BDSM and Adult Personals Sites

(Crossposted from Gloria Brame's site.) 

Let's just say you're the kinky type, you're on the web and you're looking for ... someone. A play partner, a date, a short-term thing, or a long-term thing, it might be anything so long as the person has BDSM interests that complement yours. Where do you look on the web?

There are seemingly a lot of choices. The adult online dating market is dominated by Adultfriendfinder.com (or "AFF"), which claims about 24 million members.  Although it bills itself as "the world's largest adult and swingers sex personals site", its profile builder gives you the options Bondage & Discipline, Sadism & Masochism, Cross-Dressing and Miscellaneous Fetishes, so it actually delivers more kink per click than some BDSM-specific sites. Those other sites include Alt.com ("A supportive alternative lifestyle community" - how friendly) and Bondage.com ("the world's largest BDSM community and the most exciting bondage and fetish website" - unsupported claims, but you admire the enthusiasm). Other adult personals sites that have BDSM components are Passion.com ("sexy personals for passionate singles" - meaning, I want to get laid but not be so blunt about it) and Outpersonals.com ("worldwide gay personals" and "get laid today" - gay men go for the blunt).  Taken together, these sites have about 2.3 million unique US visitors a day, with AFF comprising 1.75 million of that.

But in fact these are all the same choice. AFF, Alt, Bondage, Passion and Outpersonals are all owned by one company, Various, Inc. The Various family of sites dwarfs the competition in the adult personals market segment, like Sexsearch.com, IWantU.com ("where you are wanted" - catchy), Collarme.com ("the largest BDSM community on the planet" - uh oh, they'll have to arm-wrestle Bondage.com for the title), and Swinglifestyle ("start your sexual revolution!"), which along with a couple other sites thrown in there, don't even add up to 500,000 US visitors daily.

So how did we end up with what is effectively a monopoly in online adult personals? It really wasn't intentional. From an interview with Andrew Conru, the founder of Friendfinder:

Shortly after we went online with FriendFinder [in 1996], people started posting explicit photos that pushed the envelope of a friendly dating site. Our first response was simply to delete profiles with explicit photos in them. Later on, instead of fighting the persistent trend, we decided to go with it, and we created a new site called AdultFriendFinder. It started out as a kind of release valve for the more erotic adventurers. But it was so well received, it just grew like kudzu from there.

Today Adultfriendfinder knocks down about $100 $120 million in revenue annually, one fourth sixty percent [see David Evans in comments] of the total revenue for the Various group. I think AFF's success is attributable to what's called "first mover advantage", a situation in which the characteristics of a market segment are such that the first major entrant into that segment can acquire resources that makes it difficult for competitors to emerge. The main criterion an adult personals customer is looking for is a large number of ads to search, but there are a limited number of people running such ads in any given geographical area (outside of say, New York City), so the adult personals site that gets biggest fastest wins. AFF won that race.

There's another reason that a competitor to Various/AFF doesn't spring up, that is illustrated by this story about how AFF founder Conru can't find anyone to buy AFF:

Most investors can't do anything about Various other than watch it expand. Many firms have "sin clauses'' with their financial backers that outline the types of companies they are strongly discouraged from backing, such as adult entertainment outfits. An IPO is an option, but stocks of publicly held adult content companies get discounted heavily because so many investors, like mutual fund managers, can't buy the shares. There also aren't many potential purchasers and Conru says his company is worth more than they can afford. There's no easy way to "exit'' Various.

"Exit", in the investment sense, means "cash out", make a profit. Potential investors in competitors to AFF can see the difficulty that Conru is having in exiting, and investors are always interested in the path to profit. Investments that can't be turned over don't interest them. So despite Various/AFF being profitable, the investors who might fund a competitor stay on the sidelines.

Still, there are signs that Conru is seeking an IPO. Data point number 1: Acquiring smaller sites, like the Bondage.com acquisition earlier this year. Firms seeking to go public will sometimes "roll up" competitors first, to create a bigger splash. Data point number 2: Late last year, Various went out to hire a CFO. Data point number 3: A really good writeup at CNN Money with a mention of the fact that AFF appeared as a gag in a recent movie starring Diane Keaton and Mandy Moore. It's portrayed as a joke that AFF had nothing to do with, but I read both the story and the movie placement as conscious attempts by Conru to break down resistance to investors buying into his IPO.

All of us kinky types should be rooting for Conru to have his IPO. The reason is that AFF going public means a huge pool of capital will become available for competitors - which will mean actual multiplicity of choice when you're out there on the web ... looking.

Comments

[David Evans]

Where did you hear that Various makes $400 million a year? What other lines of business make up the rest?

[Mithras]

Errr, I read it somewhere from an interview Conru had given. I guess I better go back and find a cite.

[Mithras]

Okay, this Business 2.0 article from March says AFF provides 60% of a total of $200 million. The spurious rumor about FF being sold quoted a revenue figure of $298 million - but consider the source. It's possible I picked up the figure of $400 million from this Jeremy Zawodny post from 2004, when in fact he was quantifying total 2003 spending on online adult content (although that seems low). So, I dunno.

[Charles Pisano]

Thanks for the informative article. I run ifoudu.com that uses iwantu.com back end. This works very well because I don;t have to go out and find members they are already available to me.

Charles Pisano
http://www.ifoundu.com