EFP 137: Brokering Websites In The Adult Industry

Where can you go if you want to buy or sell a website in the “adult” industry?

Most website brokers (including us) won’t touch adult/porn websites. While they can be quite profitable, their traffic and monetization strategies can be significantly different from a “regular” site which makes the vetting and due diligence process quite different.

So Where Do Adult Website Sellers Go?

We do have customers with adult sites, though, and I’ve been looking around for someone that can help them out.

In this episode, I sit down with Bruce from adultsitebroker.com to get his take on buying/selling websites in the adult industry. We ended up having a fascinating conversation regarding monetization, traffic, and growth strategies. I’m hoping that even if you’re not interested in the adult site space, you’ll be able to take some nuggets from this episode you can use in your own business.

Check Out This Week’s Episode:

Direct Download – Right Click, Save As

Topics Discussed This Week:

• Buying/Selling Adult Sites
• Marketing Adult Sites

Mentions:

• Bruce Friedman of Adult Site Broker
• CNet
• Listing # 40216 – Health and Fitness Niche in Affiliate Site
• Adult B2B
• ASACP (Association of Sites Advocating Child Protection)
• Adult Business Consulting
• Dan Norris @ WP Curve
• Analysis of sites success 3 years after purchased over @ Margin Hound

Spread the Love:

“Porn drives innovation.” – Justin – Tweet This!

“Doing a soft-core site is good if the content is unique, If it’s not unique it’s not gonna work.” – Bruce – Tweet This!

“The biggest difference in adult is the attacks from the outside that the industry has to deal with.” – Bruce – Tweet This!

So – what did you take away from this episode? Have you ever dealt with credit card fraud? Let us know in the comments!

 

Justin:                                   Welcome to the Empire Podcast, episode 137. What’s it like to be a website broker in the adult industry? Today we sit down with Bruce Friedman from AdultSiteBroker.com to discuss his role in working with buyers and sellers in the niche. You can find the show notes and all links discussed in this episode at EmpireFlippers.com/porn. All right, let’s do this.

Speaker 2:                           Sick of listening to entrepreneurial advice from guys with day jobs? Want to hear about the real successes and failures that come with building an online empire? You are not alone. From San Diego to Tokyo, New York to Bangkok, join thousands of entrepreneurs and investors who are prioritizing wealth and personal freedom over the oppression of an office cubicle. Check out the Empire Podcast. And now your hosts, Justin and Joe.

Justin:                                   Porn drives technological innovation. Now, you might’ve heard this before, but I came across a really interesting article on CNET the other day talking about examples of this. Now, Joe, we’re gonna sound a little old here. But you remember the Betamax versus VHS battle that was going on when we were kids?

Joe:                                        I do. I remember it.

Justin:                                   So the article argues that the reason VHS really took off is Betamax wasn’t long enough to shoot or record full porn videos. So because of the technological innovation people being able to watch porn in their homes with VHS tapes rather than going to some sticky, funky theater to watch porn, it was like a really big technical-

Joe:                                        I’ve never heard that part of the [inaudible 00:01:28]. I thought it all came down to marketing, but interesting.

Justin:                                   Yeah, interesting. So there are a lot of other things where I think porn drives innovation, right? It’s monetization types, the affiliate model, paying for content, they’ve definitely had that figured out for a while.

Joe:                                        I mean one of the first ways to charge credit cards on the internet, you know, if you watch that middle man movie-

Justin:                                   Oh yeah that was great, dude.

Joe:                                        Great movie.

Justin:                                   Yeah.

Joe:                                        All about that kind of stuff, so yes, absolutely. In the Internet world, at least, they do drive technological innovation. I don’t know about for rocket ships and stuff like that, but …

Justin:                                   So I’m gonna embarrass myself a little bit in this interview because it’s gonna be apparent and very obvious I know way too much about porn for … like, it just has to come out. I gotta ask, can we talk about tube sites, talk about the whole thing, but it’s a really interesting interview? And I’m interested because you know, there’s a ton of money in adult, right? You and I both know a guy that made millions back in the day in adult, and has then spent a lot of that money, not building startups that way that have worked after the fact.

Joe:                                        Right.

Justin:                                   But there’s a lot of porn in adult today, although it has had some problems with the tube sites. So I really want to kind of dig into that. I also want to talk about the monetization methods and how things are changing, right? With so much free content out there, like how has the porn industry been changing? We’re also gonna find out or see what we can learn on the other side of the industry from websites that are bought and sold in the adult industry, like if they are leading the charge in technical innovation, what are they doing in the brokering space that might be different or interesting to us?

Joe:                                        Yeah, I think that’s pretty cool because buying and selling these sort of adult sites is an interesting platform, and I would be interested to see what he says in terms of what are the multiples people are getting, what’s the feedback on their longevity, that sort of thing.

Justin:                                   This is something that you and I have particularly said no to, and this is one of the reasons I actually came across him is because we were looking for someone that does adult sites. It’s not something that we offer. And it’s not that we have anything against porn in particular, right? But it’s just not a side of the business that we wanted to do, you know. It just, I don’t know, does it muddy things?

Joe:                                        I think it does. I mean, I think the porn and gambling sites in my experience, my limited experience in dealing with the owners, it tends to be the type of guys that they’re not exactly straightforward with the numbers. And I would rather be more straightforward with the numbers and very straightforward with who you are, what you are, and where you are than they are willing to be.

Justin:                                   You’re gonna hear me ask him a little bit about the types of people that are in porn. Are they real business guys? Are they a little flexible with their numbers? Are they straightforward? And so that’s something I actually thought would be interesting to get into. But since we don’t do the porn sites, and another reason we don’t do them is because the vetting is much more different and difficult than the sites we have today because their traffic strategies are completely different. They have different monetization strategies, and it would be more difficult for us to do them. But, so I get into all that with him. Before we do that, though, buddy, let’s do our featured listing of the week. What you got for us?

