shave ( 1+2 = 2 ) Eh !

You shave your webmasters, then THEY NEED to find a better way to make money. ( Spam, Scams, Cheats, stolen ccc.... )

HUngry for that sign up you offer free trials, most of the surfers are fucking horny and want porn, the only time they read fine prints is when they receive bill and decide to CB your charges.

I say many people will survive and the strongest will be those who had same business practice for over the last 5 years. Never change model, never increased payouts... Only consistency.

Another thing that makes me twitch is the bunch of newbie coming in this business as computer wiz that don't even know where their dick goes when they are with a women.

What happened to the good old REAL PORN PEOPLE. the ones not afraid to get nacked or to party right now... Looks like we are a dying bread and the new one is fucking up our business with all the nice cheating schemes.

But changes is good, especially when it brings back people to same level all around ;-))

[LaurieX]

Yup this will definatly affect everyone in one way or another. I hope everyone can find a way to get through it.

[StuartD]

The thing is.... people are reacting the same as when Visa made it so that you have to pay a yearly fee and the $750 setup and Canadians have to incorporate in the US... and blah blah blah.

Some people cried "the end of the world" type stuff... but it's still here. Some people are gone but most dealt with it.

Not to say this isn't a bigger deal.... it is... but people will manage. Things change... it's how the world is.

For the most part, I've seen sponsors raising their payouts.. I guess it's a way of laughing in Visa's faces... or it's a way of re-affirming their affilliates that they aren't going anywhere... or... it's just a way to get more affiliates signed on... getting more signups... hoping to get so much that 1% would be hard to get to.

It's kind of smart if you think about it.

Either which way... the raised payouts from various sponsors in response to this will go away. Either this will bite them in the ass, or they'll get their surgence of new affiliates and rise in signups and then they'll be able to lower the rates again.

But... in the end, everything will be balanced out... and everything will roll along until the next big huge industry changing event happens.

[pornJester]

In the long run I think this will be good for our industry. There are two main reasons for chargebacks I believe: one is that people just know they can do it, so they do. Second is because of shady practices by some paysite operators. Even though 1% is a tight number, I believe after a while our industry will gain more trust from consumers as companies start to clean up their acts.

Also though I believe Visa and MC need to crack down on those consumers who abuse our industry with chargeback reason one i gave above as this could play heavily with a 1% restriction.

[Max Sweet]

Hi everyone! Long time lurker because I wanted my first post to be something meaningful so here it goes:

Many people are pointing the finger at shady sponsor practices etc. but one thing no one's mentioned yet is webmaster fraud. Per signup programs attract cheater webmasters that put through signups with stolen creditcards etc. and its THESE practices primarily causing high chargebacks. For this reason you'll see more revshare progs and per join being reserved only for known webmasters or bigger companies trading signups....

The other thing I'd like to mention is the quality of our products. (ie. members areas).

I worked in a Porn video store for a year and it was a really great place to learn adult marketing as you get to TALK to the consumer face to face about what they buy! All aspects of marketing are covered (packaging, graphics, text etc.) and all of these played a role in the sale. What I found was there's mainly 2 types of movies:

1. Movies produced by one director/performer/company with a very distinctive style that always delivers what it promises ie. Maxhardcore, Rocco Siffredi, Extreme Associates. The consumer LOVES the style and knows what to expect when renting these tapes. They KNOW they're not gonna get ripped off because the content is original and usually very hot! These movies attract the seasoned masturbator who needs a new fix every day and these are the guys dropping LOADS of money on our sites.

2. Compilation tapes with "Best of" content like 1001 cumshots, "30 Anal Gapers" etc.
These tapes almost always get rented by newbie renters who still think that QUANTITY is better than QUALITY. They usually don't rent a second one

NOW I see members area the same way. There's programs like Alsscan, Maxhardcore, Ox, Nasty and us () that have a distinctive style that surfers come to trust and keep coming back again and again. because they really CAN'T get that stuff anywhere else! This is the content that gets em off and so they have to get ALL of it (being habitual collectors as well as spenders). For these types of sites we get high rebills, high type in traffic and low chargebacks.

