2257: Sentenced to 5 years..!
 

2257 - Sentenced to 5 years of 20+ hours per week stuck in the office or paying an employee - Ramnifications?

This thread grew out of a post in the Noob Showcase thread about the TGP Case Study. More specifically discussion about how free hosting & 2257 can play a part in choosing which sponsor to use for a gallery.

There has been a lot of discussion about what 2257 software to use, and when you are required to keep the records.

IANAL* but to the best of my understanding it goes something like this:

Section 75.5 requires that if you are keeping 2257 documentation then you (or an employee not a 3rd party) have the records available for inspection during "normal" business hours with a minimum of 20 hours per week.

Current thinking says that whoever publishes the gallery is required to keep the records. If linkenhotten is ruled as ?mere distribution? as many hope, then this discussion may be moot. However, if the interpretation continues to be that even hotlinking qualifies you as a secondary distributor then potentially

If the sponsor is hosting/publishing the gallery, then the sponsor is responsible for the 2257 documentation. (If this is not correct please let me know!)

If the sponsor offers free hosting of your galleries, then it would be in essence a custom, exclusive, free hosted gallery. Perhaps in the future CEFHGs (custom, exclusive, free hosted galleries) will be a feature that affiliates look for in a sponsor if they don't have the resources to deal with 2257 documentation.

Assume for the moment that any one of the compliance software solution completely satisfies the 2257 requirements for record keeping (I don't feel qualified to pass judgment).

So even if you have the perfect software, and your records are in perfect order etc etc then in order to even use one image that requires 2257 documentation, you have to be prepared to make a 20+ hour per week commitment for at least 5 years.

What are the ramnifications? I think it could go something like this:

The separation gap (if you will) between heavy hitters who have the resources to maintain records, and the smaller webmasters will become a sharp divide.

Those who can maintain records, and/or afford the staffing commitment gain the advantages of being able to use more compelling content (sexually explicit and/or exclusive) as well as mobility (use any sponsor they like & switch without penalty).

The smaller affiliates will face a lack of mobility (need stay with sponsors who offer CEFHGs, leave a sponsor lose the Long Tail sales)

Economy of scale dictates that there will be consolidation in the market. The trend towards "Super Affiliates" being make or break for a program will increase.

Some programs will try to smooth the gap with CEFHGs and probably other ideas yet to come. Servicing the newbies has a much higher cost vs. ROI. Sponsors will have to strike a balance, both in terms of their time/resources and over saturation of their content.

As the balance of power between Affiliate programs & Super Affiliates is shifted, the Super Affiliates will demand more and more resources to keep their business.

Sponsors profit margins will decrease, therefore stability or padding. Some programs will crash from "flying too close to the sun". Consolidation occurs as the market matures, and competition decreases.

I can go on and on, but if you are still reading, then I hope you can see where I am going with this.

Does it have to be like this? ----->

-----> Am I missing something?

------> What do you think?

-Jeff Random
*I Am Not A Lawyer

YARGH! 2house?

Sig spot!

interesting

Sure has the style down...

ADG Webmaster

It says his name at the bottom, he works for AVN I believe.

hrmmm thats really wierd --

however thats not me --

Thanks for keeping an eye out though -- !

2HP



edit: oops, wrong nick

:1orglaugh :1orglaugh :1orglaugh

:1orglaugh :1orglaugh

i've done this before.

That's prolly your best post ever...oops, I mean "you're" best post ever.

Shit, now people will think I am AlienQ. Your all loosers. :321GFY

ADG Webmaster

In the event I am wrong, and it's not the same person with the same name that works for AVN, I apologize.

SSsshhhhh ;)

he's a good guy.

Uhhhm, yep, yep, yeppers.

You got it right NewBreed, no apology required.

I am posting on my own behalf , not AVN's.

With 2257 being your area of focus these days it would be great to get your input on the 20 hour/week issue.

Chio - in looking back over the post I guess it must be the "(if you will)" that set off your 2HP detection system. I have always admired the advanced technology on your ship, but in this case false alarm.

Whenever you disengage pirate mode I am incredibly impressed with the knowledge and insight of your posts. Would love to know what your thoughts are as to how the 20+ hours could/will affect things if you want to share.

For that matter, what do the rest of you think?
I really want to know, and I am not the only one.

