Adult Site Broker Talk Episode 78 with attorney Michael Fattorosi

Adult Site Broker Talk Episode 78 with attorney Michael Fattorosi

Bruce F., host of Adult Site Broker Talk and CEO of Adult Site Broker, the leading adult website broker, who is known as the company to sell adult sites, is pleased to welcome Veteran adult industry attorney Michael Fattorosi.

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Listen to Michael Fattorosi on Adult Site Broker Talk, starting today at

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Speaker 1 (0s): This is Bruce Friedman of Adult Site Broker and welcome to Adult Site Broker Talk, where every week we interview one of the movers and shakers of the adult industry, and we discuss what's going on in our business. Plus we give you a tip on buying and selling websites this week. This week we'll be talking with adult industry attorney Michael Fattorosi.

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Now let's feature our property of the week. That's for sale that adult site broker we're proud to offer for sale. One of the most famous affiliate programs in the adult industry, they're a subscription based dating adult social network and Cam's affiliate program with exclusive ownership of custom developed websites and offers in straight gay, hardcore and mainstream niches. They've been a prominent and sustainable affiliate program for 18 years. The company has weathered countless industry changes and regulations, and has always paid its affiliates well, and on time, this includes the entire affiliate database with historical performance data.

Plus the email list with 6.4 million active addresses, the technical platform has recently been rewritten and is modular based and built for scale. The entire system is hosted in the cloud, which allows for easy third party integrations, scalability, and cost optimization with a focus on billing optimization, traffic monetization, and risk mitigation. The business intelligence system and team have been designed to maximize lifetime value and build a sustainable and longterm stream of passive income.

There's a full technical infrastructure, including billing load balancer, gateway, and call center tools with customer support and content moderation. This is a turnkey business that would allow anyone that is great at traffic acquisition to own the entire life cycle and lifetime value of the customer. It has the technical infrastructure, reputation, relationships, and systems and processes to massively scale revenue, all this for only 2.95 million us dollars.

Now time for this week's interview. My guest today and adult side broker talk is adult industry attorney Michael for our return visit. Michael, thanks for being with us again today on adult site. Broker talk,

Speaker 2 (3m 39s): Thanks for having me on again.

Speaker 1 (3m 40s): It's my pleasure. Now the law offices of Michael w federal Rosie were established in 2002, Michael originally set up in LA and now lives in the Netherlands. He represents various types of clients and adult entertainment, depending on the issue. He can represent clients within all 50 states within the U S as well as in Canada, Europe, Australia, and the UK. Over 90% of his clients are companies and personalities in the adult industry. Michael's also known on social media as porn law.

He's been a licensed California attorney since 1997 and has been representing companies in the adult entertainment industry since 2003. He is a graduate of the American university in Washington, DC and Whittier law school in LA. Ray was a member of the law review. He's been a seminar speaker, numerous adult industry events. Michael also has written articles for expos world and expos video adult store buyer magazine, and has been quoted on Fox news, CNBC TMZ, the Hollywood reporter Playboy magazine, the daily beast, the site, broker talk, and other various media outlets.

He's been interviewed and appeared on K TLA TV news in LA. And he's been seen on reality TV shows my bare lady too on Fox reality, as well as the right hand and web dreams on HBO and showcase Canada lately. Michael's branched out into the export business. He exports wine, pasta sauce, pasta olive oil, and marmalade to the U S and meets and hard cheeses in Europe. So Michael, last time we discussed your food and wine manufacturing and export business.

First, for those of our listeners who don't know what you're doing there, why don't you tell them a little bit about it?

Speaker 2 (5m 27s): Well, I mean, I, you know, I moved here. I moved to Rotterdam and the Netherlands two years ago and I'm set up an export business to export various Italian, you know, specialties and wines directly to the United States out of Italy. And I've got my own pasta and pasta sauce and olive oil label. And I also import into the Netherlands for distribution into restaurants and to somewhat, you know, small private sales, but it's mostly restaurants.

A lot of my products are carried by the largest Italian grocery store in Amsterdam. So if you have to go to Amsterdam, you can find my wine there right now. Yeah. It's, you know, it's, it's not that I'm bored with the law, but it's sort of like, you know, I'm 52 and God at 50, I decided that I was going to enter into the last phase of my life. And I wanted to do something in addition to being a lawyer, something that I could enjoy during, I don't know if I'll ever be retired, but, you know, as I kind of slow down my practice, if I can replace it with some other things, it would be interesting.

And so now the plan is in another year, I'm probably gonna move to Florence, Italy and get an apartment in the city and then maybe buy a country house outside Florence. That's sort of the plan right now.

Speaker 1 (6m 56s): We're going to have to visit you, man. That sounds great. I'm in, I I'm, I'm a, I'm inviting myself.

Speaker 2 (7m 2s): Well, if you're in Italy, come by, you know,

Speaker 1 (7m 5s): We all, we want to go back. We went in September of 2019 up to the, the wine growing region in the north. And yeah, God, I can never think of that. Oh my God, what a week went thereafter, the Prague show and best vacation I've ever had. My first time in Italy, not my wife's first time she had been there once before and God, I just, I just had such an amazing time.

