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Interesting take on the situation boneprone. I'd agree, there is a necessity for free sites in order to stimulate demand and provide a (cost effective) means for promoting premium services. The problem is the new demand generated by these free sites is lagging behind the supply created by these same hundreds of thousands of new free sites.
Online porn is shifting from a service model to a commodity model, with no differentiation in perceived quality between free and pay sites. It used to be galleries were full of shitty pics, with upsells to sponsors who offered better pics, movies, streaming videos, etc. It was a model that clearly worked as the old-timers like to point out ("I remember back in '96, you just tossed some banners on a page and...."). Now there's movie posts with a dozen 5Meg films updated daily There's also much less innovation going on. 'Voyeurdorm' type-stuff, TGP's, link lists, email programs - those were all innovative when they arrived and helped keep the industry 'fresh'. But you don't see much innovation anymore, just mimics (624 TGP's listed at DMOZ). Innovations now are things like dialers (no offense), homepage hijacking and more sophisticated CJ scripts. Effective in a way, but not exactly stuff that grows an industry.
Porn's just becoming a commodity, same thing as selling salt. Nowadays a surfer believes he can find the same quality pics, movies, streaming videos, etc. on free sites as the paysites - so why pay? Note I said the surfer *believes* that to be the case, not saying it is the case. And the biggest reason for that is so many of the premium sites are completely inept at building a brand name, and so many free site webmasters are pushing these sites. Using your analogies, imagine 100,000 MTV stations pushing 400 different boy bands, or 20000 TV stations advertising 250 different movies - each claiming to be this summer's blockbuster. The consumer wouldn't buy into any of them.
Lack of developing brand recognition is a huge problem, but there are a few exceptions in the industry. Best, I'd say, is the folks at voyeurweb.com who have created THE brand name for voyeur fans. AP seems to know what's going on, with a consistent-looking banners over the years and focusing on one site in one niche. The Jennacash thing looks like it has great potential to build a recognizable brand name among surfers. But then there's the MaxCash's and Cybererotica's, each pushing 50 paysites, with 200 different styles of banners. Consumers see that stuff and will learn to ignore it, if they haven't already.
That said, bitching about free sites is a complete waste of time since absolutely nothing is going to slow it down. It's going to be up to the sponsors to develop products that entice a surfer to rise above the free smut.
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