I reccon simplest way arounf the whole thing for everyone would be if sponsors provide free hosting for the affiliates, and just put an include file in the bottom of everypage with a link to the 2257 information

Don't you guys think most of us don't have to be worried about much. It's the ones that have those underage looking teen sites and really rough sex sites might have to worry a bit

Sorry, but the person putting up the free site would still be the publisher (Not the domain owner, as they will have contractually given the space to the end webmaster - so the end webmaster would once again be liable to provide 2257 information (major entry point).

Further, free hosting is now a huge risk business, as webmasters can post up graphics and images that are not 2257 compliant, and can put the domain holder into a lot of shit. Freehosting is the answer to a question everyone should have stopped asking a long time ago.

Alex

Thank you participating RawAlex. I think you are correct as far as unregulated 'free hosting' not being the answer to 2257 concerns. However, what I had been thinking of is a slightly different situation.

What if the affiliate is acting as the "designer" of the gallery working from sponsor provided content?

The sponsor then hosts/publishes the gallery similar to the way they would a FHG. The key difference would be that the sponsor keeps the gallery exclusive to the affiliate who designed it.

So instead of a FHG this would be a Custom (designed by affiliate) Exclusive (nobody else can use it) Free Hosted Gallery (CEFHG).

By doing so, it seems to me (IANAL) that the responsibility for 2257 would rest with the sponsor. It seems at least on first look to be a similar situation to BYOT.

Regarding the potential risk of hosting the gallery:

The sponsor would retain control by only posting hand approved galleries. No automated approval. (Unless they had a great deal of trust in a relationship and might enable the equivalent of a partner account for valued high volume affiliates)

Heck while I am out on a limb here - this in fact might result in a sort of inverse TGP situation where they have a full time employee or team reviewing galleries.

Now that I have clarified, what do you think?

I don't think the gallery maker would be 2nd publisher if he neither owns the content nor the domain and publishes the images on a domain owned by the publisher.
That would be like calling someone working in a print factory the publisher of a newspaper. He would simply be a commission based sales person working for the company.

Alot of major sponsors have freehosting for their webmasters, and simply if by default they add an include file at the bottom of every .html page I don't see why the webmaster should have anything to worry about.

The sponsor should clearly be very strict about people only using content they provide.

Anyway, I am not too worried about it since I don't live in the USA, but I hope for you guys this has a happy ending and get's fixed so it is not as unfair as it is at the moment.

Yes, it's hard to live in the USA :winkwink:

LOL -- that's hella funny -- jeff is a great friend -- but occupies another body, i swear -- :)

2HP

That didn't make much sense to me, I am confused :helpme From the thread title, I thought someone got some jail time :Oh crap

Well not exactly jail time, but certainly a serious time or resources commitment. The five years in fact is if the company or partnership is disolved. If it is an ongoing business then it says:

Each record shall be maintained for seven years from the date of creation or last amendment or addition.

If you are a solo webmaster that means for the next 7 years you have to be at your place of business or have an employee there 20+hours per week!

What if your fortunes take a downturn two years from the last time you submitted an image? What if you want to get out of the business, and fold up shop? Doesn't matter - you are still forced/sentenced to 20+ hours/week.

Know what, I actually still have this post up in another browser, I just got busy the other day and haven't gotten back to it...lol

OK, as far as my opinion on the 20 hour requirement, I don't think it would help much, as we are already putting in more than 3 times that at our office. I do however believe that anyone who is in this business seriously should consider 20 hours to be a very small time-frame considering what it takes to be successful (especially in the beginning).

not sure if that's the part of the question you were looking at ma answering...

If competition decreases, it will increase later. The void will be filled by companies who can afford the new startup and maintenance costs of doing business. That's just my two cents. Up and down and around we go.

I think that the US government is getting exactly what they want. Less and less people in the industry, and then they will end up going after the big boys. And the big boys will be shelling out major cash to protect them selves.

That is part of the question that I had in mind, let's follow it out a little bit.

I agree that 20 hours/week is not much to work. However, it's quite a commitment to be at the office 20 hours/week.

Paysite owners are one thing, but let's just focus on an individual webmaster. Not a newbie, but maybe not a "whale".