Speaker 2 (7m 33s): Italy's such an amazing place. It really is. If anybody, for those who are listening it, you know, it's a lot like California. It really matches it's about California in size. And it's also like California climate. So in Northern Italy, the mountains, it's cooler weather. You've got some wine growing like you do in California up in Napa. And then as you move further south, you get into more of the Mediterranean climate, the warmer weather, the beaches. And then when you get all the way down to the very end of the boot in an area called Pulia, you have a white Sandy beaches, like you would find in Greece on Mikan in those areas.

Yeah. Oh, it's, that's one of the hidden gems of Italy that nobody really knows about is the really Southern beaches. They're just absolute. Absolutely beautiful.

Speaker 1 (8m 23s): I've heard of it first. I've heard of it. Well, as far as your one and one in food business, I mean, that's a big passion of yours. Like it is of mine.

Speaker 2 (8m 33s): I mean, it's something that I grew up with my father doing. So my father would make his own wine and we'd make his own pastas. We, you would actually make the dough and make pasta. And then he would also, he wouldn't grow his own olives. We didn't have like an olive orchard, but what he would do is whenever he made, he would start the sauce with a blend of olive oils and Bazell and oregano and black pepper, red pepper,

Speaker 1 (9m 4s): Garlic.

Speaker 2 (9m 7s): And that was sort of the base to his sauce. So what I did is I took that and I turned it into a dipping sauce within a bottle. People love it.

Speaker 1 (9m 15s): Okay. So, so Mike, next question is, when am I going to get some of this stuff out here in Thailand?

Speaker 2 (9m 24s): Yeah. I've never shipped to Asia. I have no idea. Even if I can ship to Asia, I have no idea how much it would cost me to ship to Asia. It's it's it is definitely expensive to ship this stuff. That's sort of the downside of having it. Well, that's a downside of having the business because, you know, people want the products, but when, when you factor in the cost of shipping, you know, they don't want the products anymore. And that's the problem. It's almost, it's a hundred dollars to ship a box to the United States.

How much? A hundred dollars. Yeah,

Speaker 1 (9m 58s): I know.

Speaker 2 (9m 59s): So when you add in the price on top of that, of the products, you know, you're talking about a $200 purchase, so

Speaker 1 (10m 6s): Yeah, and, and here you got to add all the taxes in and the government error is absolutely criminal, which one isn't, but this, this one more, this more, more than anything else. So I guess the business is going well,

Speaker 2 (10m 19s): You know, right now I'm trying to decide what I want to do with it because of the plan to move to Italy next summer, you know, do I want to continue it because I'm also thinking for a couple of years now, I wanted to get into the tour business in Italy and you know, with COVID I've not been able

Speaker 1 (10m 37s): To do that. I was going to ask you about,

Speaker 2 (10m 41s): Yeah, well, I was, I w I started this, I started the tour business in 2018. That was sort of like a launch, but then we didn't really, we, we really didn't launch it 2019, and then it was summertime. So we didn't really get any bookings. So 2020 was going to be the year. And then of course, you know, and then 2021, we thought about it, then I was like, no, there's probably not going to be enough. And now I'm trying to decide if 2022 is the year and, you know, with COVID, it's so difficult for people to travel.

Like right now, I was supposed to have a friend come visit me in the Netherlands. And he had the backout because the Netherlands has imposed a 10 day quarantine on any Americans arriving, whether they're vaccinated or not.

Speaker 1 (11m 26s): Any anybody that comes in here, it's 15. We had to go through

Speaker 2 (11m 29s): It. Yeah. I mean, it's, it's ridiculous.

Speaker 1 (11m 32s): And we we're and we're fully vaccinated.

Speaker 2 (11m 34s): Yeah. Yeah. That's what, that's what the Netherlands said. They don't care if you're vaccinated or not. You have to do a 10 day quarantine and two tests to get out of warranty. Yep. Yep. You can do one at five days and get out, or you can do one at 10 days and get out. So really hard to try to plan a,

Speaker 1 (11m 51s): Not a good time in the world now to be in any travel related business.

Speaker 2 (11m 58s): I don't think that's going to change. I don't see either. I don't see COVID going away.

Speaker 1 (12m 4s): No, I don't either. I don't either. I, I think COVID is going to be here for years. And, and then what about the next pandemic? And if you, if you read it epidemiologists and what they have to say, this is just the first and, and, and probably not the worst.

Speaker 2 (12m 24s): Well, I mean, it's not, it's not the first, not

Speaker 1 (12m 25s): The first, but first of first of a string and they think is what you're saying.

Speaker 2 (12m 30s): I don't think that's going to happen. I hope not.

Speaker 1 (12m 32s): I hope no.

Speaker 2 (12m 34s): I mean, these things, it's what the last one was a hundred years ago. So I mean, you know, out, if we'll have another one in five years or 10 years or 20 years, it may be 50, 60, 70 years it'll happen.

Speaker 1 (12m 46s): If certain parts of the world continue to have the kind of relationship that they have with animals and eating animals that shouldn't be eaten. Okay. I'll say China, then the next pandemic is not far off. And it's just, it's just, it's inevitable.

Speaker 2 (13m 10s): No, I'm still not convinced that this came from an animal. I really think this came from a leak in a lab.

Speaker 1 (13m 16s): Sure. But, but it had to come from something originally. And, and, and so from a bad exactly. Exactly. Okay. Well,

Speaker 2 (13m 25s): This is true. This is just too perfect of a virus to come from the wild.

Speaker 1 (13m 29s): Yeah, I guess you're right. I guess you're right. So a lot's obviously been happening on in our industry lately, MasterCard, once again, change the rules. So what's your take on that?

