He came to Berkeley from the East Coast and fell in love with San Francisco, which he refers to as the epicenter of technology.
An entrepreneur at a young age, or maybe a hustler (depending on your point of view), Evan Horowitz has built an incomparable and closely protected online empire. The methods to his madness are unpredictable, but the results stand on their own.
The co-founder of XPays, a patent-protected affiliate system that markets other people’s sites, and the lord of online celebrity sex videos is many things—a worker, a thinker, a music lover, someone with friends in high places, and a shrewd businessman.
Just don’t call him litigious.
How did you get into Berkeley?
I attached my tax returns from my high school days. From ages 13 through 17, I ran weekend ski trips a couple times a year for kids in my local area. I made a nice spread between what it was costing me for the condos, bus, lift tickets, and meals and what we were charging. I also come from a string of “garmentos,” so I was getting wholesale children’s apparel and selling it at local flea markets. When I came out to Berkeley, they told me I had a strong chance of getting in because they liked my initiative. I got rejected from a whole bunch of the University of California schools, but I got into the best one.
Tell me about your first sites.
In 1994, I started to realize the power of the Internet. [Business partner] Michael [Landau] and I launched two sites: OfficialSearch.com and Linkasaurus.com. Official Search would return one, two, or three matches, unlike the other engines that gave you millions of matches. Our aim was to give you the official site.
This led to adult?
Lo and behold, an adult-site owner came to us—we were selling books from Amazon on Official Search—and he asked what we were doing for adult-related products. We had never thought about it, but started directing traffic toward adult products. Our earnings went from pennies on an Amazon sale to $25 a sale for a free membership to an adult site. The site owner told us we could do whatever we wanted to market his site. In 1998, we built an affiliate program around his sites separate from his own affiliate program and launched XPays.
In 2003, Microsoft sued XPays for spamming. That must have sucked.
We were their guinea pigs, but we protected all of our proprietary data throughout nearly two years of litigation. In my opinion, they were looking for a national marketing campaign to compete with AOL and EarthLink, because AOL and EarthLink constantly were running anti-spam commercials. We had a machine specifically configured for outgoing mail, and we could deliver immense quantities of mail. I think that put us on the radar, along with our location, but our mail always was in compliance with the law—this was before CAN-SPAM, by the way.
How do you feel about being the “guinea pig”?
The good news is we settled and lived to fight another day. The bad news is we immediately ceased all email marketing. I guess over the long term, it’s had a positive effect. My days are spent on new technologies instead of dealing with mailers. On the negative, I don’t think their suits have done anything to slow down the volume of spam. Our mailers were ethical. Our affiliates were held to a high standard to get approval. They had to honor removes. We had remove lists shared between different mailers. Overall, it was a learning experience, and I have no regrets about it.
How do you get your hands on these celebrity sex tapes?
We have rights to the Paris Hilton sex video, Pam and Tommy, and the Tom Sizemore sex video. The Hilton video was years in the making, really, because it’s all about networking. By attending shows and networking, we positioned ourselves for a home-run deal. I got a phone call in the middle of the night from D-Money, who was on the phone with the rights holders, Jim and Rick Salomon. They felt very comfortable with us; they liked that our affiliate program was modular, and liked that they would be featured content at XPays. The tapes found us; we weren’t looking for them.
What’s so great about your new VOD site, XVN?
We’ve paid a lot of attention to the user interface, player speeds, and the different browsers. We’ve built XVN from the ground up with the latest server architecture—we’ve spent millions of dollars on this project in the first year. We have 100 terabits and growing of our own storage, and we’ve paid great attention to having a variety of content, some of which has never been encoded for VOD before.
Do you think the pay-per-minute business model will replace the subscription site?
There always will be people who want the all-you-can-eat buffet. In my mind, the VOD market is the future, because you can employ download-to-burn or pay-per-minute modules.
Can you compete in the current VOD market?
Absolutely. We’re coming in as the No. 4 adult VOD in America. We have some interesting exclusives. Plus, we’re the only VOD that will have the Paris Hilton sex video.
How deeply are you involved in the domain market?
Since we started, we’ve been buying and selling domains. We now have about 4,500 choice domains. One of the first we bought was PornStar.com, which we sold to MALLcom a year and a half ago for more than $500,000. We bought CheapFlight.com and sold that. We have Spend.com, and we’re still sitting on it. We also have some generic keyword-based domains, like AffiliateModel.com. Domains are great for feeding traffic, reselling, and protecting your brand—one of the first runs we made were domains starting with the letter “X” or containing the word “pays.”
Is it fair to say you have some enemies in the business?
I think anytime you have success in an industry, there are going to be people who are threatened by that and take issue with it. I don’t think we’ve ever intentionally wronged anybody. Anybody who’s had an issue with us, it’s probably more of a personal issue for them.
Is it your job to police the Internet?
Our use of the legal system to protect our rights has been to the benefit our business 100 percent. I would recommend all companies protect their rights. A lot of people spread false information and have considered cease-and-desist demands to be lawsuits. They’ve insinuated that we file frequent lawsuits. The first lawsuit we ever filed was to protect our rights in the Paris Hilton sex video. We’re not litigious; we’ve filed one lawsuit, and everyone we sued had ample opportunity to comply with our requests.
Do you regret anything you’ve done?
[Long pause] No. We’re really looking forward and have some great stuff coming out. I can’t think of anything that I’d like to take back. Most of the things we’ve attempted have been very successful. We’ve paid out over $40 million to affiliates.
Tell me about [PartyGaming founder] Ruth Parasol.
She made quite an impression. I recall a conversation in which she was talking about milking newbies. She explained how, with the Internet at the time, the model really wasn’t about revsharing with big accounts, but getting a lot of accounts to pay start-up fees, and that’s where your revenue would come from, because most of these people never would be successful. I don’t share the same attitude, but that’s one conversation that really stuck out.
How has this business changed since you’ve been involved?
The saturation and number of webmasters has grown; so has technology. There were times when we wondered what would happen when broadband was widely adopted.
What’s the next big shift?
The convergence of TV, the Internet, and hand-held devices is next. Set-top boxes and information-based technologies also will be big. The hand-held market also will lead the way and be a great source of marketing and revenue.
What’s next for you?
We’re launching a service called Chat Mobile. We’re offering handsets for prepaid and post-paid cellular with a default chat environment built into the phone. The neat part is—because it’s our phone, our service, and our brand—I can update the software on the phone, market to our users, and we control the deck.
Are you positioning yourself to be an adult content aggregator for mobile phones?
Not necessarily. I think we have enough content at the backdoor of XVN to put on the phones. There are opportunities for dating companies and other services. We’re more looking for subscribers; however, I can preload or upload to the phone with any links.
If you were ever on the cover of Forbes, what would the headline read?
“Being Part of a Great Team Allows Individual Talents to Show Themselves”
