Exclusive Interview With Video Secrets

Chuck:
Greg and I have known each other since we were children, since we were eight years old. We were in the life insurance business, working for New York Life prior to this, and we met a couple of other guys who kind of helped us get the company off the ground in the beginning. We kind of collaboratively came up with the idea. Greg asked me if I wanted to be a part of it and the rest is history.

XBizLori:
When did you get involved in the adult industry and why?

Greg:
Video Secrets was first formed in 1996 out of Boston, Mass. We started with five employees and an idea. We thought the idea would definitely cost us under $10,000 to $20,000 with very little manpower and very little time. Needless to say, hundreds of thousands of dollars and six months later, we were up and running.

Both Chuck and I were involved in the life insurance business, which is a very social business where you deal with business owners, entrepreneurs, technical people, and finance people. We were both relatively successful at what we did so we met a lot of people. We met somebody through our travels and through our work that said, "I have an idea and I would like to share it with you."

We had an idea about how we wanted to take our insurance and planning business to the next level by using video cameras and video streaming, so we approached this person because we knew he had a tremendous amount of experience in video. He really liked the idea and he said, "This is a great idea, however, you know, I'm not sure how many people will sign on. It may take you a long time to get all these professionals hooked up and it’s going to be very expensive. How about this idea…”

So he explained the idea of what is now Video Secrets.

Chuck:
Yeah, we were kind of burnt on the insurance business. It was fun that we were doing it together, you know, and that we were taking a leap and basically taking all the money we had saved up in our lives to do something outrageous.

Greg:
There are a couple of approaches we took in the business which we aren't sure a lot of people took, but this is how we approached it. Similar to building any normal brick and mortar business with ethics, and wanting to see the growth rates of a normal traditional business model, we never had a year that went so up and so down and so forth. We relied on our morals to be conservative, to be ethical, to be honest. I looked at Chuck one day, and I remember this as if it was just yesterday in Boston, and I said, “Chuck, if we are ethical and honest and we do this right, we could probably make a lot of money in this business.”

XBizLori:
How did you come up with the name Video Secrets?

Chuck:
That’s an interesting one. It was late at night with Greg, myself, and another guy that was working with us at the time, and we were looking through a catalog, a women’s catalog of lingerie. We liked the word “secrets.” It was alluring and again not too revealing, and the fact that we are a video company, we kind of merged the two words and we were like “Video Secrets,” sounds like another good name brand in the world. So we kind of rolled with it, you know. It wasn’t a real name, a corporate name, but that’s the name that has always been on the Internet and you can wear it out in public and people always ask you, “What is Video Secrets?” Greg has the best answer for it.

Greg:
It’s a secret, you got to check it out on the Internet.

XBizLori:
What was your first adult site?

Chuck:
Good Question.

Greg:
Well, since we never really revolved around individual websites, we really specialized in the streaming of live content to other websites, so one of the first things we realized when we got into the business was that there are a lot of great websites out there that really know how to market. But one thing that they are missing is this live component. How about we create this live component, use the webmasters to help us market it, and that’s where we came up with the whole affiliate side. We obviously didn’t originate that whole term and what the marketing affiliates do, we just said, “OK, we are going to use marketing affiliates for life.” So our first actual video site was Video Secrets.

XBizLori:
So back in 1996, did the technology really support your vision at that time?

Chuck:
It really hadn’t caught up and its just now catching up. Our stuff was made for high-speed. With our stuff you could get up to 20 to 25 frames per second if you were on a high-speed connection back in those days. When Greg and I started researching what was out there, I remember there was a JPEG every five seconds. I believe back in 1997 when JPEG servers pushed technology, a lot of people were kind of manipulating it. We found a guy out of Europe who we basically licensed this stuff from and it was nice because we didn’t need to download. We were one of the first to market without a download, which helped us pick up momentum.