Let's say that he/she submits to TGPs, has some free sites, etc. Let's also say he/she has found their conversions to be much better when using sexually explicit images, instead of PG-13 images.

Coming up next week is Internext. This is a great chance for webmasters to not only have a great time, but one of the best networking opportunities.

If that webmaster goes to Internext, then either they have to have an employee at the office for 20+ hours covering for them, or they are violating 2257.

If they don't go, they miss out on all of the knowledge, and opportunities that networking at the shows brings. This means lost opportunities, missed relationships, less than current learning, and quite frankly less fun or quality of life for some.

Once again we see the gap increasing.

Some webmasters (like myself) will react by not using images that require 2257 documentation. That works for me because I mostly do organic SEO, and webmastering is a tertiary income for me. If I had to make my living 100% from webmastering I would want to be able to use explicit images.

But what about full time solo webmasters, who now have an additional burden that is tough for them to afford?

Most likely, a webmaster who chooses to go to Internext will be just fine. Odds are they won't get a summons or have a records inspection during those 3 days.

But I could certainly see next year, or the year after that as part of the "War on Porn" the government scheduling suprise inspections during major industry events, as well as through the holiday season.

I wouldn't like to have that kind of vulnerability hanging over my head like the sword of Damocles.

It's not so much the 20+ hours/week, as it is the every single week without exception.

It's not just conventions/conferences. Want to go on vacation? Got a funeral to attend? Opportunity to fly around the world and close a major deal? - Too bad, there are no exceptions written into the law.

Maybe we will see more and more alliances/partnerships developing amongst the solo webmasters.
If you and three other webmasters you trust team up, then it becomes a lot easier to comply. (Of course forming relationships with other webmasters is easier in person, so you want to go to the show but don't have someone to cover for you ...)

So for those of you who are keeping 2257 docs, but don't have a large operation, how are you handling this?

In this example, I think if someone is doing that well, and they choose to use content that requires docs, and assuming they are provided docs by the sponsor, they should be able afford a small office to store the records. For 2-300 dollars a month, it is certainly worth it for them to seek out a small office or some office space somewhere. Alternately, there is nothing wrong with using a home as an office. It's a little different I think for a webmaster to use his/her home address for records storage, as they have a less than likely chance of being visited as say a model would. Is it bullshit? Yup, I think it is, but it's also about choices and commitment. If an affiliate chooses to use content requiring records, they should be commited to following the law that comes with doing so.

AaronM and I actually talked about this a couple of months ago. What do you do in the event you get visited while away at a convention? Well, this part of the issue has a lot to do with the size of your company. As a single webmaster just submitting galleries, you could be in a world of hurt if your number gets called while you were away. My "I-A-N-A-L" advice is to clearly post your hours of operation to not include the times/dates you will be gone. For example this show coming up will not in most cases require someone to be gone for an entire week. Also this show for the most part is held over a weekend. Most smaller webmaster cannot afford to be gone that long anyway. If you are gone for four days, you could adjust your posted hours to the other 3 days of that week.

Now then, if you are a meduim-to-large company, you will probably already have a complaince officer/custodian in place on your staff. Even a part time employee could satisfy the 20 hour requirement. For example Adult.com, I am sure they have someone available at the office while most of the other work-force is away.

Again, this is a choice the webmaster will have to make. No matter what business you are in, commitments to time and money will be a huge part of your succesc and ROI. So if a webmaster wants to make it big, they need to do whatever it takes to make it big, even if it means breaking even or even taking some losses in the beginning.

Again, I think they could just adjust the posted ours of business for hat week, and not be gone any longer than absolutely neccesary.

That's a warm and fuzzy idea, and I know a couple of groups that are doing something like that, and rotationg shows they attend based on several factors like who can afford what and who can sit this show out, etc.

There are some other things people can do to avoid some of the hassle, but they need to talk to their own attorney to make sure he agess with the idea. For example, a small group of people could form an LLC in Nevada (just as an example). Hire a management company to manage your LLC. Name the Manager of the LLC as your Custodian. The management company is open for business and inspection 40 hours a week, and therefore fits within the regulations.

You might be right with most free hosting models....


But not with the BB free hosting model... they appove and then publish all of the pages. In that case, an affiate would be nothing more that a jr. ad exec proposing things to be published.

