Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 1 of 48
2008 BUDGET AND BUSINESS PLAN FOR BACKPAGE.COM 

OVERVIEW 

Since its conception in October of 2003 through its launch in March of 2004 and its 

subsequent tremendous growth over the last 44 months, Backpage.com has evolved through a 

variety of business models as we have grown the product. At first it was envisioned as an internal 

solution for the eleven NT papers. We then attempted to sell expensive "charter" licenses to other 

papers (mainly but not exclusively alts) giving the licensees the same models as the NT papers had: 

a relatively expensive ($32k to $63k) initial purchase with annual hosting and maintenance fees to 

cover the Backpage operating costs (maintenance going to overhead along with some markup on the 

hosting and license fees charged by Desertnet) while the "charter" licensee was able to keep 100% of 

the revenues generated by their local site, the same way in which the NT papers operated. 

While we were able to sell a few (4) of these licenses initially, the market response was that it was 

too expensive, but that a less costly upfront fee would be acceptable in exchange for some type of 

revenue share. In early 2005 we began to market these packages and had a good amount of success 

over the next 12 to 15 months, selling about 15 licenses for sums ranging from $2000 to $16,000 

with revenue splits ranging from 50/50 to 75/25 (75% to the licensee). 

During this period growth of the national network was spectacular. In July 2004, after the launch of 

the 11 NT paper BP sites, visits totaled 342,852. By October of this year total visits exceeded 8.9 

million per month (see chart below) Revenues generated from the site (not including any 

maintenance and hosting fees charged to licensees) grew from $29k in July 2004 to over $454k in 

October of 2007. Ads placed via the website grew from 12, 195 to over 772,000 per month. Page 

views now total over 147 million as measured by Google Analytics (which we switched to in July 07 

for more accurate measurements). 

ads placed via BP 

Visits $ generated website Page Views 

July 2004 342,852 $29,729 12,195 2,895,733 

July 2005 2,262,585 $94,238 61,065 19,021,090 

July 2006 6,141,756 $247,696 272,842 77,500,898 

October 2006 7,760,352 $265,827 408,774 87,313,962 

October 2007 8,993,456 $454,317 772,517 147,503,813 

In late 2005 and early 2006, in conjunction with the launch of eight Spanish sites tied to Univision, 

we began to launch stand alone city sites without a newspaper partner. While no print upsell 

opportunity exists in most of these markets ( such as Chicago and Atlanta) we now realize positive 

revenue streams associated with every one of these sites, streams that inure 100% to Backpage. 

Today we have 38 "owned and operated" backpage city sites running with 30 more planned for Q's 

1-2 of 2008. 

In 2007 we launched a number of new initiatives with great success, some greater than others. In 

May in New York we launched a paid rentals section following Craigslists' entry into this paid arena 

a few months prior. While our actual revenue did not meet our original projections, the initiative has 

- 1 -

DOJ-BP-0004602308 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 2 of 48
built significant revenue and sales opportunities for the Voice staff and revenue continues to grow in 

the sales department (see chart below): 

NYC Apartment Rentals 2007 Revenue Analysis 

Online Sponsor Total Web Total Staff Sales Total Revenue 

January $ 552 $ 800 $ 1,352 $ 1,352 

February $ 532 $ 500 $ 1,032 $ 1,032 

March $ 657 $ 1,900 $ 2,557 $ 2,557 

April $ 818 $ 600 $ 1,418 $ 1,418 

TOTALS $ 2,559 $ 3,800 $ 6,359 $ 6,359 

May $ 9,086 $ 900 $ 9,986 $ 7,750 $ 17,736 

June $ 6,107 $ $ 6,107 $ 3,300 $ 9,407 

July $ 4,864 $ 1,000 $ 5,864 $ 3,934 $ 9,798 

August $ 2,890 $ 600 $ 3,490 $ 6,990 $ 10,480 

September $ 2,590 $ 700 $ 3,290 $ 6,251 $ 9,541 

October $ 3,365 $ 650 $ 4,015 $ 6,549 $ 10,564 

November $ 2,872 $ 856 $ 3,728 $ 7,198 $ 10,926 

December Projected* $ 1,533 $ 429 $ 1,962 $ 6,000 $ 7,962 

TOTALS since May 1 $ 33,307 $ 5,135 $ 38,442 $ 47,972 $ 86,414 

Grand Totals $ 35,866 $ 8,935 $ 44,801 $ 47,972 $ 92,773 

*Dec 1-14 daily avg * 29, used $6000 estimate for NYC for December 

This is admin site APARTMENT rentals ONLY - no other categories included 

In addition we launched our patent applied for auto re-post function which has generated 

considerable additional revenue as well as ad count. 

