Single-word domains from the common vocabulary usually make for shitty brands.
Probably because business efforts behind these domains are rather transparently profit-seeking and wired for the short-term, make a quick buck, approach.
Also there's a good amount of technological quackery that goes on in the hyping of these domains to not-so-tech-savvy investors who don't realize that a typical 14yo kid understands intuitively that "sex.com" is probably a crap parked site or link directory, whereas pornhub.com, on the other hand, provides a service that 14yo will love.
"..and we've got a GREAT domain name, pets.com, I mean, if you want a pet, where you gonna go? We're right there."
Labors of love are what win and enable you to eventually fleece your customers and have them thank you for doing it -- not having a 13 million dollar domain.
I don't have anything specific in the adult industry to base my assumption on but it's based on looking at the conversion rate of many sites in many different industries. 1% seems to be the low-end of what a site can convert at if you do the basics right. But I'll admit it's an assumption that needs to get tested.
I do but I can't give you the exact figures, that's not my decision to make.
The big problem is probably defining what people call 'conversion rate', typically that's 'virgin traffic' divided by actual sales.
The problem with that particular definition is to track accurately how many people have never seen your site before.
For a site that is growing steadily the number of 'new' visitors that will eventually convert over the life cycle of their account is a number that always relates all of todays 'new' traffic to the total sales of today, but the sales of today were not typically caused just by people that visited today for the first time.
So accurately tracking conversion rate is not as simple as it may seem at first glance.
Also, and this is a completely different issue, conversion rate is not the most important figure at all, and I find the thread we're discussing this in amusing because even though the first poster in the thread accurately identifies recurring billing as an excellent revenue driver it completely misses out on the life-cycle aspect of an account, and typically accounts do not last forever.
Industry standard is 3 months, so if your subscription site has a 1% conversion of free traffic to paying members then you will still only make 3 times your monthly charge on them.
To do better than that you'd have to work really hard on tweaking that 3 month figure, retention is almost as important (if not more important) as initial sign-ups.
Really interesting for me to read this analysis. For my online game, conversion of people who visit the landing page is about 0.5%, but once they're paying, churn is in the 3%-5% range per month, which is around 25 months retention on average. So for me, it seems that the real money is in trying to get the conversion rate up and I'm mostly ignoring the retention, because it seems like I'd have to do a lot of work to move the retention rate.
I guess people looking for sex are quicker to pull out their wallet but also quicker to be satisfied.
If I have a goldmine, it's been eluding me. I'm not that great at marketing and seem to be able to only get so many people in with adwords. People pay $10/mo, so a new user is worth something like $200 and I'm currently bringing them in via adwords at about $50 each, but that's the average and if I up my bids, the cost to bring in more will be about $80 each, which seems high considering how long it will take to make the money back. I only get about $3k spend/mo with adwords at the current bids.
Edit: Costs are already so low that the only way to increase net profits would be to increase revenue per user, perhaps with added micropayments, but it seems to me that with so few paying users <1200, I should be trying to get a larger user base and then later increase revenue per user?
If you have a proven conversion funnel and high retention, you should be able to absolutely blow this thing up via Facebook Ads. AdWords is hardly the ideal channel to drive significant game traffic(unless you're awesome at Content Network).
Or set up an affiliate program paying about $1 per free signup.
Don't know if I'm awesome at content network, but about 95% of my adwords clicks are coming from the content network and not from actual search.
I get people via Adwords at less than 20 cents a click. According to Facebook, the minimum bid for people who like online games or mmorpgs, or other categories I've tried is currently well over a dollar. I did get some clicks from Facebook when their ads were fairly new and the minimum bids weren't so high, but conversion rates were much lower than those from Adwords.
Anybody that promises you a guaranteed subscription rate is not above board in one way or another.
How traffic converts from one site to another is a matter governed by a very large number of factors, typically if you sell balsa wood aircraft advertising on a site for knitting supplies is not going to net you a lot of customers.
I've been 'helping out' a fellow HN'er with a bunch of traffic and to date we've yet to see a single conversion. That doesn't mean that his product is bad or that the traffic is lousy, it simply means there is an impedance mismatch.
So you can only determine what works and what doesn't by trying it. But once you are spending money on clicks then that 1% is a good ballpark figure because that's what you'll need to make money on your traffic buys unless there is a scam involved.
On 'junk' traffic (exit consoles and other bad tricks) conversion rates can be as low as 0.01% or worse, on good or great (matching) traffic it can be substantially in excess of that 1%. Audience match is key, and that goes for any form of traffic buying, adult or non-adult makes no difference, if the user lands in something they didn't expect on the 'far' side of that click it had better be a positive surprise or you've just effectively made your precious domain worth less.
