I've been out of the loop for too long, but back in the day (when Tube sites were just starting up), it was getting harder and harder to make money. So many people were starting up, and Visa was cracking down hard on charge backs.
The biggest issue back in the day was Content licencing, which with today's whole DMCA crap, I would expect it to be far worse on a user-generated content site. If you licensed images for a specific domain and they appeared on another domain you owned, you would have legal representatives sending you emails (most of the time you would just do a deal with the owners and extend the license). This wasn't the result of the content being found by the owner, this was from organised firms that were hired just to scan images and videos looking for specific sets that they represented. When I hear about user-generated content sites these days, I think of one giant nightmare when it comes to content.
It's easy enough to throw something together and try to make some money from advertising, but to be successful in that industry boils down to 3 things. Traffic, Quality and Retention.
- You won't get subscribers without Traffic (fairly simple). If you think that you can get organic traffic off the bat, think twice. You'll need to set up some deals with guys who own key domains to have them funnel traffic through to you. (I don't know if this sort of market still exists, but I can't see that it would have died off)
- To convert the subscribers you need Quality or unique content (which the successful sites will usually do in-house or through companies that will work with them to produce unique content). If you're going to throw up a few galleries of cheap $5 content sets that everyone has seen before, you're not going to get the conversion.
- Retention, is a tricky one. Back in the day you used to count on the subscriber, doing a one off then forgetting stinging them with a re-bill or two, or three. Then when they got their bill they were too embarrassed to challenge they usually silently cancelled. As I said before, around the time I left, Visa was starting to really crack down on charge backs as subscribers had actually grown a pair and started wanting their money back. The only way to fight this is to offer what you advertise and more. You won't keep everyone happy, but you'll see a nicer charge-back rate.
For the record, I was a coder, I wasn't the guy behind the camera, or even the guy that designed the sites. I dealt with the systems, and kept them running. It's not a glamorous title to throw around at dinner parties, but it does bring up some interesting conversations when you start talking about the things that you seen in the industry.