Where's this industry going

[Mr-AJ]

I talked to a friend last week. He's a special affiliate having direct contact to some sick rake machines. He offers good rakeback deals to them.
But it's so sick what some skins offer him and his players. Getting 70 % rakeback + affiliate commission is standard letting the room invest money in rake races and such. Don't know how this room wants to make money but that's neither his nor my problem
But that's just one example. Taking a look at the very big affiliates out there just approve this tendency. I know what pokernews wants to earn and I know what other big affiliates like pokerstrategy are looking for.
It's just mad.
And at this point you have to question where this industry should be going? I mean this is a great time for players and affiliates but if poker rooms make no money with players and affiliates the whole system makes no sense any longer. Is it a solution to cross sell a lot and looking for players that donk a bit at the blackjack table?
Well if so this industry has serious problems in the future...
What do you think?

[rakefreeze]

I talked to a friend last week. He's a special affiliate having direct contact to some sick rake machines. He offers good rakeback deals to them.
But it's so sick what some skins offer him and his players. Getting 70 % rakeback + affiliate commission is standard letting the room invest money in rake races and such. Don't know how this room wants to make money but that's neither his nor my problem
But that's just one example. Taking a look at the very big affiliates out there just approve this tendency. I know what pokernews wants to earn and I know what other big affiliates like pokerstrategy are looking for.
It's just mad.
And at this point you have to question where this industry should be going? I mean this is a great time for players and affiliates but if poker rooms make no money with players and affiliates the whole system makes no sense any longer. Is it a solution to cross sell a lot and looking for players that donk a bit at the blackjack table?
Well if so this industry has serious problems in the future...
What do you think?

Very impressive job of contradicting yourself.

I don't know if it's a language problem but you state in your first paragraph that it isn't your friends' problem if the site offers his players 70%+. Clearly, it is his (and his players) problem as if they always go to the room that offers the best deal at some point they are going to run into a problem getting players or affilates paid.

The poker sites that drive most of the traffic have proper business models, and the trend for these sites will likely be to put downward pressure on the % paid to affiliates.

[Mr-AJ]

Well it's not his problem because he makes a lot of money with great deals right now. And players get a lot of their rake back so they also like this deal. But this doesn't mean that it isn't a problem in the future. So right now he's happy that a lot of skins are kissing his ass but that doesn't mean that it will be the case forever.
And that's something I think we should talk about and not the fact if he'll have problems or not. Just the point that affiliates get paid sick amounts nowadays and skins have to outbid themselves.

I don't think your last statement is true in general. Of course the closed sites like Stars, Party, Full Tilt, etc. can put pressure but not a skin in Ongame, iPoker, IPN, Entraction, Cake network.

The point is that most of those skins have to pay sick amounts to affiliates and/or giving away illegal high rakeback offers to keep the rake machines producing.
And my question is where this should end if some skins have to invest a lot of money for some affiliates just to get promoted by them.

[MJ]

All you are pointing out is that some skins start up simply to be parasites and steal existing network players from other skins by backdooring high rakeback deals.

NONE of these deals have a long shelf life, and the networks DO shut them down eventually.

It's just pure lazyness and lack of innovation - we can spend 200k starting up an Ipoker skin too so I can poach players from Titan, but it doesn't mean I'll still be in business with happy players a few years from now.

Your friend btw, while he might enjoy the easy money - is simply destroying the network, legitimate rakeback deals, and is not helping further the legitimacy of the rakeback industry whatsoever.

[Ridge]

Well said MJ, this is not a long term business plan or one that makes sense. Brandon is a great example of a strong business plan and good execution when starting a poker room. Obv. he's not paying me to say that lol, but just look at what he's done with ACED.

Started slow and steady, didn't spam or shove the program down anyone's throat. Made sure all bugs and tweaks were done before marketing to me and other affiliates. Had competitive offers, good CS, good bonuses, good rakeback, and finally got a big name player that draws more players to the cash tables and tournament. <<< Is a winning formula long term for a room.

[MJ]

Right, and he's trying to build the network not just steal players from other skins - exactly my point.

[Mr-AJ]

That's my point - but not the whole one.
Network skins cannibalizing each other is one side of this tendency. The networks do try to avoid it but it's not that simple. Look at NoIQ or Carlos they probably didn't hurt the network rules but were too agressive and not break even. So iPoker offered them to go.

But what about the whole sick situation with affiliates getting paid sick amounts? If you have to pay $ 500 CPA for a big site (and that's actually true!) the next site has to pay $ 550 CPA the next one $ 600 CPA. At some point it's impossible to work profitable with this affiliate and this point is already reached. But what's next?
Poker unionization against rakeback and high affiliate payments?

Btw I absolutely agree with both of you regarding Brandon and Aced!

[PTC]

But what's next?

Equilibrium I would guess. Its a bit funky because costs are high for skins but marginal costs seem to be very low. You can hit me with a PM if it really intrigues you.

[PTC]

I dont think low was the right word now that I thought a little. I just meant that its a flat curve that won't change much.

[nirva]

[x] Overuse of 'sick'
[x] Cannot take post seriously

This happens in every CPA industry, CPAs raise until it hurts profits and bad businesses close > CPAs go down to a sensible level.