I've read a lot of theories as to why people are making less money and selling fewer memberships today than in years past.
I think most people have not realized the true reason for the change in the industry and the decline in revenues. There are actually a few major factors that have caused the declines for the casual free-site webmaster. I'll discuss the biggest one in this thread. I have a few more that I will discuss in future threads:
1- By far the biggest cause of reduced revenue are the credit card institutions of Visa and Mastercard. Adult Merchants and third-party processors are required to submit a transaction code that identifies their sales as "high-risk" and "adult-internet" Banks that are part of the system are free to reject such transactions. A recent article that I read indicated that 80% of attempted sales are now rejected. My personal experience is that it is more like 50%. In years past no sales were rejected for this reason. The result has been at least a 50% decline in available customers, and thus, a 50% decline in revenue.
It is actually more painful even than the numbers would suggest. I've heard talk of how many customers cancel before their trials end. In truth, most member sites will find that the majority of their cancels come from credit card declines - not affirmative user cancels. The reason for this is that the credit card companies have something called "velocity checks" Velocity checks instruct merchant banks to reject multiple transactions on the same card if those transactions are "high-risk" and/or "adult-internet" if the transactions are attempted too close to each other (as long as one month apart). Thus, if someone is charged $3.95 for a 3 day trial, a velocity check could mean that the card will AUTOMATICALLY get rejected for any other adult-internet charge for the next 30 days. This results in about 50% (from my experience) of all membership drop-offs between trial and full member.
2- Coming up next: Email Lists
I think most people have not realized the true reason for the change in the industry and the decline in revenues. There are actually a few major factors that have caused the declines for the casual free-site webmaster. I'll discuss the biggest one in this thread. I have a few more that I will discuss in future threads:
1- By far the biggest cause of reduced revenue are the credit card institutions of Visa and Mastercard. Adult Merchants and third-party processors are required to submit a transaction code that identifies their sales as "high-risk" and "adult-internet" Banks that are part of the system are free to reject such transactions. A recent article that I read indicated that 80% of attempted sales are now rejected. My personal experience is that it is more like 50%. In years past no sales were rejected for this reason. The result has been at least a 50% decline in available customers, and thus, a 50% decline in revenue.
It is actually more painful even than the numbers would suggest. I've heard talk of how many customers cancel before their trials end. In truth, most member sites will find that the majority of their cancels come from credit card declines - not affirmative user cancels. The reason for this is that the credit card companies have something called "velocity checks" Velocity checks instruct merchant banks to reject multiple transactions on the same card if those transactions are "high-risk" and/or "adult-internet" if the transactions are attempted too close to each other (as long as one month apart). Thus, if someone is charged $3.95 for a 3 day trial, a velocity check could mean that the card will AUTOMATICALLY get rejected for any other adult-internet charge for the next 30 days. This results in about 50% (from my experience) of all membership drop-offs between trial and full member.
2- Coming up next: Email Lists
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