Programs like ARS where all content is bought/leased and seen 1000 times just isn't gonna cut it anymore for the seasoned consumer. That's why they resort to cross sells, upsells, free trials etc. to get every dollar they can out of the sufer with no thought to doing FUTURE business with him.

I guess what I'm saying is for sponsors - its time to pick up a camera and show what you're made of and for webmasters - choose wisely where you want your hard earned traffic going and how you want your surfers treated...

Just my 5 cents lol...

[webgurl]

well i have not read all ur posts but i know that if the big guys are lowering their payouts under 25 buks/signup
I would like to send my traffic to the reocurring Smaller Affilate Programs, why would you want to make anything under 25 buks persign up versus one initial sign up from a 3rd party that can lead to many more continuous revenue. Although ones like sunny dollars pays that but they are all good
Now i think the big players need to develop more quality sites instead of the mash potatoe sites , replica's of same old played out paysites seen a trillion times . Its time they shape up or ship out .

[webgurl]

Also ,
Glad lots of sponsors are taking out the Free Trials Passwords for Paysites, Those are no good , they should have never existed .
I think the basic 2.99 is okay for a trial , but free hmmm......
I predicted awhile back this was gonna happen with another dump from visa , 1% Chargeback is too hardcore does that mean alot of webmasters with shitty high traffic that does half ass conversions going to get banned / red flagged from alot of programs ?
Alot of close buddies of mine can exceed that 1% Chargeback Ratios within a short period of time . How does that work ?

[Hashishan]

Originally posted by Cyndalie
I think "4 free" type of programs will see a rise in action, as it's often easier to do 35 free joins per day at a dollar each than it is one per signup sale. Most 4free programs have averaged 1/35 for me and memberships sales can be as bad as 1/2000, do the math.... If they could better track 4 free signups that convert to full memberships, a recurring model could be possible, however it's a long shot.

Sponsor programs may want to regain more control on the traffic they allow and ways they advertise. To survive, geofiltering traffic affiliates send my better help overall program conversions so that sponsors can still make money with the traffic they can convert via partnerships with related sponsor programs or expanded offerings.

Programs that offer mutliple types of sites and payouts I think will survive, because they have more internal structure to decide what traffic they allow to hit what type of payment forms as well as create more avenues for conversions without having to send the traffic away...

just some ideas...

all very good points

cross sells have given this industry a bad name (to the point that i no longer mention i do porn sites, if i dopeople assume im some kind of crook)

maybe this will clean up porn sales a little and people will stop being afraid to whip out the plastic

[NetRodent]

Originally posted by Max Sweet
1. Movies produced by one director/performer/company with a very distinctive style that always delivers what it promises ie. Maxhardcore, Rocco Siffredi, Extreme Associates. The consumer LOVES the style and knows what to expect when renting these tapes. They KNOW they're not gonna get ripped off because the content is original and usually very hot! These movies attract the seasoned masturbator who needs a new fix every day and these are the guys dropping LOADS of money on our sites.

2. Compilation tapes with "Best of" content like 1001 cumshots, "30 Anal Gapers" etc. These tapes almost always get rented by newbie renters who still think that QUANTITY is better than QUALITY. They usually don't rent a second one

You make some interesting observations and I certainly think you have a point. Obviously a "seasoned masturbator" needing a new fix every day will spend more money than a curious newbie. However the real question is what percentage of the market is made up of seasoned masturbators? I would imagine that masturbation addicts are a small portion of the population.

[twinkley]

Here is Connors take on it ...

http://www.theadultwebmaster.com/news/030714_cc.phtml


Personally, I think it will spur new growth. I know, I know - bad position to take. However, the fact of the matter is you can have a 1% CB rate if you have good fraud prevention, fantastic customer service and easy easy ways to cancel.

Yes, it sucks that payouts are being lowered - however, if you have good traffic, you can easily use a good recurring program and make just as much if not more.

Things are changing - thats a fact. I hope we will be able to adapt with them and our saving grace is technology. With the advent of tablets, I think that the software should be soon on the way to make real digital signatures available ...

Anyways, Im getting off the point. Yes, this is a temporary setback, but we are nothing if not a resiliant, adaptable industy - we will adapt to this too - they cant get rid of us that easily

twinkley