As the online adult entertainment industry suffers through a deepening sales slump, it’s easy to look at CNN or CNBC or just about any other major media outlet and draw a straight line between our industry’s woes and those of the rest of the nation. And by no means is the general economic downturn a strictly American trend. It only makes sense then that with a global economic downturn in full swing, any problems that adult companies might be having making sales are connected.Sometimes what seems to make sense though isn’t what’s really going on.
I’ll admit that analysis of the adult entertainment industry is more guesswork than science. The companies in this business rarely share their true numbers with the rest of us, but instead look for ways to project success even when their targeted perception doesn’t match up with the actual books. Are the companies that we think are successful really successful? How many companies that we know nothing about are making bank quietly behind the scenes? It’s hard to say.
So while getting to the root of our industry’s financial picture is never easy, there is something to be said for experience. When you’ve been in the online adult business for as long as I have, you start to see patterns and trends. So while nobody may know the truth exactly, what we can get is something like “truthiness,” if I may borrow a word from Mr. Colbert. We can get some educated theories about the state of our industry.
Before Jon Stewart demolished CNBC’s Jim Cramer, before Barack Obama took the oath of office under less than optimal economic conditions, and before former Treasury secretary, Henry M. Paulson Jr. got down on one knee to beg Speaker Pelosi to help pass the bank bailout money that George W. Bush wanted, this industry was already facing a challenge. Long before John McCain “suspended” his campaign, when we all thought Bank of America was golden, the adult industry was seeing problems with its bottom line. While it’s convenient to assume any hard times now must be connected to the banking meltdown we’re all hearing about on a daily basis, I’m afraid that explanation is just too convenient and doesn’t fit the actual time line for this downward trend.
About a year ago we had a better idea of what was happening. The word we kept hearing about was “piracy.” Adult companies saw the rise of “tube sites,” which swiped from their arsenal the single best selling point for subscription-based adult websites: full length video. While thumbnail gallery post (TGP) sites had already crippled the market for adult images, prior to the tube site revolution the adult subscription sites at least had video to entice potential subscribers. It’s true that peer-to-peer (P2P) networks had already hurt adult sales long before tube sites arrived, but use of those networks still required special software downloads; plus, use of P2P networks felt shady to many Internet users. But with tube sites, the user doesn’t really know whether the site licensed the content or not, so they have plausible deniability. There’s no software to download. The video is sufficient length, often of fine quality for the purpose.
So let’s face it, pre-recorded digital media sales are in trouble, and it has nothing to do with the economy. It’s the same fight that the music industry fought and mostly lost. It’s the same fight that Hollywood continues to fight, and is likely to lose as well. (But at least Hollywood has one advantage that we don’t: people know it’s illegal to download Hollywood movies that they haven’t purchased.) It turns out that the news business is feeling the sting of the Internet as well, with many local newspapers like the San Francisco Chronicle on the verge of collapse – subscriptions are way down because readers are getting their news for free off the Internet.
This is the problem that we face as an industry. If your company is making decisions based on the “economy” then your company is fighting the wrong fight. Hollywood is still selling tickets to movies. Popular musicians are still selling out concerts across the country. Consumers may be tightening their belts somewhat, but that hasn’t stopped them from seeking out entertainment. The fight you need to be fighting is with your company’s business model. What you need to be asking yourself is “How can our company make money in a modern wired marketplace when so much digital content is available for free?”
The answer might be found in marketing live cam shows, or selling toys or novelties. It could be that you need to use digital content to lure people to your site, and then find a way to act as a broker for goods or services that aren’t even adult in nature. It might be in marketing adult personalities, then booking them at local adult clubs. Whatever your solution, when you ask the question “How will I make money?” your answer should not be simply the sale of subscriptions to pre-recorded digital media. Not anymore.
It’s possible you might get some help from Congress in this fight. House Financial Services panel Chairman Barney Frank (D-Mass.) and Rep. Ron Paul (R-Texas) are currently engaged in a full force campaign to ease restrictions on Internet gambling. That would be a huge boon for the adult Internet industry because it would give you a new way to make money with adult traffic. But opposition to online gambling is strong and organized, so it remains to be seen what happens here.
But the next time you hear someone blame the “economy” on poor sales of adult content, think about my words here. Don’t fall into the tempting but flawed line of reasoning that says the same thing that’s hurting Wells Fargo is also hurting you. Because if you do, you could be putting your energies in the wrong place; or else you might be tempted to bunker down and hope the storm passes. It won’t, not without your company first taking the proper steps to ensure a flow of revenue in a modern wired marketplace. And to do that, you need to understand exactly what it is that ails you.