Greg:
We already have the technology to go to 30 to 32 frames per second, which is as fast as ICQ. Now it’s just a matter of balance and the infrastructure of the Internet catching up so we can run it at that kind of speed.

Chuck:
There aren’t as many computers in the American home as there are televisions or there are phones, and as that continues to catch up and that continues to permeate the culture, more and more people are getting online. Whether it’s dating, personals or these types of chats that we do, it’s a mechanism of communication. It brings people closer together. There are a lot of people who live really isolated lives out there. You’d be amazed. Half of the chat sessions that go on Flirt4Free aren’t even about sex. They are about life. People filling a void for another person who is lonely and can’t really go out there and socialize like the rest of us do.

Greg:
Our future vision, which continues from the original vision, is that we see within the next five years the Internet and television colliding. We are looking at all this time on the Internet as almost a warm-up practice session for when it hits everybody’s television. You can sit back in your hotel room and interact with a live model. You can tell her or him what you’d like to see him or her do. Or you could just watch an adult movie. There are some people that are called “passive viewers” who would rather watch an adult movie. There are a lot of people who are active viewers, who would actually like to control the show.

Chuck:
Interactive viewers.

Greg:
We are waiting for the big conversion to happen. Our goal is to be right on the crest of the wave so we’ll be the first live interactive chat that you can control with a wireless keyboard on your couch and turn to Channel 72 and see all the models to choose from.

XBizLori:
Video Secrets scored one of the biggest names in adult, Jenna Jameson. How did that come about and how does that relationship work for Video Secrets?

Chuck:
Again, that comes back to our roots, you know. Kind of like how we started the company with one of our really good childhood friends. I’ll let Greg tell the story.

Greg:
Basically, a friend of Chuck’s growing up got into this business early on as a webmaster, ran a few websites, and eventually he started working for Club Jenna. This was probably, I would say, three or four years ago, and …

Chuck:
The person we are talking about by the way is pretty well known; his name is Mani on the boards.

Greg:
Again, this goes back to what I said before. Jenna really wanted to do something on the live side, and we really wanted to do something with Jenna. So we met almost three years ago and we set a meeting. We said, "We really want to do something with you.” She said, "We really want to do something live.” And given that, we decided very easily that she would be the exclusive spokesmodel and we put in an exclusively live Internet Jenna Jameson service. Both parties were extremely happy and that’s how it came about.

XBizLori:
So how many models do you have?

Chuck:
You know, it’s a high turnover business. We have some girls and guys who have been working for us for six years and they make a tremendous living video chatting. Worldwide right now, we have about 20 studios. We are in Asia, Canada, we are in South America, Central Europe, Northern Europe, and expanding slowly, but all totaled, I would say on the girl side we have close to 1,000 models. Obviously they are not all on at once. On the guy side, I would say it’s about closer to four hundred, maybe 500.

XBizLori:
On average how many shoots do you have going at one time, live chats?

Chuck:
Live chats, altogether with our live stuff, I would say we have 50 on average, 50 female rooms and probably half as many guy rooms.

XBiz Lori:
At any give time?

Chuck:
Actually, that’s about average. Sometimes we hit higher, sometimes we hit lower in hours.

Greg:
And overall we produce a little over 1,000 hours a day of live content.

XBizLori:
Tell us all the ways that webmasters can make money with Video Secrets.

Chuck:
Oh, man. For starters, if you are a free site, you can promote for free on any free sites in the world. The beauty of that is that we give you a product free for you and free to your users. All they have to do is enter an email address, verify that they are of age, and they get in, and they see absolutely nothing obscene. All you see are girls and guys from the waist up flirting, essentially, and what happens there is that they are now engaged. The performers engage them. They have a thousand to select from. They can go around and check out who they want to chat with.

