opinion

2012 — Beyond the Year in Review

Stephen Yagielowicz

With the elections and the holiday season over, and the new-year upon us, it’s time for our annual analysis of the key factors that shaped the adult entertainment industry during 2012 and how those developments will set the stage for 2013 and beyond.

For a range of perspectives on the year’s most important issues from the point of view of frontline operators, we turn to the XBIZ.net adult industry social network to see what its members considered to be among the most important events to impact their businesses in 2012 — and to uncover what lessons they’ve learned over the past year as a result.

Focusing on providing content that is minimal in cost, yet valuable for the consumer, is the standard that is being set by iTunes and the app market.” -Sherry Ziegelmeyer, Black and Blue Media.

According to Yo Adrian of Yanks Cash, 2012 saw some big changes surrounding organic traffic, especially for adult website operators seeking free visitors from Google.

“Not only did Google reassign many big adult keywords like ‘pussy’ and ‘masturbation’ to display only mainstream results,” Adrian explained, “they launched some big algorithms that really tanked a lot of sites using optimization and link building methods that have always been common for our industry.”

Adrian told XBIZ that the big lesson he took away from this, is the importance of diversifying your traffic sources.

“If all of your organic traffic only comes from a few keywords, next year try to make it come from a few dozen,” Adrian concluded. “And if all of your traffic comes from organic search, I’d start thinking about branching out and either buying or trading traffic from other sources, just to protect yourself against more big swings next year.”

Black and Blue Media’s Lead Publicist, Sherry Ziegelmeyer, noted that credit card companies are getting much tougher on adult businesses.

“Not only have the big three (Visa, MasterCard, Amex) gotten much more strict on whether they will even allow processing of sales from adult oriented business (and that’s not just video, but also Internet pharmacies, gambling, alcohol, etc.) they are also getting very tough on negotiating chargebacks in the company owners’ favor,” Ziegelmeyer told XBIZ. “The consumer can now guarantee if they want to do a chargeback, there will be nothing to stop them.”

“The only way to help a bit in this is to maintain many different payment processing options,” Ziegelmeyer explained. “And to make sure that your product is A) valuable and ‘as described’ to the consumer, so they don’t feel the need to charge back, and B) priced so that consumers aren’t feeling buyer’s remorse after their purchase.”

She says that getting the processors to change their views on adult businesses means that all owners would need to step up their ethics — with commitments to eliminating auto-recurring billing and cross sales, and by providing double opt-ins, etc. — and she also feels that micropayments are the future of all entertainment media revenue.

“Focusing on providing content that is minimal in cost, yet valuable for the consumer, is the standard that is being set by iTunes and the app market,” Ziegelmeyer concluded. “I am working with clients to convey the need to rethink how they approach consumer sales, and if I were to get into an actual product based business model, that is where I would focus my own business strategy.”

PKS Consulting’s Master Ryan offered insights including a “C” to the points above: “C) Guarantee a refund. It is cheaper to refund an unhappy customer than it is to wait for a chargeback, and it also opens up the possibility that they will be back.”

As always, traffic issues are foremost, however.

“It got even harder to find customers this year,” Ryan told XBIZ. “Search engine traffic went down and conversions from advertising and traffic brokers are at an alltime low (which is saying something, since they sucked before this year).”

He concurs with others that the largest websites leave little on the table as far as quality traffic goes, complicating the process of attracting new potential customers.

“The main things that convert now are personal (one-toone) and social marketing,” Ryan concluded. “It’s now very slow and expensive to convert a customer, so you better keep them for more than a month.”

Jahaziel from DickzToyz.com echoed the vital need for adult website operators to diversify their traffic sources.

“I have learned that you need to have your own sites where you can place your content because if it’s on a mainstream site, i.e. YouTube, it can be targeted and taken down,” Jahaziel told XBIZ. “I have also learned that creating valuable content is a must, [as is the importance of] constantly educating yourself.”

Jahaziel’s comments reflect the often daunting learning curve that adult entrepreneurs face post-launch of their website. It is not a simple matter of “build it and they will come” (or cum, as the case may be), but of ongoing learning in order to stay abreast of the latest factors, technologies and trends that impact the adult entertainment industry.

Kari ‘PlatinumPuzzy’ Anthony of BBW FanFest and Platinum Puzzy Productions, found bittersweet lessons in 2012 — balancing the success of the first BBW FanFest niche adult trade show, awards ceremony and sizeand lifestyle-friendly event, with the realization that some people will never be satisfied, regardless of the situation.

“You just give it your best, and appreciate those who appreciate your sacrifice,” she told XBIZ. “Having been burned on a few deals, and being placed into self-realization myself, I learned to not have too many fires roaring at once.”

Kari gave voice to a common complaint within the adult industry today, saying that getting burned on deals is inevitable, and advises other operators to prioritize and plan accordingly.

“I lost some major accounts and friendly connections with people I had grown fond of. To disappoint and never hear from them again taught me an incredible lesson,” Kari confided. “Some things just can’t be mended even through time, so you pick up the pieces, learn from them and move on.”

Despite these past setbacks, Kari remains highly optimistic and looks forward to a “successful, prosperous and enlightening” 2013 — a sentiment no doubt shared by many others in the adult entertainment business today.

But challenges from the past will linger on.

One of the problems facing adult website operators in 2012, as XBIZ.net member “Alien,” points out, is that free porn is often of better quality (and available in higher quantities) than is found on many paid membership sites, leading to their decline.