Speaker 2 (13m 42s): Well, I mean, it's not something where they've changed. The rules what's happened. And this has been happening with billing companies for years is that, you know, we don't have governmental regulation. We don't have obscenity cases anymore. Really. We don't have self-regulation. So almost the vast majority of regulation of content in the United States is being done by the credit card processors. It's true. And you know, they they've done this for years now. I don't know if you remember, years ago, there were, there were sites that specialized in sleeping or sites that, where they put girls under hypnosis.

And those were around for a little

Speaker 1 (14m 26s): While, like simulated rape.

Speaker 2 (14m 30s): It wasn't really rape, but it was more a lack of consent. Right? It was more how

Speaker 1 (14m 37s): You are an attorney.

Speaker 2 (14m 39s): Well, listen, it's that? Well, that's the problem that the credit card company had. That's why they didn't call it rape content. They called it lack of consent content because the viewer couldn't really determine that there was consent being made by the participants. And so the credit card company said, well, we're just not going to bill for that. And then all of a sudden went away. Right. And so they, you know, they've been regulating content like this for years. So really think what MasterCard is doing is, you know, all that new, I think what MasterCard is doing for the first time is they're basically imposing the 2257 rules.

They're saying, you know, we're just going to make sure that everybody file follows 2257 to some degree, you know, it's not a perfect 22, 57, but they want to make sure that everybody has IDs, that everybody's age is checked and that there is consent and that there are model releases. And so, you know, they're there and that's kind of the problem with the platforms. You know, what happened was as porn hub started and the tube sites started and they moved outside the United States and basically thumb their nose at the FBI.

But the FBI, you know, I was at a X conference years ago. It's probably 13, 14, 15 years now. And we had an FBI agent and literally the FBI agent said, well, you know, if you're overseas, we could come inspect you, but we probably won't. And that was basically a green light for everybody to set up outside the United States. And because the platforms were set up outside the United States and the tube sites, they didn't care about 2, 2, 5, 7, because they knew it would have never been enforced against them by the FBI or the department of justice.

Right. So everybody that came after that, you know, just said, oh, well, you know, we don't need to do this because pornhub's not doing it red. Tube's not doing it. This company's doing it that, so why should we do it? Yeah. And that's what allowed all of this uploader, you know, user generated content to tube sites and to other sites to happen because nobody wants to give away or, you know, post their, their personal information to porn sites. They just don't. And so now with what happened with PornHub, with the girls do porn and the allegations that there was a child abuse material found on their site, MasterCard just did the logical thing and said, well, you know what, we're just not going to process for you unless you regulate yourself.

And, and then, and then nobody really regulated themselves. And then MasterCard, it goes, okay, well, since you won't regulate yourself, here are the new regulations from us. And that's where we are now. We're one month away from regulation by MasterCard and part. And part of the problem too, is that we have content creators that are standing on the shoulders of giants. And they do not even realize it. They are out there creating content and, you know, luckily first amendment, but they don't realize that people went to jail so they could have the right to make $30,000 a month of only fans.

And they don't care about the law. They don't, they don't care. They don't care about two today. They don't even know what 2, 2, 5, 7 is. They don't even know what a model releases half the times. And you know, they think, oh, well the platform, this is what I'm paying. My 20, 30, 40% cut to the platform is so the platform can take care of those issues for me and platform looks at it, like not our issue. We're a secondary producer. You've got to keep the records. We don't care. Right. And that's where MasterCard steps in and goes, well, Nope, we're going to change this whole thing up.

We're going to make sure everybody has the records.

Speaker 1 (18m 26s): Well, in the final analysis, that's not necessarily a bad thing

Speaker 2 (18m 30s): Either. I listen, it's, you know, it, it will keep child abuse, material offline, you know, but if you talk to real free speech and I'm, I'm not a free speech guy, meaning that I believe in free speech, but I'm not a constitutional attorney. I'm not out there fighting these ivory tower lawsuits, but the free speech guys will go, well, this is, this will, you know, chill free speech because people won't want to upload their content because they have to give away their IDs.

And, you know, and are they correct? Absolutely correct. Feel free speech, but it's a balancing act, you know, and that's what the courts do. They, they do this balancing act between the governmental interest and your right to speak freely. And right now, I think with the attacks that are happening on the industry with how some of the major websites and platforms have been acting, that that is tipping more towards, you know, the government has an interest in keeping kids off of the internet from being naked.

And it's a very hard argument to make against that. Of course,

Speaker 1 (19m 35s): Of course, now that that leads us very well into the whole only fans fiasco. So we record here in September and they've eliminated adult content, and now they reinstated it. So was this, was this just a big publicity stunt? Or do you think performers need to find other options?

Speaker 2 (19m 56s): Oh, absolutely. You need to find other options. There's no doubt about that. Now this, if this was a publicity stunt, only fan should fire their PR people because this, this was a ridiculous publicity stunt. I don't know why they did it. You know, I wish I had an inside to only fans. I've got ideas, you know, maybe they used it as a way to renegotiate with their banks. You know, when, when the bank saw how, what the fee, what the pushback was, maybe they were able to go back to the banks and, and reduce their rates.