It's not breaking even, right? The domain was 13 million. It makes "almost 7 figures" a year. So in 13 years, assuming that people still keep visiting a bogus site, it will have paid for the domain registration.
If you just want to break even, you should probably just register a google.com typo domain for $20, and then you need a lot fewer visitors to break even.
Sex.com doesn't seem to be that lucrative of a domain name(not 13mm lucrative)...if it was, more companies would try to rank for the term sex.
right now it's
1. Wikipedia Article
2. FBI Sex Offender Registry
3. Psychology article
4. Porn Tube Site
5. HIV charity
6. Virginia State Police Sex Offender Registry
7. Music Review Blog
8. Sex Pistols music site
9. Georgia Sex Offender Registry
10. Center for Sex Offender Registry
I'd bet there is a ton of traffic because people just want to see what kind of site is hosted on sex.com, so its a lookie loo situation, where you'll have a crappy conversion rate. So a traditional porn site won't work that well.
A better option would be to open a casual encounters type site(basically adult friend finder), and charge $5-10-20 bucks a month under the guise of making sure that there are no fake profiles.
Don't you think google threats porn/sex sites kinda different than others? I bet non-porn sites rank better for non-porn keywords than porn sites ('sex' is not necessarily porn keyword). And there is nothing porn SEO experts can do about it.
Make it an adult dating site...it has the makings of a strong brand.
The significant type-in traffic will help get over the network effect issues that plague most dating sites, and your traffic is very targeted- people looking for sex(or at least naughty pics). So you'll quickly have a core of active users you can leverage to build your audience.
Dating sites done right are FAR more profitable than porn sites.
Elsewhere they say the industry standard is 3 months average length of a membership. It properly takes that long (maybe not consecutive) if not more for somebody to get of the dating market permanently. A porn site has little chance of going viral (who wants their facebook status to be "John is browsing cocksuckersluts.com"?) and almost no chance of an upsell - but I know that people share recommendations of online dating sites and when there they are an excellent place to send people to other partners (looks like you are going on a date! Do you want to buy flowers and reserve a table for two at a romantic dinner?) something that is not likely to happen on a porn site.
The most obvious ideas are porn site, adult dating site, etc. The biggest challenge is figuring out the highest and best use. I think the best use is turning sex.com into the authoritative site for sex questions / videos. With this approach, you can get a captivated audience and build a lasting brand.
Sex is something we all want to know about, but it is still taboo to publicly talk about in the US, UK, India, etc. I notice other posts mentioning developing a porn site, or adult dating site, but those seem like low hanging, 1-off sales. By building a brand, you can generate a higher customer LTV. If the owner of sex.com can afford to pay $13 million, he should be able to afford several million to develop expert content, products, and a long term business.
To give you insight in the value of creating a product company, look at Bill Phillips who acquired EAS in 1996, and solid it for $160 million in 1999. http://www.ergogenics.org/231.html
The reason he doesn’t simply jump into the lucrative online porn industry? Because such an endeavor would close the door on other, more mainstream options, narrow down his exit possibilities – such as selling to a public company – and limit the ability to take the business public in the future, Jeff says.
I've noticed recently that most porn businesses are, in fact, private. The TechCrunch article alludes to this as obvious, but to me it is not. What would be the obstacles to taking a porn business public?
I don't think you're likely to contest that 1999 was an easier time for IPOs.
Private Media and Playboy are both public. And unprofitable. And not especially worth all that much these days; you'd have a hard time getting a "real" IPO done even at Playboy's 180M market cap, let alone Private's 20M valuation.
The question was 'obstacles in the way of taking a porn company public', as far as I know there are none (legal or reporting wise).
I don't know why a porn company going public would be any less 'real' than any other company.
1999 was an easier time for IPOs but not an easier time to make money online. Don't mistake the money that was pumped in to the market for turnover, there are many more people making cold hard cash online now than there ever were in 1999.
The one problem with porn as a business is that the number of potential exits is very limited, another problem is that the market is very fragmented which will likely limit the size of the players.
It is one of my biggest weaknesses, but I figured once I'd proven it possible with whatever domain, I could search out another one. It's in my plan for this year, begin investigating new domains... neither of those seem very fitting, but thanks for considering it!
I'd go with a daily blog style page, something like "Today's Big Thing," but sex-related. Fresh daily content guarantees you a recurring audience and makes it so you potentially only need one employee, the editor.