In August we launched our national buy program which lets customers post paid sponsor ads across 

all 70+ markets with one transaction. Customers can pick and choose the market in which they wish 

to post or simply post in all markets. The program has proved to be phenomenally successful and 

surpassed our projections may times over. In less than five full months the program has generated 

$324,000 (including our projection for the last half of December) averaging in excess of $70,000 per 

month. 

We also have spent a considerable amount of time and resources in 2007 in improving content 

quality. Automated spam routines remove bad postings within 15 minutes at a pace of 180,000 

removals per month. The staff's global delete tools increased by ten fold the amount of spam 

manually removed. We added country geo-locating by IP to block more international IP's and 

Captcha to slow down posting robots. We even struck an alliance with an abusive over poster to 

migrate to paid national sponsor ads. 

- 2 -

DOJ-BP-0004602309 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 3 of 48
In terms of marketing, we struck a deal with TheEroticReview.com (TER) with reciprocal links. It 

created huge brand awareness in this niche industry and increased page views from TER by 120,000 

per day. 

Over 100 tasks were completed with incremental improvements to the site. Most of these tasks are 

the result of customer emails sent to support@backpage.com. Support currently averages 300 emails 

per day. 

In 2007 with Jess Adams coming on board to take over the accounting and reporting responsibilities, 

we have, for the first time, been able to accurately measure two critical items: 

First is the total revenue generated by Backpage at all levels including online, print upsells, license 

fees, maintenance fees, hosting charges and all other revenue streams that we have developed. The 

total Revenue for 2007 looks like this: 

2007 TOTAL 

BP REVENUE $4,020,064 

SETUP $9,250 

HOSTING $187,174 

MAINT $208,893 

GOOGLE $128,254 

OODLE $15,788 

NYC $47,972 

TCU $63,392 

TOTAL $4,680,788 

BP Revenue reduced by relevant Hosting & Maintenance amounts for Intro licensees and Metro/ EBX 

For 2008, our projections are as follows: 

2008 TOTAL 

BP REVENUE $5,554,855 

SETUP $4,000 

HOSTING $265,015 

MAINT $240,217 

GOOGLE $77,455 

OODLE $12,000 

NYC $113,796 

TCU $84,437 

TOTAL $6,351,776 

BP Revenue includes Print, Sponsor/ Online, National, and Preferred Sponsor 

BP Revenue reduced by relevant Hosting & Maintenance amounts for Intro licensees and Metro/ EBX 

- 3 -

DOJ-BP-0004602310 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 4 of 48
In addition, we can now measure and track the bottom line contribution Backpage brings to VVMH 

at all levels. Throughout this calculation we assume that 30% of all print upsells are a cost of sales 

to the papers. For 2007 the contribution looks like this: 

BACKP AGE ENTERPRISE IMP ACT 2007 

REVENUE 

Print 

Web (Online I Sponsor) 

Web (National Ad) 

Google AdSense 

Preferred Sponsor Rev 

Oodle Revenue 

Other (NYC, TCU) 

TOTAL REVENUE 

COSTS 

Corp Alloc 

Maintenance 

Hosting 

Univision 

Powered By Affiliates 

TOTAL COSTS 

GROSS PROFIT/ (LOSS) VVM 

30% Print Expense 

NET PROFIT/ (LOSS) VVM 

NET PROFIT FROM BACK.PAGE 

TOTAL PROFIT/ (LOSS) VVMH 

NOTES: 

December 2007 is projected 

Web (National) used 70% VVM allocation 

Google AdSense used 70% VVM allocation 

Oodle used 70 % VVM allocation 

$872,802 

$1,906,620 

$79,971 

$46,913 

$ -

$5,390 

$111,364 

$3,023,061 

$201,798 

$161,825 

$136,025 

$10,075 

$31,491 

$541,214 

$2,481,846 

$261,841 

$2,220,006 

$(153,745) 

$2,066,260 

Corp Alloc used 10% online I sponsor only - adjustment to true up to actual will be made at 2007 year end 

