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jayeff · 07-24-2005, 12:22 AM

Basically you are asking the question which often leads book publishers to buy printing houses and car makers to buy design shops. Once you recognize that in addition to the cost of whatever goods and services you are buying, there is also a profit element, it can be appealing to bring those things in-house. Potentially you are not only going to save money and serve yourself better than a third party would, but you could have another income stream.

This doesn't only apply to the traffic provider but also to the content provider: both could question the wisdom of using the other. Quite a few have already done just that and are at least tentatively moving into each other's territory.

The move isn't without risk: your new site(s) may not sell as well as you anticipated. And although some traffic providers stay with a set of sponsors for long periods, the appeal to many is their ability to switch their traffic to take advantages of the latest hot sites or trends. That ability would be limited if you had to feed traffic to your own site(s) to recover your investment.

In fact, the content provider thinking of moving into traffic generation might have less at stake. With the 30%-60% margin he can potentially save, he can afford to go many routes. If relevant to what he chooses to do, he has lots of "waste" traffic to feed a new traffic pump. His main risk is that some of his bigger affiliates might object to helping create their own competition and that could put a serious dent in the benefit of his efforts.

Probably the biggest restraining factor is not pure economic consideration but the entrepreneurial nature of our business to date. Most self-made people, particularly those who have succeeded beyond their most ambitious expectations, are very reluctant to get involved in areas they do not really understand, or to trust other people to make any but minor decisions about their business. Yet the skill sets needed for the various aspects of this business are very different and even if one person does learn them all, there are only so many hours in a day. The kind of "cross-fertilization" you are considering is only likely to happen successfully on a large scale once online porn has more corporate-style operators.

07-24-2005, 12:22 AM
jayeff Confirmed User Join Date: May 2001 Posts: 2,944	Basically you are asking the question which often leads book publishers to buy printing houses and car makers to buy design shops. Once you recognize that in addition to the cost of whatever goods and services you are buying, there is also a profit element, it can be appealing to bring those things in-house. Potentially you are not only going to save money and serve yourself better than a third party would, but you could have another income stream. This doesn't only apply to the traffic provider but also to the content provider: both could question the wisdom of using the other. Quite a few have already done just that and are at least tentatively moving into each other's territory. The move isn't without risk: your new site(s) may not sell as well as you anticipated. And although some traffic providers stay with a set of sponsors for long periods, the appeal to many is their ability to switch their traffic to take advantages of the latest hot sites or trends. That ability would be limited if you had to feed traffic to your own site(s) to recover your investment. In fact, the content provider thinking of moving into traffic generation might have less at stake. With the 30%-60% margin he can potentially save, he can afford to go many routes. If relevant to what he chooses to do, he has lots of "waste" traffic to feed a new traffic pump. His main risk is that some of his bigger affiliates might object to helping create their own competition and that could put a serious dent in the benefit of his efforts. Probably the biggest restraining factor is not pure economic consideration but the entrepreneurial nature of our business to date. Most self-made people, particularly those who have succeeded beyond their most ambitious expectations, are very reluctant to get involved in areas they do not really understand, or to trust other people to make any but minor decisions about their business. Yet the skill sets needed for the various aspects of this business are very different and even if one person does learn them all, there are only so many hours in a day. The kind of "cross-fertilization" you are considering is only likely to happen successfully on a large scale once online porn has more corporate-style operators.