.XXX and Micropayments - "What the Internet giveth, the Internet taketh away"

[AsianDivaGirlsWebDude]

Interesting read in the Atlantic about .XXX and Micropayments:

The smut business just isn't what it used to be.

The early days of the Internet were a bonanza for major pornography studios, as the web transformed adult entertainment into an instant, unlimited, and completely private experience -- always just a credit card charge and a cable modem away. But what the Internet giveth, the internet taketh away.

As the most recent Bloomberg Businssweek recounts in its feature on the rise of the new and controversial .XXX domain, the big production companies have seen their profits shrink by as much as half since 2007, as audiences have fled to aggregators such as XTube and YouPorn that offer up a never-ending stream of free naked bodies.

Stuart Lawley, the entreprenuer behind .XXX, has a plan to try and reclaim some of that lost revenue -- micropayments. Per Businessweek:

Next year, ICM plans to introduce a proprietary micropayment system. This service, Lawley promises, will help blue-chip pornographers fight back against the proliferation of free and pirated smut online. "We're going to do for adult what Apple (AAPL) did for the music business with the iTunes store," he predicts.

Consumers who have become conditioned to grainy, poorly shot giveaways, Lawley says, will get reacclimated to paying for higher-quality hard core. Price, quantity, and specificity are key. Rather than the traditional model--$24.99 upfront for all-access monthly memberships--porn consumers will shell out 99¢ apiece for short clips of niche material (akin to buying a favorite song, not the whole album). Perhaps more compelling, people seeking porn on their mobile devices will have a convenient way to purchase a quickie on the run.

Yikes. Comparing your business plan to Apple is pretty standard corporate trope these days, but in the case of porn, the iTunes analogy is hopelessly inapt. Here's the problem: Pornography is mostly a commodity product. Music is not.

People have favorite bands and expect a certain level of production value in their music. Bruce Springsteen devotees aren't just as happy listening to Bob Seger or an a cappella rendition of "Born In the USA." It's at least a little rarer to have favorite porn stars. And the audiences aren't demonstrably sensitive to production values. Worse yet, the tools for do-it-yourself filming are improving every time Apple upgrades the iPhone's video camera.

In other words, convincing people to pay for to watch sex is a much taller task these days than getting them to pay for a song.

In fact, it's a bit like getting them to pay for a newspaper. Like the porn studios, big media companies have seen their own profits plummet in the face of free aggregators, amateur bloggers, and the nearly limitless competition supplied by the web. Unsurprisingly, micropayments have been a hot topic in the news industry over the past few years. But so far, they haven't really taken off. Here's how Clay Shirky explained the fatal flaw with the idea back in 2009:

The fantasy that small payments will save publishers as they move online is really a fantasy that monopoly pricing power can be re-established over we users. Invoking the magic word "micropayments" is thus grabbing the wrong end of the stick; if online publishers had that kind of pricing power, micropayments wouldn't be necessary. And since they don't have that pricing power, micropayments won't provide it.

What holds for journalism in this case holds for sex. In both cases, the competition is so broad that customers are likely to go elsewhere rather than pay. There are, obviously, exceptions in the case of newspapers -- the Wall Street Journal has a profitable paywall, and the New York Times appears to be having some early success with its own. But that might be cold comfort for the adult entertainment world.

That is, if you assume people still have slightly higher standards for their news than for their porn.

Discuss...



ADG

[JFK]

"This service, Lawley promises, will help blue-chip pornographers fight back against the proliferation of free and pirated smut online. "We're going to do for adult what Apple (AAPL) did for the music business with the iTunes store," he predicts.

Well bless us all St Stuart, always here to help

[Freaky_Akula]

More proof that Lawley is clueless.

[Tijuana_Tom]

We've seen other brands attempt VOD/PayPerScene already and it hasn't been successful.

Apple has a strangle hold on the MP3s it sells forcing people to use itunes and not share.

