The Porn Industry Is Losing Billions

[BlackIraqMan]

For Pornographers, Internet?s Virtues Turn to Vices
By MATT RICHTEL

The Internet was supposed to be a tremendous boon for the pornography industry, creating a global market of images and videos accessible from the privacy of a home computer. For a time it worked, with wider distribution and social acceptance driving a steady increase in sales.

But now the established pornography business is in decline ? and the Internet is being held responsible.

The online availability of free or low-cost photos and videos has begun to take a fierce toll on sales of X-rated DVDs. Inexpensive digital technology has paved the way for aspiring amateur pornographers, who are flooding the market, while everyone in the industry is giving away more material to lure paying customers.

And unlike consumers looking for music and other media, viewers of pornography do not seem to mind giving up brand-name producers and performers for anonymous ones, or a well-lighted movie set for a ratty couch at an amateur videographer?s house.

After years of essentially steady increases, sales and rentals of pornographic videos were $3.62 billion in 2006, down from $4.28 billion in 2005, according to estimates by AVN, an industry trade publication. If the situation does not change, the overall $13 billion sex-related entertainment market may shrink this year, said Paul Fishbein, president of AVN Media Network, the magazine?s publisher. The industry?s online revenue is substantial but is not growing quickly enough to make up for the drop in video income.

Older companies in the industry are responding with better production values and more sophisticated Web offerings. But to their chagrin, making and distributing pornography have become a lot easier.

?People are making movies in their houses and dragging and dropping them? onto free Web sites, said Harvey Kaplan, a former maker of pornographic movies and now chief executive of GoGoBill.com, which processes payments for pornographic Web sites. ?It?s killing the marketplace.?

It is an unusual twist on the Internet-transforms-industry story. The Internet quickly presented a challenge to some businesses, like recorded music and newspapers. But initially, the digital age led to a kind of mainstreaming of pornography by providing easy and anonymous access online.

The spread of high-speed Internet access promised even further growth. Instead, faster connections have simply allowed people to download free movies more quickly, and allowed amateur moviemakers to upload their creations easily.

Perhaps counterintuitively, the market continues to be flooded with new video releases, both online and on disc. Mr. Fishbein said that this year he expected to see more than 1,000 X-rated DVDs a month produced for retail sale, a figure driven in part by the new spate of low-budget filmmakers.

?The barrier to get into the industry is so low: you need a video camera and a couple of people who will have sex,? Mr. Fishbein said.

Some companies say they have had success with selling subscriptions to their Web sites, and in offering movies for download or watching online. But Internet revenue, while growing modestly, is not compensating for the drop in video sales and rentals. In 2006, revenue from online subscriptions and sales was $2.8 billion, up from $2.5 billion in 2005, according to estimates from AVN ? an increase but nothing near the e-commerce growth enjoyed by many industries.

The more traditional pornographic film companies are not giving up, of course. They say they have an answer to the new competition: quality.

They are seeking to differentiate themselves from makers of inexpensive films by selling with fancier packaging in stores or through slicker Web sites, and by using better cameras and more experienced directors and performers. They are banking that viewers will be discerning when it comes to sex.

?We use good-quality lighting and very good sound,? said David Joseph, president of Red Light District, a production company in Los Angeles that has made films like ?Obscene Behavior.?

Mr. Joseph said his company did not waste its time, or that of the viewers, on unnecessary plot lines.

?There?s not a whole lot of story ? it?s basically right to the sex, but we?re consistent with the quality,? he said, noting that the company is also careful to pick interesting backdrops. ?We use different locations, rooms and couches.?

Red Light?s sales have dropped more than 30 percent in the last two years. To counter the trend, Mr. Joseph says the company plans to start giving film buyers an extra promotional DVD with more scenes from its movies, which typically cost $20. He also plans to improve the packaging of his DVDs.

A similar tactic is planned by Sean Logan, chief of Nectar Entertainment, which has made movies like ?Exxxtasy Island.? Business is down 25 percent in the last year, Mr. Logan said, and, because his movies cost $50,000 to $80,000 to make, he cannot afford to compete with some DVD competitors who are dropping their prices as low as a few dollars a film to maintain their volume of sales.

But Mr. Logan said he could improve his packaging for retail shelves. He has begun adding a sleeve around his box covers that includes a foil logo and metallic sheen to bring out the images, as was done on ?Brazilian Island Trilogy.?

He said he was sticking to his plan to shoot his movies in exotic locations like Brazil or simulating them with elaborate sets. For the movie ?Mystified,? Nectar built an elaborate set that included a waterfall in a warehouse in Canoga Park, Calif. It is not your everyday backdrop for hard-core sex, Mr. Logan noted: ?It looks like ?Lord of the Rings.? ?

