Recently, Oz had a chance to talk with Barry from Black Dog about their programs, and the future outlook for content providers as well as for the adult industry as a whole:

Oz: Let’s start with a
description of what Black Dog is all about, how long you’ve been operating, what
your products are, and introduce yourselves, so we all know you. 🙂

Black Dog: We are Barry and
Hazel and we are the principals of BDU. We’ve been online since February but
we’ve been putting this together for nearly a year now. Currently our products
is just getting started but Spread4u has been running for 3 months and is really
taking off.

We try to distinguish
ourselves from others that may appear similar by offering nothing but 1-on-1
sessions. Chat rooms are ok but phone sex makes billions of $ every year because

Oz: And this is the ‘live
content that pays you’?

Black Dog: Yes "Live
Content That Pays You" is the name of our partnership program for Spread4u
and Stroke4u. Another way that we distinguish ourselves is that we are basically
for every minute of business they send our way.

Oz: All of the content is
1-on-1, and there is no fee for this content — in fact, you pay webmasters to
feature it — am I understanding correctly?

Black Dog: There is no fee
to webmasters. We pay them.

Oz: Heh. Not bad.

Black Dog: We think so 🙂
Since we supply all the content and bandwidth and our service is free,
webmasters have nothing to lose but everything to gain by signing up with us.

“We originally
wanted to start a regular adult site, but realized it is probably too late to do
that successfully without a huge budget.”

Oz: What do you think of
the internet content business — what attracted you to it?

Black Dog: We originally
wanted to start a regular adult site, but realized it is probably too late to do
that successfully without a huge budget. So we looked into it some more and
demand. Since Barry is a programmer by trade, it was easy for us to put together
the necessary software to get the site up. And it’s working great! 🙂

Oz: I concur with your
decision about the paysite business. It is a very, very crowded business.

Black Dog: Yes and we
realized that could work to our advantage. You can never have too many
customers! It is so competitive today that smart webmasters are always looking
for an edge over the site next door. We thought we could be that advantage.

Oz: Am I correct in
understanding that all of your content is video?

Black Dog: Live video with
chat. And ALWAYS 1-on-1.

Oz: How does your
affiliate program (I see it listed as ‘banner program’ at your website) work as
part of the master plan?

Black Dog: Really the
"Live Content" and "Banner" programs are essentially the
same program. It’s just that some webmasters want to integrate our content into
their site, while other just want to put up a banner.

Oz: Ah.

Black Dog: Either way the
user gets the same content and the webmasters earns a buck a minute.

Oz: Internet copyright
infringement (primarily adult photos, I think, so I’m not sure how much this
applies to your business) has been a very hot topic at YNOT and Weboverdrive as
of late. What is your take?

Black Dog: It does not apply
to us that much because we don’t use stills and a hacker would have great
difficulty trying to record our video. However we do show thumbnails of our
performers on the website and we take copying those photos very seriously. So
far we haven’t had any trouble. I think anyone who goes to the trouble to create
content should have the right to decide who can use it and the right to enforce
their copyright to the maximum extent of the law.

Oz: Do you think
improving technology is going to play a key role in reducing this problem?

Black Dog: Possibly. However
I haven’t heard of any technology yet that can reliably prevent copying of
images.

Oz: Neither have I.
Digital watermarking seems to be a growing trend, however, and perhaps an
encrypted viewing format would help.

Black Dog: It doesn’t seem
likely to make a big difference in the foreseeable future.

Oz: Right, agreed.

Black Dog: Digital
watermarking is only useful AFTER you caught the violator. And to view an
encrypted image it must be decrypted at some point.

Oz: What is your take on
the future of adult content online? I would like to share my thoughts on this
issue, and then hear your reaction.

Black Dog: Go ahead.

“My gut feeling is
that as broadband becomes more widely deployed across the United States, we’re
going to start seeing ‘network’ programming for broadband”

Oz: My gut feeling is
that as broadband becomes more widely deployed across the United States, we’re
going to start seeing ‘network’ programming for broadband — adult network
programming, ala Playboy and Penthouse broadcasting directly across the
internet. If that happens, I believe we’ll be seeing a big consolidation of
resources and content into this ‘next generation’ TV network.