I don't know, could be, or maybe they use it just to be able to continue to process. Maybe the bank said, well, you can't have porn. And then they showed them the response and they were like, okay, fine. Keep the porn. Or, or maybe they're going to quietly get rid of porn anyway. Yeah. I mean, they came out and made the announcement, but that doesn't mean that they don't have other ways to slut to slowly close the porn accounts. Yeah. I mean, I'm sure only fans is looking at Reddit right now and licking their chops.

I don't know if you saw Reddit is they're trying to do an IPO and they're trying to get an evaluation of the company for $15 billion. So, so, and, and Reddit is full of porn, but, and read, it's going to get the IPO, even though it's full of porn because it's like Twitter, like, okay, there's porn on there, but it's not the majority of what the website is, you know? And I, and I think that's what was only fans goal only fans goal was to get rid of a, a good amount of the pore and try to go more mainstream and then to do an IPO for billions and billions of dollars.

So whatever would have been lost from the revenue generated by adults, it would have been more than made up in the amount of money that the owners would have made off of an IPS.

Speaker 1 (21m 52s): Oh yeah. Definitely very well could be the case. So there seems to be a new fans or clips type sites starting up every week lately kind of reminds me of the days when cams really started to take off people are contacting my consulting business, wanting to start a clip and a fan sites. So can all these pop people possibly make it in this space?

Speaker 2 (22m 16s): No. None of them are going to make it in this space. None. None, no, no. I mean, th th this is what nobody understands about these sites and everybody thinks, oh, well, it's easy money. Well, what they forget, what they forget is that the biggest, and I am the attorney for one of the biggest platforms out there right now, which is AVN stars. So I have, you know, I have a certain position that I was able to, to see this as it started with AVN stars.

And what people don't understand is, is that it's very easy to defraud these platforms because there are, you know, there are parties in Russia and Ukraine, other areas of the Eastern block, where they trade in illegal acts, illegally gotten credit card numbers. And what they'll do is, you know, somebody will open up a performer account and then somebody will open up a fan account and then they'll use the credit card to run 200, 300, 400, 500, a thousand dollars through the system.

And, you know, if, if the, if the owner of the credit card doesn't really know that it's stolen, they can get, you know, several hundred to maybe even a thousand, a thousand or more through the credit card processing. And then what immediately happens is, is that because the performers want to get paid out so frequently daily, daily. So the person who opens up the account, they just go ahead and, and, and take the money out and put it into a bank account.

Right? And so then they, then both the, the fan and both the performer close their accounts on that, on that platform. And then by the time the platform gets noticed that it was a charge back on a stolen credit card. It could be 30 or 60 days, and those people are long gone with the money. So the

Speaker 1 (24m 18s): Platform eats it.

Speaker 2 (24m 20s): And so the platform eats it how proud and so

Speaker 1 (24m 22s): Prevalent is this

Speaker 2 (24m 23s): Mic extremely, extremely prevalent. And that's what people don't understand is that in order to open up one of these platforms, you have to have a shit load of money sitting in reserves to deal with the fraud that you're going to be hit with for the first several months or year or up to a year. Because what it requires you to do is have a very robust fraud department, right? You need to have people sitting on your site 24 hours a day, seven days a week, because you have to cover every single time zone in the world.

Right. And you need to be able to catch these accounts and stop them before they get a week before they open. So, you know, if you, if you have a situation where, you know, people can self certify their accounts and open them up without somebody checking it out, that's a problem. And if you can have people who remove or can create the payment to their bank account, without it being approved, that's a problem. Yeah. And so, you know, sites, all these sites that are coming forward, they, I doubt highly if they have the, the staff, the money, the investment, to have that type of, of robust customer service on the backend where, you know, they've got 10, 20, 30 people working 24 hours a day across several times zones that are checking every account that's being made, because what'll end up happening is that, you know, after a while, you'll see patterns, you'll see patterns in the way the fraud happens, and it will help fight the fraud.

You won't, there will still be fraud, but you can bring down your monthly losses a lot. And, and, and these, and these sites work on such a low overhead.

Speaker 1 (26m 11s): I was going to say that again,

Speaker 2 (26m 13s): A low profit margin, because they're only taking 20%. Some are only taking 10%. And it's like one, some

Speaker 1 (26m 21s): Are doing a hundred percent promos now.

Speaker 2 (26m 24s): Yeah. And that's just ridiculous. And that is just absolutely ridiculous because they're getting hit, you know, they're making no money, plus you're getting hit with fraud. And they're just doing that to try to stay afloat, you know, more so than anyone else. But yeah, in, in a year there could be a lot of money lost for fraud. Hmm. You know, and that's what people who were opening up the sites and, and see, and that's the thing too. That's, that's, that's sad is that the performers, the content creators don't realize this, you know, they're, they're going to go join up at whatever site that their friend says to go join up and they don't do the homework.

Right. And they don't talk to people. You know, this, to me, this was the same thing back, you know, 15 years ago when girls were flocking to Los Angeles to get into porn, they weren't doing the homework on the agents. And a lot of them were coming up with bad agents. And then once they signed the contract, they were like, oh shit, I'm stuck. And they were calling me to get out. And I'm like, yeah, you got to call me before you sign the contract. Not after, you know, so the same thing's gonna happen here is that a lot of performers, a lot of content creators are gonna sign up, but really bad platforms.

And they're going to get fleeced, or they're going to get defrauded and the platforms are going to go down and they're going to waste all of that time, putting all of that effort into marketing that, that platform and that platform won't exist in six months.

