So You Just Bought Sex.com For $13 Million – Now What? | Hacker News Reader

So You Just Bought Sex.com For $13 Million – Now What?

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36 pointsbjonathan59 comments

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.

Are there any single, common word domain brands that have been successful? I can't think of a single one.

From what I understand, Diapers.com is a highly successful business. Their parent company Quidsi, who also owns Soap.com, was recently acquired by Amazon for $540 million.

I would go with a reoccurring membership porn site.

125k daily visitors x 1% conversion rate = 1250 new customers per day

1250 new customers per day x 365 days in 1 year = 456,250 new customers per year (reached at the end of the first year)

456k new customers per year x $120/year in revenue (assuming $10/month) = $54.7mil per year in revenue

(though the math isn't fully accurate since it doesn't take into account churn but it works to illustrate a point.)

With a tiny bit more brains, you could take that up to $100mil/year, prove the stability of the revenue and sell for 10x of revenue at a cool $1 Billion Dollars (Dr. Evil pinky finger lift)

Obviously it's much easier to be an armchair quarterback and pull numbers out of thin air than to execute and create real value.

What justifies assuming a 1% conversion rate?

How many people do you run into walking around town, what would justify a 1% conversion rate in selling products to them? Just because 1% seems small does not mean it's a guaranteed conversion rate.

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.

1% would be a very badly converting adult site so I would think that would be an ok assumption.

I don't know if you have stats or if you're just making numbers up, but in all seriousness if you have the conversion rates for some popular sites I'd love to see them. Just for curiosity's sake.

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.

That's where the real money is.

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.

You've got a goldmine there!

With a retention like that you could drop your conversion rate even further (so market more aggressively) and still come out on top.

Don't bother optimizing the conversion, the retention or any simple formula but instead focus on optimizing the one number that matters: net profits.

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.

A couple of ideas:

- increase your price (see: http://news.ycombinator.com/item?id=1639712).

- consider partnering with sites that you select to send you traffic and give them a kickback of for instance $20 / signup.

Agreed. Retention is key to any subscription based business.

And I was thinking 1% was too generous. My guess would be more like .01% to convert.

In a world where porn is mostly free, I doubt you could get a 1% conversion.

You doubt that based on what?

http://srv349.rackco.com/showthread.php?t=119198

This company promises 1:300 rate. subscriptions. 1 out of 300 unique visitors will join. I had 1200 unique visitors and no joiners.

http://www.upiu.com/articles/pornography-business-is-booming

She the conversion rate from viewers to paying members is about one in 200

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.

I suspect it's not that easy or the previous owner could have restructured the business and its debt instead of declaring bankruptcy. Truth is there is no money left in sex/pornography.

You consider you'd get 125K new daily visitors, while in reality it's probably (mostly) the same people visiting the site.

Why would people come back to a landing page littered with ads, more than once every few months?

Yep, it's an assumption that would need to be tested and considered.

I don't think I've gone to random domains since I was on a 14.4 modem. I find it pretty hilarious that that domain can break even just parked.

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.

I wonder if some of them come from people "searching" from the address bar, or even from search engines?

(Google results for "sex" are kind of funny.)

Sell it for $15 million to someone who is more of a sucker than you are.

Isn't that the same plan Goldman Sachs has for its 'investment' in Facebook?

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.

Honest question: Got any numbers to illustrate that last point?

Sure: Here are some numbers based on affiliate network stats, from the affiliate side:

Amateur Match conversion rate is between 14-22%, paying out an average EPC between $0.70-$1.07.

If they can afford to pay more than $1 per click and still be highly profitable, I assume they're converting free users to paid/upselling quite well.

If someone remains a member an average of 3 months at $30/month, you're looking at a CLV approaching close to $100.

Dating sites done right are FAR more profitable than porn sites.

That seems odd to me because if the dating site works people will not be coming back.

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.

> if the dating site works

That's a mighty big if. Especially for an adult dating site, where I'd guess the guy/girl ratio would be at least 500:1.

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

I would re-open the craigslist.com "Adult" section.

Actually, that's a great idea - making a version of this at sex.com, with ads, could be amazingly lucrative.

But don't base it from the US.

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?

> What would be the obstacles to taking a porn business public?

Nothing, really:

http://www.forbes.com/forbes/1999/0614/6312214a.html

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.

Oh, as regards real, I mean dollar volume. You won't get Goldman to underwrite an IPO for such a small valuation. You could certainly do a shell merger or bulletin board/pink sheet listing.

The owner's no dummie, but dang, maybe a little more planning?

How about they just buy my company (or hell, hire me), rebrand to sex.com, advertise mainstream utilizing a real ad agency, and easily turn in 20-30 million over the next 3 years.

Your domain name seems extremely sub-par for how high quality your site is.

I messed around for a few minutes and came up with:

  funtickle.com
  meowsex.com

Not sure if those are any better, but just wanted to see what was out there. ;)

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.

1. Open up a website for students. Student EXchange = sex.com 2. Stack EXchange can get a shorter name or use them as a short URL.

Wait until the next stupid bubble and sell it for a profit. Easy money.

If I had 125k more visitors a day, I'd make around $272,100 a day.

How about anonymous postings of sex encounters/sex fantasies?

How can you possibly go bankrupt with a domain name like that?

You would have to hire a very expensive team and completely mismanage your funds.

It's a goldmine. You're pretty much guaranteed to get traffic.

The last time I paid for sex it only cost me dinner and my self-respect. I bet you get a really good time for $13 Million :p

http://theinternets.com

* gasp * someone bought The Internets! All of them! What'll we do?!

does anyone have any idea what i could use shag.me brought it a few years ago when the .me come about but still dont have any idea what could be a good idea for a site all ideas welcome,

thank you

matt

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