Porn Sales Down? Don’t Panic!
In a famous 1968 show from John Cleese called “How To Irritate People,” pilots of commercial airplanes make the passengers panic just by telling them not to panic. It’s a funny reminder that the tendency to panic is in all of us, and sometimes all we need to induce panic is the thought of panic itself.Right now I’m seeing a fair amount of panic in adult entertainment circles. Many affiliate programs are privately telling friends that sales are down, and they’re not sure how to turn things around. There have been rumblings from the adult studios that DVD sales are nowhere near what they once were. Even the owners of adult product stores are reporting a financial crunch. And when we see other people panic, well, often we start to panic ourselves.
The tendency of course is to look at all this upheaval in the adult business sector and then draw a straight line to all the bad news we’re seeing on television about the economy. Turn to almost any newscast and you’ll get pictures of stockbrokers pulling out what’s left of their hair, or burying their face in both hands. Surely it’s no coincidence that at the same time economists are warning us that we’re facing an economic downturn on the possible scale of the Great Depression, the adult industry is struggling with sagging sales.
Except a coincidence is exactly what we have here folks.
Before you push the panic button while watching CNN and looking at your stats, take a deep breath and remind yourself that the economic crisis they’re talking about on TV hasn’t hit “main street” yet in the way they’re predicting. And at this point at least, there’s no reason to believe that the economic crisis they’re all screaming about will ever hurt our industry the way it’s sure to decimate businesses like the auto industry or the home market. Our industry doesn’t rely on credit the way other industries do, and we have the ability to make our product extremely affordable to almost any income level.
Let’s look at a few numbers from Hollywood to back up my point that a bad economy isn’t the cause of our problems. So far in just four weeks, a brain-dead movie about a talking Chihuahua has made approximately 80 million dollars in ticket sales. In just one weekend, a fifth installment in what has to be a tired and exhausted horror franchise just pulled in 30 million in box office – and that was the second-place film for that period. First was yet another Disney attempt to produce shallow American teenagers with their “High School Musical” franchise – that one pulled in 42 million in one weekend. And these are just the American box office numbers.
All this tells us that people are spending money on entertainment still, and the less the entertainment makes you think deep thoughts, the more money it makes.
So let me be blunt. The problem with the adult industry has nothing to do with the economy. The problem is with our business models, just like it was a problem last year before anyone could seriously mention the words “great” and “depression” on TV while talking about the future economy.
When videotapes were first introduced, Hollywood sold copies of their movies at absurdly high prices that were out of reach for most consumers. It didn’t want regular people to have the ability to purchase and own its films; Hollywood’s business model relied on revenue from movie theaters, selling rights to television stations and cable channels, etc. Home video was initially seen not as a boon, but a threat. When video rental stores started popping up, Hollywood fought against them with misguided and ineffective legal action. Now we know that home video sales often eclipse revenue from box office – even though box office sales still account for a sizable portion of Hollywood’s revenue.
Hollywood was showing a lack of foresight when it feared the home video market. That was a mistake that it did not intend to repeat when DVDs proved you could augment a $9 ticket with a $20 purchase three months later. So are we Hollywood of the past in the sense that we’re addicted to business models that worked before while refusing to embrace the new possibilities? It’s not a perfect parallel, but I do think there are some lessons that our industry can learn from Hollywood’s history.
In our case, we have preferred business models that are now on the skids. DVD sales definitely fall into this category, but I’m thinking more of the monthly recurring subscription model that has been the backbone of the online adult business for many years now. When it works, it’s a beautiful model. The consumer generally gets all the porn they can eat for a flat monthly fee. The seller gets a recurring membership base that provides a steady source of income that can weather the occasional downturns in new sales on the strength of existing members. The income is reliable, and the porn is reliable, so everybody wins.
But consumers are telling our industry what they think of our business model with their purchasing habits. The issue isn’t whether or not consumers want porn. Of course they still want porn. The issue is whether consumers are willing to pay for porn in any economy, good or bad, and that’s where it’s our job to present them with something that works.
Think it’s impossible when there’s so much free porn out there? Consider what Apple did with iTunes, a music store that thrived in a market dominated by “free” music downloads via P2P clients like Kazaa and BearShare. Its true Apple had their iPod and Mac platforms to push iTunes, but that’s only part of the equation. Apple was also shrewd to insist that all music downloads would sell for $1. There were no elaborate subscription plans. No minimum purchases. Want one song or a whole album, just download what you want and pay as little as $1 for your purchase.
Consumers have a lot of reasons to pause when confronted with an adult website’s payment screen. Do they trust the website with their credit card number? What if the site doesn’t make it easy to cancel? $20 or more is a moderate purchase for many people, worthy of some pause and consideration. Being locked in to a recurring expense feels a lot like cell phone contracts or other month-to-month obligations that quickly become a burden. It feels a lot like paying bills, which isn’t a positive thought for most people. It may even be that some people feel a stigma at being a “subscriber” to a porn site, which is a lot different than paying a few bucks to take a one-time look.
In these thoughts, and in other ideas that haven’t been discussed here, lies a winning business model that can turn things around for the more savvy amongst us. There’s no need to abandon the monthly subscription model because a certain percentage of consumers will prefer it to other ways of buying porn. But there is a need to look past it, and look for models that allow consumers to buy porn on their own terms. We need more models that let the buyer decide what to buy, how much to buy, and when to buy. In fact we’ve already seen that companies with models along these lines are seeing fewer declines than companies that rely strictly on the sale of DVDs or monthly subscriptions.
So don’t panic. Now is the time to get aggressive with your business, not pull back. Now is the time to try new things, to push your company, its products and its brand. Don’t make the mistake of thinking that the economic downturn they’re talking about on TV and writing about on news sites means you can’t win in today’s market. It’s simply a matter of giving the consumers a product that they’re willing to purchase. Do that, and you’ll do well.