Speaker 1 (27m 49s): You know, you talked about the fraud patterns, you know, a person joins and then another, a model joins. And then that person's feeding the model. You would think that, that those, those types of patterns could be pretty easily picked up by AI.

Speaker 2 (28m 7s): Yeah. But who's got the money to spend on AI. Yeah. I guess, I guess. Yeah. I mean, listen, you know, I, I've got clients that use AI for, you know, child abuse material, right. And for other things, but AI, you know, from a programming standpoint is really expensive, you know, and even if you use a verification company, it's somebody who wants to defraud you is going to get around anything that you put in the way.

And really the only way to stop the fraud is, would not be acceptable. The only way to stop the fraud would be to tell models. We're not paying you out for 30 days because 30 days is usually enough time to know whether or not a credit card is going to be charged back because of fraud for some other reason. But nobody knew who, what models in a sign up, or what content creators going to sign up for a platform that says we're not paying you for 30 days. None of them will.

Speaker 1 (29m 6s): Yeah. Because they've been spoiled by, you know, daily and every three days and every week payouts.

Speaker 2 (29m 12s): Yeah. I mean, that's, that's the thing only fans is, is, is an 800 pound gorilla in the room. And, you know, they can afford to take on losses that other companies can't even begin to fathom because they just generate so much cash. And that's what people don't like, oh, well, you know, only fans and all of these other companies are equal and they're not the only fans is way above everybody.

Speaker 1 (29m 38s): Oh, of course. Of course. So these types of sites are the big thing. Now, now from your insight and the industry, what do you think the next big thing will be ZR? Really? Yep. I mean, to me, VR has kind of lagged, it kind of got started with the, with the bang. There's a handful of sites that seem to be doing pretty well with it. But I don't know. I mean, it doesn't seem like anybody's really lighting the world on fire.

Am I wrong about that?

Speaker 2 (30m 11s): Well, you're going to see somebody like the world on fire pretty soon.

Speaker 1 (30m 15s): Oh, he knows if somebody, okay, well,

Speaker 2 (30m 18s): I'm, I'm part owner in a company that

Speaker 1 (30m 21s): Okay. Very good. Very good.

Speaker 2 (30m 24s): What we haven't seen in adult is mainstream VR technology and augmented reality technology,

Speaker 1 (30m 33s): Right?

Speaker 2 (30m 34s): Yeah. So I mean, you know what we see as VR in adult really isn't VR. It's just a, a cool way of shooting some video to make it feel like you're, you're, you know, there, but when you, when you start talking about real VR and you're talking about a motion capture,

Speaker 1 (30m 52s): What's the difference between real VR and what most adult companies do

Speaker 2 (30m 56s): You ever watched Westworld? No. Nope. Okay. Well, have you ever looked at some really high end VR games? I have not. No. Sorry. It's hard to describe because what, what you can do with mainstream VR and that level of technology is amazing compared to what is done in adult. Yeah. I mean, you know, a lot of times when people are shooting, an adult are just POV scenes with two cameras to give a sort of a binocular view of the, of the action.

Right. But when your VR is coded VR, it can't be stolen. You know, it's it survives on, on its own its own servers and it enhances, and it brings to life a level of interaction that you just can't get with somebody shooting like a POV VR scene where yeah. You, instead of looking at it on a flat screen, you feel like the girls, but she's, she still doesn't feel like she's there because there's nothing else you're doing with it.

And nobody's

Speaker 1 (32m 2s): Yet nobody's doing that an adult right now.

Speaker 2 (32m 4s): Not that I'm aware of, no,

Speaker 1 (32m 6s): The project you're working on. Well, yep. Interesting. Got to keep me posted on that and why, why can't it? Why can't it be stolen?

Speaker 2 (32m 15s): That's not a question for me, but what I've been told is that it's not, it's not like a video it's, it's, it's not a situation where it's a video that you upload to a website. It's, it's the ability of the headset to interact with the server.

Speaker 1 (32m 32s): Oh, okay. So we can, so it basically can't be downloaded. It can only be strained. I

Speaker 2 (32m 37s): Think so. Yes.

Speaker 1 (32m 40s): I'm not the tech guy either. So if you, if you did, if you gave me the details, I'd probably go, huh. So there you go.

Speaker 2 (32m 49s): I'm not a part of the group for my tech skills. I'm part of the group from my legal skills.

Speaker 1 (32m 52s): I kind of figured as much. Well, when it's, when it's ready to, to try out I'm I definitely want to be among the first sounds exciting.

Speaker 2 (33m 4s): It really is exciting. Like it's, it's, I've been working with them for six, seven years now and I've watched their technology just explode. And so, you know, it's, it's going to be something that the adult industry has never seen before. Whether, you know, it comes down to whether or not people have headsets and everything that I've read, everything that I've seen over the next, you know, 3, 4, 5, 6 years, there'll be more reasons to have a headset and that'll be able to make it more accessible for more people.

Speaker 1 (33m 41s): Walt, the point of entry be pretty high as far as the equipment to shoot.

Speaker 2 (33m 45s): I don't think so. I think it will be in the terms of, you know, three, $400.

Speaker 1 (33m 50s): And in terms of shooting

Speaker 2 (33m 51s): It, oh, you shooting it. I thought you meant the headset for the fans as far as shooting. Yeah. I don't, I don't know what that would be.

