CAM101 Podcast - Episode 10: The Economics of Major Cam Sites.

Listen on Apple Podcasts: https://podcasts.apple.com/us/podcast/10-the-economics-of-major-cam-sites/id1476963722?i=1000447379991

Listen on Spotify: https://open.spotify.com/episode/02h3ssJ9eGIJB1vgtzSJYf

Show Notes

Why do we work with Flirt4Free? In this episode we go deep into the economics of major cam sites. And make the case for why we continue to choose Flirt4Free as our network and why we love them.

Note on Pandora’s Business Model: We’re a management agency for cam models. We’re not a studio. All of our models work directly with Flirt4Free, get paid by Flirt4Free, have Flirt4Free’s pay scale, etc. Flirt pays us (out of their end) to put models on their site and help those models make money on their site (the equivalent of 10% of the models commissions, which varies based on their sliding scale). No other hidden business interests, that’s how we make money.

My view is that our job is to make the decisions that lead to models making the highest per-hour income. One of the important pieces in that is to evaluate the major cam networks and partner with the ones where the highest incomes will occur. We think that’s Flirt4Free.

We believe strongly in transparency. And this episode is an effort to make clearer how and why we make decisions. In it, we talk about Flirt4Free, MyFreeCams, Live Jasmin, Streamate, and Chaturbate and their respective business models.

Thinking about camming from the perspective of a cam network.

A lot of cam sites have a bad reputation. People complain about all of the major sites - even Flirt4Free. Overall, they are lambasted as being these money grubbers - leeching money from cam models that should go to the performers instead - they do this because they are rent-seeking greedy corporate pigs. That is the general reputation of cam sites.

In my view, none of the major cam sites that we’re talking about fit this description, if you understand how their businesses work.

Cam sites are basically like big record labels (or tv networks).

Quality Control Anecdote

I talk about QC - the record label from Atlanta that has been dominating music for the past few years (Migos, Lil Baby, Cardi B, Lil Yachty, and more). How insane it is that an upstart record label, previously unknown, ended up producing some of the biggest artists the world has ever seen - that the world never expected. Yes, a lot of credit has to go to the artist, but I think there is some magic happening relative to the management of QC (Coach, P, and their management team).

To me, Flirt4Free has that same magic in their upper management team. They are just executives who are crazy good at what they do, for any industry, and I think we’re lucky to have them in the cam industry.

The 3 Main Interested Parties On Cam Site

The network (the site), the affiliates (customer traffic), the models (broadcasting).

The networks main job is providing the infrastructure to facilitate the interactions between customers and models. They have a lot of interested parties to satisfy.

In my view, the economics for the network (their costs to operate the site) are relatively equal. Employees cost what they cost, credit card processing costs what it costs, offices cost what they cost, taxes are what they are. No major cam sites are just one guy in his basement making all of this work, these are large, 9-figure revenue companies.

The game beyond that is balancing the interests of affiliates and models. How much money goes to each.

Cam sites are network effects companies. The bigger they are, the better they are. A site has to be a certain size to be viable, that size is about $100,000,000/year in revenue (in my view).

Every model needs tons of traffic to make a living. The site provides traffic. It’s helpful if those customers are well-targeted in the early stage advertising so that they fit into the demographic of users who will spend money on the site. Note: I don’t think anyone is better at the traffic game than Flirt4Free. I also don’t think anyone else in the cam industry believes anyone is better at that then Flirt4Free.

When it comes to getting traffic to cam sites, Flirt4Free is the best. They dominate the affiliate market in America. Part of this was getting there first, they started the industry in the late 90s, won all of the best affiliates early, and have continued to win the best affiliates year after year. This is the most important thing for a cam site: traffic.

Traffic comes primarily from affiliates.

Affiliates

If there is traffic, models can make money. If there isn’t, they can’t. Full stop.

The quality of traffic is key, not the total numbers (although scale matters). If 10,000 users spend $1 - that is a lot better than if 100,000 spend a penny.

The affiliates want to make as much money as they can. As such, they care a lot about the models on the site. If a site doesn’t have great models, the traffic they send won’t convert, they won’t make money.

Affiliates - to their credit - are as ruthless/greedy as all of us. If they send a million visitors to Site A and it converts .1% worse than Site B, they will choose Site A, every time. In the US marketplace, affiliates overwhelmingly choose Flirt4Free. They have a great incentive program and pay out 30% to affiliates.

Models

The other side of the equation is models. Models care about where they will make the most money. If any model would earn $1 more per year by switching to another site, they’d switch.

Affiliates need models, models need affiliates. The network needs to keep both sides happy. Raise the % too high for affiliates and models rates drop and models leave. Raise the % too high for models and affiliates leave and models rates drop and models leave.

Most of the game is keeping models happy, but you shouldn’t discount the importance of having quality relationships between the network and their sources of customer traffic - that’s the most powerful factor in determining models income (which determines everyone else’s income).

