Q&A: Evil Angel's Adam Grayson on Delivering the Digital Goods

This article originally ran in the June 2015 issue of AVN magazine. Click here to see the magazine online. With the recent announcements that director Toni Ribas and BAM Visions have joined Evil Angel’s roster of award-winning directors, the company, which was founded in 1989 as a vehicle for John Stagliano to distribute his own movies, only further cemented its reputation as one of the industry’s most innovative companies and a place that world-class talents encompassing varying creative temperaments love to call home. That Evil Angel is director-friendly has never been in doubt; Stagliano’s seminal decision to allow his helmers to maintain ownership of their movies has for years provided the foundation for the company’s success. But massive and often disruptive technology-driven changes over the past decade that turned the relationship between creator and consumer on its head, and which affected all media-centric industries, have also tested the solidity of the Evil Angel business model as well as the company’s willingness and ability to adapt to the times. Both have not only survived but appear to be thriving, thanks to core changes that were put into place about three years ago, spurred by years of deliberation followed by some gutsy decisions by Stagliano, then general manager Christian Mann and CFO Adam Grayson, that ended years of licensing deals in favor of bringing control of the company's broadcast division in house. At about the same time, internet operations were outsourced to Gamma Entertainment, which has since become a very close partner with Evil Angel. As far as Evil Angel’s base of now just under 20 directors whose content it distributes, some directors have gone their own way in recent years while others have come aboard, but in a wide-ranging conversation with the 35-year-old Grayson in the longtime Van Nuys offices of Evil Angel—where the small room that was once Mann’s office is now a permanent Mann Cave following his passing last year—a picture of a once again formidable adult company comes into hi-def view, a portrait of big umbrella brand comprised of many substantial sub-brands, that is grabbing hold of its future with an optimism and sureness that only a few adult companies could even think to muster with any conviction. The conversation reveals a well-established company in which new technologies are harnessed in the service of the original mission: to help directors supply consumers with quality fare that Stagliano himself can stand behind. Simple stuff, really. AVN: When did you start at Evil Angel? Adam Grayson: I started in January 2009, about four months after Christian did. I knew John only casually but I was friendly with Joey Silvera, and it was Joey who introduced me to John. It’s funny, but one of the most surprising things about John was how quickly he would go to the worst place of his skill set with someone he barely knew. “I can’t possibly know anything about this. Look at all the poor decisions I’ve made.” Never bringing up any good decisions he’d made. Almost as if the success he had achieved had been an accident? I’ve heard him say things like that. But I look at it and think, no one has a perfect record; I’m sure there are things he could have made better decisions on, but in the long run he’s created this company out of nothing. But I think even for John it’s hard to separate Evil Angel as a company from gonzo as a movement. He would be the first to tell you that The Adventures of Buttman was like their fourth or fifth release, and if that hadn’t happened, the history of this company would be very different. And then with that early success he made some key decisions, right? Well, one huge stroke was the idea of the content creator owning the content and being vested in its quality and its life. The second was the death of the fourth wall, and they just so happened to take place within a year of one another. ... I don’t think it was ever John’s ambition to distribute other people; he just wanted a distribution channel for himself so he could control things from soup to nuts. So then do we look to his innovative business model as the reason for his longevity? I think it’s more his integrity. … John is less interested in money than anyone I know in this business. I’m sure some of that is motivated by the fact that he’s made plenty of it already, but he’s not terribly interested in the structure of his 2015 income. What that means is that the structure here is always set up for the director to make more money. I always joke that if a dollar rolls downhill here, it never goes into John’s pocket, but always makes its way into the director pool. Does that brand of integrity translate into unique loyalty on the part of his directors? Absolutely. I have been in some tough meetings with these guys over the years, having some tough conversations, and these guys don’t blink: ‘Whatever John says.’ Their loyalty to John is shocking. ‘Well, if John thinks that’s the right thing to do, sign me up.’ I have never seen an adult company with so little squabbling. Can you really run an ethical company and still be on a successful upward trajectory? We do and we are. Our directors get paid in full the second business day of every month; no one in this business pays quicker than that. We have no cross-sales on any of our websites; we have nothing misleading on any of our movies. If we replicate a disc and then realize there’s a name on the art that isn’t in the movie, I can guarantee that it gets shredded that day. I don’t care what the cost is. The core value here really is about delivering a product to consumers that is packaged and marketed correctly, and that their expectations are met every time. About cross-sales. You say you have none. Is that a policy set of affiliate program Famedollars.com, or is it  your policy? It’s John’s policy. ... John will not do it because he thinks it is fraudulent toward the consumers, period. And he thinks that if Evil Angel has one asset it is its reputation with the customers to provide the product as advertised and nothing less. He feels that it would tarnish that relationship with the customer. This sort of raises the question of branding—which also raises questions about whether it is Evil Angel  that will be branded, or the directors or certain titles, or all of the above. Enviably, Evil Angel has been so successful in its history that I don’t think anyone ever paid much attention to branding. This company made a fortune from what I call the two-percenters, the hardcore porn fans. … This company paid its rent very comfortably not working about the other 98 percent. Evil just did what it does, and a certain part of the market came with it, and it never had to worry about anything. … Looking at it now, however, at everything we do, whether it is the website, broadcast or DVD, I can look someone in the eye and say, if a customer takes the Pepsi challenge, we will come out ahead. The analogy I use is wine. I’m not a wine guy—I can’t tell the difference between a $25 bottle and a $250 bottle—but the guy who can tell, can tell, and I think the same thing can be said about porn. A guy who doesn’t care is probably not going to be able to tell the difference between an Evil Angel Rocco movie and a 4-hour LeisureTime comp, but the guy who is a real customer and spends money is going to be able to tell. And one day he’s going to rent that first Evil Angel movie and go, “You know what, this is better than that other stuff, and I’m going to spend more of my porn budget on that stuff.”Can you define quality? I think at Evil Angel there are 18 different definitions of quality because every director has a different style. Someone at first might think Mike Adriano and Jay Sin are interchangeable because they’re both about gaping anal, but stylistically those are two very different guys, especially for a connoisseur of anal porn. So, from a distance, there is a certain consistency across all of it, but to me what quality means is that it is all created with care; from casting to photos, from the camera work through editing, it is done with care for the purpose of making sure that the person who consumes it down the road gets the best product that can be presented from the raw ingredients. … It’s the same task as in theater or mainstream film; it’s the director’s job to take that lump of clay and bring out the best in it. To me, what separates the amateurs from the pros, or the pros from the hall of famers, is when a performer shows up hung-over and in a bad mood; some people are going to end up with a bad scene and others, through the trial-and-error they’ve developed over the years, save the scene, usually because of what the director got out of them. Is quality the answer to getting people to pay in the first case, even when it comes to millennials? Can that work? It is working. On a purely accounting level, 2014 was the best year we’ve had since before the global financial crisis of 2008. So, yes, it’s working. But revenue is also coming from far more diverse places these days, isn’t it? Yes, obviously it’s more of a mix than it was in 2007. The hard goods part of our business is less than half what it was, which has been the case for the last few years. But it’s not considerably less than half. Believe it or not, we still sell a significant amount of DVD at a really high price. If you want we can go back to the warehouse and see the guys packing boxes. We’re releasing five or six new releases a week, and people are buying them. Domestic and international? Domestic is atrophying quicker than international on the DVD side, but the web side is growing quicker domestically. The good news for us is that the drop-off of hard goods has been more than eclipsed by the growth of digital revenue, so top-line is growing and bottom-line is growing. I’d like to revisit my definition of quality for a minute. I think quality is a subset of value, and is also a factor in every market. Every consumer wants to believe that they are getting value that exceeds what they paid for something. What are the components of value? The price you pay, the quality of what you get, the user experience, the customer service; all of these things get bundled into this soft word, value. So, for us, quality is probably the single biggest slice of that value pie, and it has resulted in things like our website subscription revenue growing every month. Since Gamma and FameDollars took over the site, I don’t think we’ve had a month-over-month downturn, and we believe that it is because we are fixated on making sure that the value of what we give a customer exceeds what they paid for it. … I am not terribly interested in the market of porn consumers. I am far more interested in the market of porn customers or prospective customers. There are a certain percentage of people—a 19-year-old in his dorm room who has no money in his pocket but has a high-speed internet connection—who is never going to spend money on porn, period. And then there’s the 65-year-old guy who has money but maybe a small window every week to go watch porn, who doesn’t want to fool around with broken links or whatever. He’s going to pay for it, by subscription or by the minute, and those are the guys we’re interested in locating and attracting, and that’s also where the value formula comes in, when they see what we provide for them is equal or more than the money we are asking of them in turns of money. For the guy who perceives the value to be lower than that, good luck and god speed, but I’m not that stressed out