Maintenance used 2007 budget not GL as adjustment needed at year end 

Hosting used 2007 actual BW usage as adjustment needed at year end 

Assumes December projected expenses and December projected 2007 adjustments - see 2007 P&L tab 

- 4 -

DOJ-BP-0004602311 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 5 of 48
Our 2008 bottom line impact is forecast as follows: 

BACKPAGE ENTERPRISE IMPACT 2008 

REVENUE 

Print 

Web (Online/ Sponsor) 

Web (National Ad) 

Google AdSense 

Preferred Sponsor Rev 

Oodle Revenue 

Other (NYC, TCU) 

TOTAL REVENUE 

COSTS 

Corp Alloc 

Maintenance 

Hosting 

Univision 

Powered By Affiliates 

TOTAL COSTS 

GROSS PROFIT/ (LOSS) VVM 

30% Print Expense 

NET PROFIT/ (LOSS) VVM 

NET PROFIT FROM BACKPAGE 

TOTAL PROFIT/ (LOSS) VVMH 

NOTES: 

Web (National) used 70% VVM allocation 

Google AdSense used 70% VVM allocation 

Preferred Sponsor / Oodle used current allocation formula for VVM 

Used 0.3% estimate for Univision (based on 2007 actuals) 

Used 1.4% estimate for Powered By Affiliates (based on 2007 actuals) 

- 5 -

$767,029 

$2,604,349 

$229,975 

$30,790 

$64,223 

$3,238 

$198,233 

$3,897,837 

$457,515 

$174,509 

$158,850 

$10,114 

$47,199 

$848,187 

$3,049,649 

$230,109 

$2,819,541 

$214,371 

$3,033,912 

DOJ-BP-0004602312 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 6 of 48
ADJUSTMENTS FOR CY 07 BACKPAGE FINANCIAL STAEMENT: 

The following schedule details the adjustments necessary to close out the Backpage books for 2007 

due to inaccurate entries, unfinished decisions or variances from projected to actuals: 

2007 ADJUSTMENTS SUMMARY 

NYC Rentals 

Legal Expense 

Backpage Corporate Allocation Correction 

VVM Maintenance Correction 

VVM Hosting Correction 

VVM 10% Allocation Correction 

NYC & MN TCU 10% Allocation 

TOTAL CREDIT DUE BACKPAGE 

Supporting schedules will be in handouts and 

embedded in tabs in master budget 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

(37,128) (50% for 2007, 50% in 2008) 

(37,500) (half to Dallas, half to Backpage) 

(81,048) (incorrect allocation at beginning of the year) 

(15,105) ( correction to original incorrect schedule) 

(44,605) ( correction from projected to actual) 

(30,862) (correction from projected to actual revenues) 

(11,136) (correction from projected to actual revenues) 

(257,384) 

- 6 -

DOJ-BP-0004602313 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 7 of 48
2008PLAN 

2008 presents us a series of opportunities to take Backpage to another new level. We have 

consistently achieved a top ten ranking in Comscore's ranking of national classified sites, with our 

page views at number six every month. As a free classified site, only Craig has more. While Kijiji 

has passed us in uniques (we are about equal in visits as of November 07) they do not get nearly the 

number of views per visit that we do. 

The 2008 basic plan again proposes to significantly increase our investment in Backpage.com in 

order to capture key pieces of the "free" online classified market and carve out a clearly defined 

position as the other player in the free classified market. 

Our Basic Strategic Plan is as follows: 

1. Grow visits and page views in categories with revenue and page view potential: escorts, 

massage, adult jobs, biz ops, pets, and employment. 

2. Grow revenue by further development of current revenue features and build new customer 

retention tools. 

3. Launch 30 or more new markets. 

4. Develop a selective affiliate solution and referral link acquisition process. 

5. Put a staff in place to handle the tasks above including continued user improvements, abuse, 

spam, fraud prevention, user and user content creation, feeds, affiliates and link building. 

6. Marketing and public relations. 

a. Public relations. 

b. Pay for personals. 

c. New paper campaign. 

7. Grow revenue for VVM and backpage as a stand alone. 

The specifics for major development in 2008 include: 

a. Spam clean up tools. 

- Browse content nationally. 

-MD-5 Hash 

b. User improvements 

- Delayed sponsor release. 

- Popular searches 

-WAP 

- Receipts 

- Google Search appliance. 