So your view is that webmasters should not be allowed to take 2 week holidays unless they are willing to pay someone to sit over their records?

Not at all, it's the Government's view, I was simply offering a work around based on Jeff's example.

Checking out 2257 info for several large US paysites, some have their custodian of records offshore. i doubt that is by accident.

Got a "work around" based on my comments?

All docs in order -- one man shop.

Never leave the home/office for more than a few days?
I'll rather go to jail for selling legal porn.

i think if the goverment is going to target anyone it will be the meathole and facial abuse type sites and the under 12 look teen sites. I think for most of us, we don't have much to worry about

I have no idea how legal that is, but thank you - it's the type of thinking that I was hoping for out of this thread.

Maybe that is a potential business model? Although wouldn't the Custodian be on the chopping block if your records weren't in order? If so, they would probably need to be well compensated and/or intimately involved in your operation.

Whether or not professional custodian evolves into an opportunity, IMHO there is quite a bit of opportunity right now for sponsors.

Programs who choose to recognize & provide solutions for the "middle class" webmaster affected most by the regulations stand to gain quite a bit.

Of course it takes more resources to do so, but as your relationship moves from "one sponsor of many" to "almost indespensable partner" then the investment will be paid off. Especially as some of the "middle class" webmasters move up.

In the thread that raised this discussion for me I suggested that

"Perhaps in the future CEFHGs (custom, exclusive, free hosted galleries) will be a feature that affiliates look for in a sponsor".

What do you think about the idea of CEFHGs?

What other ways do you think programs can help support webmasters in a mutually beneficial way?

Is the FBI still posting at GFY?

way too much text, summarize please?

Problem:

"Middle class" solo webmaster, 2257 records, 20+ hour/week minimum = lack of freedom or burdensome expense.

Potential Solutions:
CEFHG (Custom, Exclusive, Free Hosted Galleries)
Forming Groups, potentially LLC w/shard custodian expense
??????

Your input requested.

Jail wouldn't be too bad, free food and free sex.

if you have a non nude site can you get away with this just asking LE to email you for inspection address
http://www.karisweets.com/2257.htm

Fucking hilarious! :1orglaugh

This is where an attorney and some sound decisions on the part of the business owner come into play to consider how hard you may want to attempt to comply while still maintaining some privacy...

In our case, the business was set up like this...

* LLC is formed in Nevada legally, as an adult corporation.
* As part of the formation of the LLC, Members and Managers were chosen.
* The General Manager handles any and all business dealings with the state and federal government.
* General Manager is also named the Custodian of Records for our company.
* Manager recieved regular updates to the 2257 records as required, and promptly filed those records wherever appropriate.
* Annual cost for all business services comninded was aroun $1,900.00

So, if the Manager of the LLC is indeed an active employee, available 20 hours per week, has direct involvement with the company, and properly maintains the 2257 records, I don't see why this could not be a more widely used option.

Again, IANAL, but our's never objected to it as far as I know.

Now then, what I cannot for the life of me understand, is those companies coming out with absolutely non-compliant means of providing docs to affiliates such as setting up hotlines and providing online records storage options when those things are just asking for trouble by all parties involved.

It's of course my :2 cents: , but I think I have my solution worked out pretty well for us, so I am good with that for now. :)

It's not like it's the sponsors asses on the line why should they care

Forming a Nevada Corporation ~$700
Cost of meeting to choose Members & Managers ~$300
Filing & Updating 2257 records ~$????
Finding someone willing to be your Custodian of Records for $1,900 per year - Priceless

What are you paying your Custodian of Records in that model? Do they have a percentage of your business?

$7/hour x 20 hours/week =$560/month. That works out to at least $6,720 per year already.

Thoughts?

Around $1,900.00 a year, it's part of the duties required as a Manager. Hey, I don't set the prices, they do...lol And I have a way to get those records to the Custodian in as little as a few minutes when they need to be updated.

So let's say there is a required meeting of Managers every week or so to satisfy the obligations of all parties in the LLC. Those meeting days just so happen to fall on days I do updates to a site. It takes but a few minutes for the Manager/Custodian to update the records, and that can be done during the meeting.

Sorry, is that sarcasm? I can't quite tell if it is. The sponsor and affiliates asses are on the line equally, that's why I posted I could not believe some are doing the whole phone thing.