Programmer behind YouPorn empire arrested in Belgium

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by car • 14 years ago

122 83 14 years ago

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GuiA• 14 years ago

I've always mused with the idea of creating a user-submitted-content based porn website.

The base code can be whipped out in a few days, and getting traffic for that kind of thing seems to be super easy. The goal would then be to make minor money through smart advertising (most porn websites today are usability hell, with every single white space covered in ads; i'm sure one could do some smart conversion optimizations there), and major money through acquisition when the brand is built.

I feel that this might be a "low hanging fruit" kind of venture because of the social stigma associated with it ("I'm CEO for a social cupcake sharing app" is so much more cooler than "I'm CEO for a porn site"), but I might just be naive about the whole thing.

zalew2• 14 years ago

porn is a low hanging fruit? it's a tough market.

rdl3• 14 years ago

If I were to do it, I'd just run a porn site and a non porn site with the same code base. Then I could make money from porn while talking about the non porn side of the technology at parties or whatever.

Also, I think there was a bit of a land grab in porn before; it has really consolidated to a few big players, with margins otherwise in decline. Manwin/youporn is one of those big players, from the article.

The other bad thing about porn is that even if you have high revenues (and earnings), companies often sell for something like 1x earnings, which is crap.

joke-away• 14 years ago

>run a porn site and a non porn site with the same code base

so like reddit then

true_religion9• 14 years ago

Bit of backstory....

In the mid 2005s, the 'tube' sites emerged serving theoretically user-generated content in the vein of Youtube. In reality, very few actually focused on ameteur material, and most just had full videos or clips from paysites.

The ones with full videos were considered to be 'illegal' tubes but the adult market doesn't have an organization with the clout or lawyers equivalent of the RIAA so most of the content stayed up.

The tube sites made their money through advertising and through CPA affiliate programs for paysite networks. Paysites had a love-hate relationship with the tubes. On the one hand, they got traffic conversions. On the other hand, the tubes would use content without authorization which hurt the conversion ratios, and made the paysite content as a whole less valuable to surfers in the know.

Manwin was originally a paysite network, but unlike their competition they embraced the idea of tubes. They launched paid-content websites (under the Brazzers brand) while founding their own tube network (KeezMovies, PornHub).

That vertical integration gave them higher margins than the compeition---they owned both the traffic generators and the eventual paysites needed for conversions. As they became more successful, they went on a buying spree and through various mergers and name changes emerged with over 10 paysite networks under their brand as either wholly owned entities or content partners (e..g Playboy), and 8 of top ten tube sites.

As for margins....

I believe there was a margins slump from 2007 onwards due to the slump in the advertising market as a whole. But mainstream adprices are creeping upwards, so adult-side margins should also be improving.

> companies often sell for something like 1x earnings

AFAIK all deals are closed behind the scenes, and mostly between private parties. So the information on the sale price is not good.

_6tfp2• 14 years ago

Creating your own porn site looks much easier then it is. You'll need a lot of traffic before you earn some bucks, and all competition is fighting for the traffic. But it's a fun thing to do!

If you want to start out, I suggest to get yourself a domain name and use http://www.smutnode.com to setup a tube site in minutes.

_6tfp2• 14 years ago

Another tutorial for new people to the industry can be found on http://startapornsite.smutnode.com

kysol3• 14 years ago

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.

true_religion9• 14 years ago

For the record, he's talking about user-generated content so even if users upload unlicenced materials he's covered by DMCA protections.

He won't have to worry about licencing content, since he won't knowingly use copyrighted content beyond what freebies are offered to CPA partners.

I think everything you're saying makes sense for a Paysite, but he's not a paysite---just an affiliate and traffic producer which is a bit more downstream.

As for dealing with the major players to have traffic funnelled through him, he won't be able to do that initially because (a) traffic trades require that you have traffic to trade and (b) you're going to want to have your traffic stream through organic links and SEM since you likely can't afford to pay for traffic for a non-paysite: the ROI just isn't there in advertising.

kokey• 14 years ago

The main thing that changed in the industry is that now these adult video streaming sites basically serve you the content for free, and like television that's paid for by the advertisers, it's paid for through affiliate fees. These are mainly affiliates for the online gambling companies who don't have access to other advertising channels, and a bit of adult dating. The issue is that conversion from this type of content to gambling doesn't make perfect sense, so it's often a better idea to produce content that are a natural fit to gambling instead.

true_religion9• 14 years ago

> user-submitted-content based porn website

If you think about it, there's no real difference between the code base for a user submitted porn-site and a user submiitted site for videos and pictures. The only change is the template used on the frontend, and the nature of what you allow to be uploaded.

So a user-submitted content site can be created with a turn-key script that can be had for less than $1000.