about marketing to those people. I know it’s very different from the MindGeek approach, because their flagship products are really appealing to those people, and hey, that’s their business and this is our business. I don’t lose a lot of sleep over it. Do you lose sleep over the Torrents or any methods of substantial piracy? We do everything in our power to prevent things. We work with Nate Glass over at Takedown Piracy to handle the tube takedowns, we work with different enforcement companies all over the world to handle BitTorrent abuse. I go to sleep knowing that with the technology available to me that day I have done everything I can to combat piracy. If I get hysterical worrying about someone watching one of our movies for free, I would never get any sleep. Are you saying there really are budding porn customers in all those non-paying porn consumers? Yes, life events happen. Someone just told me that it used to be that we got a new customer whenever someone turned 18. That doesn’t happen anymore. Now we get a new customer when a life event happens. Turning 18 is no longer that life event; getting a first well-paying job is a life event. So then the goal is to inform them that you exist? Exactly, and that is the entire focus of our branding and marketing, informing these people who are entering that customer pool that there is efficiency out there. The one thing that most people will agree on is that trolling those sites is time-consuming. You mean the tube sites? Yes, because the meta-tagging is poor, it takes a long time to find things, and the efficiency of one’s time when you’re looking for something is more valuable to some people than others. If you’re in college, you can spend 16 hours looking for something. But if you are an executive with kids running around and a wife who makes demands on your time, you have a very limited window to find something and consume it. So in a sense we are selling people their time, and that’s something we think about a lot, but again, it’s a part of that overall value formula. How can we impart value to people? But I do believe that every day brings more people traversing that chasm from being a consumer to a customer, because of a life event. Do you brand Evil Angel or the underlying director? I always talk about how every movie we put out has two brands. It’s got the Evil Angel brand, which means something, and then it has the Joey Silvera or Rocco Siffredi or Buttman brand, which mean something else. Interestingly, we look at metrics from our website about who watches what, and there are certain clusters of directors—like, a guy who is a Mike Adriano fan is likely to also be a Rocco Siffredi fan, and a Kevin Moore fan is likely to be a Jonni Darkko fan, because of the selection of talent, the way they shoot, the fetishes they choose to shoot, but just because someone is an Evil Angel fan doesn’t mean they watch all the movies. So what does the Evil Angel brand mean, then? I think it relates back to the expectation that whatever I press “play” on will pass a certain bar, a certain commitment that Evil Angel has made to the customer that anything that ships out of our warehouse or feeds off our servers met a minimum threshold. I think there are more companies like that today than ever before. John and I talk about this a lot; that the overall quality of porn being made in the last five years is at an all-time high, because people realized that you couldn’t sell junk forever. … For years, in terms of quality product, it was a race to the bottom. I will admit that the first porno I ever bought was a four-hour Leisure Time comp. I looked at this box cover, a mark who didn’t know anything, and I go, ‘Huh, four hours! 240 minutes! For $3.99!’ And then you look over and there’s an Evil Angel movie with only 140 minutes (because they bought the best tape stock and that was all you could fit on it), and it would be $54.99. That was an easy choice for me back then. For me, it was about six months or a year of buying these four-hour things before I realized I was starting to see the same scenes over and over again, and that the girl on the cover wasn’t even in the movie. I remember the first Evil Angel stuff I ever watched was Randy West, but I had to hop that fence in terms of my mindset, thinking, ‘Well, maybe I’ll just rent it first because it’s really expensive,” but the first few times I did it, it was very easy for me to tell the difference. The light bulb really went on—and I don’t think I am that unique a person—where I said to myself, “Man, this is really visibly better than that other stuff.” Whatever “better” meant in that moment, it was better. And from that point on, in my former years, it was Evil Angel, Elegant after they left here, Anabolic, Diabolic, this stuff that had become very clear to me was simply better. And then of course there did become a time when I had a few shekels in my pocket, when I said, you know what, I think I will pay $39.99 for a movie I’d already rented twice and knew I liked a lot. It was a gradual process for me, as I think it is for many people. Let’s get back for a second to your interest in increasing mainstream branding, consumer exposure. There are so many avenues and platforms on which to communicate. Social media is very important. It certainly skews younger, with people who don’t necessarily pay, but as social media matures and as people get older, they’re going to start paying for stuff, and we want to be branded, we want them to be aware of us, even if they aren’t paying yet. For us, it’s about looking at the world around us in a certain way. We may make porn a certain way, but we can’t be so arrogant as to think that we’re going to tell people what screens they’re going to watch it on, or what payment system they’re going to use. I think there was