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Porn Wars: Part 3

Porn Wars: Part 3

March 28, 2003
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" In a previous installment, I said that traffic and revenues were your two main concerns – and everything that you can do to provide these factors “in house” (rather than rely upon outside sources), gives advantages. "

As this series progressed I have tried to reveal some of the thought processes behind what I see as the most viable of future business models for players in the online adult entertainment industry. Using militarily inspired metaphors to try to explain the need for such a competitive marketing plan, I’ve hopefully laid the groundwork for today’s installment where everything will come together…

Readers of Parts 1 and 2 of this series might have been a little confused by my analogies, so to try to make things a little bit clearer, I will continue with a brief case-study of a well-known adult Internet company that has been effectively using elements of this underlying strategy for some time now – HELMY Enterprises.

At this point, I need to honestly tell you that while HELMY signs my checks, I wasn’t really thinking about his operation when I first considered this strategy, nor even when I started this series a few days ago – but as I started to look around to see if I could find a reasonable, “real world” example to show you, I found a great one really close to home! While there are several other operations that might qualify as examples, none came so close to the ideal that I was envisioning – so I guess it’s really true that “great minds think alike…”

What I’m On About…
Where I’ve been coming from throughout this series is that as competition increases, each and every one of your strategic resources that you rely upon and must find “outside” of your own operation is a vulnerability – a real weakness that leaves your business’ fate in uncertain hands. The flip side of this virtual coin is that every asset that can be internally controlled is a strength – a competitive advantage to be exploited.

As I write this, I consider the beginnings of the Industrial Revolution here in America (yep, hold on, I’m going off on a tangent again). The building of the Trans-continental Railway was an immense undertaking, requiring huge investments and unprecedented natural resources. During this undertaking, visionaries like Carnegie, Morgan, Schwab, and others saw the opportunities inherent in vertical markets. Not only did they want to build a railroad, they built empires based on the need for steel. Steel which required mines to provide iron ore, the ships that carried it to the furnaces, huge pools of labor housed in dwellings rented from the company, with clothes and food obtained from company stores – top to bottom (and all around the sides), these giants of industry built their incredible fortunes almost entirely “in house.” Today’s smartest porn companies can do the same…

Getting Down to Specifics
Which brings me back to HELMY... In a previous installment, I said that traffic and revenues were your two main concerns – and everything that you can do to provide these factors “in house” (rather than rely upon outside sources), gives you an advantage. While content and hosting play significant roles in the success of your operation, stability, competitiveness, and an over saturated marketplace, have rendered these two resources “commodity items” where easy arguments for outsourcing can be made.

Let’s take a closer look, and to make things easy to understand (even though the ‘flow’ is ‘backwards’) let’s start with revenues. Relying upon a sponsorship (affiliate) program to provide the bulk of your income puts the bulk of your income in someone else’s hands. No matter how good or helpful the sponsor is, you are still subject to THEIR effectiveness at converting prospects, honestly reporting ALL of those conversions, and then following through with a prompt payout – under the terms and amounts THEY decide.

While even last year I was saying that starting a pay site was a bad idea, I now believe that having at least one is a vitally necessary ingredient for your success, and should form the “anchor” of your operations, providing at least one “in house“ source of revenue. An ambitious program like HELMY’s offers 28 unique pay sites, covering the most popular niches, and providing a diversified revenue base. Upsells and the careful handling of exit traffic (both to in-house destinations, as well as to outside sponsors) both increase and diversify revenues.

With revenue options adequately taken care of, an ever growing stream of fresh, qualified surfer traffic is required to fuel the hungry network of pay sites. While most successful operations will rely upon all of the traditional sources of traffic, savvy companies will include homegrown traffic sources, such as link lists, TGPs, adult search engines, etc. Filling this role is HELMY’s “Lucky Joint” – one of the most visited free sites on the Internet, and a terrific resource for feeding traffic to the company’s pay sites.

And speaking of resources, let’s not forget about XBiz! Having a resource site that shows Webmasters how to increase revenues (like by sending traffic to a ‘killer’ affiliate program like HELMY’s GigaCash), or how to increase their traffic (like by posting galleries at Lucky Joint), the company is able to truly help themselves by helping others – and the whole process occurs “in house” – a brilliant strategy!

While there are other high quality free sites, resource sites, pay sites, and affiliate programs, there are not too many other companies that can claim excellence in ALL of these areas. Yet it is in fact “excellence” and thoughtful integration of all these elements (and more) that will be required to be competitive into the future.

While ongoing development of your assets and strategic partnerships can help to secure a profitable future for your enterprise, it is quite clear to me that those who are able to control as much of their supply chain – and customer base – as possible, will be the ones who survive.

Stay tuned for my final assault, where I’ll show even the newest of newbies a step by step plan to quickly, easily and affectively implement this strategy for themselves! ~ Stephen


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