Joe:                                        We’re talking about listing number 40216 today. It’s in the health and fitness; it’s an affiliate site created back in February 2015. It centers on weight loss products, and it has this very specific affiliate program that it gets all its monetization through. It’s netting just under $17,000 a month. We have it listed for just under $340,000. I think it’s a great site because it is very hands off. It does rely on an affiliate program for the weight loss pill, but if you’re looking for something in this sort of competitive niche, this is a great site to get you into it. I’m not saying this is a starter site, for sure, at $340,000, but it is something that will get you at the top of the niche right away.

Justin:                                   It’s nice just to know portfolio. It gets about 100,000 page views a month, about 65% of which come from search engine traffic. So it does have that position in the search engine; it gets some search engine traffic.

Joe:                                        Yeah, the domain name is very nice, too. It’s very brandable, so I think if you want to take a look at something like this, please contact us.

Justin:                                   Alright, man, enough about that. Let’s dig into the heart of this week’s episode.

Speaker 2:                           Now for the heart of this week’s episode.

Justin:                                   I’m really excited to be interviewing Bruce Friedman at AdultSiteBroker.com. He does website brokering for the adult or porn industry. He also does website marketing over at adultb2b.biz. Bruce, thanks for coming on, man. I appreciate it.

Bruce Friedman:               Hey, thank you, Justin. It’s good to be with you.

Justin:                                   It’s good, man. So I was actually the first time we spoke was a few days ago. And I was a little, there was a little bit of apprehension in talking to you. I was like, this guy’s in the porn business. Like, what’s he gonna be like? What’s his deal exactly? How’d you get in the porn, man?

Bruce Friedman:               Yeah, well, I’m not really into porn per se. So let’s just clarify that right away. Well, I mean, look, I had a long standing mainstream marketing and advertising background. I was in advertising from the time I was 15 in high school selling for the high school newspaper. And I guess I was always a sales guy. I always sold, from the time I was a Cub Scout, and I was leading the pack in Scoutorama tickets. So I always knew I could sell. So the whole thing is that when I got into my professional career and actually did go into sales, but I always wanted to be in broadcasting and studied broadcasting at San Francisco State University. And I wanted to be a sportscaster. And I did a lot of that work when I was at State, and including some professionally on a freelance basis, making very small money. But it was great experience, stringing for some networks and things like that, covering games. And so I did get into radio, and initially, I was doing both announcing and sales. And I worked at the same radio station for a total of 21 years, which is a lifetime.

                                                And when I got out of that, I started my own mainstream marketing company. After a couple of years of that, I had discovered Southeast Asia, and I live out in Bangkok now, and you can hear the thunder in the background, I’m sure. We’ve got a, one of our lovely afternoon thunderstorms, and my dog, my California dog also in the background barking her head off. So excuse that. But anyway, that was good, and it was still what I did, marketing, but I really did want to live out here. So I sold the firm, and it was like okay, what now?

                                                Well, kind of a funny story, somewhat sordid, so it hopefully, if you need to bleep any of this, let me know. We, I used to go on these trips, and I used to come back with some rather interesting photographs of some of the people I met. I’ll just kind of leave it at that. And all my friends in the locker room at the gym always encouraged me to start an adult site, and I’m like, ah man, really? And then I went, well why not? So I started looking into it. Well, I realized I couldn’t put those pictures online because I didn’t have permission, but I kind of went off half-cocked and started a site that I bought content. And it was a soft core site because really that was what I liked. I thought the hard core was kind of boring, personally. Don’t tell any of my porn friends that, but it’s not my thing. And I just thought, a lot of pictures of beautiful Asian women without clothes on would be fantastic. Well, the public didn’t really think that. And it didn’t work out.

Justin:                                   So let’s talk about that for a little bit. I mean, you were somewhat into porn. You were on a personal level you were into it. But you’ve never really run it from a business perspective, and you have some business experience, said look-

Bruce Friedman:               When it was in front of me, I was into porn.

Justin:                                   So you said, I think I can get into this business. So you start, you’re buying some content, and doing it for your first site, and it doesn’t work. I mean, looking back, do you know why that first porn site that you built didn’t work?

Bruce Friedman:               Yeah, for a variety of reasons, Justin. Well the reason it didn’t work was twofold. At the time, I was a babe in the woods. I made all the mistakes. I gave a guy $2000 to build a website up front. Never got a website. Never got anything. So I made all the mistakes.

                                                One of the mistakes was buying existing content that everyone had seen, and so it really didn’t have a lot of interest, doing a soft core site, which soft core sites are good if the content’s unique. If the content’s not unique, it’s not gonna work. And that just goes across the board in our industry. So a lot of the mistakes I made I can now tell people not to do, which I don’t think there’s a better teacher than experience.

                                                And I got in there and lost a good chunk of money myself, but in the process, I found to continue answering the first question, I found that I liked the industry. I like the people. It’s funny that you said you didn’t know what you were getting into, talking to a porn guy. But I found that the people in our industry with some notable exceptions of course, the people I would meet at the trade shows, and I would deal with were some of the most honest, up front, straight-shooting, again exceptions. There are exceptions. And lovely people, you’re gonna meet on God’s Earth. They’re business people, for the most part. And they want to make money and have fun. And I don’t see anything wrong with either one. I also don’t see anything wrong with adult content, as long as it doesn’t involve kids, doesn’t involve animals, doesn’t involve anything that’s really horribly immoral.

Justin:                                   Non-permission-based, yeah.

Bruce Friedman:               Well, yeah. Yeah. Absolutely, or children, you know, or animals. Yeah, people who, or rape. Any of those things that are illegal, and I’m not talking about someone on the religious right consider immoral because we tend not to agree. But some people would tell you, they should be able to tell the world what they should do in the privacy of their own home. And I just think that’s completely wrong. And I think that things like porn actually keep a lot of bad things from happening like rape and a lot of other things. So there’s a lot of good to it. In fact, we’ve got an organization in our industry that’s fully funded by our industry, ASACP. I’ll give them a plug. ASACP.org, and it’s all about child protection.

Justin:                                   I want to get into the ethics and kind of legality of adult site brokering.

