Supply, Demand and Finding a Balance With Online Adult Content

This article originally ran in the April issue of AVN magazine. Click here to see the online digital edition. In the earlier days of adult entertainment, film crews worked meticulously to capture the passion of adult entertainment for display on cinema screens. The number of films available was never more than a handful of new releases at any given time, but that changed radically when home video become technologically possible. Suddenly almost anyone could buy a camera and film sex for distribution via VHS tapes or eventually DVDs. Local video store shelves stayed stocked with new titles at what was thought to be a brisk pace—until the dawn of the internet age finally opened up the XXX floodgates fully. At the height of production entire new paysites stocked with dozens of exclusive scenes popped up on a continuous basis and it seemed as if the world had an insatiable appetite for fresh new content to be shot and published in virtually every niche imaginable. Now, as many shooters will attest, the total number of new videos being filmed industry-wide is a small fraction of what was once being produced. That raises an important question: Is there a lack of fresh new exclusive content for fans—and does it really matter for the modern adult entertainment business? "I think the days of porn-by-the-pound are over," said Steven Hirsch, founder/co-chairman of Vivid Entertainment. "We find that the best traction with consumers is in our unique and different offerings that you won't find on the free tubes. We feel that the companies that will survive will work on making their own unique content." There definitely appears to be truth to that in the sense that some programs are actively producing fresh new content. While the market for shooters may seem dry, to fans of those sites the content is as fresh as ever. "There is no shortage at all," said Erwin de Boer, VP of online media for ManicaMoney.com. "It just depends on where you´re looking. We´re doing five to six exclusive new high-quality video updates every day on the ManicaMoney network and our audience appreciates it. There might be a shortage of fresh content in the U.S. market, though, because there seems to be less companies producing that kind of generic gonzo material. There´s always a huge amount of niche-specific stuff available for fans and affiliates who know where to look." From the production studio perspective, selective consolidation is definitely in play. "In my opinion we see right now that the consolidation on the paysite side of the business also led to a consolidation on the production side of the business," said Stefan Geisler, aka MaDalton, owner of AmazingContent.com. "A couple of big companies still buy huge amounts of exclusive content, and a couple of producers are really busy. Unfortunately, many of those producers with the 'wrong' clients suffer nowadays from a lack of work. Some already left the business. Meanwhile, others expand and add unemployed personnel from those who gave up. Will there be a shortage of fresh content? Yes, when you subscribe to the wrong website. But not when you pick the right one." Among companies that do continue to generate exclusive new content, there is also a very real understanding that the new content they produce needs to be better than anything available for free already. "A lot of content has become homogenized and recycled at this point because it's the only way for some companies to turn a profit," said Spike from Homegrown Video. "This trend will probably continue for the industry at large as technology continues to transform the way we consume porn. Homegrown, by its nature, has to constantly bring in new material to keep its fan base happy and growing, and there are other companies in the space that have embraced and capitalized on this wave of change. Look at Jules Jordan, Girlfriends Films and Hustler. All have maintained a strong brand and consumer fan base, which has supported their efforts to produce new content. When you sell water by a river you better make a compelling and consistent case to get consumers buying what you are selling." One of the pivotal people in the rise of free porn tube sites was JT, a founding member of YouPorn.com in late 2006 who served as director of global business until the sale of the site in May of 2011. JT is still known to many as 'The YouPorn Guy' and was the face, eyes and ears of YouPorn—responsible for the monetization of the company's user base, which ballooned to more than 370 million monthly visitors during his time at the helm. JT also was part of the YouPorn team that pioneered and operated the groundbreaking Content Publishing Program launched in early 2007, which partnered with more than 2,000 sites that adapted to the new reality of adult web traffic patterns. After the sale to Manwin (now MindGeek), JT started his own production company, Really Useful Limited, which is founded on knowledge gained by running one of the busiest consumer websites of all time. Now the company has grown from a staff of four to more than 80 people, producing exclusive content for 17 recognized paysite brands and set to be paired with new high-profile tube domains, including Tube.xxx and Tubes.xxx, which were recently purchased in a private sale for a reported $750,000. Clearly his views of the current pace and future use of adult content carry significant weight. "There are fewer production companies today than there were five years ago, and therefore a shortage of new original adult content," JT said. "With the advent of adult tube sites back in late 2006, early 2007, the industry found itself on its knees. Program owners could not cope with the influx of free content on the tubes and they witnessed their membership revenues dry up and other staple revenues, such as DVD sales, plummet. They found themselves in a Catch-22 situation: having to cut operational costs whilst still trying to keep existing members and entice new ones. Inevitably, content production budgets were slashed, and this had a detrimental effect on the overall quality and in some cases quantity. Some content owners started to license their previously exclusive content, and this meant saturation. Unfortunately, many program owners shut down, thus limiting the amount of content shot in the industry as a whole. This has created a clear gulf between older, stale/burnt content and new, fresh content." According to JT the companies that adapted prospered because "many of the companies that weathered the storm did so by using the tube sites to their advantage: joining the content partner programs of the biggest tubes, giving them ‘official’ sponsored clips in return for an affiliated banner, and promotion to their millions of daily visitors. Many programs flourished under this new method and new companies have since entered the space." As to the future of exclusive content, JT said, "For those that produce fresh, exciting and exclusive content, yes, they will see a positive impact on membership sales. Tubes are very hungry beasts. There is simply not enough new content being shot to fulfill their needs. That's why companies such as mine, Really Useful, have flourished by joining the content partner