Speaker 1 (33m 57s): Yeah. How long until it's going to be available that

Speaker 2 (34m 0s): I don't know either.

Speaker 1 (34m 2s): Okay. Okay. I won't, I won't ask any more questions. You definitely got my attention. So now Mike, this, this industry's always been under attack. Okay. But it seems like the attacks are coming more frequently and even heavier than before. Does it seem that way to you? Or is it more of the same?

Speaker 2 (34m 21s): Oh, it seems more. Okay. It's always been under attack. Like you said, it depends where the facts are coming from. You know, everybody likes to use porn to raise money aids, healthcare foundation did it a couple of years ago with the condoms in porn stuff. And you know, they were low raise money from that. And now we've gotten a cozy and Exodus cry. If you go look at the tax filings for, for the cozy national center of sexual exploitation, I think is what it stands for.

If you go look at the tax filings, you know, every year for the last four years, since they've been really attacking the adult industry, you know, their, their contributions that they've taken in have doubled the triple, right. So we mean, you know, it's, it's a good football for them to kick because it brings in more donations. And then those donations are funneled to attorneys who drive the litigation against the industry, which, you know, just makes more donations come in. So it's, it's good business for them.

Speaker 1 (35m 24s): Non-profit my buck.

Speaker 2 (35m 25s): Well, they're not, I mean, yeah, their profit. I mean, they're there, I think on staff attorney makes 175,000 a year, their direct, or maybe their director makes 175,000. I'm not, you know, I looked at it, but I can't, I didn't remember. I

Speaker 1 (35m 40s): Didn't remember, but

Speaker 2 (35m 41s): Yeah, but, but overall, you know, this is, this is a reiteration of morality in media and they'd been around since 1962. They're, they're not new. It's not like they just popped up. I don't know where they just renamed themselves. And so, and they used to try to get the government. They used to lobby the government to attack porn and then the government just has no interest in attacking porn anymore. And so they decided to do it themselves through these, you know, sex trafficking litigation cases that they filed.

I think they're up to three, four, maybe five even, which was ludicrous. Yeah. And you know, what's sad about it is that the FSC is not really providing any, any assistance with that. I represented, I represented a small company in one of their litigations and you know, the F the FSC silent on this. And I wonder why, because I don't think it's good publicity for them. That's why

Speaker 1 (36m 41s): They don't want to pick a sex trafficking as mentioned. Yup.

Speaker 2 (36m 44s): Yup. You know, and that's, it's, it's not w when FSC was formed many, many years ago, the idea was so the companies could join together, donate and create a legal defense fund. Right. And FSC has moved so far away from that. It's ridiculous. And now they don't provide any legal defense fund. And, you know, I'm not sure why people still join the FSC, but they do, but the agency's not helping out small companies or even medium-sized companies with defense of these cases.


Speaker 1 (37m 15s): Okay. Very interesting. Now I see sex workers are now fighting back with some bank protest. D D do you see this doing any good or is it going to backfire?

Speaker 2 (37m 28s): Well, I don't know. It's not going to do any good. I don't know. I mean, you know, it's like sitting at a picnic and an ant crawling across your toe, or you going to like, you know, stop down on the end or are you just going to let it crawl across your toe and leave? You know, if they become annoying enough, then yeah. It can cause problems with the banking, with the processors and the banks. It's the last thing that we need in the industry. But, you know, I, and I set it on, on X I said, you know, the banking industry could turn off adult tomorrow and they wouldn't miss a beat.

And there's this idea in porn that, oh, they need us. No, they don't American express American express left 21 years ago and never looked back.

Speaker 1 (38m 14s): They seem to be doing

Speaker 2 (38m 15s): Pretty well. Yeah, exactly. So, I mean, you know, the, the amount of e-commerce that happens a daily basis, you know, they wouldn't even probably notice that adult was gone.

Speaker 1 (38m 31s): I mean, adult adult used to be the big dog, but that's not the case anymore.

Speaker 2 (38m 35s): No, no, no. I mean, who in adult is sending rockets to Mars?

Speaker 1 (38m 43s): I don't know. Alec hell Alec Helmy maybe, I don't

Speaker 2 (38m 45s): Know. There isn't anybody rich enough in porn to build a spaceship. We're not dogs. Amazon's a big dog. I mean, you know, or maybe 20 years ago, porn was important to billing, but not anymore. Right.

Speaker 1 (39m 4s): All right. So this is something I have a little bit of trouble understanding. Maybe you have a better take on it. NFT seemed to be all the rage now, and they, they seem to be gaining steam in an adult. Is this a trend that you think is going to continue? Or is it a flash in the pan?

Speaker 2 (39m 23s): I don't know. I'm kind of clueless when it comes to crypto and MTS. Yeah. I've got a client that's got a token in, in, you know, problem with NFTs is that, you know, it has to be something special I think. And it has to have, and it has to have a blockchain attached to it. Right. And I don't know how many NFTs and porn have blockchains attached to it because without the blockchain, then you don't have ownership rights. Right. And so, you know, there's another thing I heard about been finance, but that's not really blockchain.

So I actually just, I, I don't want to call them a client yet, but there's a, a crypto coin that just approached me to help represent them in the adult industry, because they want to do crypto with an adult and they want to do the NFTs. And so, you know, I had to put them in touch with somebody that I know because he knows blockchain and he knows the adult and he knows crypto. So we just had discussion about it. But, you know, it's, there's, there's what, less than 1%, maybe, maybe there's 1%, maybe 2% of all transactions and adult have to do with crypto.