Bruce Friedman:               Let me finish this thought. These guys, they do nothing except remove, help remove the bad stuff offline and keep kids offline. And our industry 100% supports that. So this is the kind of industry I’m in, and the kind of people I deal with. And I always like to say when we have a trade show, it’s like a family reunion. It’s quite a group.

Justin:                                   So you were surprised, starting to get further in the industry, you made a lot of contacts when you were building your site. You were surprised to see that, they were fairly business-minded. They were relatively good to each other. They did good business, and there is some interest in obviously keeping out the illegal or things that are on the worst end of the spectrum out of business so that it can stay legitimate.

Bruce Friedman:               Yeah. Huge interest because the worst thing that can happen to us, and I put myself in the group is to be associating with people that are doing illegal things. And all those people give everybody a bad name. Plus we just don’t like it. We’re here to put things out that are going to be pleasurable to other adults, and things that other adults will enjoy and not to hurt anybody. And those other things hurt people.

Justin:                                   So tell me how you went from building your first site, not having some success, having some failures to actually connecting more with people in this space and starting to kind of build the network and make a name for yourself.

Bruce Friedman:               That’s an understatement, not having success, by the way. Well, I’d already really created a network, so it was a real easy transition to start the marketing firm because I had the marketing background. I had a marketing platform and system that works. And it was sitting on the shelf gathering dust. And so I implemented it into the adult industry. I used my existing contacts because one thing I used, I’ve learned over the years in the mainstream world, is that everybody you ever meet, get their business card and put them in your database. So I already had a database, and I started sending out newsletters every week, marketing tips, and which I already had in the can from my marketing system, which was nice. And this information, if you read it, and you look at it, you don’t need to hire me because it’s, just follow it, and you’ll improve your marketing. But most people, as you know, they want help. So they call on me to help them build their marketing and make their marketing better.

Justin:                                   So your approach was to give them the tips, the plan to do it, and then there are some people that don’t care to do it themselves.

Bruce Friedman:               Right.

Justin:                                   They would rather just pay you to do it for them. And that was kind of your approach to marketing. You got some traction, some success there. When was the first time that you realized that there was a potential or a possibility for brokering websites in the space?

Bruce Friedman:               It’s a funny story. I had this potential client I was talking to. We were having our second or third call, and we were talking about marketing. He had a series of small, gay affiliate programs, and just to explain to your listeners, an affiliate program normally contains a number of websites, one or more websites. So he had some affiliate programs, and a lot of websites. And he said, you know, Bruce, I think I want to sell. And I went, okay. So I’m thinking, why is he telling me this? And he goes, well, you think you could help me? I went, yeah, why not? I mean, I know a lot of people in your space. I don’t see any problem with it. And coming from San Francisco, I certainly have no problem dealing with gay people. Three weeks we had it sold. All I did was use my existing contacts. I emailed them, real simple. And I went, hmm. I might have something here. Found it totally by accident.

Justin:                                   Just out of curiosity, are most of the people that own or run gay theme porn sites gay themselves, or it strictly a business thing?

Bruce Friedman:               Ownership, some, most. The people who actually are hands on, almost all, if not all. Pretty much almost all. I mean if the gay side of the business is one of the most stable ones, so it’s a great investment. So if you look at the large operators in our industry, they all have a really large stable of gay sites, and some of the smaller operators have gay, some gay and some straight. And then I actually know of, I know of a guy that actually a couple of different groups … in fact, one of them unfortunately, gentleman passed away at a very early age. He had a heart attack. He was, I think he was only like 32 years old. I didn’t know he was that young because I had known the guy already for 12, 13 years. I didn’t realize he was 19 when I met him. And he’s straight, and his business partner’s straight. And I know another guy who, him and his business partner are straight, so you do have situations where you have straight people owning gay sites because it’s a good way to make money. You just need to understand the niche, and my, and usually will put people who are hands on who appreciate the niche. And in that case, they would more than likely be gay.

Justin:                                   It’s really interesting. It just seems like you just can’t fully separate the ethics or your personal ethics between the business, I’m sure some people do, but, you know … say for example that, someone is anti-gay. Well, they’re just not gonna own or buy or deal with gay sites. Someone who is …

Bruce Friedman:               Oh well, if you’re anti-gay, you can’t, I don’t think you can really be active in this industry because you’re gonna have a real problem going to events because the events, there used to be gay events and straight events and gay shows and straight shows. Now it’s all merged. It’s all merged. Granted, you’re gonna have a gay lounge, and there are some gay parties. I go to the gay parties. I want to do business with these people. I’m not stupid. I used to be a little uncomfortable and didn’t, and then I thought, what are you doing?

Justin:                                   Yeah, but like, beyond that, let’s say that you are just vehemently against fantasy rape or whatever. Let’s say that you had a personal issue with it or whatever. You’re really hard business to be in, so it’s really hard to separate kind of the your personal ethics and the business. In what ways are, like is the adult website industry different and in what ways is it same to traditional websites and online businesses?

Bruce Friedman:               Well, how is it different? That’s a really good question. I’d say the main way it’s different is all of the attacks that come from the outside and all of the things that legally that the adult industry has to deal with, Justin. I mean, there are government people that are against it. Obviously, you’ve got the religious right. You’ve got people who because they don’t want it, they don’t like it, they don’t, they’re against it, so they try to legislate against it. What’s interesting about that is some of these people, you look at a lot of the right wing Republicans, some of the most supposedly conservative people in the world, you come to find out that they’re surfing porn, that they’re hiring prostitutes. So I mean, we both know how that is. So that’s the biggest difference in adult is the attacks from the outside that the industry has to deal with. And we have a legal arm called the Free Speech Coalition. And we have First Amendment attorneys who volunteer for it. Of course, they, it’s not completely … they’re not being completely charitable because they’re looking to get exposure out of it and clients. But they give their time to help the industry fight off these attacks.

Justin:                                   That’s really interesting. So you’ve got this whole side and for different reasons, too. People fighting against your industry, and then you have attorneys on your side, trying to make a name for themselves for protecting First Amendment rights and that kind of thing. So you’ve got this whole battle going on. I mean, do you just kind of ignore that and do business? Is that kind of the approach?

