Selling Free: Mechanics of the Business Model

Stephen Yagielowicz

There’s a lot of discussion in adult webmastering circles these days about the future of premium porn and the move to free, ad-supported websites as the business model of choice for many operators. Piracy is frequently cited as the culprit driving porn’s market shift and indeed, porn’s piracy problem is mainstream’s problem, too — since “nobody” wants to pay for movies, music or games anymore, they want it all for free...

Is this perception reality, and if so, what can be done to mitigate the revenue loss?

Free is not the end of the world — it is a proven business model that has been thriving for ages in the publishing industry, with print and broadcast television serving as great examples.

Solutions, though elusive, are available, but they require a deeper understanding of the primary factors and operating environment today if “selling free” is to be profitable.

At the outset, it’s important to define “selling free” as both the need to sell something that is available for free, as well as the need to gain traffic and market share for free sites competing with powerhouse tube and other sites. For example, many consumers would rather “share” digital content than pay for it, but even then, getting your content in front of these freeloaders is becoming increasingly difficult due to search competitiveness and other restrictions on distribution channels which complicate matters for marketers.

The situation gives new meaning to the phrase “You can’t even give it away … .”

This article will focus on the first factor and leave traffic generation for another day, seeking rather to answer the fundamental question, “Why would someone buy something that they can readily obtain for free?”

In the past, I would have relied on the well-worn example of bottled drinking water — but today, I will tell you about my lovely wife Dawn and the money she spends on dirt and rocks — something she never did before, but chooses to do now.

Dawn is a frugal girl who ridicules many of the foolish things people spend money on — and if I had told her when we met that one day she would spend lots of her energy and hard earned cash on bringing rocks and dirt out to the desert, she’d of thought I was crazy — but you guessed it, that’s exactly what she’s been doing.

You see, we live in a high desert area surrounded by rocks and dirt — and in fact, it is safe to say that besides the odd juniper tree, we have very little else here except for rocks, and dirt. Oh, and wind, which is so bad, that you basically have to hunker in your bunker or get blown away — with a resulting lack of landscaping niceties such as shady gazebos and lush foliage that would be quickly destroyed in this harsh environment, unless made of concrete or some other unattractive option.

Drought conditions also prevent large lawns and the like; with my postage stamp-sized parcel one of the few lawns in the neighborhood. This isn’t a matter of taste but of water costs and the fact that our dirt isn’t dirt at all, but volcanic ash and cinders almost devoid of organic material and moisture-holding ability.

Want a lawn or garden?

You’ll need to truck in some proper dirt.

Want an alternative to ash blowing in through every open window like beach sand?

You’ll need to cover at least those areas closest to the house with gravel to suppress the wind-blown cinders whirling about — and not just any gravel will do — you’ll take a cue from all the neighbors and use the color, size, shape, texture and type of your rocks as your landscaping statement; where like raking a Zen sand garden, you seek to bring order to chaos. In Dawn’s case, that means washed and sorted Mexican river gravels of a varied character (but consistent size and smoothness), trucked at least 1,000 miles to get here…

Despite the fact that she does not need to pay for rocks and dirt, Dawn is still willing to do so under the right conditions — when her desire for “the right stuff” outweighs the appeal of abundant free alternatives — and if you can sell dirt and rocks to my wife, then there’s hope for the future of paid porn, no matter how much of it is available for free…

What has this to do with adult entertainment? The example illustrates how people’s attitudes evolve over time and circumstance, and how someone who would not pay for porn today, might become your best customer tomorrow. This is an important factor in our discussion, because on the adult Internet, most free sites contain ads for paid sites — so if there is no ultimate revenue stream, then the advertising dollars would dry up — limiting the lifespan of some free sites and their business models.

Sure, not everyone is willing to pay for something they have free access to, regardless of the desirability of the offer; but enough people are willing that it makes sense to adjust your expectations of market size and profitability. In other words, the “good old days” are not coming back, but today can be good if you handle it right.

Looking at it this way also frees us from the shackles of anti-piracy based solutions, because the reasons why porn is so freely available become unimportant, and the focus can then be placed on generating revenues in this new environment. The point is that with or without piracy, enough people are still willing to pay for their porn and if you make it easy and give them what they want at a price they will find “worth it,” you could profit.

Making sense of this situation’s complexities is easier within a historical context that takes into account the cultural, psychological and physiological factors of selling free.

Consider sex itself: it is a basic human need — but one that can be satisfied for free. Indeed, many folks are quite content to get what they can for free from a lover or spouse, or masturbation — yet against this backdrop arose “The World’s Oldest Profession,” where something as simple as sex, resulted in something as complex as commerce.

Why settle for “pot luck” when you can order off the menu? If you want anal with an Asian, a blowjob from a blonde, or a romp with a redhead, all you have to do is pay for it.

This specificity of desire signals a transition from need to want and is a psychological shift that isn’t played out by all people. For example, many folks get through life without ever patronizing a prostitute, just as many consumers of adult entertainment will not pay for the material that provides them with satisfaction. In other words everybody wants sex, but not everyone is willing to pay for it; whether in the real world, or in the audio, visual and textual depictions of nudity and sex (aka porn) that serve as the next best thing.

Successive technological developments have eased access to porn, making it more available, with printing presses, photography, motion pictures, telephones, television (cable and satellite), home video and the Internet all playing roles in the spread of adult entertainment — and as each technology brought porn closer to home and further from the potential embarrassment of inperson acquisition, this material became more popular and mainstream — but this easy access may have also led to a decline in perceived value.

The zenith of porn’s explosive growth was the cultural phenomenon of porn on the early Internet, but this was really a fad-driven market bubble that gave rise to countless mom-and-pop and small operators and affiliates who grew fat on easy sales and bountiful visitor volume — but which have been supplanted by professional corporate players that have elevated competition, which has left many smaller companies blaming piracy for a resulting sales slump, when the real cause may be natural marketplace corrections.

Of course, this still leaves us trying to sell free, but free is not the end of the world — it is a proven business model that has been thriving for ages in the publishing industry, with print and broadcast television serving as great examples.

For instance, XBIZ World magazine is an example of how publishers can provide a wealth of valuable, original and exclusive content without charging a fee to the reader — and print is a tough market in comparison to the online space — which offers distinct advantages over print and TV due to its measurability of advertising and traffic metrics, which boosts potential profitability; despite the lower perceived value of many online offers in comparison to their real-world counterparts.

Consider also that the further an offer moves away from sex or other physical contact, the further it can move away from profits, because the offer is shifting from providing a physical need, to a much less necessary psychological want. This can take the shape of adult haptic technology, or of rich Corinthian leather seats as an upsell to your new car — it’s all about touch and feel — and it is hard to replicate those factors in the digital world.

The desire for interpersonal connection is what makes money flow even in financially uncertain times, so any long term solution to the problems of selling free will need to be based upon a consumer’s need to be heard and acknowledged and to have their requests positively responded to and all their desires fulfilled.

This “having a choice in the matter” is the essence of interactivity and can take the form of everything from a customer directing a performer in a live adult webcam show, to having a more advanced, customizable and intuitive user interface for premium sites.

Any ideal solution for smaller players will not squelch “sharing,” because in today’s mature marketplace where good search engine listings are hard to come by, social media (and “sharing” more broadly), is becoming the driving force for content discovery; thus, making content harder to find or access is not the solution to selling free.

With all of this in mind, there is no perfect solution to the problems of selling free — but many approaches may be tried by inspired adult marketers changing with the times while finding value in something that is free — and making a profit by selling it.

Stephen Yagielowicz is XBIZ World’s senior technology editor.