a certain arrogance for a period of time in which people felt that people who wanted porn would have to come to them, but the world is so fluid now. I remember a few years ago John asked, “What’s the new shiny disc?” And I said, “There is no disc. It doesn’t exist.” I mean, VHS lasted twenty years, DVD really had a significant lifespan of eight to ten years, and we could look at digital and web as one thing, but it’s bigger than that. I also asked John a few years ago what this company is. His answer was that we sell porn DVDs. Wrong, I said. We are engaged in the digital distribution of content. It’s our job to get ones and zeros anywhere that someone wants to pay to consume them. We do sell a lot of hard goods out of our warehouse, but it’s really just about distribution digitally, which is exactly how the studios across the hill are thinking about their business, despite the fact that people still go to theaters to watch their movies. Is this where broadcast comes in? Yes. In fact, this definition of what our business is led us directly to the broadcast initiative that we began a few years ago. Christian and I came to a place where we were trying to take a step back and see the big picture. How do we connect the dots between the stuff we make and all the people out there? We came to the conclusion that the traditional world of brokered distribution relationships was just not going to be for us anymore because we were of a certain scale in terms of the amount of product we were producing that we could do everything in-house. It sounds like a sea-change sort of decision. Well, the reason why most people want to get rid of third-party brokers is because they take a percentage of the money; I think for us it was less that than that we wanted to control the destiny of where everything goes, and understanding it. In the analog world, everyone is selling territorial rights. But is your logo even on it once it comes out in a particular country? Is it being re-edited? Is the box cover terrible? There are so many questions that arise, and it just got to a point where we wanted to control Evil Angel content from the presses to the customer’s hand. It’s not that revolutionary; lots of other people in the business have taken that stance, but when we looked at it, we found that the scale of this company justified the cost associated with the decision. We’d been working exclusively with Hustler TV for eight years. They didn’t do anything wrong; in fact, we’ve maintained a cordial relationship after the fact, but Christian and I looked at one another and said, “Why are we doing this here?” We have enough programming. We’re pretty much the only—maybe MindGeek, with all the different brands they control—but we’re the only studio in the traditional sense that has enough content to power an entire broadcast business on its own, and not have to go out and license. So why don’t we just do this? When our movies were on VOD and broadcast for Hustler, everything was branded as Hustler! Which means that if someone was watching something really good, they didn’t know it was Evil Angel! When exactly was this? It was spring-summer of 2013 when we decided that we were going to let our Hustler TV agreement expire and we were going to make a go of it ourselves. This was just about controlling our own destiny. Was there a weaning process? They had a certain exploitation period, so we just stopped providing titles on a certain date while they still had the rights to earlier ones. They were taking six of our titles a month, with exclusive worldwide broadcast. And over the course of that relationship we had grown from like ten movies a month to twenty-four, but the six had never moved. We were a size thirteen foot fit into a size six shoe. They had rights to anything that falls under the broadcast umbrella, so it was transactional VOD, subscription VOD, IPTV, linear broadcast channels and pay-per-view. What about Roku or other streaming set-top boxes? The only place we’re on those is through people like AEBN, who take the time to build the infrastructure for that. OTT is the lingo for that type of delivery; over the top. But with the exception of Roku, everybody in the U.S. pretty much has a no-adult policy—Apple TV, ChromeCast, people like that—while Roku has a more-adult-friendly policy. AEBN and SugarDVD have developed Roku channels. Overseas, the OTT world is actually a lot more inclusive of adult, so we’re actually talking to a few OTT hardware brands about including Evil Angel. After we did that Hustler deal, which I think was 2005, over time all these rights issues started coming up; one thing now means something else, and contracts that didn’t use to conflict now sort of conflict because all of these words have been blurred together. In reality it’s a server on one end and a consumer device on the other and just a bunch of ones and zeros being sent. Some cable companies don’t even have traditional cable boxes anymore but these hybrid streaming boxes. How long before the Roku and a cable box are fundamentally the same thing. The blurring of it becomes substantial, which is another reason we want to control it on our own so that we don’t have to worry about dancing around all these things, so we said that in the spring/summer of 2013 we would make a go of that, and … we did it. Is this just the beginning of the growth you anticipate having over the coming years? Absolutely. Cable penetration in the U.S. is currently about 110 million household accounts, which means we still have a long way to go.Is the management of that process all in-house? Everything. Did it take a lot of work and resources to do all of this? We were really lucky that there were a number of experienced people who were out of work at that moment, and we snapped up a number of them; people