Financial model

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Financial model

Modification date: Jan 31, 2006

This model is only apply to the traditional network. Currently the adult network is free.

Content

Intro

This is the detailed and strict reference guide for the financial distribution knowledge in dotSilver Union. Before reading this you might find it helpful to view brief Financial Overview for better understanding of terms and figures here.

In discussing the financial model, we will use one stipulation that should ease the explanation: instead of saying “an amount was accrued to the partner who owns the partner site” we will say “an amount was accrued to the partner site”. Surely, a partner may have several sites in the dotSilver networks. And his/her earnings will be calculated as a sum of all sites’ earnings. But since a single partner site owned by a dotSilver partner is a basis for all transactions and calculations, we consider a situation with one site operating and bringing income.

By saying “we and us”, we mean the dotSilver system and its staff. By saying “you”, we mean the partner who decided to co-operate with us in our business.

Explanations of all terms that you can come across in the text that are underlined can be found in the Glossary.

Payments and accrual

The payment process is divided into several steps that might occur within a relatively extended period of time:

  1. Member payment (a member makes a payment for purchasing site membership);
  2. Sale distribution (partner shares appear on partners’ reports);
  3. Partner pay-out (partners receive the amounts that were shown in their reports).
Now let’s cover all of them in more details.

Member payment

All member payments are collected by dotSilver system. It is our responsibility to choose appropriate and effective way for receiving payments. Basically, this step does not directly relate to partner operating procedures and in no way affects partner earnings. When a site member makes a payment, he/she is temporarily redirected to a payment system we work with. After the payment the member is returned back to the partner site.

Sale Distributions

According to dotSilver financial model, all partners that have some relation to the event of members’ contact are entitled to receiving a share of a payment that a member makes within the system. So, owners of Paid Member Registration Site (PMRS), Subscription Site (SS), Contacted Member Registration Sites (CMRS), and Initiated Contact Sites (ICS) are all included into the payment distribution scheme.

At the time of payment the amount paid by member is divided into 3 large portions:

  • Amount accrued to Paid Member Registration Site;
  • Amount accrued to Subscription Site;
  • Amount to be distributed between sites whose members will be contacted by the paying member and sites where contacts were initiated.

So here we have the first formulas:

S = Sst + Sexp
where
S – amount paid by the member for his/her membership.
Sst – amount that is distributed between partner sites at the moment of payment.
Sexp – amount that is distributed between partners sites at the moment of membership expiration.

The first amount (Sst) will be distributed right after the payment, when the membership period starts:

Sst = Spmrs + Sss
where
Spmrs – amount that is accrued to the Paid Member Registration Site.
Sss – amount that is accrued to the Subscription Site.

Each of the two amounts is calculated using the distribution percent shares that are set for the whole dotSilver network.

Spmrs = Sst * Ppmrs
Sss = Sst * Pss
Ppmrs + Pss = 100%
where
Ppmrs – share (in %) of member paid amount that belongs to Paid Member Registration Site.
Pss – share (in %) of member paid amount that belongs to Subscription Site.

So the first two amounts (accrued to Paid Member Registration Site and Subscription Site) will be accrued to the corresponding sites and will appear in the financial reports of partner control panel at dotSilver.com right after the payment.

Let’s see what happens with the third amount.

The basis for distribution of this payment portion is the number of contacts that the member made during the membership period. So the amount that is paid for each contact is calculated by this simple formula:

Sc = Sexp/Nc
where
Sc – amount that is distributed per each contact a member makes.
Nc – number of contacts that were initiated by a member during his/her membership period.

As can be derived from the nature of this calculation, it can be done only after the membership expiration. So the number of “pieces” that this third portion is split into and the amount of these “pieces” directly depend on the number of contacts that the member made during the membership period. Each of these amounts is then divided between Contacted Member Registration Site and Initiated Contact Site:

Ssc = Scmrs + Sics
Scmrs = Sc*Pcmrs
Sics = Sc*Pics
Pcmrs + Pics = 100%
where
Scmrs – part of Sc amount that is accrued to Contacted Member Registration Site.
Sics – part of Sc amount that is accrued to Initiated Contact Site.
Pcmrs – share (in %) of per-contact amount that is accrued to Contacted Member Registration Site.
Pics – share (in %) of per-contact amount that is accrued to Initiated Contact Site.

Let’s suppose that during the membership period the member did not initiate any contact. This would be a really unusual situation but still theoretically it is possible. In this case, the third amount would be distributed between Paid Member Registration Site and Subscription Site (those sites that took part in the initial distribution). The portions would be calculated using the percent rates that were used in distribution of the on-membership-start amount (Sst):

Spmrs = Sexp * Ppmrs
Sss = Sexp * Pss

Settlements and Partner pay-out

At the end of every fiscal period, financial results are calculated for all partners. This process is called settlement and includes calculation of all financial figures that determine the financial result of each site.

All partner earnings that are collected during the fiscal period become payable only after the settlement. At the moment of settlement all financial figures (positive and negative) are calculated and the final result is then transferred to financial balance.

If partner balance reaches the release level, then the total amount becomes payable. It is the partner’s responsibility to track all figures that appear on the partner financial report and claim the earnings payout.

Let’s look at the following situation. A partner might have several sites in both networks. So the balance is calculated for all sites in one network. And the release level is used for the sum of all amounts in one network.