At that point, basically our performers are acting as sales agents for our webmasters. They are drawing in the customers. A customer comes in and buys through that link. The webmaster makes up to 35 percent of every dollar spent by the customer throughout the life of that customer through our system. So if he turns out to be a gentlemen who spends $100,000 a year chatting with a live model, which happens quite often, one webmaster could make $35,000 gross with us per customer. Per capita no one spends as much money as a live chat customer on the Internet. So that’s one way.

Another way is to use Flirt4Free inside your membership sites, which is essentially the same product. However, when a model goes one-on-one and you have the version that is presented inside of a membership site, the free viewers that aren’t buying can still see a small video, which is great because that just keeps people at the site, keeps them engaged and they can see what’s going on. They can’t hear anything but they see what they get for their money before they buy. Essentially they are window shopping, browsing.

Another way to make money with us, which is a little bit premature to say, but it’s coming up by the time this clip comes out, is we are going to have a VIP program for our Flirt4Free users. Essentially all of our webmasters will be able to promote just another extension of this great product, which is going to target the heaviest users, the people who spend the majority of the money on the site and give them monthly pictures, daily pictures, Flirt4Free feature shows that we have done, all the shows we have done with the starlets we’ve ever had on the service. There will be archived shows on their favorite models. We feel that’s going to be very promising going forward.

Another way, which is a little indirect, would be to lease some of our content products. We have a number of content plug-ins on the straight side and also on the gay side, and some for transgender type sites. Those do require an outlet up-front lease fee, but our slogan is: "The content you keep." And if anybody does their homework, they realize that it's a little bit of a variation from our New York Life slogan, which used to be: "The company that you keep," but we call it "The content you keep." You know?

It’s tough to sell content these days, but what we really judge for content, quality-wise, are people holding on to it or dropping it. We have staying power. The majority of the people that continue to pay us for the content say: "It’s worth it for me to pay you a couple of hundred dollars, a couple of thousands of dollars a month for these content plug-ins because I’m making hundreds of thousands of dollars by pulling the customers and letting them know I have Jenna Maxxx, or I have Private Channels, or I have American Beauty content. It’s retaining people because every month we don’t charge more for it, but we are constantly getting more value out of it by adding content every month.

Greg:
And our members are hopefully retaining longer.

Chuck:
Exactly.

Greg:
And if 30 members retain for an extra two months because of one of the content products, then they’ve made their money five times over. One of the other things that you can really focus in on is with the content products. There are a lot of content products out there. We focus on brand name. We said, “We can make this content or we can partner up with some of the biggest names in the adult industry such as Penthouse. We have a product where you can get all the Penthouse form letters and they are updated. You can submit your own Penthouse form story. You a win a T-shirt if it’s chosen through the magazine. We went to Earl Miller, Penthouse’s most published photographer, and asked him, “Earl, do you want to do a gallery?” He said, “Sure.”

Chuck:
A couple of well-known gay producers, John Summers and Matt Sterling, we got one in the can, which I guess is debuting within a month. It should be very popular, called, “Tushy TV," which is a joint offering by Seemore Butts and us. Seemore, as you know, is from the acclaimed show “Family Business.” So it was probably five years ago that a gentleman named, Bjorn Scarlen approached Greg from Private Media back when Private Media was first getting into the Internet game. Since than he’s moved on to another company, but in the meantime, when he and Greg got together they hatched up the idea of cataloging over 300 titles and putting them on channels. What we did was edit them, that way you can come in and click on any channel. Let's say interracial or you want to see girl on girl or whatever the case may be, you can click and it gives you 500 clips of that exact thing you want to see. So once we did that, Greg looks at me and is like, “Let’s just replicate this. Let’s just find the name brands and work with them.” Like Greg said before, these people have spent hundreds of thousands and millions of dollars over years in the magazines; the Hustler Casino, the Playboy Casino, Penthouse, everywhere. It’s just a natural progression.

Greg:
Yeah, it usually tends to be the first content that a webmaster buys and the last content they drop.

Chuck:
And it’s also the stuff we grew up on.

Be sure to stay tuned for parts two and three coming soon...