Hrm...
So many idiots, so little time.
Not that I want to incite anything, but man. I've been planning on launching a small little paysite something like "Phil's picks" or whatever, where I offer a new set/day of some of the hottest girls I can find in content.. It'd be tiny, like 100 active members at best. I know for a FACT that this is NOTHING like running these huge affiliate programs. Period. The huge programs might have great backends and all, but they will will get nailed.
Why? Lets just discount affiliate fraud (which accounts for a lot actually), and the "savvy" porn buyer that charges back everything because they are evil little fuckers.
Think about the way affiliates market shit. "FREE" this and that, etc. Promise nearly anything to get the sale. That's fairly normal, I mean affiliates get paid for sales, not recurring. Even on revshare affiliates don't quite think long-term, although it's not quite as prevailant in my experience.
So you have this huge 500-1k new members a day ball of wax you have to try to maintain, and detect fraud/etc. It just adds up fast. Say you have a cheating affiliate that runs for a month, then you catch him. He has say, 100 sales. All fraud. 50 of those say, will charge back. But, that is NOT only 50 chargebacks. Think about it.. Someone will get their bill a month later, which will have two months (probably) of charges on it. Maybe 3 total charges if theres a 3 day trial or whatever. They might spend some time trying to figure out wtf it is, and now you're up to 3 months, plus the trial. They finally call, and bamf.. 4 chargebacks right there per person. That's 200 chargebacks for one cheating affiliate that you didn't catch for 30 days. (keep in mind, 100 sales/mo is what? less than 1% of your volume by far? And very, very few people will catch that the first month to say the least).
Now couple that w/ normal chargebacks of idiots forgetting they had the membership (hey, I've done it.. I didn't CB, but I know most people will. You have fun finally looking at your CC statement after using auto bill pay, and seeing 4 months of charges you forgot about. Most people are living paycheck to paycheck, and that $160 or whatever is a LOT to them, and DEFINITELY worth charging back over). Plus the normal affiliate "over promise, under deliver", and you're pretty screwed.
Every larger (over 100 joins/day) program owner says the same thing to me. If they cut off new joins right now, they would be totally fucked. Those new transactions account for an offset for all the people charging back 3-4 months down the road all at once. If they were single month chargebacks, it wouldn't be as much of a big deal because catching fraud would be that much easier.
Also remember this whole business is built on emotional/instant gratification. Some guy with his pants around his ankles isn't thinking as clearly as he will be in 45 days when his wife gets the credit card statement, or his rent is due, or whatever. I'm willing to bet there is TONS of "buyers regret" in this businesss. "Why the fuck did I pay $40 for this! shit! I can't afford to pay rent even this month!" after their 5 minutes of fun. Porn addicts don't account for a statisically significant percentage of the population when you compare it to adult revenues.
Oh well, I have a mirade of opinions on this. Just sick of the little tiny program/site owners thinking it's all in what you have to market. Yes, when you're small it won't be an issue. You can focus on little things that much easier, and someone making 50 sales/mo as an affiliate is probably going to be a damned heavy hitter for you, and you'd be combing though his shit with a fine comb. Plus I'm willing to bet that the amateur or "stalker" niche as I like to call it, doesn't have the same amount of CB problems, as you get the insane guys hanging around wanting to chat with the girl, or whatever.
I think you'll see a huge change in the business. Watch a few VERY large programs falter, and either fail or drastically change their business model. The good news is I think this will spawn a new rebirth of small amateur sites, that market to a VERY specific niche, and provide a 1 on 1 experience for customers. Unfortunately, this doesn't scale, and unless some large programs can adapt fast, there may be a whole lot fewer people coming to internext in two years.
It's going to raise the bar of entry some, while lowering it to be considered "successful" I think. No longer will you have to make $1mil/mo to be considered a "baller" in the business, since so few people will be doing that type of volume.
Watch a lot of large programs start moving traffic aquisistion in house too, so they can better control their exposure. The big boys will stay big, but just different than they are now. Less pie to go around to all the TGP submitters, or whatever.
Man.. this got long. Oh well. I'm sure everyone will pick it to death, I don't care. I've thought about it a lot, and have actually seen real hard numbers, unlike a lot of folks here save some notable exceptions in this thread.
-Phil