So, I mean, you know, if in, in, until it reaches mass acceptance, it's, it's just a novelty in adult.

Speaker 1 (40m 44s): Certainly go up if the credit card companies dump us.

Speaker 2 (40m 48s): Well, I know, because even then, I don't know if it'll go up because you can buy crypto with credit cards. Yeah, that's true. That's true. So, I mean, you know, it's, and I, I don't think the credit card companies are gonna dump us. I don't think, I don't think, I think the credit card companies will be dumping sites. I think that will happen. Think, you know, after these rays go into effect, whether it takes two months, six months, a year, there will be spot checks on companies by the, the banks and the processors.

Yep. And if those companies don't have the documents in order, the way MasterCard wants, then I, and if it's agregious enough, I think that they're just going to have their building shut off. Just like what happens to corn hub? You know, if you're missing. Oh, no. Oh no. I think, I think depending on how egregious it is, they just pull the billing period.

Speaker 1 (41m 47s): Well, they did, but they reinstated it.

Speaker 2 (41m 49s): MasterCard didn't reinstate it for PornHub. They didn't, I don't think so. No. They reinstated for browsers and things like that.

Speaker 1 (41m 57s): Oh, I thought they, I thought they got reinstated. I thought I saw, I read an article about that. So, so these, so these crypto clients, are they paying you in crypto Inquiring minds need to know? So

Speaker 2 (42m 11s): I, I do not accept crypto for payments.

Speaker 1 (42m 15s): Okay. Everyone, you got that. So with performers having more control over their content these days, do you think there's still a future for membership sites?

Speaker 2 (42m 28s): I think so. Yeah. It's tough because my heart is always in membership sites because some of my, you know, my earliest clients and still my friends, Mike, you know, certain clients that I have run those sites, have those sites platforms have created a different customer. And, and what happens is when this all comes crashing down, because it's going to come crashing down. When, when guys start to realize that they're not talking to their favorite porn star, when they realize that, you know, you know, Susie big tits, isn't awake at 4:00 AM discussing your problems.

And you're, you know, probably tipping either somebody in her family, her boyfriend, her husband, or maybe you're, you're tipping in a customer service rep working out of a call center. Right. You know, when, when guys start to realize yeah. When guys realized that. No worries. Okay. Can you hear that? I can, yeah. That's our air raid sirens.

Speaker 1 (43m 35s): Do you need to go?

Speaker 2 (43m 38s): Well, it's amazing because here in Rotterdam, you know, the reason why Rotterdam's all new and it doesn't look like Amsterdam is because the Nazis burnt it to the ground with a firebomb campaign. Lovely. And the, the, our Dammers never forgot that. And they still do these, you know, air rate tests once a month. I just happen to be,

Speaker 1 (43m 60s): I think it's, I think it's charming. No, go ahead. Go ahead with what you were saying.

Speaker 2 (44m 5s): And so what was I saying? Where was I?

Speaker 1 (44m 11s): We were talking about membership sites and still a place for membership sites and Susie big tits talking to a customer service rep somewhere.

Speaker 2 (44m 19s): Yeah. When, when these guys realize that they're not talking to your favorite porn star, what are they going to do? Are

Speaker 1 (44m 24s): They going to realize, do you think they're really going to realize that

Speaker 2 (44m 26s): I do. They have to, at some point they, you know, someone's going to do a story about it. There's going to be some angry call center person who gets fired and they're going to call daily beast or one of these other ones. And, you know, like I pretended to be Susie big tits for four months online. And none of the guys knew, I think that's, what's going to happen. And I think someone, you know, a disgruntled employee is going to do it.

And then when people realize that, you know, when they realize that their favorite porn star, isn't sitting around at two o'clock in the morning, four o'clock in the morning talking to them, no, no, don't get me wrong. There are some that do, there are definitely some that do. Yeah. You know, I know my ex used to, you know, spend a tremendous amount of time talking to her fans. And so there are still a lot of, a lot of performers, content, creators that are honest with their members and they are on there and they are speaking with them, but there are a tremendous amount that are not right.

And so when that happens, I think it all comes crashing down. And now the tube sites are kind of, you know, neutered because of the MasterCard situation. And when people realize that all of these fan sites are, you know, basically, you know what I think you and I are old enough to remember are the pictures of really hot girls on phone sex lines. Oh yeah.

Speaker 1 (45m 56s): Well, wait, wait, are you telling me that wasn't her.

Speaker 2 (46m 0s): Exactly, exactly. And so, and so guys we're like, okay, well I know she's not the girl in the picture, but she's got a sexy voice, so it's okay. There you go. And I think guys were okay with that because whoever did the phone sex, you know, they could count on it, at least being a woman. Right. Okay. And they could count on that woman having a sexy voice and, and they could, you know, suspend their disbelief that this was not the war. This was the woman in the picture. Right. But when it comes to stuff like only fans were, a lot of the messaging is through texts.

You could be talking to a guy, right. You could be talking to the boyfriend, you could be talking to that. You can be talking to a gay guy. If you a dude,

Speaker 1 (46m 40s): You and I both know a very large companies that do a, what do they call it? Moderation for dating sites. And I'm sure they're doing it for these types of sites.

