Overcoming the Past

Stephen Yagielowicz
Despite the rosiest remarks of some affiliate reps and others, there is no doubt at this point that 2009 was perhaps the worst year in the history of online adult. A "perfect storm" of economic concerns and credit cutbacks, an increasingly rapid shift away from physical media distribution, plus rampant piracy and a glut of free porn many years in the making, all conspired to drive the last vestiges of profitability from the once thriving business models of many companies.

Some companies and individuals responded to these realities by running their businesses into the ground and perhaps leaving affiliates and vendors unpaid. Others tried to obfuscate the damage to their bottom line through layoffs and other downsizing and restructuring maneuvers. Others still gave up all pretenses and turned to the various industry message boards looking for work at another company — even from their one-time competitors.

But there are those, however, that are turning adversity into opportunity; going back to the drawing board and taking a fresh, "clean slate" approach to profitably satisfying their particular markets and audiences. Some of these operators are shedding cumbersome infrastructure and costly overhead expenses, focusing on a niche-based or boutique approach regardless of their market segment; others are bringing many years of experience to new companies and initiatives, increasing the level of competition across the board.

The challenges may be profound but the opportunities for new breed operators are there and the evolution of the industry as a result may take some by surprise. Whether they focus on bringing various technological advances to their market space or are able to recover sufficient profitability by running a tighter ship or by simply having far less overhead, these entrepreneurs may be the ones to revitalize the industry — or at least build themselves an attractive target for acquisition by a larger entity. The results may vary, but the toll they take on some established companies may push a few more over the edge and escalate the reshaping of the adult landscape.

The key to this success, of course, is in identifying, understanding and then mitigating the inherent weaknesses in the industry's yesteryear marketing practices and the vulnerabilities of your competitors — and indeed, in unlocking the secrets of selling that which can be easily obtained for free.

Sure, many of you are tired after running for years at Internet speed and many are looking for greener pastures elsewhere; but the adult entertainment industry remains a strong and viable career path, even if it isn't the easy road to riches that many once thought it was and some still believe it to be. It just depends on how hungry for victory you are, how well you can please your customers, and how badly you can thwart your competitors and their outdated offerings and initiatives.

Admittedly, a handful of outwardly well-capitalized companies dominate their respective market segments, but some of these companies are pure facades — houses built on shifting sands and lacking a solid foundation. Whether it's a big name production company sitting on a warehouse full of unsold inventory; or a high paying affiliate program that is susceptible to the whims of the card associations and whom could see their business models struck down with a ban on cross sales; or maybe it's an ad or traffic network with overpriced or unsellable inventory. Whatever the case, there are widespread weak points within the industry that are lying just below the surface and that could present some substantial opportunities for forward thinking marketers who can leave the past behind.

For example, that unsold DVD inventory might be available inexpensively enough to offer as a free disc with a minimum purchase of VOD minutes or a website membership. Perhaps adult cross sales will evolve from being solely membership based to offering tangible goods, with less complaints resulting and perhaps a longer lifespan without card association intervention. Perhaps advertising prices will drop or venues become more targeted as existing companies seek new markets or different ways to reach their primary audiences. There are many ways to adopt new business models, adapt existing approaches and improve our collective bottom lines.

Of course, some will still beat the boastful drum of success, no matter what happens or how broke they really are; holding on as long as possible to the perception of profitability while milking those around them for every last dime — and all the while insist that things just couldn't be better. Others will work quietly and cost effectively, keeping their secrets to themselves and go on making money just like they always have — while exploring new opportunities along the way.

One thing is certain, 2009 was not "business as usual" — and 2010 is bringing no guarantees with it, except for one: those who learn how to overcome the problems of the past will see a brighter future.


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