Quote:
Originally Posted by Libertine
Yeah, YouTube probably was a bad example.
I'd say things like Megarotic, Rapidshare, etc. are pretty good examples of the business model apparently working, however. There are tons of sites following their business model.
The limiting factor here are bandwidth costs vs advertising revenues, though. In the long run, bandwidth prices are going to go down, simply because things like HD content require loads of fairly cheap bandwidth.
At some point, it's going to become viable to add the costs of large amounts of (probably non-exclusive) content to the bandwidth costs. In fact, it might already be viable. Either way, when that moment comes, most paysites (except those offering very unique content) are going to get hit hard.
Think of it this way: In the beginning, conversions were great. Then came TGPs. Those had lower conversions, but got lots of visitors. Then came MGPs. Lower conversions again, but these too were willing to sacrifice margins for volume.
What I'm describing is simply the next step in that process: it will decrease margins, but will make up for that with volume. That volume it will get, of course, by taking traffic from the traditional sites.
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First off, as Tony said, Megarotic and Rapidshare are both terrible examples, because they are copyright challenged. They have NO production costs, nor do they feel compelled to use the content to promote the site, program, or DVD that it comes from. They are the types of services that are sending us all to hell.
To decrease margin for increased volume is a business model discussion. Giving away dollar bills for free and hoping people will tip you back more isn't a business model. It's insanity. Pre-TGP conversions were 1 in X and life was great. TGPs made more traffic, but conversions dropped to 1 in X times 3, MGPs moved it to 1 in X times 10. When the conversions gets too far out of hand, the cost of acquiring the customers starts to exceed the net income.
I could go on, but safe to say when the business is compressed down to a 5% margin business, very very few companies will be left making porn. That day is coming much closer all the time.