- Profiles 

- User authentication 

c. Revenue improvements 

- Affiliate program. 

- Sponsor specials. 

- 7 -

DOJ-BP-0004602314 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 8 of 48
- Bank ofbackpage. 

- Re-solicit queries and CRM 

- Preferred Sponsor Position platform 

d. Content 

- Extended expiration 

-OpenAPI 

- Feed solutions 

- Marketing tools 

- Email database. 

e. Marketing 

- Staff blog for PR and transparency 

- Create SQL database for email promotions 

- GEO IP ads 

f Personals program in seven cities: LA, OC, Phx, Denver, KC, Houston, and Dallas 

- $100 per week per city drawings for 52 week to buy original personals content- random drawings 

- Half page personals listing ads in each city each week 

- Contest and program administered exclusively by Dallas staff 

- In paper and banner promotion 

- see separate powerpoint tab 

QUANTITATIVE GOALS: 

For 2008 we have attempted to better identify trending and growth in a fashion that allows us to be 

more predictive about growth for the company as well as for individual markets. We benchmarked, 

ad count and visits vs. revenue to get an idea of dollars per ad posted and dollars generated per visit. 

The results were generally very predicative (see spreadsheets following this section). We also found 

a highly correlative relationship on a market by market basis for visits and page views, although it 

varies greatly from market to market. 

We used the last four months of 2007 as our baseline values for ads, visits and pages and built our 

models using the above predicitive benchmarks. Following that we put each line item to the "sniff 

test" and found in about 80% of the cases that our model felt fairly accurate. In some cases (such as 

October 07 - Phoenix ... Larkin and Lacey arrested by Arpaio, escort ads and revenue immediately 

plunge and rebound a few weeks later) we manually adjusted the ad counts, visits, page views and 

ultimately revenues to better reflect what we felt was a realistic prediction. 

- 8 -

DOJ-BP-0004602315 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 9 of 48
2007 vs 2008 growth all markets peak month: 

(See spreadsheets for month by month and market by market growth) 

Actual Projected Percentage increase 

October 07 October 08 

Ads: 772,513 1,150,336 49% 

Visits: 8,993,456 11,077,233 23% 

Page Views 147,503,873 210,849,716 43% 

Print Revenues $ 116,019 $ 92,719 -20% 

Online/Sponsor Rev. $250,001 $322,255 29% 

National Rev. $ 66,484 $ 94,726 42% 

Total All Online Revenue $454,317 $543,997 20% 

(Includes Google, Oodle, TCU, NYC, Premium Sponsor revenues) 

- 9 -

DOJ-BP-0004602316 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 10 of 48
ALL BACKPAGE PROPERTIES 