Bruce Friedman:               You have to. You have to be aware of it. You have to be aware of the news. I get a couple newsletters a day from a couple of the resource sites. Whynot.com and [nexbiz.net 00:19:48] who send out news on a daily basis and do a real nice job of that. And you monitor it, and if you see something legal that’s of interest, you take a look. If there’s a real interesting seminar at a trade show you’re at, you might want to sit in on that. And I talk to my legal counsel from time to time who is one of the foremost attorneys in our industry, Cory Silverstein. And he, he’ll let us know what’s going on.

Justin:                                   One of the things that interests me in the business, the adult business is that a lot of times people talk about porn or the adult industry, kind of driving technology. And it seems to be the case in marketing as well. A lot of times the marketing that’s going on is cutting edge or bleeding edge for traditional online businesses, so that’s another difference. But what are some ways that you’ve found that like it’s similar to your regular average website or online business that might have surprised you?

Bruce Friedman:               Everybody’s there to make money, and in the case of anything membership-based, it’s pretty much the same. Nothing really has surprised me, I would say. The biggest surprises are that mainstream doesn’t always adopt some of the real wise things that our industry does right away.

Justin:                                   Do you have an example of that?

Bruce Friedman:               Upsells, things like that. I mean, it took so long, adult was really, I think the first to really adopt upsells and cross-sales and things like that. And it took a while for the mainstream industry I think to catch up.

Justin:                                   Well, let’s dig into the business of buying and selling adult sites. Can you tell me like what a typical buyer or seller might look like? I mean, who are these people? Are they individuals? Are they larger organizations? Who is starting them from scratch and selling them? And who’s the one buying them up?

Bruce Friedman:               The answer would be all of the above. I mean, just like in your business, you’ve got small guys that want to get started. Maybe somebody has one site, and they want more. Maybe it’s a large group like [Limegeek 00:21:47] for instance who’s the largest owner of adult websites in the world and own properties like [YouPorn 00:21:53] and [vannaredtube 00:21:55] and things like that. And then I mean, really, it can almost be anybody. It can be an investor who’s looking to invest in the adult industry. And there are those. So they buyers can look like a lot of different people. However, I get interest from a small group of the same people on almost every offering. I won’t say almost every, but the interest can come from a lot of the same people because you’re gonna have your core group of people who are looking to add to their portfolio or invest.

Justin:                                   You generally deal with sites that are only $50,000 or more in value.

Bruce Friedman:               Correct.

Justin:                                   So I know that we’re coming from that point. You’re not looking at the much more smaller sites that people start off. But can you tell me like what a typical site that you help broker, what does it look like? Like how old is it? How much earnings do they have? How much traffic? Do those things just, they blow up like as soon as the site’s created, or is it like a really slow burn to get them up to critical value?

Bruce Friedman:               Well, the first part of your question, it’s all over the board. I mean there’s people making money. There are people losing money. There are people making a lot. There are people making a little. In terms of now, the second part of your question was …

Justin:                                   What do these sites, I guess, how do they start off? Do they start off when someone creates them and six months later, they’re getting a million page views a month? Or does it take a couple of years to kind of build up enough content to where you’re starting to get some traction.

Bruce Friedman:               Well, it really depends. I mean, it depends on the type of site. Is it a tube site? Is it a dating site? Is it a live cam site? Is it a content site? Is it free? Is it membership-based? Is it a TGP? Is it a forum? I mean, there are so many different types of sites, and within those, there are endless answers.

Justin:                                   So every one of those types of sites is like a particular, it’s a type of business structure, right?

Bruce Friedman:               Mm-hmm (affirmative).

Justin:                                   And so they’re structuring a business this way or that way. Which ways have you seen to be the most effective? And which ones are kind of dying off?

Bruce Friedman:               Membership sites are dying off because of all the free content because of the tubes. The tube sites now, I mentioned YouPorn and RedTube, people like that, I mean they have, I don’t know what the percentage is, but it’s a huge percentage of the traffic now in the world. Now this is the result of a couple of things. One is when tubes first started, they would put short little video clips on to promote the site.

Justin:                                   Yeah.

Bruce Friedman:               Now they put whole movies on. So as a porn surfer, okay, my question would be why pay for something that I can get for free? Now there are answers to that. I’ll get to those in a second. The other problem is the economy. The world economy is not what is, was before, and the people are unable to pay. And let’s see, you’ve got your bills. You could pay your cable bill, or you could pay for your porn site. You could pay for your water, or you could pay for your porn site. You could pay for your electrical, or you can pay for your porn site. You can get groceries, or you can pay for your porn site. What’s gonna go, you know?

Justin:                                   Groceries.

Bruce Friedman:               Exactly, being a guy, of course. But you know, so the reasons are that the pay site has everything better organized. Okay. The content’s gonna be of a higher resolution generally, which by the way, some of the tubes now will charge you a membership fee to watch things in a higher resolution like HD or higher. Okay. So actually tube sites now do have a membership model, almost all, and sometimes there’s niches that are represented in pay sites that they do such a beautiful job of it that you just can’t help but be a member of the site.

                                                A good example is [Medart 00:25:51] okay, which I think most guys are familiar with this site. It’s a, and I know the owners. I’m not just plugging him because I was a fan of them before I knew the owners. And Medart, it is beautiful, and it’s artistic pictures of beautiful naked women. There’s no sex in there, which is kinda what I wanted to do, but I wasn’t shooting the content, right? And these guys have some of the best photographers in the world shooting it. And the owners now actually bought it from somebody else; site’s been around forever. And it was the original art porn site, although it’s not really even porn. Art adult site. And now there’s so many imitators, it’s not even funny. In fact, I know this one guy, he’s German, and he shoots in Russia, and he does something like this. But his site, he just doesn’t have the content, and so anyway.

Justin:                                   So you have the tube sites that are basically putting a lot of the membership sites out of business. They start taking over. They’ve got a ton of content. And the membership sites realized, hey, we need to go higher quality, HD. We need to offer a better user experience, or we’re just getting crushed by these tube sites. And so the tube sites they’ve got, they’ve got a ton of content. And let me ask you really quick, just a quick answer. The tube sites, are they user-generated content? Are they created by the tubes themselves, or are they buying up content? All three?

