The smut business just isn't what it used to be.
The early days of the Internet were a bonanza for major pornography
studios, as the web transformed adult entertainment into an instant,
unlimited, and completely private experience -- always just a credit
card charge and a cable modem away.
But what the Internet giveth, the internet taketh away. As the most recent Bloomberg Businssweek recounts in its feature on the rise of the new and controversial .XXX domain, the big
production companies have seen their profits shrink by as much as half
since 2007, as audiences have fled to aggregators such as XTube and
YouPorn that offer up a never-ending stream of free naked bodies.
Stuart Lawley, the entreprenuer behind .XXX, has a plan to try and
reclaim some of that lost revenue -- micropayments. Per Businessweek:
Next year, ICM plans to introduce a proprietary micropayment system.
This service, Lawley promises, will help blue-chip pornographers fight
back against the proliferation of free and pirated smut online. "We're
going to do for adult what Apple (AAPL) did for the music business with
the iTunes store," he predicts.
Consumers who have become conditioned to grainy, poorly shot giveaways,
Lawley says, will get reacclimated to paying for higher-quality hard
core. Price, quantity, and specificity are key. Rather than the
traditional model--$24.99 upfront for all-access monthly
memberships--porn consumers will shell out 99¢ apiece for short clips of
niche material (akin to buying a favorite song, not the whole album).
Perhaps more compelling, people seeking porn on their mobile devices
will have a convenient way to purchase a quickie on the run.
Yikes. Comparing your business plan to Apple is pretty standard
corporate trope these days, but in the case of porn, the iTunes analogy
is hopelessly inapt. Here's the problem: Pornography is mostly a
commodity product. Music is not. People have favorite bands and expect a
certain level of production value in their music.
Bruce Springsteen devotees aren't just as happy listening to Bob Seger
or an a cappella rendition of "Born In the USA." It's at least a little
rarer to have favorite porn stars. And the audiences aren't demonstrably
sensitive to production values. Worse yet, the tools for do-it-yourself
filming are improving every time Apple upgrades the iPhone's video
camera.
In other words, convincing people to pay for to watch sex is a much taller task these days than getting them to pay for a song.
In fact, it's a bit like getting them to pay for a newspaper. Like the
porn studios, big media companies have seen their own profits plummet in
the face of free aggregators, amateur bloggers, and the nearly
limitless competition supplied by the web.
Unsurprisingly, micropayments have been a hot topic in the news industry
over the past few years. But so far, they haven't really taken off.
Here's how Clay Shirky explained the fatal flaw with the idea back in
2009:
The fantasy that small payments will save publishers as they move
online is really a fantasy that monopoly pricing power can be
re-established over we users. Invoking the magic word "micropayments" is
thus grabbing the wrong end of the stick; if online publishers had that
kind of pricing power, micropayments wouldn't be necessary. And since
they don't have that pricing power, micropayments won't provide it.
What holds for journalism in this case holds for sex. In both cases, the
competition is so broad that customers are likely to go elsewhere
rather than pay. There are, obviously, exceptions in the case of
newspapers -- the Wall Street Journal has a profitable paywall, and the
New York Times appears to be having some early success with its own. But
that might be cold comfort for the adult entertainment world.
That is, if you assume people still have slightly higher standards for their news than for their porn.
Marcel
Pohl was a student at the School of Economics and Management in Essen,
Germany. But not for long -he passed 60 examinations and graduated in
three semesters, when the normal course is 11 semesters. You’d think the
school would be proud, but they are suing Pohl for €3,000, which is the
tuition payments we would have made if he stayed as long as other
students!
Long
before Apple got its mojo back, the king of the technology hill was Microsoft.
