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The Economics of Porn Musings

The Economics of Porn Musings

October 27, 2008
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I recently read a fascinating article by beloved industry journalist and sometimes pundit Kathee Brewer in which she covers opinions by Andrew Keen, author of Cult of the Amateur: How Today's Internet Is Killing Our Culture in which he states the financial crunch now manifesting itself in the death of businesses and banking institutions worldwide virtually guarantees the death of free content on the Web. According to Keen, the demise of the free model of internet content should not be mourned, because it’s part of what got everyone into such a mess in the first place.

In short, what Mr. Keen seems to be saying is that the current worldwide economic meltdown will result in the end of "free porn" and return our industry to past levels of profitability.

This seemed like a rather hopeful notion, so I sent along Kathee's article to old friend, neighbor and top-flight business and economics writer, Geoffrey James. Here is what he shot back to me:


Hi Colin:

Actually, I have a different take altogether.

The "free" community of bloggers and so forth are exactly like the letter writers of the Victorian period. The fact that they write on their own gives them a greater appreciate for good content, most of which is going to created by professionals. What's more, the free content providers create link clusters to the good content, which in turn makes it more popular.

That's what's happened to my Sales Machine blog: which is growing by about 10k to 15k hits a month and is well into the six figures in terms of hits.

This has nothing to do with stolen content, of course. I'm talking about free content.

The analogy would be amateur BDSM sites don't compete with Wasteland and other premium content sites, but instead should "feed" into it. The amateur stuff creates a demand for the professional stuff. Piracy screws up the equation, but that's another issue.

The issue of web advertising is another factor connected to the value of content. In the past, it was impossible to tie content to advertising revenue because there was no "click-through." As a result, there's been a "mad men" situation where the value of advertising is assumed, and the value of content is simply to drive circulation. With the Internet, however, the value of an advertisement is immediately quantifiable and what's been discovered is what most sensible people knew all along, which is that advertisement is a terrible way to generate new business.

The ability to quantify the value of content is forcing a massive readjustment of priorities in marketing budgets and causing marketing professionals incredible pain as they adapt to the fact that they're not "mad men" but the guys who have to do the donkey work of the sales organization. (The sales guys always knew that advertising was crap, but nobody ever listened.)

I think it's ridiculous to think that the economic meltdown will have any effect whatsoever on any of this, other than generate more blog entries.

Geoffrey

So, point, counterpoint.....;-) For me, the jury is still out on how the current economic crisis may effect the adult industry, and what long-term role free content may play in profitability, but I'll just continue to keep my ear to the ground and move around the chess pieces accordingly! (hmmmm... haven't we all been doing exactly that since 1995?)


Colin is CEO of the award-winning network, wasteland.com. Since 1994, he has been a leader in the adult industry, speaker/moderator at dozens of conferences, writer for industry trade publications and websites, and innovator in most aspects of our ever-changing place in the market. Find out more about him and his role in adult entertainment on the web at Spicecash.

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