PRINT REVENUE 

GRAND TOTALS - 2006 Actuals $ 1,416,740 

GRAND TOTALS - 2007 Projected $ 1,836,075 29.60% 2007 Projected vs 2006 Actual 

GRAND TOTALS - 2007 Actuals $ 1,328,510 -27.64% 2007 Actual vs 2007 Projected 

-6.23% 2007 Actuals vs 2006 Actuals 

GRAND TOTALS - 2008 Projected $ 1,183,425 -10.92% 2008 Projected vs 2007 Actual 

ONLINE / SPONSOR REVENUE 

GRAND TOTALS - 2006 Actuals $ 1,208,289 

GRAND TOTALS - 2007 Projected $ 2,149,925 77.93% 2007 Projected vs 2006 Actual 

GRAND TOTALS - 2007 Actuals $ 2,474,651 15.10% 2007 Actual vs 2007 Projected 

104.81% 2007 Actuals vs 2006 Actuals 

GRAND TOTALS - 2008 Projected $ 3,381,416 36.64% 2008 Projected vs 2007 Actual 

NATIONAL AD REVENUE 

GRAND TOTALS - 2007 Projected $ 54,820 

GRAND TOTALS - 2007 Actuals $ 295,361 438.78% 2007 Actual vs 2007 Projected 

GRAND TOTALS - 2008 Projected $ 976,421 230.59% 2008 Projected vs 2007 Actual 

ONLINE / SPONSOR + NATIONAL REV 

GRAND TOTALS - 2007 Projected $ 2,204,745 

GRAND TOTALS - 2007 Actuals $ 2,770,012 25.64% 2007 Actual vs 2007 Projected 

GRAND TOTALS - 2008 Projected $ 4,357,837 57.32% 2008 Projected vs 2007 Actuals 

GRAND TOTAL -ALL REVENUE 

GRAND TOTALS - 2006 Actuals $ 2,625,029 

GRAND TOTALS - 2007 Projected $ 4,040,820 53.93% 2007 Projected vs 2006 Actual 

GRAND TOTALS - 2007 Actuals $ 4,098,522 1.43% 2007 Actual vs 2007 Projected 

56.13% 2007 Actuals vs 2006 Actuals 

GRAND TOTALS - 2008 Projected $ 5,541,262 35.20% 2008 Projected vs 2007 Actuals 

(See detail spreadsheets for month by month and city by city numbers) 

- 10 -

DOJ-BP-0004602317 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 11 of 48
CORPORATE ALLOCATIONS TO VVM PAPERS 

In 2007, we allocated 10% of online and sponsor revenue ( excluding national, Google and Oodle ads 

which are charged out separately) generated by the VVM papers back to Backpage to cover the 

additional backroom cost of administering and focusing on the growth of the VVM paper sites. 

In 2008 we are proposing that number be increased to 15 %. There are two reasons for this. First is 

the increased projection for online revenue. In 2007 our online/sponsor revenue for the VVM papers 

beat projection by 111 %. We had projected a 68% increase over 2006 and beat that number by an 

additional 26% ( compounds to 111 % ). In 2008 we are projecting an additional increase in this 

category of37% over 2007 or $698,000. Second, in order to achieve this goal we have to increase 

our support overhead substantially. We estimate the cost to be a minimum of $389,000 in additional 

expenditures. Almost all of this money is targeted to VVM cities. While the allocation increases 

from $210,000 in 07 to $457,000 in 08, net revenue to the VVM papers still increases $528,000 or 

29%. See the two following spreadsheets for details: 

Backpage.com 

Analysis of increased expenses 2008 over 2007 

Original Date: 12/17/2007 

Updated: 12/19/2007 

2008 Proj 2007 Proj 

Salaries $ 724,400 $ 483,744 

Bonus $ 202,600 $ 125,000 

Health 

Insurance $ 40,310 $ 24,996 

PR Tax $ 83,430 $ 54,787 

Depreciation $ 3,653 $ 

Marketing/ Ad $ 114,000 $ 70,000 

TOTAL PROPOSED EXPENSE INCREASE 

2008 OVER 2007 

* Dec 2007 projected 

2007 Actual* 

$ 507,264 

$ 130,004 

$ 24,713 

$ 44,508 

$ 

$ 72,142 

- 11 -

2008 Diff Explanation 

$ 217,136 Adding 8 new staff members in 2008 

$ 72,596 Adding 8 new staff members in 2008, increasing availability of bonus 

$ 15,597 Adding 8 new staff members in 2008 

$ 38,922 Adding 8 new staff members in 2008 

Purchasing additional PCs / Laptops for 

$ 3,653 additional staff 

$ 41,858 Marketing in-house - ads $ 20,000 new ads 

Personals 7 markets $ 42,000 year 

PR Releases and 

composition $ 9,000 6 press releases submitted 

Directories (SEO) $ 8,000 Buy ads on directories (SEO) 

Posting Services (SEO) $ 10,000 Blogging etc (SEO) 

Affiliate Expenses $ 25,000 Affiliate Mktg Program 

$ 389,762 

DOJ-BP-0004602318 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 12 of 48
Backpage.com 

Analysis of VVM cities allocation of revenue to BP 

Sponsor/ Online revenue only 

2007 2007 2007 2008 2008 2008 Net Increase % Increase 

15% Allocto Netto VV 

Actuals 10% Alloc to BP Net to VV Cities Projected BP Cities 2008 over 2007 '08over'07 

Phoenix $ 264,276 $ 26,428 $ 237,848 $ 340,971 $ 51,146 $ 289,826 $ 51,977 22% 

Dallas $ 440,495 $ 44,050 $ 396,446 $ 562,981 $ 84,447 $ 478,533 $ 82,088 21 % 

Denver $ 90,183 $ 9,018 $ 81,165 $ 120,347 $ 18,052 $ 102,295 $ 21,130 26% 

St Louis $ 36,117 $ 3,612 $ 32,505 $ 49,004 $ 7,351 $ 41,653 $ 9,148 28% 

KC $ 51,801 $ 5,180 $ 46,621 $ 70,066 $ 10,510 $ 59,556 $ 12,935 28% 

Houston $ 216,267 $ 21,627 $ 194,640 $ 330,811 $ 49,622 $ 281,190 $ 86,549 44% 

Cleveland $ 66,632 $ 6,663 $ 59,969 $ 104,695 $ 15,704 $ 88,991 $ 29,022 48% 

Miami/Broward $ 247,137 $ 24,714 $ 222,424 $ 337,689 $ 50,653 $ 287,036 $ 64,613 29% 

