(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.
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