Nectar, like Red Light, recently introduced a redesigned Web site to compete better online. Nectar charges $29.95 a month for access, which allows members to look at thousands of still photos and stream 35 movies from its library.

But this is a far cry from the price and the volume of free X-rated content available on some sites. One site operated by Adult Entertainment Broadcast Network has 200,000 videos, many of them submitted by amateur videographers, said Scott Coffman, the company?s president.

?We get input from all over the world ? Japan, Germany, Brazil,? Mr. Coffman said, noting that even he was surprised by the number of contributors. ?It?s the same thing as YouTube, where you?re wondering, How many people out there have cameras and are filming this stuff??

Mr. Coffman said he was not in the business of giving away content. About half the videos submitted to the site, he said, are from pornographic movie companies looking to get viewers interested and persuade them to pay for a longer download or DVD. Some companies pay to have their clips displayed on the site, and some give it a cut of the revenue if a visitor turns into a customer.

In fact, many of the free video clips circulating online are distributed by companies using them as marketing tools. Mr. Kaplan of GoGoBill.com said he thought that was a failed strategy.

?They think that if they give people enough of a free sample, they?ll come back and pay, but that?s not true,? he said. The reality, he said, is that people are surfing for free material, getting what they want and then leaving.

But some in the industry disagree. Manny Ulele, the founder of a Las Vegas-based video production company and Web site, said the use of these teaser videos was turning the online pornography business into something of a science. (That is not his real name, but one he uses for business purposes.)

Mr. Ulele said his company could pay $500 to $600 a day to get its short clips listed prominently on popular video clearinghouses. He said that fee could be justified by the rates at which people follow through: 1 in 1,000 viewers of the free content click onto his site, he said, and 1 in 600 of those might buy something ? a subscription, DVD or other product.

Over all, he said, his Web site has around 10,000 customers paying $30 a month to download or stream video clips.

?The perception of the consumer is that there is free porn,? Mr. Ulele said. ?But most of it nowadays is controlled.? He added that he and other operators understood what length of video clip, and what kind of clip, would hook viewers.

?We?ve been fine-tuning it for years,? he said. ?We?re able to determine exactly what works and what doesn?t.?

Source:
http://www.nytimes.com/2007/06/02/t...ogy/02porn.html

[Donkey Punch]

we just gotta be more aggressive n take it back )


:::PUNCH:::

[buzzy]

YO, we gotta take the power back

[rotterdammer]

interesting article man!

[bobby666]

really worth reading

[pornmasta]

you should forward this topic at some christian freaks:

people do pornography at home !
and what about the law 2257 ;)

[RawAlex]

In the end, this sort of thing might be the death blow to 2257 - it won't stop the spread of porn, and there is absolutely no way to track the ages of the people appearing on "you post it" video sites.

In the mean time, the commercial porn world will be decimated by ever increasing costs and declining returns.

[FakeNick]

how any reputable source can quote AVN as reputable is beyond comprehension

[Chariott]

What is this in the sig? Holy shit!

[Kelli58]

Porn has always made an increasing amount of money even during declines in the overall economy because we have always, until now that is, been the ones who come up with unique ideas and new ways of doing things.

But what have we really done to advance porn in the wake of this social networking revolution? I'm not suggesting copying it but instead coming up with something even better which is what in the past we've always done. So why are we not advancing past sales tactics and web sites we had from the 1990s?

Have we gotten so comfortable with the status quo that we forgot we are the pioneers?

I can remember a time in 1996 - 1998 when everyone was hungry for new ideas and ways to improve their income and coming up with rev share programs and the like. But what have we done lately? As of about 2000 I can't honestly think of any new techniques that have come into play, even the concept of hosted galleries was around back then so we can't even use that one.

It breaks my heart to talk to some of the biggest names in the industry and see them not bat an eye when it comes to investing in new ideas or new technologies but instead smile as I go walk away.

Had I walked into their office in 1998 with the same ideas, these same things would have been considered but now people just don't seem to want to change in any way shape and ford. I just don't understand it at all.

[MissMina]

Great read... Now to come up with an effective way to turn those number around...

[peterk]

This article is bad news, we need to change those numbers

[SmokeyTheBear]

the saddest part is the porn industry is still fairly tight knit , and this shouldnt be a problem, it could be handled very easily from within...


the trickle effect of the porn industry slumping goes deep.. hosting registrars designs scripting.

[XMaster]

bump for a good read

[Iron Fist]

Interesting read... thanks!