Now, in my experience with ad-based content.... advertising rates vary by a pretty sharp degree from month to month if you go through a 3rd party agency. You can make 6 months at X rate, then see a sudden unexpected 30% decline on the same traffic. Couple that with the fact that adult-based ads pay less. For example, Facebook makes $1.00 Desktop CPC, but adult ads regularly sell for $0.01 CPC---1% of mainstream!

Because of that, I can see why sites will have 8 or 10 ads per page in order to get enough margin to cover unexpected rate losses.

I do think you are 100% right about one thing. Smart conversion optimization would be a huge boon in the adult market. Currently, none of the major CPA firms take adult content so its a green-field market. The schelp factor is that you'd have to work with 100s of independent accounts, all with minimum payout floors, but its doable with the right team and lots of traffic.

notatoad• 14 years ago

I question how much of the "user submitted porn" is actually user submitted. Flickr, YouTube, etc i buy that all the content is submitted by users. Porn sites, it seems far more likely that the content is mostly uploaded by paid staff. It's hard for me to believe that there are people who see a porn they like and think "wow, I should submit this to youporn". If you're going to build a porn site, the biggest part of the job is probably seeding it with content.

kysol3• 14 years ago

The major tube sites from the looks of things are primarily dominated by other sites trying to fight for traffic via branded videos, or by cutting a deal with the owner to have branded pages that not only showcase their uploaded content, but a few banners here and there to try and push half satisfied viewers to the core content hub.

I'd guess that the tube site is getting some sort of service fee for allowing the sites to have a "premium" service, as well as some sort of kick back depending on the conversion rate from leads generated by the content (why the premium videos are generally listed higher).

If you think that 1) the videos are legit and that guy just happened to stumble across those two girls in the woods, then you're also going to also believe that 2) most of the content is amateur. - It's a sad truth that the industry preys on the weak minded.

I'd say that a fair amount is self-uploaded (via content bought from providers, or produced specifically for the site), but a majority is uploaded from other content houses to try to promote themselves. Think Free to air TV... average crap shows, filled with 80% advertising.

true_religion9• 14 years ago

> seems far more likely that the content is mostly uploaded by paid staff.

That's true, but the paid staff is on the end of the content producers in exchange for having their advertisement placed next to the videos.

Also, Manwin actually charges content producers a 'content rate' in order to use their tube-sites for traffic generation. In the beginning, most tubes had unauthorized full videos which would draw in a user base, but were succeptible to DMCA take down. Now with their premier place in the marktplace, Manwin seeds their tubes with either their own content or requires content partners to produce 1 full video per X weeks in order to remain a featured partner.

As for clips... those are freebies given out to affiliates, I have a hard time believing that everyone doesn't use bots to upload that to the Tube-sites.

fafner• 14 years ago

Manwin, the company behind YouPorn, also owns Porn production companies such as Brazzers.

jiggy2011• 14 years ago

I don't know, if you browse certain subreddits you will find a lot of user submitted content which was submitted for free.

Alaskan005• 14 years ago

"most porn websites today are usability hell"

How do you know :)?

They are scripts for almost every successful model out there but the problem is reaching mass user adoption. For under $1000 you can have a site done, logo and all but if not enough people submit their videos...

philip1209• 14 years ago

Most major ad networks do not allow adult content on the pages where they advertise. This means that you lose both access to quality ads (that bring the user experience you desire) and you lose the higher CPM/CPC of better networks. This means that monetization is the difficult aspect, and "usability hell" is brought by oversaturation with ads to compensate.

tomjen33• 14 years ago

Actually that is an oppertunity for those who are good at convincing people to go to the sites that normally don't advertise on porn and show them the advantages (cheaper rates).

I understand that you don't want a brand like ms. Fields cockies next to a gangbang, but that is soley for ads that promote brand adwareness -- those that directly sell products could properly advertise on porn sites with little risk. I doubt anybody will discount bingocardcreator because Patio11 got a great deal on ads.

(In fact people are known to be less rational when turned on, so it might make sense to put less "need to have products" closer to the porn).

moondowner• 14 years ago

YouPorn actually is a pretty complex (and scalable) system, you can check Eric's slides which he gave about this on SlideShare: http://www.slideshare.net/shurastik/eric2012-12337839

PanMan• 14 years ago

I'm not so sure about that. I just worked on a website that contained some video (for a children's show TV format), and we did some calculations on what hosting the video would cost.

With 50 Mb/video, you can do 20 video's for 1 Gb of traffic. Which, at AWS cost 12 cents. Let's say you'd pay half that at a cheaper CDN, 6 cents. You would, just for transporting the video, need to make 6/20=0.3 cents/page. That's $3 CPM, which seems high. And this is only for transporting the video, not the other infrastructure needed. Not so sure that's a winning business-model.

To be fair, we also looked into setting up our own servers, some places have a few TB traffic with a $50 VPS, but than you need a lot more sysadmin work.

true_religion9• 14 years ago

AWS is the most expensive "CDN" that I've ever seen in my life. Their prices rival Akamai and their service certainly doesn't.

