Right now the owner of a pornographic website is doing an AMA on Reddit, and the details behind his business are fascinating.
While we have no idea what the website itself is, we can ascertain a few things about the business model. Essentially people buy videos made by studios individually from the site, the proceeds of which are split between the studio and the site.
He claimed to clear $280,000 last year, so evidently people like to watch pornography on the internet. Who knew?
It's worked out, and the owner doesn't actually have to do much work anymore. It's fully automated. "For me," he said, "it made sense as a money generating asset requiring little effort beyond the initial build."
Most interesting of all was the advice the owner gave someone who wanted to start up their own site.
Here's how he explained the sunk costs of getting into the business to an aspiring porn-site entrepreneur:
Good luck with it. It's a challenging industry. Things that would take 20 minutes on a normal business can take days in the adult industry. (finding a payment processor, for example)
A redtube-style site would be quite a challenge, financially, I think. Policing it could also be pretty difficult.
The most expensive part, for me since I did all of my own design and programming, was getting VISA/MC approval for a high risk account. VISA has a $1000 annual fee and MC has a $500 annual fee, at least through my payment processor. [...]
You can make use of Amazon Web Services to lower costs substantially.
Up front the first hurdle is convincing Visa or MasterCard to let you accept payments. Still, that's not even the hardest part. Here's what it takes to get the site up and running:
If I calculated it in hours spent on it myself, looking at around 3 months, so we'll say 500 hours. I charge $65/h if I ever take on freelance clients, so looking at about $32000 for someone at my rate. I'm expensive because of my extensive experience, so you can probably get it done for less.
It was very difficult in the beginning. Luckily my consultant, the girl who convinced me to start the site, is a studio herself and knows a lot of the top studios. We went after the top studios and offered them better %s and it worked. We now have:
751 studios 19,138 videos Apx 5000 visits per day - A good number of which are sent directly from the studios to purchase on the site or send a tribute.
Most of the business, he said, comes from people buying between a dozen and thirty products per day, and then cash donation — 'tributes' — make up the other half of the business.
Here are the technical stats. As he said earlier, the entire operation is automated, with most of the hosting on an Amazon server:
The site itself runs on a single server, a VM actually. It runs PHP with CodeIgniter for the framework and MySQL as the database. I make extensive use of CodeIgniter's caching abilities.
I have an FTP server setup where the usernames and passwords are powered by MySQL. Each studio gets their own FTP login. I have a cronjob that will run every few minutes and pick up files that are finished uploading and send them to Amazon S3 after gathering some basic meta information.
Once the video is safely on S3, the studios can complete the meta data, pricing, and choose when the video goes live.
All the video previews and gifs are uploaded to S3 and served through AWS Cloudfront CDN.
That's about it. Pretty simple.
So if you've ever considered getting into the lucrative online pornography business, that's what you've got to handle first.
More From Business Insider
- Facebook offers thousands of cheap WiFi hotspots to fuel expansion in India
- John Oliver is rallying to save Obama’s ‘net neutrality’ rules, but it may not matter much this time around
- Thousands of identical messages attacking Obama's net-neutrality rules have been suspiciously flooding the FCC website