SF $ 42,724 $ 4,272 $ 38,452 $ 54,801 $ 8,220 $ 46,581 $ 8,129 21 % 

LA/OC $ 138,592 $ 13,859 $ 124,733 $ 211,745 $ 31,762 $ 179,984 $ 55,251 44% 

Seattle $ 26,283 $ 2,628 $ 23,655 $ 46,402 $ 6,960 $ 39,442 $ 15,787 67% 

New York* $ 261,140 $ 26,114 $ 235,026 $ 386,497 $ 95,102 $ 291,394 $ 56,368 24% 

Nashville $ 11,843 $ 1,184 $ 10,659 $ 18,476 $ 2,771 $ 15,705 $ 5,046 47% 

Minneapolis** $ 124,493 $ 12,449 $ 112,044 $ 168,097 $ 25,215 $ 142,883 $ 30,839 28% 

Totals VVM 

papers $ 2,017,984 $ 201,798 $ 1,816,186 $ 2,802,582 $ 457,515 $ 2,345,067 $ 528,881 29% 

Additional 5% allocation of VV sponsor I online revenue to Backpage.com 2008 over 2007 (15% vs 10%) to cover increased expenses 2008 over 2007 - see 

separate expense analysis. Increased allocation will still yield higher net Backpage sponsor/ online revenue for all VV cities in 2008 over 2007 - $528,881 total. 

* Includes NYC Rentals plus $37,125 in 2008 for 1/2 of2007 NYC Rentals Adjustment 

** Includes MN TCU 

- 12 -

DOJ-BP-0004602319 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 13 of 48
LINE ITEM NARRATIVE AND ANALYSIS 

Direct Revenues: 

1. License fees and upgrades: none projected. We are no longer selling licenses to newspapers. 

2. Set up and development costs: $4000 FOR MISC. UPGRADES INCLUDING Latino sites 

3. Contracted Maintenance Fees with all licensees including VVMH papers 

4. Hosting Fees: Costs of Bandwidth based upon usage and Desertnet contract schedule. 

Projections are tied to current page view usage and projected growth thereof 

Revenue shares to BP at Net: 

5. Print, online and sponsor revenue: from projected schedules based upon previous years 

trending analysis and estimates for 08 growth net of charges to introductory licensees. No 

VVM revenue shows here as 100% inures to the paper less the corporate charges which are 

detailed further down. 

6. National ad revenue: from our trending and projection forecasts. 

7. Google Revenue: Continues to trend downward as it did in 07 

8. Preferred Sponsor ad revenue: This only projects $10,000 per month from the commitment 

we have from American Furniture warehouse (fuller description of this program elsewhere in 

this document). If successful, it will be re-budgeted in F-1 or F-2 

9. Oodle Revenue: This is a minor sum. 

10. Other Revenue shares: No money projected here as this category includes NYC rentals and 

Twin Cities uncovered sold by local staff 100 % inures to the city less the corporate charges 

which are detailed further down. 

Cost of Sales: 

11. Hosting Fees: Our net costs due to DesertNet from the gross schedule in item 4 above 

12. Custom Set up Fees: Costs associated with set up fees as charged in item 2 above 

13. Credit Card Discount Fees: Assumes 4% for 2008 for everything going through the BP 

server 

14. Chargebacks: assumes 1.5% for locally placed ads, 3.5% for national ads 

Expenses: 

15. Salaries: We have added an additional 8 people to handle the additional work associated 

with the increase in volume and initiatives: spam, adult, pets, rentals, LA focus, national resolicits. We also have projected a more sophisticated staff manager for the Phoenix office 

beginning in Q2 

16. Bonus: Package opportunities have increased by $70 kin 08 to cover additional personnel 

and responsibilities if we hit the revenue and traffic goals. 