With volume, you can get CDN pricing to 1 cent/page. The adult market, if nothing else, is a place where even mid-range sites can have massive volume and cut special deals.

henrikschroder• 14 years ago

How would you compete with XTube, YouPorn and Cam4 that are already entrenched in the market and occupy various niches?

filvdg• 14 years ago

Just like megaupload was a bandwidth monster, you would be surprised with the hardware and bandwidth requirements these sites have once they become popular ....its not a system you run on Amazon AWS ... And investment in network protection you need to defend against DDOS ...?

DanBlake• 14 years ago

The guy has to be making crazy bank. Wonder why he didnt just pay his taxes. When you are bringing in a likely 100m a year, what difference will another 10m make? I think the guys behind huge sites like this just have weird personality's that make them like to hack every system they can which obviously ends up in situations like this.

Tharkun• 14 years ago

Breaking even on a small website is easy. Doing it on such a large scale, not so much. Never mind making a profit.

People have this unrealistic view of porn site owners, as being rolling in the dough. It's true for soeme, but they're a minority. Doing porn brings a lot of heat, not just because every tax man out there assumes you're cheating, but also because if anyone is geetting naked for you, you MUST be some kind evil human trafficer, and probably a child pornographer as well. It's a strange lil world. Sometimes I miss it.

marme• 14 years ago

taxes on 100m are not 10m more like 45m as the top tax rate in germany is 45%. The 100m a year is gross revenue also not net profit so he is probably pulling in a lot less after operating costs. People just get greedy and dont want to pay their taxes

brianchu• 14 years ago

Just one note: 45% is the top marginal tax rate. No one is actually taxed such that they lose 45% of their income through personal income taxes. The effective (average) tax rate will be much, much less.

EDIT: not to mention lower taxes due to deductions, capital gains, legal tax shelters.

zura• 14 years ago

Do not wanting to pay 45m out of 100m (or even less) is not a greed, it is a common sense.

avoutthere• 14 years ago

Note that he has not yet been found guilty.

mikeburrelljr• 14 years ago

Be sure to watch the video with Fabian Thylmann on the bottom of the page - or direct linked here: http://youtu.be/VCQCsWOivGo

rprus• 14 years ago

Crap, that's my boss =/

daimyoyo• 14 years ago

Not anymore.

shawn-butler• 14 years ago

Probably only briefly. The only thing that kept Martha Stewart from retaking the helm of her company was an agreement to settle a civil suit the terms of which included a 5 year ban.

Do the criminal penalties for tax evasion in Germany also entail such a ban? In the US, it is fines and imprisonment only.

billirvine2• 14 years ago

Alas, Hacker News - - - I knew ye well.

(poor subject for this site)

TelmoMenezes• 14 years ago

I find your reaction fascinating. You find the topic of porn so disturbing that a mere (very dry) discussion of its business side ruins the entire experience of HN for you?

On a side note, you may be naif about hacker culture. On one hand, a lot of hackers consume porn (by virtue of the fact that a large percentage of the general population does). On the other, we tend to be curious about stuff, even stuff that is considered a "poor subject" by conventional social norms. We're not that big on conventional social norms...

gordonguthrie• 14 years ago

> even stuff that is considered a "poor subject" by conventional social norms. We're not that big on conventional social norms

Hmm, if you want to avoid conventional social norms, then NOT talking about porn on the internet is the way to go, I would say. The world is awash with people talking about porn.

Xylakant• 14 years ago

Especially given that the article was released in a very renowned german newspaper in the "business and finances" section. There's no actual porn anywhere around.

billirvine2• 14 years ago

> I find your reaction fascinating

Ooo fun, -4 on the Karma for that comment.

My comment was not related to porn so much as to the obvious link-bait and predictable "0_o pron!" pile-on. Smells faintly of Reddit with a soft lingering bouquet reminiscent of DIGG of yore.

theorique• 14 years ago

This is a technical and business discussion regarding hosting of large quantities of user-submitted / user-generated video content.

This is squarely within the mandate and range of interests of Hacker News.

dutchbrit• 14 years ago

I sometimes don't understand how American Porn Tubes can survive with 18 USC § 2257: http://www.law.cornell.edu/uscode/text/18/2257

hackerboos2• 14 years ago

Ask anybody who runs a porn site; nobody is checking documents.

tomjen33• 14 years ago

> is produced in whole or in part with materials which have been mailed or shipped in interstate or foreign commerce, or is shipped or transported or is intended for shipment or transportation in interstate or foreign commerce

You don't ship anything made with materials -- the videos are all digital, so there is no shipping or transportation going on at all -- so what you are doing doesn't fall under that requirement.

tjaerv• 14 years ago

http://gawker.com/5967224/porn-king-fabian-thylmann-arrested...

shizzy0• 14 years ago

It was as if a million moans cried out in ecstasy and were suddenly silenced.