[Gerco]

If you have something that someone else want to buy you will still sell it. You need to make yourself different, stand out from the others, protect your brand, and quit giving everything away for free! It's the same old shit over and over and over again... take a look at the tgps blogs whatever...all the girls look the same, all the guys look the same all the sex looks the same... why buy into a site when even to stupidest of surfers can just wack off for free all day long and have an unlimited source to draw from. This industry has doen this to itself. And whats this tight knit crap? really? do you think the web guys really give two shits about the DVD guys? Fuck no. Everyone is out to make money for their own ass. Who here really looks at this as something they are going to "leave behind for the kids to take over when I'm gone" ? not many if any. you see the big sites come and go, flood the net with their content make a quick buck and then the crap becomes so over saturated its worthless in 6 months. Add that the volume of shear theft thats going on and we really are going to get to a point where no ones going to pay for porn anymore. How many times have you heard it over and over from the bloggers etc... "Pay for porn? why? Anything you want is free"

[Gerco]

oh and 50-80k to make a film? fuck. imagine if that money was put toward actually fighting the thief, making a few hard examples for everyone else to draw on. I still say, the industry needs to goto the source and actually track down a few uploaders at home and sue the crap out of them on front page news... people might think twice then.

[Paul Markham]

Good read. It's been interesting watching the way the other sides of the porn industry viewed the Internet.

15 years ago I was trying to stop my content getting on the Net, along with many others. We felt the Net would never take off and now some of us are making the lions share of our income from it.

[yahoo-xxx-girls.com]

Nice artical BlackIraqMan !

Thanks,

,

[testpie]

Originally Posted by BlackIraqMan

Some companies say they have had success with selling subscriptions to their Web sites, and in offering movies for download or watching online.

I have to be honest and say I didn't read the whole article, but the part I quoted above made me chuckle - I just love the way the author has fallen into the trap of quoting something as old as time as a brand-spanking new idea.

Because these companies clearly were just giving away usernames and passwords to their sites for free before they woke up and realised "Shit! We can make MONEY OUT OF THIS!"...

[KILL_FRENZY]

Interesting article

[yahoo-xxx-girls.com]

Does anyone think its an issue of tuns of TGP/MGP and their CJ that is causing a partial decline in revenues in the porn industry ?

I would really like to hear some input into this issue...

Thanks for your time,

.

[V_RocKs]

So in other words there is more money in Internet porn than ever before?

Hallelujah!

[Big_D]

damn that was a good read

[Circus_Penis]

I have to say that viewers do care about quality and presentation. Personally I've seen a lot more productivity from the well lit and shot films than some jack ass with a handi-cam content. HD porn is garnering user interest more and more as well. Porn viewers just like everyone else are concerned with the quality of their purchase.

The issue isn't with the internet but with the places you have to go to physically purchase adult dvds. These stores tend to be shady as shit and the neighborhoods harboring them aren't exactly the nicest places. Most people are now watching their porn online for free or from VOD companies. Theres no tapes or dvds to hide from the spouse, no dealing with weirdos in a store, and its a whole lot safer and confidential.

[Andy Servers4Less]

I foresee some major consolidation/ acquisitions on the production side of things. Just my guess.

[Andy Servers4Less]

oh and btw 100 posts, booyah!

[cruxop]

It sounds like the author is somewhat new the concept of online porn. He probably expected 100% of porn to be locked up behing the velvet curtain of the local video store.

[TeenCat]

more powerful is action than thousands of words

[montel]

I think this is the standard lifecycle of any industry - it compares to electric light bulbs, televisions, radios etc... at the start there are super profits and high barriers to entry due to technology... the high profits attract more capital and the barriers fall away - the profits will eventually (in theory) be reduce to zero.

[zand_stein]

there are competition in every business......
all you have to do is you must be competitive.... try something unique or difference that will improve your market......

[C H R I S]

Thanks for posting - hadnt seen this one.

[warlock5]

What a moron, paying for expensive sets and waterfalls? This article reminds me of the RPG and comic book industries, publishers focusing huge amounts of time and money on completely non relevant things. Adaptation and evolution are friends to those who follow them and the grim reaper to those who do not.

[TheAmericanCannibal]

I like Sean Logan
Even if he is completely full of shit.

He fits in very well with the rest of us internet people.


That $50,000 to $80,000 is more like $20,000 with some hookups from mainstream friends and the use of their cool sets.

I don't want to rain on his parade, but it's pretty common knowledge that the only big boys that spend that kind of dough on production are Vivid, Wicked, and Digital Playground.

To be fair though, Nectar does shoot some high quality stuff-
Most of their videos look like a Fifty Cent music video with sex in it