Bruce Friedman:               Both of those, they buy content. I don’t really know of any tubes that generate their own content except of course companies like [inaudible 00:27:17] that have pay sites. So companies that have pay sites and have tube sites create their own content.

Justin:                                   And that’s [inaudible 00:27:24] for the membership sites probably. They put clips of something up, and then you, it gets you to become a member.

Bruce Friedman:               They’re putting full movies on there. But it also promotes their sites. But what, the big thing that it does, it creates traffic that they can send to their sites. See, that’s the big thing. Now, how do tubes makes money? Okay, that’s one way tubes make money, if they own sites. Another way tubes make money is selling advertising. A third way tubes make money is upgraded memberships.

Justin:                                   Yeah, okay. So they’ve kind of chopped out some of the membership models, they’re adding some membership models themselves to get some of the HD so they can do that. And you’ve found that some of the membership sites or some of the smaller sites are going more niche. So they’re doing kind of the adult art kind of approach. They’re becoming much-

Bruce Friedman:               Well, not to start. Not to start. There’s so many niches. You can have a niche with midgets, with tall blondes in Antarctica, I mean. I’m going a little far here, but I mean, there’s every niche you can possibly imagine and many you can’t imagine.

Justin:                                   Let me ask you, Bruce, so how do you in the regular website business you value sites based on a multiple of net monthly profit, right? And so …

Bruce Friedman:               Correct.

Justin:                                   It’d be, for us, it’s anywhere from 15 to 25X, 30X, the net monthly profit. How do you value adult websites? Is it the same formula, or is it something similar?

Bruce Friedman:               Similar, yeah it’s similar. If it’s revenue-generating site in terms of, let’s say it’s a membership site, okay. We use the multiple. Let’s just say, but if it’s a site that does nothing but … they all make money, or most of them make money. I’m usually not going to try to sell anything that isn’t making money. But sometimes they’re people that haven’t really even monetized the site. And in that case, you base it on traffic, okay. So you look at the traffic, and what would the traffic sell for? And then you base it on that. But generally, it’s a multiple of profit, and that’s really what the buyers are paying for.

Justin:                                   Do you ever broker sites that have a bunch of traffic but just aren’t monetized, so you can’t base it on the monetization? You’ll sell sites that are traffic-based only because there are people looking for it, right?

Bruce Friedman:               Oh yeah, absolutely. And I mean some of these guys, they just never got around to monetizing it. I have this one guy who has another site that’s so much bigger, and so he just never really got around to it. But all [inaudible 00:29:48] he accidentally came up with this huge site.

Justin:                                   So which niche is this? Now obviously we’re talking about the tubes being hot right now, and some of the membership sites taking a hit. If I wanted to build or buy a site today, if I was going to start getting into it, which kind of business model do you see as being popular or profitable in two to five years? And can a small player, or someone just starting out, can they build a tube site? Or is that just for the large conglomerates?

Bruce Friedman:               Okay. The second question, yes. It’s easy to build a tube site. There are templates. You can be up and running in a day. You’ve also got white labels where people are, have platforms where all you have to do, they supply the content. All you have to supply is the traffic. That’s always the rub, of course.

                                                Two to five years is tough, man. That’s a lifetime in adult. That’s a lifetime in the business world, and it’s a lifetime in the online world. I can just tell you what’s happening now, okay. I don’t have a crystal ball, and it’s really funny. I go to these shows, and these guys do these things about okay, what the next ten years bring, or what the next, even what the next year brings. They don’t know. They can only take a guess, so I’m not gonna be one of those guys. I’m not gonna be that guy. Right now, dating is hot. Adult dating is hot. Mainstream dating is hot. Dating in general is hot. Live cams are hot. Okay. Tubes are still hot.

                                                But here’s the problem. As soon as you find something that’s hot, everyone and his brother gets involved. So for instance, the live cams. Well, before, and I’ll give you a good example of somebody who I used to have as a marketing client. I had one of the first live cam sites. And unfortunately, what they did was, they let everyone else eat their lunch, taking their eye off the ball. Pretty soon, it became one of the bottom live cam sites because they didn’t, you know, they really didn’t keep an eye on things. They didn’t upgrade their site. They didn’t do a lot of things, when they could’ve stayed near the top. And they should have hired me to do marketing a long time before they did because by the time I got to them, unfortunately, they had no money. Kind of hard to help somebody who has no money, right?

Justin:                                   We were talking before the show about mobile, and that seems to be a pretty big one if you want to make a splash. You want to go after mobile right now because that could be pretty hot.

Bruce Friedman:               Well, you’d better, considering what Google’s doing now. We were talking about that. I mean, if you’re, you’re gonna lose big time in the search engine if your site isn’t mobile-friendly. So, but what I was about to say about the live cams, so there were a few really big live cam sites. And boy, all of a sudden, everybody jumped into live cams. Well, guess what happens. Everybody, the slice of the pie just gets sliced so many different ways, and then all the new people come in. I won’t say they don’t half stand a chance because I never like to say that. If you’ve got money, you always stand a chance.

Justin:                                   Let’s talk about the new people because it seems so intimidating to get involved in adult. So you’re talking about, in the beginning of the show, about original content and getting new content. I’m thinking to myself, okay, so if I want to get original content, I have to find a girl on Craigslist that’s willing to do it. I have to hire a photographer if I’m not one already. Like, is that really the way that you go about doing it, or are there already photographers out there with portfolios, original content, like how does that even work?

Bruce Friedman:               Okay, hiring a photographer, probably not. Okay. There’s content companies. There’s people that will produce content for you. Okay. And there are photographers who will work. I mean, that’s not a problem. And they usually have access to the models, so you don’t have to do that. There’s a lot of different ways to do it, but I mean, that really … really, the main way is to find a content producer. Hopefully, not in the United States where it’s so expensive, okay. A lot of the content’s produced in places like Czech Republic, Romania, Colombia, Philippines, even though it’s illegal there. And other places where they don’t have to pay as much.