[Barry-xlovecam]

If it's micropayment for a downloaded file it will be "user uploaded" to tubes.
The quality may suffer but the price of the "user uploads" -- FREE will win out.

[Yanks_Todd]

The comparison to iTunes is juvenile. iTunes worked because it was paired with an innovative disruptive piece of hardware in the iPod.

[Far-L]

Originally Posted by Yanks_Todd

The comparison to iTunes is juvenile. iTunes worked because it was paired with an innovative disruptive piece of hardware in the iPod.

Ding. Bingo. That whole piece of so-called journalism is a repetition of all the best cliches.

Clearly DRM works for Apple where it seemed to fail for adult, but one doesn't need to be held in the prison of an ipod to be free to collect and trade music all day and night on any number of devices besides an ipod. The reason people deal with the rights management of Apple is it is a seamless and relatively painless consumer experience. I blame the way most deployed DRM rather than blame the technology; so, adult could still do something similar right now without something Lawley plans to develop.

However, mainstream subscription models do work, Wall Street and NYT are just two examples, and people are making sales to subscriptions from the free content which he misses entirely. What happened more precisely to the old studios, not all but most, is they failed to adapt. Of course, doing a piece like that would have involved a bit of digging, doing some archaeology of the biz, and oh yeah... work.

[candyflip]

Paul Markham has been saying this for years.

[DVTimes]

https://gfy.com/showthread.php?t=1072591

[sandman!]

wont work good luck tho

[mafia_man]

Originally Posted by Tijuana_Tom

We've seen other brands attempt VOD/PayPerScene already and it hasn't been successful.

Apple has a strangle hold on the MP3s it sells forcing people to use itunes and not share.

Because every site wants you to load $20 worth of "credits" before you can make a download a scene.

What we are talking about here is an iTunes style billing system for micropayments. They can take a 30% cut as long as they only charge the card the price of the product.

Oh and everybody has a favourite pornstar.

[MrCain]

Chargeback meet ICM. ICM meet chargeback. ICM meet FAIL. Wait, you already know each other

[livexxx]

Ahh. I think I know where the micro payments is coming from

[tony286]

porn isnt music. Very different model.

[rock-reed]

Revisiting this thread over time...

Do we still feel that Flattr has not a chance in hell?

[JSWENSON]

Everyone says that porn is not music, which is true, but once you hit the $1 or $2 price point it is an impulse purchase and may as well be free to a large number of consumers. Not saying this asshat will pull it off but it will be a successful system in the near future. Nothing out there compares currently. As someone mentioned, buying $20 in credits from any site you want to get a video from isn't going to happen on a wide enough scale. I'd pay $0.99 for a porn video I wanted to see though, and so would millions of others.

As a user, if this was a wallet type system, where you fund your account with a 3rd party "bank", both safely and securely, and then visit the adult paysites that are signed up with that bank, then this would make sense to me. You can go from adult pay site to adult pay site and make 1 click purchases for 99cents, and buy only the scenes that you want...anonymously. As a user, I'd be safe in the knowledge that I was not going to have my CC banged, it would not show up on my bank statement etc and this would give me confidence as a user to make that purchase. Especially if they process for mainstream sites too. Very easy to hide your dirty little secrets from your wife.

As a site owner, I am pretty sure my sales ratio would significantly increase selling single scenes if only for the fact that there will be minimal declines as these sales wont touch a traditional billing company or V+MC. Sure, there will be CB's but not for $24.95 + $25-$35 CB fee's. I am also sure that users that own these micropayment wallets wont be restricted to 99cent purchases. Meaning, that once they have sampled a few 99Cent scenes, and they see that a monthly membership is worthwhile because of the amount of quality scenes there are, that they would be able to buy a monthly recurring membership too, as long as they had the funds in their account.

