The Economist Takes Look at Today’s State of Porn

LONDON — There’s a sign of change in the air for the porn industry, according to a story published in The Economist.

That change, according to the magazine, could fuse the real and online worlds through virtual reality and robotics after years of dominance by the plethora of adult tube sites that have turned porn into a commodity.

“Porn is a pioneer in virtual reality, a technology being eyed avidly by Facebook, Microsoft and others,” the magazine said. “Along with video-gaming, the industry is sure to play a key role in its mainstream adoption. Sex-with-headsets is either brimming with potential or a dead-end, depending on whom you ask."

The Economist explained about the “fast-growing cottage industry” that makes sex toys that work with Oculus Rift and other VR headsets.

“There is also much excitement about teledildonics: remote-control technologies that allow people thousands of miles apart to control each other’s gadgets,” the magazine said.

The Economist tried to connect the dots about porn’s current online hold, and how some sectors of it were blown apart by the advent of free tube sites that emerged years ago.   

It told the story of former former MindGeek principal Fabian Thylmann as one who was intent on “world domination” by offering sexually explicit free content on the web.

Thylmann, according to the article, now thinks that the porn industry as a whole has seen profits dive by three-quarters since the pre-adult tube site days when money was simple — “set up a website with some pictures, control access using billing software and see the bank account fill up.”

“[T]hylmann left a lasting legacy — just not the one he had intended. Inadvertently, he helped cement the tubes’ dominance, turning porn into a commodity in the process,” The Economist said of Thylmann, who told the magazine that he has remained out of the business since leaving MindGeek.

Now, the game has changed in porn, and consumer traffic is where the money is at, the magazine said.

“The traffic the tubes can direct towards pay sites means that their relationship has evolved from hostility to close, if grudging, co-operation. More and more content producers are signing deals to let their stuff appear on tubes: if a viewer clicks through to the originating site and subscribes, the tube will get a cut, sometimes as much as 50 percent.

“Since tubes get so many visitors, the bargain may be worthwhile for paysites even if only one in 1,000 of them decides to subscribe. But the tubes are by far the bigger winners, getting not only commissions but more videos, which in turn drive up their traffic and ad rates.

“The model has been likened to a ‘vampiric ecosystem’ in which MindGeek and the other tube sites feed on paysites, sucking their profitability.

The Economist interviewed XBIZ Publisher Alec Helmy for the article, titled "Naked Capitalism."

Helmy noted that revenue from porn is well below its peak and that the number of major studios have been sliced by 90 percent.

The Economist, which also took a look at the cams sector and niche-carving pioneers like Kink.com, said that revenue from porn producers may never return to their former heights.

“But whether or not such innovations bear fruit, the industry is once again offering other media and online businesses a glimpse of the future,” the magazine said.