The burden of bank and transfer commissions and processing fees is shared the following way:
  • all commissions and fees caused by processing of member payments are covered by dotSilver Network;
  • costs of partner earnings transfer are covered by partners and are deducted from these earnings.

dotSilver commission

According to our business model, just like in many partnership and affiliate models, we employ the principle of commissions. But unlike most of the partnership systems do, instead of offering our partners commission payments, we reserve the right to retain a commission in favor of our system, thus giving our partners a platform for running a dating business. Commission constitutes a small percentage of partner earnings and is mostly used to cover our expenses (like salaries, hosting costs and other development costs). So our partners receive all their earnings less running costs.

dotSilver commission is retained from every amount that is accrued to a partner. You can view the commission amounts and their totals in your financial reports.

Refunds and chargebacks

It is the most unpleasant aspect of the whole operating process. But situations with reversed payments are possible and should be dealt with on quite a regular basis. Operating in dating business is subject to certain risks and this is the reality that all agents who work and earn in this area should realize.

All payments that flow through our financial system are subject to several various checks. And if at any step the transaction is deemed to be fraudulent or highly suspicious, one of the security measures that our administration staff is instructed to take is canceling the transaction. Surely, this action entails canceling of all distribution calculations that were made in favor of partner sites. Appropriate figures will appear on partner financial report.

Reversed amounts appear in the report with a negative sign. They are displayed with no direct connection to the corresponding accrued amounts. It is very possible that they will be displayed in different fiscal periods. So if a portion of member payment, that was later refunded, was accrued and paid out to a partner in a previous period, the corresponding refund amount will affect financial results in the current period.

Sometimes suspicious transactions can be a ground for deletion of the profile of the member who initiated the transaction. And we reserve the right to decide whether or not we should take this action based on our experience and business intuition. This is also noted in the Partnership Terms.

We also should discuss the procedures that are taken to process chargebacks. In case if a payment, for whatever reason, was reversed by a bank, it imposes a fine on the vendor. According to our financial model, all agents who have commercial interest in and benefit from being a part of our system should take the financial responsibility at the scale of their benefit. That means that the partner who received a certain share of a transaction that was reversed with fine imposed will be responsible for covering the same percentage of the fine amount as his/her share of the member payment constituted. So if we designate the part of the member payment that a partner received in total as Sp, then the fine amount imposed on the partner (Fp) will be calculated according to this formula:

Fp = F*(Sp/S)

Just like refund amounts, the fine amounts will appear in the partner financial report. And a fine amount appears in the period when corresponding chargeback took place, no matter when the initial payment was made.

Reserves

Reserves are used for dealing with results of possible refunds and chargebacks. They assure that a certain amount is held in the reserve fund. Reserve amounts are held from partner’s earnings during the settlement at the end of each fiscal period (they are accrued on the whole turnover that was made during the period). Each reserve amount will be returned to the partner’s balance after several fiscal periods. So, normally, at the end of each period a share of the period turnover should be deducted in the form of reserve retention and an amount of the reserve that was held back several periods ago should be returned and added to current earnings.

Please note that the reserve percentage and the number of periods that the reserve amount is held can be determined for each site (not partner) separately. These settings can be changed from the initial values based on the site operating performance. We reserve the right to determine custom values for these settings based on the specific situation. This is also noted in the Partnership Terms. Reasons for changing these settings include but are not limited to high number of refunds and chargebacks, attempts of fraudulent actions, etc.

Glossary

Network – in dotSilver terms, a number of dating sites that share a common database of members and have the same dating service type (traditional, adult, etc.).

Member – user of specific site who has a profile registered with the system.

Paid Member Registration Site – the site where the member, who purchased a membership subscription, created his/her profile with the system.

Subscription site – the site where the member purchased his/her membership subscription.

Contacted Member Registration Site – the site-“owner” of the member who was contacted by the member who purchased membership.

Initiated Contact Site – the site from which a contact was initiated.

Contact – a message of one member to another. This includes messages that are sent to member inbox and contacts initiated in the Instant Messenger (only if the member-recipient presses the “Accept” button). If, during one membership period, a member sent several contacts to the same member, they will all be treated as one contact.

Release level – minimum amount subject to be paid to partner (please note that release levels for different networks might differ).

Reserve amount – a portion of partner earnings that is held in the reserve fund for several fiscal periods.

Fiscal period – period of time that is used for partner income calculations and is used as a basis for payout procedures.

Refund – reversal of payment.

Chargeback – reversal of payment that is accompanied with a fine imposed.

S – amount paid by the member for his/her membership.

Sst – amount that is distributed between partner sites at the moment of payment.

Sexp – amount that is distributed between partners sites at the moment of membership expiration.

Sds – amount that is accrued to dotSilver Network.

Spmrs – amount that is accrued to the Paid Member Registration Site.

Sss – amount that is accrued to the Subscription Site.

Scmrs – part of Sc amount that is accrued to Contacted Member Registration Site.

Sics – part of Sc amount that is accrued to Initiated Contact Site.

Pds – share (in %) of the member paid amount that belongs to dotSilver Network.

Ppmrs – share (in %) of member paid amount that belongs to Paid Member Registration Site.

Pss – share (in %) of member paid amount that belongs to Subscription Site.

Pcmrs – share (in %) of per-contact amount that is accrued to Contacted Member Registration Site.

Pics – share (in %) of per-contact amount that is accrued to Initiated Contact Site.

Nc – number of contacts that were initiated by a member during his/her membership period.

Sc – amount that is distributed per each contact a member makes.

F – amount of fine that was imposed along with member refund.

Fp – fine portion imposed on a partner.

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