What is interesting is that sites would need to show their member areas to the non members for these micropayment users to be able to see "whats on the shelf". I wonder how many sites would be prepared to do that? I have subscribed to so many sites over the years where once in the Member Area, that the promises that were made on the tour were a blatant lie. Yes, they have 100's of full scenes, but the 10 quality ones on the tour that made me sign up, were the ONLY quality videos in the members area.

Yes, I do own some of the busiest .xxx domains in Casting.xxx, Orgasms.xxx and we have just launched mom.xxx and this email is in support of the micropayment system and makes no difference if it was .xxx doing this or Epoch or CCBill, my feelings that it would be a success would be the same, and I have thought this since I launched my first site 15 months ago. Goes without saying, as long as it is regulated properly.

[Google Expert]

Bitcoins.

[tony286]

Originally Posted by JSWENSON

Everyone says that porn is not music, which is true, but once you hit the $1 or $2 price point it is an impulse purchase and may as well be free to a large number of consumers. Not saying this asshat will pull it off but it will be a successful system in the near future. Nothing out there compares currently. As someone mentioned, buying $20 in credits from any site you want to get a video from isn't going to happen on a wide enough scale. I'd pay $0.99 for a porn video I wanted to see though, and so would millions of others.

If it became the way to buy porn, porn will become alot smaller. Its not like music a shitty song can sell 100,000 copies and they can go on tour. No porn clip is going to sell 100,000 copies.
Clips for sale sells a shitload of content and they arent giving it away for $1. Porn seems to be bent on driving as fast as possible to the bottom.

[Chris]

Didn't cecash try this years ago and it really didnt work that well?

[purecane]

Originally Posted by JSWENSON

Everyone says that porn is not music, which is true, but once you hit the $1 or $2 price point it is an impulse purchase and may as well be free to a large number of consumers. Not saying this asshat will pull it off but it will be a successful system in the near future. Nothing out there compares currently. As someone mentioned, buying $20 in credits from any site you want to get a video from isn't going to happen on a wide enough scale. I'd pay $0.99 for a porn video I wanted to see though, and so would millions of others.

$.99 per scene???? you might be on to something.....

[halfpint]

Originally Posted by JSWENSON

Everyone says that porn is not music, which is true, but once you hit the $1 or $2 price point it is an impulse purchase and may as well be free to a large number of consumers. Not saying this asshat will pull it off but it will be a successful system in the near future. Nothing out there compares currently. As someone mentioned, buying $20 in credits from any site you want to get a video from isn't going to happen on a wide enough scale. I'd pay $0.99 for a porn video I wanted to see though, and so would millions of others.

I agree... Take a look at cam4 and chaterbate they use a similar system and give the users the option to purchase tokens so they can tip as little or as much as they want. Also look at clips4sale they also have been using a very similar system and give users the option to purchase the clips they want without having to pay a monthly subscription.

I think this will become a very popular way to sell porn in the near future...

[JSWENSON]

Originally Posted by tony286

If it became the way to buy porn, porn will become alot smaller. Its not like music a shitty song can sell 100,000 copies and they can go on tour. No porn clip is going to sell 100,000 copies.
Clips for sale sells a shitload of content and they arent giving it away for $1. Porn seems to be bent on driving as fast as possible to the bottom.

A shitty song costs more to produce than an awesome porn scene. It might suck for smaller niche sites where fans are willing to sign up no matter what but it will be good for the industry overall.

[Colmike9]

What's difference from that and Clips4Sale?..
Some site owners that I know, especially amateur ones, make a lot more money selling their individual clips there than from their paysite including affiliate sales..

[adultmobile]

Originally Posted by halfpint

I agree... Take a look at cam4 and chaterbate they use a similar system and give the users the option to purchase tokens so they can tip as little or as much as they want.

Yes, but guys tipping 1 token to a model it is an offense, it means she is valued 5 cents
Really the business for tip sites is not the small tips, but the big ones. The $250 load credits button is very popular, and had to add a $500 one as guys asked for it, to save the time of entering card number twice to load more than $250 at once.