Quote:
Originally Posted by Paul Markham
Where did you learn your business skills?
It's not just about how much you're selling, it's what the profits are after the sales that's important.
OK Penthouse funded the acquisition by taking out a loan, it happens in the business world. The idea is to take the company, then the profits from the company will repay the initial loan, usually increased profits. This did not happen so all the sales were not enough, or cost too much or the guys at the top skimmed off the profits. What ever is the reason it did not work.
So a top site selling a less than good product is good for you because this is porn. About as fucked up a theory as I've heard. Unless you can totally lock the customer into buying you will lose him with that approach.
Look around you and see what happens in the real world. Sponsors spending more and more on traffic to get less and less on sales. Because the buyer is a repeat buyer and he's not taking it any more.
And if you seriously think a free Tube site should be an alternative to a paysite you're screwed. If we can't give the customer more for his $30 than what a Tube site gives him we are in the wrong. And if the customer only needs something that costs 2 cents to satisfy him, why are you charging him $30 in the first place?
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The profits after the sales for AFF look to be in the $20MM+ range, so I don't see what you're getting at. Sure, their margins aren't the best. Yours are probably much better. But let's think which is better. Making $2M with 90% margins, or making $20MM with 10% margins?
Let's also not forget what we are talking about here. Sex dating sites are all misleading. There is bullshit going on with all of them. 10:1 male to female ratio with tons of bullshit pics and deceptive things. Of course retention isn't going to be the best. But here is where the trade-off lies. You can either become 100% legit and get WAY fewer initial joins with higher retention, or you can be like all the sex dating sites and do TONS of initial joins with lower retention. I'm pretty sure I'd take the latter, because I think the amount of initial joins is greater than the rebills would be with lower sales volume.
And yes, I'm totally OK with this because I think I'm making more money like this. I don't care if it's because of rebills, cross sales, high volume/low rebill, or whatever. Dollars and cents. That's all it is.
And why do you always bring up tubes? What do tubes have to do with this?