Originally Posted by signupdamnit

It's more complicated than that. Walmart couldn't afford to price every product at $1 either. Even if costs for each product were below $1 where they could do it there would still be an opportunity cost involved in doing so. Why sell something for $1 when you could sell just as many units before at $200 and still undercut the competition? You would be a fool to do that and only hurting yourself.

An overall declining$/impression (or $/visitor) does mean something overall in the industry. It indicates you are squeezing less and less out of each impression. Potential porn surfers are not infinite. It's unlikely tomorrow we will wake up and there will be 2 billion more people surfing for porn. At some point if the numbers get too bad there will be a point where even if you have 100% market share you will lose revenue and profit. It's even possible eventually in theory for you to no longer be able to make a profit at all. This occurs when you can no longer monetize the traffic beyond your fixed and variable costs (the shutdown point is reached).

What keeps many of those turning to the "free" model alive and thriving now I think is that they are stealing market share from others who haven't switched to it. Sure it works for you now but what's going to happen when you stop growing as there is no more market share which to easily take? The answer is you'll probably slowly starve no matter how big and bad you are.