Silicon Valley Star Starts Up New Kind of Social Network

March 13, 2008 — -- For most people, the term "social network" means one of two things: Facebook or MySpace. But one Silicon Valley pioneer thinks the next name on the lips of the Web-surfing public will be his new site: Zivity.com.

Zivity operates differently from the Wal-Mart and Target of the social networking world in two ways: it charges members a subscription fee, and, oh yeah, it also features nude photos — lots of them.

But before you lump in Zivity with extremely popular online porn peddlers like Xtube and AdultFriendFinder, consider this: co-founder Scott Banister is already a Silicon Valley success, and his newest venture is being bankrolled by big-name venture capital.

But Zivity presents Banister with a unique challenge: Can he make money on a Web site whose simple nude photos are almost quaint compared to the raunchy sex images that drive traffic, and immense profits, on the Internet?

"We are believers, and so are our new investors, in this big shift that's going on in entertainment. … [MySpace] is actually the largest photography site in the world. What they have, uniquely, is all of this photographic content in the context of a social environment," Banister told ABCNews.com.

"It's a social network built around who took the photographs. We look at that and we see a huge opportunity to enter that same market, but with a subscription-only model."

Zivity.com works like this: potential users sign up for the site (currently invite only) and pay $10 monthly subscription fees to become members.

As with other social networking sites, members connect, making online friends. But unlike other social network users, members on Zivity find a plethora of photos of nude women in various "sexy" poses, upon which they get to vote for the ones they like best.

Members join to make online friends and gain access to the nude photos. Photographers and models post their photos online to possibly earn money.

Members get five votes per month, and the models and their photographers get paid based on the number of votes they get. There is a waiting list of 30,000 members. Bannister said that because the models are paid, the company has tax information that proves all are at least 19.

"If you look at traditional media, obviously nudity clearly has its place," he said. "Certainly it works on the 'L Word' and 'Weeds' and 'Sex and the City.' New York Magazine can have Lindsay Lohan."

Fees Make It Ad-Free

The subscription model allows the service to avoid advertisers. From Banister's viewpoint, the absence of ads gives users the freedom to post nude photos and the confidence that their information will never be leveraged for profit.

"The key advantage is that you no longer have to answer to the advertisers. MySpace has a big department of people to police MySpace ... for nudity," Banister said.

"When you're 100 percent supported by advertisers you're kind of in a strait jacket. We're trying to create a social network environment that doesn't have to play into that strait jacket. … We've sent the advertisers packing."

Last year, Facebook got into serious hot water when it automatically enrolled members in its Beacon program, which broadcasted their purchases on certain Web sites to everyone on their friend lists. Eventually, Facebook founder Mark Zuckerberg publicly apologized and made the program an opt-in application.

Funds Rolling In

Banister launched Zivity with co-founders Cyan Banister, his wife, and Jeffrey Wescott last year at the TechCrunch 40. The site began initially with $1 million in private funding. The company announced this week that it secured $7 million additional venture capital from BlueRun Ventures and Founder's Fund, which has bankrolled PayPal and Pogo.com, among others.

Three of Banister's other tech ventures have been purchased by corporate behemoths Microsoft, AOL and most recently, Cisco.

So, Zivity has the cash to keep it running for now, but will consumers take the bait?

Tech analysts' opinions vary widely about what Web surfers will and won't pay for.

Rob Enderle, principal analyst at the Enderle Group, says paying for content is the future of the Web.

"A lot of people were convinced people weren't going to pay for [cable]. … There's no doubt that the same kind of model will work on the Web," Enderle said.

"We hear advertising gets in the way of things, but we're still at the very beginning of that. … People pay for 'World of Warcraft.' People pay for that kind of entertainment. … We know where it is working, is pornography."

In terms of more traditional, non-nude forms of social networking, Paul Saffo, a technology forecaster in Silicon Valley, agrees.

"There is a constant in the history of media. All ultimately successful media forms go through a pornography phase," Saffo said.

According to Saffo, social networking, as we know it, will eventually splinter into smaller private groups like Zivity.

"The one size fits all social networks is atomizing out into private networks," he said. "It used to be hip to be on Facebook, and now it's hip to be on the private social networking club."

Can It Compete With Free Porn?

But even if people are willing to pay for privacy from advertisers, will they pay to see photos of naked women when they can see more graphic videos of sex online?

Paid subscriptions are nothing new, especially when it comes to porn.

"The pornography market is huge. It's one of the major drivers of the Internet," Enderle said.

Xtube, one of the most visited sites on the Net, has a pay-to-view and revenue-sharing model similar to Zivity's. The audience pays 50 cents to $2.50 to view short homemade porn flicks. Posters get 50 percent of the revenue.

Last year, Penthouse paid $500 million for Various, Inc., a group of personals sites, one of which, AdultFriendFinder.com, operated like a paid membership social network.

But TechCrunch co-founder Michael Arrington says it's unfair to compare Zivity to porn.

"This isn't competing with porn. ... [Men] develop this sort of crush on [the models]. There's no easier way to show them that than with your vote," Arrington said. "Think about strip clubs. You tip. There's an analogy."

Instead, Arrington compares Zivity to the mind-blowingly popular site SuicideGirls.com. Originally conceived as an "alternative" to traditional porn, the site's group of tattooed, pierced women became a pop culture phenomenon in 2003, launching nationwide burlesque tours.

"If you create a friendly atmosphere, you can extract money more easily," Arrington said. "If they can develop relationships on the site, they can develop a successful model."

Pinups vs. Porn

Enderle points out that, from a content perspective, the photos on Zivity seem more like a throwback to the pinup girls from the 1950s and 60s than the more graphic, very profitable porn underbelly of the 21st century Internet.

The challenge for Zivity will be to convince people to pay for tamer entertainment than the hardcore pornography they can find elsewhere on the Web, often for free.

"Will people pay for something that isn't really pornography? If this was something that was going on in the 50s, I would say absolutely," Enderle said. "There's a possibility that there's a market here, but it's not following any model that people would be willing to pay for in the current time period. ... It has a niche, but if you're really going to establish the pay side of the Internet, it needs to have a broader audience."

David Card, the vice president and research director at Jupiter Research, agreed.

"I'm a little skeptical that people will pay a whole lot for soft core or nudity," Card said. "People are going to have to want to pay for this whole voting experience. … It doesn't feel like Facebook and MySpace."

Card says that, more than a social network, Zivity feels like another voting Web site, HotorNot.com, which sold for a reported $20 million earlier this year.

But no matter what anyone says, Banister remains hopeful and is focused on getting eyeballs to the site.

"Our job is to go out and get 2 million [users]," he said. "We think those 2 million are definitely there for the taking and could grow far, far beyond that."