Justin:                                   Talking about the legality, I mean, that’s a really odd one, too. I mean, if you are in the Philippines, you’re like, hey, I’ll just set up some cams in the Philippines. Well, that’s illegal in the Philippines. So trying to figure out how to go about setting that up, in other countries. I like the fact that you’ve got-

Bruce Friedman:               A suggestion is don’t do it, okay. I mean, you follow all the laws, okay. Don’t break laws because jail isn’t a happy place anywhere, especially places like the Philippines.

Justin:                                   Yeah, I don’t want to be jail in Asia for porn. That’d be not so hot.

Bruce Friedman:               Yeah, and certainly not here in Thailand.

Justin:                                   It just seems really hard for someone to get kind of started with the original content, but one of the things that I love about it is the fact that you’ve got all these content producers that you can buy the content from. You can hire the photographers. And it’s similar to our space, right, where I can hire content companies to create this original, unique content. And the better that content is, the more of a purple cow that content is, your purple cows are a little different, but it’s the same general idea. You want amazing content.

Bruce Friedman:               Well, you do. You do. And people come to me now, and they say, I want to be in adult. My first question is why? If they tell me they want to get into adult because they want to hang out with models and get laid, I tell them don’t waste your money because it’s not going to happen. And even if it does, really? I mean, you know. So, and then if they say, well, no, I want to find a good business. I want to make money, I say well, it can be. And then they say, well, what, okay, what should I get into? First of all, I tell them to do something you like. So if you’re gonna get involved in a niche, be involved in a niche that you enjoy because this kind of gets back to the whole gay thing. Okay. Be involved in a niche that you enjoy, that you’re going to enjoy working in, okay. And then do something different. Okay. Don’t be like all, if you’re gonna be an Asian site, I’ll use that as an example, don’t be like every other Asian site in the world because guess what. It’s not gonna succeed. There’s a lot of people who came before you.

Justin:                                   Let’s talk a little bit about marketing an adult site. So, and this is something that you deal with directly. If, we were talking about this before, problems of starting a site from scratch right now, like what are some of the better ways to drive traffic today?

Bruce Friedman:               Well, it’s really somewhat limited. Social media’s very popular these days. You can buy traffic, which is very popular. And there are tons of companies that do that now, and there’s more popping up every day it seems like.

Justin:                                   Is it worthwhile?

Bruce Friedman:               It is, if you can properly monetize it. So, there’s a caveat there. And then you’ve got traffic from tubes, okay. Oh, if you’re buying traffic from tubes, you’re probably buying it from a traffic network anyway, from a traffic company because they’re the ones usually selling it. Some of them sell it directly. There are free sites. You can create free sites, and that can create traffic. There’s traffic trades. You can trade traffic with other sites. So there’s really, and there’s more, but those are the main ones. There’s a number of ways that you can get traffic.

Justin:                                   Gotcha, okay, so if I have a membership site, or … I probably wouldn’t do a membership site, but a really niche site that’s one that I particularly like, so I can tell what’s good or what’s bad, I may put some like, clips on some of the tube sites to drive traffic. I may buy some traffic and really, really do some hard core testing, split testing of my conversions on the page, that kind of thing.

Bruce Friedman:               Absolutely, yeah. Test, test, test. Be a testaholic, we always say.

Justin:                                   Do you, adult sites generally get subscribers. Do you ask for email addresses? Do you get some of their information so you can market to them later?

Bruce Friedman:               Of course.

Justin:                                   Do you guys use like remarketing? Can you advertise on Facebook? You can’t do that, right?

Bruce Friedman:               Not directly, but indirectly. You cannot put adult content on Facebook, but I also think that they’ve laid some additional, just days ago, they had laid some additional regulations that I still have to study up on, on Facebook, that’s gonna make it even harder for adult.

Justin:                                   Would it make sense at all-

Bruce Friedman:               Which, by the way, is another difference between adult and mainstream is that the mainstream world makes it very hard to do business with, as well.

Justin:                                   Yeah. Yeah. [crosstalk 00:37:51]

Bruce Friedman:               Google, Facebook, Twitter, all the ways that everyone else uses.

Justin:                                   Yeah, and it makes sense. Let me ask you this. Could you have a site that is acceptable for Facebook that is probably gray area? It’s acceptable, but kind of barely? And then use that as kind of a funnel to drive to your porn sites?

Bruce Friedman:               Oh, it’s done all the time. But the main way that the adult industry uses Facebook, is whack them all. They create a site, the site, they create a Facebook page. The Facebook page gets shut down. They open another Facebook page. Facebook page gets shut down. They open another Facebook page.

Justin:                                   Gotcha. So short lived, let’s get a little bit of traffic from Facebook before it gets shut down. [crosstalk 00:38:30]

Bruce Friedman:               And unfortunately, every time you do it, you lose your followers.

Justin:                                   Yeah, that sucks, and that’s not very, I mean, it’s sustainable only in the fact that you have to keep doing it over and over and over.

Bruce Friedman:               Well, but then again, you can also make notes of your followers. And then invite them again. And it’s just, it’s a lot of work. It’s pretty much a full time job.

Justin:                                   And that’s different, I think, than kind of mainstream businesses. Although, when you get into like weight loss pills or something, they have the same problems.

Bruce Friedman:               Oh sure.

Justin:                                   They’re going through the same kind of struggles.

Bruce Friedman:               Yeah, Facebook and Twitter and YouTube and so many others, they just make it very, very difficult. Google, man. Google seems at war with adult. They’re always whacking us with something, making it more difficult to deal with Google. Which obviously another way is to, you can buy Google keywords as well. But Google just makes it so hard from the standpoint of organic search now. It’s just so difficult. They’ve just really, they keep keeping regulations on top of regulations to the point where SCO has almost become a joke.

Justin:                                   Do most of these sites get traffic?

Bruce Friedman:               This is another way of getting traffic, of course.

Justin:                                   Do most of these sites even get traffic organically, or is it all [crosstalk 00:39:39] traffic schemes and advertising and?