Most cam sites fail. We’re talking about the ones who still exist - these are the winners. Hundreds of other sites tried and fail.

The Two Network Strategies Competing today

Strategy 1 is to allocate a higher % to models and a lower % to traffic. The concept is that the higher percentage will attract more models and higher quality models and that will then lead to better conversion rates from the traffic that gets sent, lowering the overall traffic costs. This is what MyFreeCams and Chaturbate do - both payout 50% to models (not easy to tell what % is allocated to traffic, but ~20% is a safe bet estimating network costs).

Strategy 2 is to have an even balance between models and traffic and try to find other ways to optimize things. This is the general approach of Flirt4Free, Streamate, and LiveJasmin.

Flirt4Free: Roughly 30% to affiliates. Roughly 35% to models. Sliding scales for both.
Streamate: 35% to affilaites. 35% to models. Even stevens.
LiveJasmin: Crazy sliding scale, similar to Flirt’s for both models and affiliates, Flirt’s is better. LJ is a major player in Europe (Flirt’s main competitor there), but we focus primarily on the US market in this episode (most of our models are American).

Looking at it from a model perspective.

Why should you have to make 200,000 credits in a pay period on Flirt4Free to get 50%, when MyFreeCams or Chaturbate will pay you 50% just for signing up? What crap is that?

Very fair question.

The answer is because of how the economics of cam sites work. That lower percentage isn’t just going into their pockets because it’s greedy, it’s going to traffic. That traffic means that when you are online there are more users in your room willing to spend money on you. It’s better to have that happening and a bit lower percentage to be able to be constantly making sales.

Dollar-per-hour income. That’s what we care about. I can’t imagine there is a model that cares about something other than that.

If we’d make a higher dollar-per-hour on MyFreeCams, we’d switch today.

If we’d make a higher dollar-per-hour on Chaturbate, we’d switch today.

If a model switches to one of those sites and makes a higher dollar-er-hour, we don’t tell them to come back. We don’t expect loyalty. We expect pure, ruthless, greed.

Over the years we’ve had hundreds of models move between sites. Both coming from other sites to Flirt4Free via Pandora and leaving us to try some of these other sites. Most who come in from other sites stick with us, most who try other sites come back after a few months.

Flirt4Free has the luxury of having the interests of their counter-parties very well satisfied - all of the partners are making a lot of money. Their affiliates are satisfied, I’m satisfied, our models are satisfied. $58/hr on average company-wide - sort of the end of story.

The Key Metrics

Average customer spending per model hour broadcast. $58/hr represents $174 per hour in average customer spending per model hour broadcast. Every hour one of our models was online in the year 2018, Flirt4Free customers spent an average of $174USD.

No sites post their revenues, but they aren’t that hard to estimate if you track them closely. We think Flirt4Free’s revenues are comparable to all of the major sites (we don’t think they’re the highest right now).

For most of the sites, we’re talking about more than $100,000,000 per year in spending and less than a $1,000,000,000 - safe range. Most of the major sites are similar in annual revenues - similar to how the big tv networks end up being similar sized.

Of all of the major sites, Flirt4Free is way low on model hours broadcast. At any given time, Flirt4Free tends to have 100-400 models broadcasting of each gender.

The other major sites tend to have 1,000+ at all times. Often several thousand.

If that’s the case, and their annual sales are comparable, what does that mean for model’s average hourly rates on those sites?

It’s a lot lower.

The Flat Rate Conundrum

This is my concern with 50% flat rate sites. I think that the average hourly rate that models earn across the board on those sites is lower than it is on Flirt4Free - because those sites pay 50% to models. I think that if the percentage was lower and more of the money went to acquiring quality customer traffic the models would make more money (so would the site).

I know this is not just counter-intuitive, but horrific sounding. What a great cam manager I am, suggesting to get a lower percentage to models - SCUMBAG.

I just mean that on a gross economic level on the site, this is the result. Less money gets spent on traffic acquisition. That has consequences.

Is it working on MyFreeCams? Is the higher percentage attracting high quality models and the traffic they are sending is converting well and they are able to get as much traffic value for less money?

Maybe.

We’ll have to ask the models on those sites. We don’t know. It’s certainly working better there than on any of the other sites who have tried to make it work.

We have a lot of models who switch from MyFreeCams/Chaturbate to Pandora. Who are extremely qualified models and were working on those sites, putting in the effort (20-30 hours per week) and were making $18/hr and want to try us to see if they can earn more. And make $40/hr on Flirt4Free, week 1. Every. Damn. Week.

The Talk we have

Anytime we get an app from a model who says they work on another site, we have the same conversation.

If you want to share your stats with us and tell us how it’s going, we will tell you if we think you’ll make more with us or not. If you would, you should probably switch. If it’s not, you should stay put.