Speaker 2 (46m 55s): Yeah. And the problem with it is, is that the FTC, when after the dating sites and find a bunch of them, I'm waiting for the FTC to go after these types of sites. I'm sure it won't be long. Well, and that's the, and that's the thing though, but do the sites know what's going on?

Speaker 1 (47m 10s): Yeah. But do the sites, do the sites care if they get slapped on the wrist by the FTC? I mean, do you think they stopped doing it at that point?

Speaker 2 (47m 19s): I, you know, I'm not an FTC lawyer, so I don't know what level the fines are. I've seen, I've seen FTC sites, Sue dating companies. And when for millions, you know, I don't know if that would go up to tens of millions or hundreds of millions on something like an only fans thing. But yeah. I mean, if it's a few million dollars only fans makes that in the morning before noon. Right. So it probably wouldn't be a deterrent, but I think what would end up happening is like I said, guys would go, well, I can't trust this, you know?

Or, or, you know what, maybe they're just so desperate that they do. I mean, I, I literally just had a fan contact me and asked me if I knew a certain porn star. And I said, why? And he said, well, because she, you know, she's trying to get out of porn, but she owes somebody $20,000 or $10,000. I forgot how much. And she's in love with him and she wants to come join him, you know? But she, she needs this money to pay off her pimp.

And until he gets paid off, she's in part of sexual servitude. And it's like,

Speaker 1 (48m 28s): It sounds like the bar girls in Petaja The lesser amounts of money, of course.

Speaker 2 (48m 36s): And, and, and he showed, and he told me who it was, and I know who the porn star is. And I know that's not the case. And then I said, how do you know it's her? And so he showed me a picture of her passport. I don't, I don't know what her real name is. So I couldn't tell if the real name is fake, but I can tell you that it looks real. It absolutely looks real. It looks real to the point of where, whoever Photoshop the picture, except they used one of her porn pictures for the picture for the past.

Speaker 1 (49m 6s): Oh

Speaker 2 (49m 7s): No. She's like got all makeup done and everything. And I'm like,

Speaker 1 (49m 11s): So this is probably like a Nigerian scammer,

Speaker 2 (49m 13s): Right? Yeah, exactly. So now he's like, when you ask her and I'm like, yeah, I'll ask her, but I can guarantee you that that's not her don't send any money. And so, yeah. There's, you know, there are, and I, I, there's a bunch of only fans, content creators that I represent who have these, these accounts that are out there scamming guys. Right. And, and guys believe it. I mean, guys, believe it. And so that's the sad part. Guys are dumb.

They're just dumb.

Speaker 1 (49m 45s): Yes. Yes we are. We were born that way. Unless, unless you've been an adult, as long as we have, then you get a little more streetwise.

Speaker 2 (49m 58s): Well, we call it the pink cloud. Did anybody ever tell you that? No.

Speaker 1 (50m 4s): I haven't

Speaker 2 (50m 4s): Heard that when I first got into porn, I dunno. It was 18 years ago. I remember I started dating a girl after my first marriage ended and I was crazy about her. And I presented one of the agents in the industry at the time. And he came up to me. He's like, dude, don't get lost in the pink cloud is what he's like. Yep. This is what happens. When, you know, you start dating porn stars and you start, you start dating sex workers. You get into this pink cloud mentality where like, you're just, you're just in a fog.

And he was right. I was in a total fog. So I can see how these guys get into these pink clouds, where, you know, they believe that this porn star or this content creator, or this performer needs the money to save them from this guy that, you know, owns them

Speaker 1 (50m 54s): Or their, or their mother needs and needs an operation or whatever. Well, Michael it's really been a blast as always. And I, once again, I hope we, we get a chance to do part three soon. I'd like to thank you for being our guest today, once again on adult Cyprus.

Speaker 2 (51m 14s): Thank you, Bruce. Thank you for having me back. Let me know when you want me for number three, you got it.

Speaker 1 (51m 18s): My broker tip today is part seven of what to do to make your site more valuable for when you decide to sell it later, let's talk about some of the factors that influence the sale price of a website. Number one is always profit will be a multiple of the profit. And that multiple is based on whether the profit is trending up or down and how fast it's trending up or down. I've seen valuations as much as five times, although that's very rare. Normally it's in the two and a half to four times area. I've also seen valuations of one time.

If the profit is taking a nosedive, if a site hasn't been monetized, then it's all about the amount and the quality of the traffic. If a sale is based on traffic, it will be a multiple of what the traffic would sell for on the open market. What are the sources of traffic direct traffic search engine, traffic and review traffic are the most valuable to traffic is the least valuable. Is the traffic reliable and sustainable? What is the traffic history? In a rare case, the valuation will be based upon revenue.

The same factors apply to that as to profit and the valuations will of course be lower than those of profits. How old is the website? Is the domain or something else? Dot com is still king. What is its Alexa rating? How many inbound links are there? How much staff does it take to run the site? How many email addresses do you have in the case of a dating site? This is very important. Another factor can be the reverse engineering cost. How much would it cost to build a site from scratch and drive the same amount and quality of traffic to it.

And how much time would be involved? What's the lifetime value of a customer on the site next week, how to buy a website. And next week we'll be speaking with Maverick, UK producer, Terry Stephens. And that's it for this week's Adult Site Broker Talk. I'd once again like to thank my guest Michael Fattorosi. Talk to you again next week on Adult Site Broker Talk. I'm Bruce Friedman.

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