Some interesting internet porn statistics brought to you by Good Magazine (mildly NSFW)
Like piracy, porn has always been at the cutting edge. The adult entertainment industry has a long history of embracing new distribution systems and driving new consumer technologies – cable TV, pay-per view websites and DVDs took shape the way they did because of it. Which is why I was surprised to read this article in the FT last week about Vivid Video, one of pornâ€™s biggest players, filing a suit against the Adult Entertainment Broadcast Network, parent company of PornoTube. As the FT sees it, â€œthe adult entertainment industry has joined the battle between old and new media companies over copyright issues on the internet.â€
So here we are again â€“ same story told with a different cast of players. PornoTube is Napster, while Vivid and co. will star as the major record labels, we all know how this one ends. As Piers Fawkes put it over on PSFK: â€œDespite all the lessons that the content and entertainment sectors could have learned about the recent history of the music industry, very little action seems to have been taken. The movie industry appears to be re-enacting the great fight the music industry had with that invisible giant – the web.â€
I think both Piers and the FT shouldnâ€™t look at this case as a clear indication of where the whole business is going. Porn as an industry isnâ€™t embarking on a one-on-one fight with the web â€“ the big picture looks more like a freaky three-way. While Vivid is suing, others in the adult business are already competing with online piracy, and doing pretty well as a result. Take SugarDVD for example, the Netflix of porn, who earlier this year rolled out their video-on-demand (VOD) business which has been growing at a rate of 50% a month, which their competitors in the San Fernando Valley have been watching with interest.
The FT reports that â€œafter a decade of steady double-digit growth, sales of DVDs â€“ the industryâ€™s biggest money-maker â€“ fell 15 per cent in 2006 to $3.6bn, according to trade publication Adult Video News, leading to dramatic layoffs. Vivid and other companies have blamed the collapse on the widespread availability of free clips on the internet.â€ Instead of looking at who to blame for the decline in DVD sales, Vivid should be looking at the explosion of clips on the web as an opportunity to roll out a new business model. Piracy is a market signal, one porn companies stuck with declining DVD sales, not to mention mainstream movie studios, need to pay close attention to.
According to Sugar DVDâ€™s CEO â€œJaxâ€, who I spoke to earlier this year, the DVD business isnâ€™t dwindling because of piracy, itâ€™s because VOD is just a better experience. â€œItâ€™s about the customer experienceâ€ he says. â€œRentals are discreet, VOD even more so. Itâ€™s good value because you pay per minute, so you can turn it off or switch channels, its not like paying $30 for a DVD only to get home and find it wasnâ€™t what you were looking for. VOD means more variety, more movies, and we donâ€™t have to deal with the Post Office so the customer gets everything they are paying for. Our margins are better because there is no envelope.â€
The adult entertainment industry has always been in the business of pushing the envelope, and despite what Vivid are doing, it looks as though as a business it will continue to do so. The advantages of the VOD model are obvious, not just for porn but all kinds of movies. If porn can make VOD work in the next year or so, my guess is Hollywood wonâ€™t be far behind.