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Acquiring Online Businesses

2013 was a busy year in the online adult industry; especially in terms of business purchases, sales and mergers. Online businesses were purchased at record prices in 2013 and I expect that 2014 will continue the trend. This is the first of a series in which I will discuss some of the more important do’s and don’ts when purchasing an online adult business. This article is not meant to replace the services of an attorney nor is it meant to be an inclusive list of everything that a purchaser should do. Part 1 will focus on a purchase from a buyer’s perspective while Part 2 will focus on a purchase from a seller’s perspective. Keep watch for Part 2 in XBIZ World. Due Diligence I am always amazed by how many purchasers contact my office in the course of purchasing an online business and have no idea what they are buying. The seller of an online business or any business for that matter is always going to present its business in the most favorable light in order to attract more potential buyers and obtain a better purchase price. As the saying goes “don’t buy a book by its cover;” do…

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Obscenity Charges against Florida Store Owner Dropped

BARTOW, Fla. - Polk County prosecutors dropped all charges yesterday against a store owner who was charged with distribution and possession of obscenity with intent to sell after detectives purchased 10 adult movies at a Sunoco gas station and convenience store in Dundee, Fla. "There will be no jail time, no conviction and no fines" for Minakashiben Patel, adult industry attorney Lawrence Walters told XBIZ. Walters and another adult industry attorney, Corey D. Silverstein, represent Patel and worked together to strike a deal with prosecutors. A total of 20 misdemeanors and one felony charge were filed against Patel, relating to adult DVDs sold from her gas station and convenience store in Polk County. Patel also was charged with sale of drug paraphernalia, based on selling Detox brand energy drink. Those charges were dismissed early on. "The obscenity charges have now been dismissed per an agreement with the state, where Ms. Patel agreed to make a $2,000 donation to a drug education and prevention fund," Walters said. "She further agreed to abide by existing state obscenity laws and not to sue the sheriff or prosecutors as a result of the arrest. “Corey and I are proud of the result we obtained…

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Learning from the Financial Crisis in Cyprus

There are a multitude of reasons why you may want to have your adult entertainment business set up outside of the United States. Some of the reasons include favorable tax laws, decreased individual liabilities, and staying outside of the jurisdiction of state and federal agents and prosecutors, just to name a few. For the record, I am not suggesting that you pack up your bags and move your corporate entity and money overseas. Nor am I suggesting that setting up your corporate entity and bank relationships overseas is a bad idea. I am merely urging you to carefully analyze all of the legal and financial aspects of your decision whether or not to pursue an overseas business entity and banking relationship. Imagine that you were running a highly successful adult business that you spent a tremendous amount of time, money and energy setting up overseas. Imagine that your business was financially strong and that you had loads of cash in the bank. Finally, imagine that your hard-earned cash was being kept in your overseas bank account, safe from taxation. Sounds pretty good, doesn’t it? Now, I want you to imagine waking up one morning and realizing that you don’t have…

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The Proper DMCA Takedown Notification

On October 28, 1998, President Bill Clinton signed into law the Digital Millennium Copyright Act (the “DMCA”). Since becoming valid law, the DMCA has been controversial to say the least, with many demanding reform. For many in the adult industry, the DMCA has been helpful and beneficial in intellectual property protection while others in the adult industry feel that the DMCA provides too much protection and has allowed “content pirates” to abuse the DMCA for its own financial gains. The adult industry is no stranger to the DMCA. The exponential growth of “Tube” style websites over the past several years has led to an unquantifiable number of lawsuits, disputes, articles and controversies. There are enough articles from adult industry experts regarding the pros and cons of the DMCA and there are equally enough articles from adult industry experts regarding intellectual property protection. The purpose of this article is to examine an often neglected but important piece of the DMCA. This article will discuss what must be included in a properly formatted DMCA notification of claimed infringement (commonly referred to as a “Takedown Notice”). Pursuant to the DMCA, specifically, 17 USC § 512(c), (c) Information Residing on Systems or Networks At…

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Let’s Talk Content and Licensing Agreements

As I write this column, the holiday season has arrived and with it the end of the year. And when the new year rolls around, the adult industry enters into one of the busiest trade show schedules of the year. In the month of January alone, AVN presents an array of shows in Las Vegas: the AVN Adult Entertainment Expo—both the B2B show and the Fan Fest—the Adult Novelty Expo, the AVN Awards Show, and InterNext. Also in the month of January, XBiz presents XBiz 360. Trade shows are a fantastic way to network, learn, improve and grow as a member of the adult industry community, and I urge you to take advantage of the many benefits of the trade shows. I have been attending AVN-sponsored trade shows for over a decade and I am continuously amazed by the great seminars and speakers put together by the AVN team. There is a good chance that you are reading this article while you are at one of the trade shows mentioned above and I encourage you to attend as many seminars as possible. Don’t be afraid to step into a seminar that you don’t think affects your particular business; you never…

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Don’t Be Trapped by Headlines

It’s been a busy time for adult industry legal news, with stories popping up on websites, blogs, television stations and message boards. In the past few months we have seen the obscenity conviction of Ira Isaacs, renewed life in the Free Speech Coalition’s battle against the constitutionality of 18 U.S.C. 2257, the failure of SOPA, the ongoing war against piracy, and, of course, condom regulations in Los Angeles. Countless words have been expended discussing these important issues, with more to come in the future. In addition to the hurricane of headlines, the United States is heading toward a turbulent election. Republican presidential nominee Mitt Romney will challenge his Democratic opponent, President Barack Obama, in what will be the most expensive political campaign in the history of the world. Make no mistake about it; the outcome of this election could have substantial ramifications for the adult industry. I encourage all of you United States voters to be fully informed about the candidates before casting your vote. But as essential as all of these issues are, what should matter more to you, the adult industry professional, are the day-to-day details of running your business. And these mundane details can be overlooked in…

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