Bruce Friedman:               Well they do, especially the longstanding ones, who’ve, the ones that have been around for a long time, but that really, if you’re starting today, that’s not something you’re really account too much for because your chances with Google are just eh, it’s a joke. It’s a real joke.

Justin:                                   We talked a little bit about kind of the legal issues and how there’s this big storm outside of the industry that people are putting pressure on. And there are other people stepping up to defend it as a First Amendment thing. And looking back, you can see Larry Flynt over there with Flynt Industries trying to defend it. And doing that kind of thing. Where have you seen the last, let’s say ten years, what kind of changes in the industry have you seen that have been interesting, either good or bad for the industry?

Bruce Friedman:               Well, the whole battle over US2257, which is the record keeping, record keeping law, which we are, Free Speech Coalition successful in getting overturned, where they wanted all of the site operators to have to have files which could be investigated by the FBI during a 40 hour work week any time they want to come in and do an investigation. They can knock on the door.

Justin:                                   Is this internationally so like if I’m operating out of Germany, for example?

Bruce Friedman:               If you’re American, if you’re American. Yeah.

Justin:                                   Oh okay.

Bruce Friedman:               If you’re American, yeah, they could conceivably come from Germany. I mean, they won’t, but they could conceivably do that. I mean, I don’t think they will, let’s put it that way. I won’t say won’t, when it comes, well, we won’t even go there. Anyway, but in terms of the whole 2257 thing, keep in mind, there were people like me, who was a sole proprietor, okay, you actually had to give your home address on your website, that was the regulations.

Justin:                                   Oh that’s uncomfortable.

Bruce Friedman:               So let’s just say there’s a nut out there who doesn’t like porn, you know where I’m going with this?

Justin:                                   Yeah, pretty uncomfortable.

Bruce Friedman:               Very. So I mean, this started during the Bush administration, are you surprised? Anyway.

Justin:                                   So, okay, so if someone were looking to get started in the adult industry today, and they wanted to either build a site or buy a site and start to grow it out and build traffic, build an audience, add unique content, what tips would you have for someone just getting started off? And what should they avoid?

Bruce Friedman:               Avoid doing it the way I did it. Tips, do a ton of research to start. Figure out what you want to do. Figure out what you like first of all. Figure out, let’s say it’s a pay site, okay. [inaudible 00:42:08] it’s a pay site. Let’s say you want to do a dating site, okay, or a cam site. Research the market, okay. Look at your competitors. Do everything possible to find out what’s going on now, what your competitors are doing, and how you can do it better. It’s just like any other business. Have a business plan. And most importantly, make sure you have enough money to carry it through, like any other business, if you’re going into this with the idea that what’s the least that I can invest to do it? Don’t do it. That’s plain and simple.

                                                And I’ll put in a plug for one of my companies here that you didn’t mention. We also have something called Adult Business Consulting, which can be found at AdultBusinessConsulting.com for those of you that can’t spell, it’s, I won’t go there. What we do it, you hire us, we start by helping you formulate a plan, do all the research for you, okay, or a good percentage of it. We connect you with all the vendors that we know are legitimate because it’s a minefield out there, okay. Like my first web designer, ripped me off for $2000. We don’t want that to happen to you, okay. And when it comes to web designers, it’s a big minefield, as I’m sure you know. As a group, biggest group of flakes you’re ever gonna meet in your life.

Justin:                                   That, and SCOs, yeah.

Bruce Friedman:               Oh yeah, exactly. So we’re gonna introduce you to somebody that we already know is legitimate. And the odds are really good that you’re gonna get your money’s worth, okay. So research like any business. Treat it like a business. And have enough working capital to give it a good go. And that should all be in your business plan.

Justin:                                   Awesome, Bruce, well, thank you so much for coming on, man. You are the founder of AdultSiteBroker.com, where you can buy and sell sites that are 50,000 or larger. You also run AdultB2B.biz, which is adult website marketing. And the last one is AdultBusinessConsulting.com, and our listeners, that’ll be on the show notes for this episode. Is there anything I should have asked you about that we didn’t get a chance to talk about in this interview?

Bruce Friedman:               The meaning of life, I don’t know. You covered it pretty well.

Justin:                                   Well, Bruce, well, thank you so much for coming on, man, really appreciate it.

Bruce Friedman:               Hey, my pleasure, Justin. Thank you.

Speaker 2:                           You’ve been listening to the Empire Podcast. Now, some news and updates.

Justin:                                   Alright, let’s get some news and updates. First off, we’ve hired a new portfolio manager to help us run sites. His name’s Kenny, and we snatched him, dragged him down to the Philippines, [inaudible 00:44:44], Philippines. He’s here with us right now.

Joe:                                        Yeah, he was actually one of our applicants for the last apprentice program. He really came with some high quality skill sets, and I wanted to make him part of the team. And we were like, going back and forth …

Justin:                                   Well, like, we got something for you, it’s just not here yet. We’re not quite sure. So then finally, we were talking to him. We were like, look, we need to hire him now because we’re going to need him in a few months. So let’s just bring him on now. We’re all here in the Philippines, why not just fly him down here to the [inaudible 00:45:13], put him up for a couple of weeks, we could all work together, and get him up to speed?

Joe:                                        Yeah, and we have a small portfolio of sites for him to start working on anyway. And I think he could start improving them and help us make us some money back from those scammer guys. So, yeah, I’m very happy to have Kenny out here. Welcome to the team.

Justin:                                   Next up, we’re looking to hire a content manager. This is something I’ve been talking about for a bit, but I think we’re just moving forward. I saw an amazing video where Dane Maxwell from the foundation interviewed Clay Collins over at Lead Pages, and Clay was talking about they looked at the model of sales force, read on how they had to build up this really large sales team and pay all these sales people lots of money. And their cost per acquisition per customer’s really, really high, and Clay was looking at what they’d done up until that point. He was looking for a new model, see if the sales force model works.