Like many other challenges facing the adult industry, this latter issue is preventable, and as some suggest, reversible, if the industry can learn from its mistakes and then move forward in 2013 — although for others, the writing is on the wall.

‘It’s sad that the adult industry doesn’t research the things it jumps into beforehand and never fights the enemies within the industry that constantly lowers the value of its hard work. We could have prevented Measure B and the Manwin take over, but didn’t,” Urban X Awards’ Pax Negro tells XBIZ. “We could have prevented all of this from happening, but now harvest time is coming and the end of our industry is near.”

Of course, some players are doing better than others and enjoying that harvest.

“I think the biggest thing I’ve seen this year is the divide between the haves and the have-nots continuing to grow, as well as the success of the progressive thinkers over the traditional ones,” Jimmy ‘Wizzo’ Foreman from JuicyAds offered. “There’s still a ton of money being made in this industry by many, not just by Manwin. I even see new people coming in and having success because they don’t have the baggage of ‘how it used to be’ and have adapted their business model to the current market, not 2005’s market.”

Innovation is a prime remedy for many of the industry’s woes, however.

“Keep innovating, have a dynamic marketing and biz dev strategy, go to as many shows as you can, and hang out with drunken porn stars,” ‘The Famous JC’ of Porn-Banana.com advises XBIZ readers, adding, “The biggest thing I have learned this year is if you have a tube site with a solid proactive DMCA policy, webmasters are happy to work with you, proving tubes can be used for the greater good.”

Beyond having good ideas, lies the power to execute them, and that often takes help.

Michael Manning of Severe Society Films echoes the need to diversify and cooperate.

“We’ve learned that every scene we shoot has to go everywhere — DVD, VOD and clips,” Manning told XBIZ. “You can’t make a living off one single delivery method.”

“We are also doing a ton of joint projects with talent and other production companies, sharing expenses and trading services,” Manning explained. “[This way] everyone gets a quality product with minimal upfront expense.”

Tony Pleasure of Pleasure Internet radio also learned many useful lessons this year.

“Try not to go for the big fish so fast because that same fish expects to be fed much more than what I can offer,” Pleasure notes. “Catch a few smaller fish to get experience and then upgrade.”

Pleasure adheres to the KISS (Keep It Simple Stupid) principle and notices that when the focus is on building upon what you do best and keeping it as simple as possible, users appreciate that and give positive feedback.

He also learned to be more careful in trusting people to handle things on behalf of his business, while exploring new opportunities.

“Innovate as much as possible to keep up with mainstream. Even though mainstream continues not to accept our industry, that doesn’t mean generations aren’t changing and becoming more acceptable,” Pleasure added. “Discover new ways to make money instead of just a couple. It’s cool to login into different sources and see revenue being generated even if it’s just a few bucks here and there.”

Once again, diversity is the name of the game.

Of course, 2012 presented many other factors that impacted the industry — from the anticlimactic rollout of the .XXX TLD to the pursuit of piracy committed by file lockers and other illicitly used sites; which was enabled by concerted anti-piracy initiatives that involved increased cooperation between otherwise competitive companies.

The Mr. Marcus case dramatically illustrated the shortcomings of self-regulation and now with the passing of Measure B, a vital part of Porn Valley is hampered by enhanced “workplace safety regulations” that include condoms in porn scenes; fueling speculation of a mass exodus of porn producers to less regulated climes.

An Obama win means that the industry may have four more years in which to get its house in order; continuing its rapid internal shakeout, minus one-less issue to deal with, as far as having to contend with a widespread crackdown on First Amendment rights in order to placate special interest groups.

With that being said, a range of groups are demanding that Congress do something about the widespread piracy of digital goods and tangible products, and some legislation is bound to result, although it would likely have little effect on the adult industry, or even exclude it completely from any coverage.

Although 2012 saw a continuation of smaller companies and individual webmasters leaving the business (or going part time) as the adult industry continues to consolidate, larger companies are not immune to the trends, but simply better able to cope with them; with some selling and others shrinking, while a handful of companies close their grasp.

For example, high-profile acquisitions by Hustler and Manwin, as well as the release of innovative new products and services into the marketplace, such as the content, ad and traffic offers launched by veteran adult affiliate program Pimproll; and the revamping of cam king Adult Webmaster Empire (AWE) flagship LiveJasmin.com; as well as updates to Mansion Productions’ powerhouse tools, indicate growth at the top of the pyramid — as well as a continuance of the buyouts, mergers and solidification of the past few years.

While owners and affiliates of old-school paysites realize that their business model is on the way out, with few suitable revenue options for replacing it, other players continue to evolve their strategies. vFor example, the ongoing mainstreaming of PornHub.com into the adult ecosystem makes it hard to ignore as a legitimate content publishing and traffic generation platform — despite the continued hatred rights holders express against tube sites as piracy havens — a reputation that powerhouses such as Porn-Hub are diligently attempting to counter.

2012 also saw the quickly escalating increase in the use of mobile devices to access (and produce) porn; as well as a raft of new experiments in social media that are testing the talents of savvy web designers and marketers alike; changing the paradigms by which all porn sites, including paysites, are defined.

In the face of less overall discretionary spending by consumers, and on the porn front, a dwindling number of beneficiaries to this cash flow, new and innovative adult business models will need to surface; if only to provide speed bumps for the tube site Juggernaut.

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