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The Ning.com Controversy

The Ning.com Controversy

December 15, 2008
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" no one is losing their rights to free expression, they simply have to find somewhere else to do it "

Recently the free social networking website provider Ning.com announced its decision to discontinue hosting adult social networks. This decision has brought to light the reasons why "free adult content" doesn't pay and never will.

Along with greatly reduced ad rates for adult networks come the additional burdens of policing illegal content in the groups and the enormous burden of DMCA take down notices associated with the vast amount of pirated adult content. In the end adult networks cost more to deal with then they produced in revenue.

I am always an advocate for free speech and do not want to see anyone lose their freedom of expression. Because of Ning's decision no one is losing their rights to free expression, they simply have to find somewhere else to do it. Anyone of these groups can set up their own hosting and website if they chose to do so. I don't feel any regret that one of the largest sources of pirated adult content is shutting down their hosting of adult. It is baffling to me that anyone in our industry can feel differently — here are my reasons:

Ning is merely making a business decision not to handle adult. Why? Because they cannot make money on it! Ning's business model is to provide anyone the tools and hosting to start their own social network website, around which Ning places ads to generate revenue. As Ms. Bianchini the president of Ning stated, "They don't generate enough advertising or premium service revenue to cover their costs." This fact should be frightening to us all.

In a world that is quickly sliding into a "free content, ad revenue" supported basis for online content this could spell disaster for adult. Non-adult content can generate huge ad revenue from mainstream advertisers, just like they have done for years on television. Google has shown us the enormous potential of online ad revenue for mainstream content, just not for adult content.

While online mainstream content is getting paid $5.00-$90.00/CPM ad rates, adult content is getting paid $0.50-$1.00/cpm. The ad rate for video on the WSJ.com is $90.00/cpm, while video on Metacafe.com gets $35.00/cpm. Social networking sites like Facebook and MySpace are at $25.00-$35.00/cpm ad rate. Until mainstream advertisers will do ad buys around adult content, we simply will not survive on a "Free content/ad revenue" basis at adult content ad rates. I do not foresee General Mills or Miller Beer buying ads alongside our content anytime soon!

Our only viable option is to ensure adult content does not become perceived or expected as "free content" by the consumer. The way we do this is by banding together as an industry and going after all sources of pirated commercial adult content being freely distributed. That means a centralized organization representing the adult industry that can go after and shut down sites pirating adult content. The less free adult content available from Rapidshare, Bit torrent and illegal tube sites the better it is for the entire adult industry.

At the same time we have to offer a carrot along with the stick approach. We have to make our content more readily accessible and affordable to the consumer. If we can provide high quality and affordable content easier for consumers to find and buy online then it is to steal pirated content, we will have won.

This will only be accomplished by coming together as an industry to ensure our future.


BUSINESS ANALYSIS

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