programs of the major tubes. There is simply less competition on the tubes when promoting your new scenes. We started with two sites in September of 2011. We identified the two strongest niches, sensual/erotic and casting couch, before launching Orgasms.xxx and Casting.xxx respectively. We then launched a succession of sites in both niches where there was a lack of producers, and where we could improve on what was currently being shot. We have just launched our 17th website and have an active member database of over 23,000 paying members. We shoot eight new scenes a month for each of my 17 sites. We never miss an update and we keep things fresh. From these full scenes, we edit around 180 10-minute to 14-minute tube clips. This means that we blast the tubes with an average of six new videos each day." From JT's perspective this is something others can learn from. Other companies, he said, “have a very similar and successful tube strategy. These companies also feed the tubes with a constant stream of quality content each week and are building their brands from within the tubes. So when a tube user is ready to buy a membership, the chances are it will be for one of these companies’ brands." Few who have worked online have the kind of overarching view of the big picture that Phil of Pimproll.com has gained through hands-on experience working with a large paysite network, affiliate program, freemium porn tube site, traffic brokerage, video distribution services and content acquisition teams along the way. From Porn.com to PaidPerView.com, TrafficForce.com, HostedTube.com and beyond, the Pimproll team has continued to adapt and innovate when it comes to content acquisition, marketing and monetization. The way Phil sees things, there is a definite rhythm to the market. "I believe that like many other products and many other industries, professionally shot porn’s overall level of success is cyclical. It is natural, in business, to want to exploit any opportunity for success and because of that, during the boom we saw in the first few years of this century, content production went way overboard. There is only so much content an individual can consume and there is only so much content an industry can support. Naturally, as supply vastly outweighed demand an inventory of content that was not exposed to the masses began to accumulate. As producers began to see diminishing returns on their product, their answer was to create more product to compensate, which compounds the underlying issue." Part of the problem is that the joy of filming adult content may at times outweigh proper business decisions in the minds of some. As Phil points out, "Ideally when this inventory of unexposed content began to emerge, there would have been a retraction in the industry, but it is tough to stop doing something that involves direct contact with tits and ass, even when the return is less than favorable. I believe that is a big reason why traditional adult content production companies continued to operate at the pace they were, well after it was no longer viable. Their proximity to the actual product being produced was far too close. Now, through consolidation, amalgamation and industry contraction, the landscape has changed and the decision makers (as far as content production goes) are not necessarily the ones holding the cameras, or even the ones in the same state or country where the content is being produced. This separation leads to smarter decisions, ones based on the lack of positive returns on content production, and that leads to a vast decline in overall production itself." As for the current content outlook, "Right now we are seeing this enormous store of content, the mass-produced but underexposed videos of the last decade, being brought to tens of millions of viewers every day on the popular tubes that are controlling the majority of the adult traffic," said Phil. "The idea of it scares a lot of people, but the reality of it is that a correction is required. A person could watch good quality porn 24 hours a day for the rest of their lives and never get through even a small percentage of the available inventory. Conversely, I can queue up all the mainstream television that is actually worth watching and get through it in a relatively short amount of time." That must eventually lead to better content if one follows Phil to the logical conclusion: "The correct solution should seem obvious (in my opinion)—neither to increase production over and over again to maintain revenues, nor to halt production entirely. It is, rather, to produce not only the right amount of content for the size of the industry, but also to produce the right types of content for the audience. One way I see this starting to happen is through content providers' use of PaidPerView.com. More and more producers and programs alike are using the Paid Per View platform to test out content ideas and determine the validity of their future projects. If a video released through PaidPerView generates a higher-than-average amount of clicks to a target website, the provider can see that their creations are more in tune with what the current consumer is willing to pay for, and alternatively, if a video experiences the opposite, a provider understands that their idea should be rethought before they pump out dozens of other new scenes like it." Looking forward, Phil explains, "These days, the analysis can and should go far beyond that point. If a provider's content generates a relatively low amount of advertising income with respect to the number of views it has received through PaidPerView.com, it is obvious that the content popularity is greatest in markets that our industry has a hard time monetizing. If the content however generates both a high number of clicks to the target product along with a high volume of advertising revenue compared to the average, the provider can clearly see that they have created something that people are not only willing to explore, but that those people who are doing so are their target audience, surfers who can and do spend money on the internet." Rather than spending tens of thousands of dollars producing new content libraries in the hope that they will sell, tools like PaidPerView and tube submission programs are becoming a test-ground for new ideas that earn revenue during the exploration phase and generate a pre-made audience for winning content that is yet to be produced. That means a greater level of efficiency is possible, and suggests that even as less content is produced, more of it will be the content people actually want to watch or are willing to pay to see. As Phil concluded, "I think the reality is, there is so much analytical information, so much data that is available to us all these days and everything that we need to make better decisions with respect to content production already exists. A lack of production cannot lead to the collapse of the porn industry; the demand will always exist and as the supply becomes increasingly stagnant, demand will only increase. The important things for us all to learn from what has happened is that we must create the right kind of supply, a supply that fulfills the needs of the consumers as opposed to one that overwhelms them or fails to entertain them."