who worked in the adult broadcast space. Within about 12 months we had our first domestic cable launch, and by summer 2015 we are going to have our content in about 70 million homes worldwide. For it being only two years since we made that decision, I think it’s an impressive achievement. The technical was not that burdensome. Obviously, we had to add some new stuff and hire some new staff, but it has been really time consuming more than anything else. I had someone tell me a year and a half ago that we would never succeed at this, that we would never be able to launch a major cable company, and I saw him recently and said—not, I told you so, but more, well, here we are, we did it. And he said, “Well, I meant if you didn’t have enough money and patience.” If there are two things that John has, it is money and patience. So here we are, and yes, we are certainly building it for the long term. In terms of where your content is seen, does it make sense for Evil Angel content to be on all available platforms as well as on your own cable and broadcast networks? No. We probably turn down more deals than any adult company in the world, because we are very selective where we go. I’m not saying I don’t want to be in front of everybody all the time, but we try to price ourselves in a premium way. … So I think we always try, when we are doing deals on any type of platform, to make sure that we are delivering high-quality content. We put a little more care into editing the broadcast versions of our movies than our competitors do, because they’re our movies, not just something we licensed to edit as fast as we could. Our No. 1 rule is not to rush. Sure, people need to be productive but if it takes an extra 45 minutes to get a shot edited correctly, what’s the problem? TVOD? It’s all subsets of VOD. Most of the money comes from TVOD, Transactional VOD, which is paying for a movie or scene; whether the whole thing or per-minute, it’s transactional for everything you consume. Then there’s SVOD, which is by subscription, like Netflix, you pay a monthly fee and get access to a bunch of stuff. And then there are variations on these as well. We are everything. The nice thing is that because we are the worldwide distributor of all these movies, with a couple of carve-outs here and there, we can license the rights for anything. It doesn’t matter if certain places only have SVOD but not TVOD. We can do either and deliver our content to anyone. Like Willie Sutton, we will go wherever the money is at any given time. If the money today is with platform A and tomorrow with platform B, we will evolve accordingly. What about virtual worlds and porn? Does any of that interest Evil Angel? It would be obtuse of me to predict how it will go or to say we do or don’t want to be there, but for us it’s about adoption. I think every day brings new consumer trends. If we look around and see that consumer adoption is happening there, we may not go out on a limb and spend millions of dollars to be early adopters ... but at the point it becomes seriously popular, we’re on board. We make and sell adult sexually oriented content. If people want to watch it inside their spoon while they’re eating dinner, we’ll figure out a way to get it there. How many directors do you have now? 18 at present, I believe. There are a few directors who are defunct who we still distribute. Are you looking to add more? John is always looking for talented people to make good porn. John, Gamma and I are always talking about what is the right size for the company? Gamma is a part of that sort of discussion? Yes, we are very close. I talk to them every day; John and I are in Montreal several times a year; they come down here several times a year. It is definitely a symbiotic relationship at this point, and there is not a lot of excluding the other party from important decisions. Because they are such a significant part of our business, and we are such a significant part of their business. We are very collaborative, a great relationship. Do you continue to be challenged personally at Evil Angel, and are you content with where you are in your career? I am exactly where I want to be. I get to do a lot of things here, and I genuinely have fun here every day. Before I go, there is one thing I wanted to ask you about, and it’s a tough one. I wanted to ask about the transition after Christian Mann passed away. Is there a legacy he left behind that you can share? Christian was here about five to six years, and I would say that his legacy is overwhelming, including with the corporate culture here, which is so much better than when I got here. I have never been part of an adult company where every employee is engaged in the long-term success of the company and genuinely cares about it, and he was responsible for a lot of that. With these initiatives we’ve been talking about, I miss him the most when we accomplish something that we had talked about doing years ago, deals that we started working on. I want to text him, and a few times I’ve texted Melissa [Mann’s widow]. That’s what really gets me; we started off on the ship together but he wasn’t able to get to the other side. We’re here! We made it. I worked side-by-side with him for five and a half years, and he really was the only professional mentor I’ve had personally, but I learned so much from him, including stuff I didn’t even know I wanted to learn. My job now. Literally, hour to hour, I do something I would not have done that way were it not for Christian. We sometimes butted heads, but he gave me a vast tool box that I use to this day. As far as the company goes, we retired the general manager position in Christian’s honor. Evil Angel will never have another GM. That seems like a fitting place to end. Thanks for your time. It was very generous. Thank you.