Many of the online adult industry’s leaders, pioneers, and heavyweights gathered this past weekend in Phoenix, Arizona for the Phoenix Forum. Organized by the great team at CCBill, this event has grown tremendously and the number of attendees more than doubled in comparison to last year.Many of the online adult industry’s leaders, pioneers, and heavyweights gathered this past weekend in Phoenix, Arizona for the Phoenix Forum. Organized by the great team at CCBill, this event has grown tremendously and the number of attendees more than doubled in comparison to last year. One of the most highly attended seminars at this year’s event was the discussion regarding the state of the industry.

The panel for this discussion included Chris Mallick, CEO of Epoch and epassporte Visa; Ron Cadwell, CEO of CCBill, Cave Creek, and DRM; Benjamin Bayr of SexMoney; Tony Morgan of National Net; Morgan Sommer, Co-Publisher and Advertising Director of CyberSocket; and Aly Drummond, a personality who needs little introduction and calls herself the “Cruise Director” of Python’s operations.

Much has changed in the industry in recent months, and along with these changes there has been much confusion and speculation about the future of the industry. The panel members at this forum seemed very aligned in their thoughts about the direction of the industry and about what the community as a whole needs to do to help ensure continued viability.

In recent weeks, our industry has seen long-standing programs fold. Thirteen million credit card numbers were stolen from a mainstream processor, which will likely have an adverse affect on our industry. New Visa regulations have required websites profiting from high-risk online credit card transactions in the United States to register their programs and pay annual fees to maintain their businesses. Cross border acquiring / settlement is no longer allowed and can have devastating consequences for offenders. Internet Payment Service Providers (IPSP’s) are required to report chargeback data to Visa with granularity to the URL level, and, to manage programs ratios to within acceptable thresholds or face large fines. Reckless programs can be terminated at any IPSP and be banned from accepting Visa with any bank or IPSP. Is this all bad news? No. But those who don’t like change have been crying out, once again, that the sky is falling. It is not.

Along with these changes, the adult industry has apparently taken a deep breath, a step back, and reevaluated its business plan. A marked improvement in sales and the maintenance of credit and chargeback ratios has emerged. Responsible programs have crossed their T’s and dotted their I’s to insure compliance with all regulations and to promote longevity of their programs. The risk vs. reward equation has changed and programs are following the rules as never before. Whether by necessity or endorsement, these changes are good for the industry.

Mr. Cadwell stated that Visa International will soon begin strict compliance regarding cross border acquiring and Mr. Mallick added that he is confident that these rules will be enforced. Mr. Morgan agreed, adding that it is his belief this will result in more revenue and less headaches for the industry.

Mr. Sommer added that his affiliation with CCBill and Epoch has helped his business and the businesses of his associates to continue to do what they do and that the level of support and professionalism he has experienced with both companies was to be commended.

As these changes appear, Webmasters adapt. They are looking for new ways to work with their traffic and to bill for foreign customers. IPSPs accept credit card transactions from all over the world with exceptions based on risk assessment or the Patriot Act. As pointed out by Mr. Bayr, there are other issues to be addressed with foreign traffic. Not every country feels comfortable using credit cards online so there are billing issues. Alternatives as pointed out by Mr. Bayr include dialer debit, dialers, pre-paid solutions, wireless, and SMS messages. Further, other considerations regarding foreign traffic were pointed out such as language barriers and access to Webmasters for support or to billing companies.

Both Epoch and CCBill offer multi-lingual support.

According to Mr. Cadwell, CCBill is experiencing the lowest chargeback ratios in its history. Mr. Mallick concurred, adding that chargeback ratios are so low that it may be time to loosen scrubbing to some degree.

Audience questions at this discussion turned to the value and legitimacy of cross sells. Mr. Mallick responded saying that cross sells are not a problem if done correctly and as long as chargeback ratios are not affected. The experience over more than a year with the current models for cross sells has proven that these models are effective. There is more incentive for an IPSP to play on the side of safety, not risk. Billing companies respond to what the Webmaster community says that their customers want, within reason of course. Mr. Sommer added today’s cross sell models are done correctly with proper disclosure and marketing, and they are a legitimate means of adding business. As Mr. Morgan put it, doing cross sells is an opt-in for the Webmaster. If you don’t like them, don’t use them.

Adding to the comments of the current state of the industry, Mr Sommer spoke about the growing trend in the industry to work by a self-imposed standard of ethics for the sake of industry survival. In agreement, both Mr. Mallick and Ms. Drummond joined in the recognition and recommendation of Adult Sites Against Child Pornography (ASACP), founded by Helmy Enterprises and headed by Joan Irvine. ASACP is working with adult industry leaders to put together “best practices” and help the adult industry self regulate. You can view their mission statement, code of ethics, and find out how to support and participate in their goals by visiting http://www.asacp.org/membership.html. As Ms Drummond stated, the last thing the industry needs right now is division and support of / participation in ASACP is a good start towards industry standards.

The closing topic addressed the focus of Webmasters and the future direction of marketing. Ms. Drummond, Aly as we all know and love her, was quick to point out that innovation is what drives this industry. And additionally, keeping your content fresh, maintaining a long-term view of your business, attending conventions and gatherings and meeting those in the industry, and of course working with Python, were all wise steps to help ensure your business’s longevity.

Mr. Morgan stated his belief that we will see the market change and the focus shift to retention. We spend so much time, money, and innovation to acquire our customers and little time retaining the ones we have. It’s time to address retention with new ideas. Ending this discussion with a good laugh from the audience, Mr. Mallick added; “Speaking on behalf of someone who makes money based on a percentage of gross, we would love to see everyone increase their retention”.

The old saying that the only constant is change never had more meaning than it does in the online world. That is why discussions of these matters are so important. I’m sure I speak on behalf of each of the panelists and attendees at the Forum in a big thanks to CCBill and each of the sponsors that made this event such a success.

Rand has been with the Epoch Transaction Services team since 1998, beginning with client services and managing a team of tech support representatives. He now oversees the compliance department at Epoch and works closely with sales and marketing as well as serving as Director of Corporate Communications. He writes a daily newsletter available to all Epoch clients and their affiliates. He can be reached by writing to rand@epochsystems.com.