Oz: First, what is your
opinion of that prediction, and second, where do content providers of all sizes
fit into the internet of the future?

Black Dog: Yes. That is a
very popular (and correct) opinion for the Internet in general. As the bandwidth
increases, we’re going to see richer and richer content appearing online. I
think that video is only going to be the next step. After that we will see new
kinds of media that we haven’t even thought of yet. And as usual the adult
industry will lead the way. Get ready for 3D virtual sex! 🙂

Oz: So where does Black
Dog, for example, fit into that mix?

Black Dog: Well we don’t
plan to stop at live 1-on-1. We have plans to shortly integrate our online
content with other types of content, including more traditional media. I don’t

Oz: I see. So you plan to
grow and adapt along with this changing landscape.

Black Dog: Of course. We
have no choice. You can’t remain static in this industry (or any other). Just as
"the gold rush is over" for adult webmasters, the gold rush is just
beginning for live content providers. Which means NOW is the time to get ahead.

Oz: Okay, let’s move onto
stuff that directly affects our readers. As a content provider you may not be
directly participating in the ‘paysite business’ but you are probably quite
familiar with many of the problems this industry is facing thanks to pressure
from the major credit cards. What is your reaction to the problem, and what do
you predict will happen in the next several months?

Black Dog: Quite frankly, I
believe that by using straightforward marketing techniques and advanced
anti-fraud detection, IT IS possible to keep chargebacks to an acceptable level.
I know this is not a popular opinion but we are living proof it can be done. As
well, new technologies such as digital signatures are just around the corner
that will be able to nearly eliminate fraudulent card use. The CC companies were
caught off guard by the Internet but I think they’re finally getting it
together.

Oz: Sure — but what
about consumer fraud? It’s become popular knowledge that one can simply charge
back any online service. Do you think the CC’s need to enforce the rules for
their customers as well as the merchants?

Black Dog: As you said above
we don’t operate a pay site, but we do bill customers directly so it does affect
us just as much.

Oz: Right — that’s why I
ask — you bill them directly, per-minute charges, which surely must be disputed
just like paysite charges.

Black Dog: Digital
signatures will solve that. A DS is just as binding as a real signature so if
the merchant can show the CC company the DS, then the cardholder must pay. Just
like a regular merchant sending in the sales slip with signature.

“The CC companies are not on our side (as if you didn’t know). The trick
is to keep chargebacks down rather than fighting them.”

Oz: Sounds great, but
when’s the solution going to be in place, do you think?

Black Dog: Within a year, I
think. I have heard no official announcements but I watch this area very closely
and the technology is now ready for prime time. In the meantime we just must
verify all transactions as closely as possible even it it means turning away
some valid customers. We have developed our own in-house CC verification that we
use in conjunction with other verification like AVS.

Oz: Aha… you said the
magic words… now, let’s say you do ‘verify the transactions as closely as
possible’ in your words… have you found that doing so gives you more
‘ammunition’ when you go against the CC and customer who’s disputing the
charges?

Black Dog: Unfortunately not
really. The CC companies are not on our side (as if you didn’t know). The trick
is to keep chargebacks down rather than fighting them. The only proof of
identity they believe in is a written signature.

Oz: I am in 100%
agreement. And I happen to think the signature requirement is a copout,
frankly…

Black Dog: Fortunately I’ve
heard that they are no longer approving chargebacks due to complaints about the
quality of service. Only fraudulent misuse of card.

Oz: I also happen to
believe that if consumer fraud was eliminated from the formula, chargeback and
credit rates would be in line with offline brick and mortar businesses…
agree/disagree?

Black Dog: Disagree. Because
nearly every adult site sells a "soft good" (i.e. a good you use
online rather than delivered to your house) we will always be prime targets for
criminals with fake or stolen CC’s. And we are even more attractive targets than
other soft good merchants because of our product.