17. Health insurance: follows pattern of usage by current staff with new costs and additional 

staff 

18. Payroll taxes: 9% of salaries and bonus 

19. Development Costs: Desertnet costs based on prior years usage. 

- 13 -

DOJ-BP-0004602320 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 14 of 48
20. Travel/M&E: Primarily Carl's expenses for trips to NYC, conventions, meetings and once 

per month to Dallas 

21. Dues and Subs: Primarily domain name registration 

22. Equipment repairs and maintenance: Misc. computer parts and services 

23. Legal: $75k projected based on Boston suit oversight, past experience and general caution 

24. Rent: costs of space in Phoenix and Dallas (note get Dallas a credit) 

25. Telephone: Carl's Cell 

26. Marketing and Advertising: As detailed in the business narrative this includes a new in 

house ad campaign, a personals cash giveaway campaign to buy content, PR and press 

releases, directories (SEO), Posting Services (SEO) and Affiliate marketing expenses, 

program to be determined. 

27. Supplies: Misc. 

28. Postage: minimal 

29. Miscellaneous: Misc. 

30. Depreciation: 3 year schedule for $13,250 worth of new and replacement computers (8 new 

staff plus two replacements and one laptop) 

31. Corporate allocation: plugged at $1269, same as 07 

Corporate Allocations from VVM papers to Backpage: 

These are calculated at 15% of online/sponsor revenue (including NYC rentals, TCU income and 

half of development costs for NYC rental project in 2007) as described in the narrative above. 

- 14 -

DOJ-BP-0004602321 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 15 of 48
PART II: PREMIUM POSITION SPONSORSHIP 

Part of our 2008 sales development is the "Premium Position Sponsorship" program. As of this 

writing we have only presented this to one account and we have a verbal commitment to begin the 

program in early 2008. In as much as we have not tested the waters for this product yet, we did not 

project any revenue other than the monthly commitment to it by the one account, American 

Furniture Warehouse. 

The program is fully developed and ready for sale. The mechanics are fairly simple. With 150 

million page views monthly, we have approximately 50 million views that are made up of viewing 

"listings pages" that is pages with lists of 100 ads per page in a particular category or section. To 

date we have sold text sponsorship advertising at the top and the right hand rail (with thumbnails 

drawn from the individual ads) of these pages to monetize Backpage. These sales are done at both a 

local and now at a national level. This has been the lion's share of our revenue streams other than 

paid adult. We have also monetized the auto re-post, rentals in New York and some other smaller 

revenue streams, but these account for lesser dollar amounts. 

The basic premise of the premium position sponsorship is to allow an advertiser to "sponsor a page" 

with a link on the top of the appropriate contextually relevant category AND allow them to have a 

sponsor ad position fixed at the top of the page on all listings pages served in that category. Because 

of the high contextual relevance and the implicit behavioral targeting involved, we believe we will 

be able to yield a very high effective CPM. We are also testing secondary contextual advertising 

positions where an advertiser will be more likely to reach their customer base (i.e.: furniture in the 

rentals section), but not quite as directly relevant. We don't believe this will bring as high a CPM as 

the direct contextual relevance but should still yield impressive results. 

We will sell these initially as package pricing with implicit CPM values backed in based upon our 

current traffic. We will be able to measure click throughs to the advertisers site (as we are sure they 

will as well) and we will be able to measure clicks from the text/sponsor ad on the listings pages into 

the individual ads on the Backpage site. 

Initially we are selling this on a full national basis only, but are technically prepared to be able to sell 

selected markets as well. Selling categories in individual markets depends in large part on having a 

critical mass oflisting pages in the targeted market to make the sale worthwhile. Initially we will 

sell the product with our current Backpage staff (Carl and crew) but should we find this has legs we 

will hire a person to sell the product. 

Our initial full sales effort (other than American Furniture Warehouse which is underway) will begin 

in January at the Adult Video and product show in Las Vegas. 

Examples of the premium position sponsorship: 

- 15 -

DOJ-BP-0004602322 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 16 of 48
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DOJ-BP-0004602324 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 18 of 48
Discount Furniture Network 

• • • !iOME Of'FiCE • 

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- 18 -

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DOJ-BP-0004602325 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 19 of 48
- 19 -

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- 20 -

DOJ-BP-0004602327 

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DOJ-BP-0004602328 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 22 of 48
PART III: NEW YORK AND LA EMPLOYMENT INITIATIVE 

The opportunity: Craig gets almost $19 million per year from employment postings in LA and New 

York alone. He has ten times the volume of employment ads that we have. He creates virtually his 

entire cash flow from charging for employment in selected markets. He is currently adding 5 more 

markets to his paid employment stable. 