They don’t even have to share stats, give us a few pictures, and we’ll give you an estimated dollar-per-hour range on Flirt4Free (we’re insanely accurate). If you’d make more, switch. If you wouldn’t, don’t.

It’s rare that people get the numbers and don’t switch. And it’s rare that we misestimate someone’s potential.

To be fair, people who are very successful on a site aren’t contemplating switching normally and aren’t reaching out to us. So it makes sense that it’s people who are struggling who are looking to switch. But still, why are they struggling? Why do we have people signing up every week, making $40/hr on Flirt4Free, when for the past 6 months they made $18/hr on another site? Why has that been the case for years, when the payouts on Flirt were ~30-32%, long before their epic new pay scale.

I believe the economics are why. Not enough money is being spent effectively on traffic.

And it really sucks if you think about it. Sites of that size, we’re talking about thousands of people who are camming, and working really hard to make it work, who are just struggling. They for sure blame themselves and feel bad, thinking they’re not good enough. It fucking sucks.

This isn’t a public service announcement to say that Chaturbate sucks or MyFreeCams sucks. They’re great companies and plenty of models are making great money on them. We just think more models make more money on Flirt4Free - and we really only care about that. And the fact that models keep switching is a strong signal to us.

As for the other sites that allocate similar percentages to Flirt. LiveJasmin might make sense if you’re European, they have a lot of European traffic, customers are xenophobic (they spend more money on models from their own countries). Flirt also has a lot of European customers - I really don’t know the answer, I care about the US market, where LJ isn’t really relevant. We don’t get many models from LJ, we don’t advertise in Europe.

Streamate, I admire their totally even approach, but I think it stagnates them. Sliding scales are better. They also have the unfortunate situation of swimming in Flirt’s wake, trying to largely do Flirt’s business model, and I haven’t seen that they’ve been able to really compete in scaling the balance of tons of high quality affiliates with tons of high quality models. I think they are good, but not as good, for girls (and a non-issue for guys).

social media

A big reservation I had about this episode was that I see a lot of cam models tweet complaints about sites like MFC/CB “taking half of our money”. They feel under-paid. They feel like they deserve better, more of the money.

In researching this episode and compiling my notes I thought a lot about those tweets. I always feel something unpleasant. i want to make some emotional response, like.

“OMG. If you understand even the most basic shit about how a cam site works you know that’s not happening. Bitching to your fans about how poor you are doesn’t make them want to spend money! If you don’t like the 50% they pay, quit, get your own fucking audience, use Skype, and keep all of the money. Oh wait, you can’t, because traffic for cam shows is unbelievably hard to get and so you make way more money on any major site than you possibly could on your own, quit fucking whining.”

I am keenly aware that I would not come out of that engagement looking good (or even alive). It’s so against the cam community vibe, where most models agree with the sentiment of the original tweet complaining. Add to that, the fact that a minute of research on Pandora would reveal that we pay (I mean, it’s Flirt paying but we recommend it) an even lower percentage. That we value models even less than MyFreeCams or Chaturbate does. And who the fuck do I think I am? And like obviously I am a pervert who takes advantage of poor cam girls who don’t know any better and I just exploit them to make money and 100% I sexually assault them because I am a creepy fucking pig.

There are a lot of ways to die, that didn’t seem like an ideal one for me at this current point in my life.

But as I thought more about it, I felt I had to make this episode, specifically for those models. I thought about what they would be going through to tweet those complaints. Looking at the deposits in their bank account, comparing it to the effort they put in, and feeling bad, not good. That made me feel bad. Under the best of circumstances, succeeding as a cam model is really fucking hard. To see people who absolutely have what it takes, stuck in poverty conditions, because of business decisions that someone else made that were suboptimal, it sucks.

In this episode I presented my own views. I don’t speak for any of the networks. I don’t have ownership in any of the networks. I don’t have access to the financial data of any networks. My estimates for other sites come from the publicly available information we could all check (I just check it a lot closer and more often than most people - because it’s super important to my business) and from self-reporting models from those sites who have contacted me.

My estimates for Flirt4Free come from representing a lot of the models on the site and paying close attention. When several of the top 10 models every year come from Pandora, and a lot more of #10-100, and plenty of #100-10,000 I can make pretty reasonable estimations about the average dollar-per-hour income for models on Flirt4Free and their total revenue. I don’t have nearly enough data points to come close with the other sites.

Maybe I’m wrong. Maybe it is the case that the Chaturbate/MyFreeCams business model is better, that they’re converting traffic better because of all of the great models there, and more spending is happening, and I just heard from the few people who couldn’t hack it. This episode exists now. I went on the record. If I’m wrong, everyone can prove me wrong.

I don’t think I am. I think cam models make a lot more money on Flirt4Free. And we should probably talk about that more.

Jordan Laubaugh
Founder, Pandora Modeling
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