Oz: An easy to steal
product.

Black Dog: Yes and fun too.
🙂

Oz: And easy to deny
having purchased, since it doesn’t ‘exist.’

Black Dog: Precisely. Hard
good merchants have an advantage because they can refuse to ship to any location
other than the cardholder’s address. We don’t have than luxury.

Oz: Okay — but if
consumer fraud was removed, at least the majority of it, do you think Visa/MC
would be complaining about online adult right now? 😉

Black Dog: No. As long as
chargebacks are high they will complain.

Oz: Let’s move on to one
final issue I’d like to bring up with you.

Black Dog: Ok.

Oz: You provide content
— the webmaster provides traffic. The two meet in the middle and that’s where
our industry exchanges most of its money. How do we make this arrangement more
efficient? Make the webmaster more money, and give the surfer more of he wants?
Do you see a stepping up to a better business model from what we currently use?

Black Dog: Tough one…

Oz: In other words, our
industry runs straightforward affiliate programs now… like you do. Where is
the ‘lost opportunity’ in your opinion… what are we missing to make the
transfer of traffic for money more effective for all involved?

Black Dog: I’m not sure if a
more "efficient" billing model is necessary. This billing model has
been working nicely in strip clubs for some time. I.E. the club owner provides
the traffic and the strippers provide the content. The customer pays the owner a
"membership fee" (i.e. a cover) and then pays the girls (or guys)
directly for the content. This is not the most efficient method but it is very
flexible.

Oz: I am referring
specifically to the way we do business on the internet. For example, if someone
flies your banner to send you a customer, they’re getting at best a 1%-2%
clickthrough rate on the traffic, squandering \’8% of it.

Black Dog: Do you mean a
1-2% conversion rate? Or 1-2% payout?

Oz: I mean a 1-2%

Black Dog: But isn’t that
how advertising has always worked? The only difference I suppose between the way
we advertise on adult sites and the way others advertise on TV is that we
typically pay a commission instead of a flat rate. Our method is better because
webmasters can boot off banners that don’t pay. But \’8% of "traffic"
is usually wasted in any advertising.

“Our method of converting traffic into gold is to give the webmaster the option to integrate our traffic directly into their site, which we have found converts MUCH better than a banner.”

Oz: Yes, but the
advantage we have with the internet is that we can filter our traffic in many
instances. If SE traffic wants a certain niche, we can send them to sites
featuring that niche. TV advertising doesn’t have the same level of demographic
data.

Black Dog: I’m not so sure.
Neilson has some pretty detailed demographics. However I’m not an expert on that
topic.

Oz: Right — that’s
getting a bit off course. But I keep wondering if there isn’t a better way to
get the ‘free traffic’ to convert into gold, without so much waste.

Black Dog: Webmasters that
send better traffic make more money just like networks that have better shows
can charge more money. Okay, let’s get back on course.

Oz: 😉 I was the one who
brought up TV — I take the blame… 🙂 Actually, that was a pretty good
point…

Black Dog: One more thing…
Our method of converting traffic into gold is to give the webmaster the option
to integrate our traffic directly into their site, which we have found converts
MUCH better than a banner.

Oz: Ahhhhhhhhhh! There ya
go.

Black Dog: Sorry 🙂

Oz: Making a better
‘connection’ between the traffic and the cash register. That’s what I was
looking for. 🙂

Black Dog: Yes. Originally
we were going to market our site directly to the public, but we soon realized
that it was better to integrate it and let the webmaster do the marketing.
That’s why we pay so generously.

Oz: I hope to see the
concept examined more closely and improved upon. There is surely a huge lost
opportunity.

Black Dog: Yes, but don’t
tell anyone. 🙂

Oz: Ha! Excellent. I’ve
thoroughly enjoyed the interview, hope you have too. Any final remarks?

Black Dog: Yes… We’re new
to the industry but I think our success proves that it is still possible today
to start and grow a profitable adult site or service without a huge bankroll.
Thanks very much we really enjoyed this. Thanks for the exposure.

Oz: Thank you!