CRAIGSLIST.ORG 

Job Postings 

(in 30 day Job Post Monthly Annual 

City Name period) Rate Revenue Revenue 

San Francisco 36,800 $75 $2,760,000 $33,120,000 

Los Anoeles 29,200 $25 $730,000 $8,760,000 

NYC 32,600 $25 $815,000 $9,780,000 

San Diego 10,400 $25 $260,000 $3,120,000 

Seattle 19,700 $25 $492,500 $5,910,000 

Boston 15,600 $25 $390,000 $4,680,000 

Washington D.C. 13,800 $25 $345,000 $4,140,000 

Total 158,100 $5,792,500 $69,510,000 

BACKPAGE.COM 

Job Postings 

(in 30 day 

City Name period) Oodle includes not counted in these numbers 

San Francisco 1,178 

Los Angeles 2,449 

NYC 3,879 

San Dieoo 4,921 

Seattle 1,151 

Boston 613 

Washington D.C. 183 

Total 14,374 

Our opportunity is to grab a significant piece of that market by achieving market recognition and 

critical mass in employment postings. To date the work that we have done has barely dented the 

disparity and we do not have the option to begin charging for employment ads with the volume we 

currently have. 

In order to do this, we feel we would have to invest a massive amount of money into a select few 

markets and "buy" the content and eyeballs in order to get to the critical mass necessary to begin 

charging for this category. We think LA and New York are our best opportunities. Our papers are 

the strongest there and the markets are the largest. The cost will, however, be substantial. Therefore 

this program, which is budgeted at $2 million dollars for a full year's deployment before we charge 

for the first ad, would be contingent on realizing significant additional revenues from Backpage, 

most probably from the Premium Sponsor Ad program. If the program takes off and generates a 

fresh 7 figure revenue stream, then AND ONLY THEN, we recommend embarking on this program 

- 22-

DOJ-BP-0004602329 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 23 of 48
with those additional dollars to capture a piece of this market. Assuming the project is a success, a 

$2 million dollar investment could easily bring in $2 million dollars in each of the two markets in the 

first full year of the operation, still only 20% of where Craig is, but nevertheless very profitable. 

And it would be something we could build upon nationwide. 

Develop a paid job posting solution for NY and LA 

1. Get content 

a. Pay to post jobs: $15k per mo 

1. Pay $1 per ad to affiliates for job postings. 

11. Set rules- job posting must stay online 30 days, ads must be authorized by 

employer to be on this site and not copied verbatim from some other site, must 

not be biz opps or commission only jobs, and postings will be reviewed for 

complaints for 90 days before payment is made to poster. 

111. Result per market will be 5000 jobs a month for $5,000. We expect abuse as 

many postings might be plagiarized by users from other sites. We will remove 

them when notified and shut down affiliate when it happens. 

1v. After several months of abuse, tighten up affiliate standards. Cost is $5k per 

month to administrate. 

2. Create employers posting $30k per mo. 

a. Four people call employers and set up Pay to post account ($15,000 per mo.) 

b. Pay employers bonuses and incentives to start posting. ($5,000 per mo.) 

c. Pay webmasters for links on their site that drive good postings. ($10,000 per mo.) 

3. Get job seekers 

a. Online marketing: $60K per mo. 

1. Geographic targeted ads on Google and Yahoo. 

11. Purchase premium positions on Simplyhired, Indeed and Oodle. 

111. Purchase sponsorships on employment focused newsletters. 

b. Public relations: $10k per mo. 

i. An article a month for a year via contracted PR firm. 

c. More traditional media: $50k per mo. 

1. This could be direct mail to HR directors to late night cable TV targeting job 

seekers. 

4. Develop innovative job specific features: $2k per mo. 

a. Undetermined. 

5. Total annual costs for above: $2 million. 

6. After one full year, start charging $10 to $15 for an employment posting. 

- 23 -

DOJ-BP-0004602330 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 24 of 48
- 24-

DOJ-BP-0004602331 

Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 25 of 48
Case 2:18-cr-00422-DJH Document 2006-2 Filed 12/04/23 Page 26 of 48
NCMEC008591

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