While there’s always someone that will tell you that things have never been better for their firm, many companies are continuing to face significant challenges in adapting their business models to the new realities of the online adult entertainment marketplace.
Some say that it’s hopeless and that “porn is dead,” but it’s important to remember that top tier companies (adult or otherwise) didn’t just stumble into success, they fought to get it and fight to keep it, and by studying how other companies handle their challenges and opportunities, we can improve our own practices — and improve sales.
Some say that it’s hopeless and that “porn is dead,” but it’s important to remember that top tier companies (adult or otherwise) didn’t just stumble into success, they fought to get it and fight to keep it.
Premium bottled water forms the basis of one of my consistently favorite metaphors for selling porn (or any other digital media) today: despite being something that we all need to survive, drinking water is free and readily accessible almost everywhere in the world — so why would someone pay money for it?
The reasons are simple and varied, and include better clarity and taste (so much of the world’s free drinking water is clouded with sediments and just tastes awful), portability, artificial additives and flavor (such as vitamins, energy boosters and other enhancements), as well as natural carbonation — even the visual appeal of a fancy bottle or label plays a role in the sales cycle.
The point is that by offering something worth paying for, consumers will indeed fork over their cash, even for something otherwise available for free — if you can effectively convey the benefits of doing so.
While this is ground that we’ve covered before, I’ve recently thought about it from a different angle.
You see, I enjoy cold, sparkling Pellegrino water (and prefer it in the glass bottle, rather than plastic), which I currently pay $5 for three 750 ml bottles in Northern California — a considerable distance from where it is bottled at its source in Italy. Bottled in heavy glass bottles, handled repeatedly and shipped at least several times, from bottling plant to wholesale warehouse, to retail market — with each step in the chain adding costs, while eating profits.
At less than $1.70 retail per bottle, I have to assume that the bulk of this cost is from the container, shipping and handling, as well as the marketing efforts, and markups from the wholesaler and retailer, which means the actual cost of the product being sold is among the least important factors in its pricing — but I’m not paying for all those things — I’m paying for the refreshing bubbles floating up in my glass and the smooth way that Pellegrino cleanses my palette.
There are several huge lessons in all this for folks marketing a product as devalued in the public eye as digital media (and porn in particular) has become, but as is my wont, I shall tangent off into one area — that of distribution efficiencies and economies of scale.
Like water that is bubbling up from the ground, porn today is a low cost commodity for distributors to acquire; and just like porn, there is a finite limit on how much consumers are willing to spend on it — making increased profitability highly reliant on reducing friction in the path from producer to consumer.
Consider Coca-Cola, a product that is mostly water, but with a raft of ingredients that lend it an air of being much more than water, even to the point of being an internationally recognized cultural icon.
Rather than being “bottled at the source,” Coke is bottled regionally, produced using a syrup base that a local producer mixes with local water and then bottles for shipment to outlets within the area.
This practice dramatically reduces shipping and other costs while maintaining a uniform product. There are literally thousands of these independent bottlers, which could be thought of as affiliates in a marketing context, each of which is spreading the Coke brand through its own distribution network while reducing the product’s cost, by bringing the point of production closer to its point of consumption.
The Coca-Cola company doesn’t just provide it products to affiliates, however, it also markets direct to individual distributors (both retail and wholesale), via providing the concentrate for fountain drinks, such as the cup of Coke bought at a restaurant or other venue, through a channel that bypasses bottlers.
In an online adult context, this is similar to a studio running its own tube site to reach fans directly, while supplying clips to affiliates and other tube sites, as well as working social media or other channels, in an orchestrated attempt to reach the maximum numbers of customers, each as profitably as possible.
Consider also the exclusivity of these products: one is available from only a single source (think very exclusive niche content, aggressively protected from piracy to maintain its value), versus material that is available everywhere (think the same non-exclusive DVD rips offered by multiple feed providers and also freely found on piracy sites and other difficult to monetize venues), and how that impacts the equation.
Sometimes persistence leads to innovation as a matter of necessity.
According to Red Apple Media CEO and cofounder Steven Daris, he and partner and cofounder, Remik, founded dotCOM host 16 years ago, then later added Red Apple Media as a division of dotCOM — in part due to their own experiences running a website hosted by a provider that did not understand e-commerce or security, and which offered terrible customer support.
“Sixteen-and-a-half years ago, we were kicked out of a hosting company after being a customer with them for two years. Without warning and without cause, they turned off our websites,” Daris told XBIZ. “We knew we could do better, so we built our own hosting company, focused on e-commerce, security and excellent customer service. We do not discriminate and we always put the customer first.”
Red Apple Media was born eight years ago out of a need to develop a pay per download and pay per minute streaming system for a large studio.
“We knew that the future of online adult would require new payment methods, more membership variety, fast streaming and download options, bandwidth tracking, secure antipiracy tools, and more,” Daris explains. “At that time, adult sites revolved around TGPs, monthly memberships and recurring monthly transactions and we quickly anticipated the evolution of each and how they would change everything about the way our clients did business.”
The company is built upon innovation, foresight and performance, with media guru Sean Green helping Red Apple redefine how media is handled across all types of sites.
“Being proactive rather than reactive, we established Red Apple Media as the go-to source for the latest and most advanced tech solutions while offering fast and reliable hosting plans for all kinds of businesses,” Daris concluded. “And today we remain one of the top hosting companies to provide user-friendly and effective tools that make it easy for clients to implement true adaptive bit rate streaming, optimize video encoding and utilize digital fingerprinting, while benefiting from the most competitive bandwidth pricing and 24/7 U.S.-based customer service.”
Take a renewed look at your own business’ needs to see where any improvements can be made — sometimes it’s simply a matter of persistence to overcome hurdles that will take you to the next level.
Stephen Yagielowicz is XBIZ World’s senior technology editor.