                                                And I think what they’ve done, they’ve done content marketing, and they were able to get cost per acquisition in the two digits, not the four or five digits and saying, look, can I steal this process? So bringing on content managers, bring on bloggers, bring on podcasters, was an excellent way for them to scale their business. And I look at our buddy Dan Norris over at WP Curve who’s doing something similar, bringing on Kyle to help with the monthly reports and a lot of the content. And I’m thinking, can’t we do the same thing? Aren’t we prime to bring on a content manager to help guide us through that, and they do some of the writing. They do some of the posts. But they also hire some contractors and help us grow.

Joe:                                        Yeah, and then I think our entry’s a little bit different. We might in the future one day need the sales team, but for right now, I like the idea of approaching our sales in terms of content managers and that kind of thing. I think that makes the leads much easier to close. They’re familiar with you. They like you. They know your stuff. And it makes the whole process just feel a lot warmer.

Justin:                                   So if you as a listener are interested in that content manager position, we should have more about that. We’ll have a blog post up in the new few weeks. If you know someone that might be interested, we’ll have you, you can just redirect them to that blog post, and they can take a look.

                                                The third thing we wanted to mention is that we’re testing through a new process to source or acquire sites for sale. This is something that’s been on a bit of a back burner for us, but it’s moving to the forefront. Really, there’s not much more important for us than to have inventory, right? If you think of us as an eCommerce business, we need inventory. And we have more buyers than we do sites available. So if we can put together a scalable process where we have our team reach out to people, see if they’d be willing to sell their site, and then do a little bit of back and forth and then get those sites listed on our marketplace, we can do really, really well with that.

Joe:                                        Yeah, I agree. I mean, I’ve used this process myself to find sellers before. And it does work. So it’s just a matter of identifying niches and going after them.

Justin:                                   So we’re gonna test through that. We’re gonna test through it ourselves first, and then we’re gonna be passing that on so that we can actually scale it up with our team.

                                                Alright, man, let’s do the listener shout section, also known as the indulgent ego boosting social proof segment. First up, we’ve got two new five star iTunes reviews, buddy.

Joe:                                        Hit me up, man.

Justin:                                   First one is from one Chris G. It says lots of value here. Justin and Joe are the real deal. They have great guests and discuss meaty and relevant topics. In addition, they also give the world a true peek behind the curtain of their own growing business. This transparency allows listeners to learn from and benefit from their successes and mistakes. Please keep up the great work, guys. Thanks, Chris, really appreciate it.

                                                We’ve also got F. [Somtay 00:48:35], says, the best. If we were talking about empires, then we must be talking about Kings. Justin and Joe are the kings of transparency, which makes them the kings of trust. And in business, there is no greater currency than just. I subscribe to a number of podcasts. This is the only one I listen to every episode. Either in the title [inaudible 00:48:52], there are always golden nuggets of info. At least once an episode, I laugh, Empire [inaudible 00:48:56] Strikes Back was a classic. And I enjoy the hit me up, brothers. Listen how you’ll feel like you’re sharing a beer with these guys, but instead of waking up with a hangover, you’ll wake up with a huge leg up on your competition. Wow, I love that review. That’s funny.

Joe:                                        Yeah, that was really good. Thank you.

Justin:                                   We also got a mention on Twitter. Jamie Grant had a question. What’s the market for legit local biz service site? Example, site sells small business owners monthly SCO, or PPC, or social media service campaigns. So funny you mention that, Jamie. That’s the business we used to be in, the local SCO space. I mean, we’d sell our customers our [inaudible 00:49:32] customers on local SCO package they’d pay a monthly fee for. I’d say definitely if the fee is recurring, and you have a bit of a track record, so you can show the lifetime value of a customer, and you can show your customer and acquisition cost, there is huge market for that. You can do really, really well.

Joe:                                        Yeah, and if you have a sales funnel to get new deals in the door because that’s what buyers are really gonna look at. If you just have a couple of subscribers, and you don’t really have a way to get new buyers in the door …

Justin:                                   It’d be a declining asset that you’re looking to sell. [crosstalk 00:50:01] much smaller multiple, but yeah, Joe’s absolutely right. If you’ve got a marketing and sales funnel, you know your customer and acquisition cost, you know you have a monthly fee, and you know what your lifetime value is, you can get really good multiples in those businesses, especially if it’s growing. So you’re in a really good position. If it’s just an asset, a declining asset, where you have customers but no new way to get them in the door, you can still sell it, but expect to sell for a lot less.

                                                There is a really interesting blog post, Joe, over at [MarginHound.com 00:50:28]. And it was a guy that did an analysis of sites and their success three years after purchase, and so it kind of sucks because you had to use third party data. You didn’t have the actual numbers. But he was able to go in and look at these sites. And you looked at, I think sites on the lower end, like 10,000, they, some of them were successful, but a huge percentage of them like didn’t do well, right? And then like the middle range, it was kind of middle of the road, and the more expensive sites, the 50,000 and up sites tended to do better over the long term. And he did come up with like a couple of reasons for this, and one of them being, the smaller site that you purchase, and there’s problems or whatever, it’s a cut and run scenario, where if you bought a $200,000 site, you’re likely to put in the effort to fix it.

Joe:                                        Yeah, that’s what I was thinking. You know, you can’t discount the psychological factor there. But if you buy a $50,000 site, you’re more likely to look at it every day, to look at expenses, to run the processes correctly, whereas if you buy a $5000 site, you’re like, ah, it didn’t make what it was gonna make before, so what. I’ll just earn what it’s earning now, you know, kind of thing.

Justin:                                   Yeah, I’ll link to that blog post in the show notes, if anyone else wants to check it out and take a look as well. That’s it for episode 137 of the Empire Podcast. Thanks for sticking with us. We’ll be back next week with another show. You can find the show notes for this episode and more EmpireFlippers.com/porn, and make sure to follow us on Twitter, @EmpireFlippers. See you next week.

Joe:                                        Bye bye everybody.

Speaker 2:                           Hope you enjoyed this episode of the Empire Podcast. With Justin and Joe. Hit up EmpireFlippers.com for more. That’s EmpireFlippers.com. Thanks for listening.