The Shape of things to come

[Vick]

Thinking this over for a while and in contrast to the opinions of people I respect
I think the downhill trend with regards to revenue generation will continue for 98% to 99% of the adult on line entertainment industry

Why .... simple

The bloom is off the rose so to speak - internet porn is no longer a novelty, everyone has seen it. Been there, done that got the Tee Shirt

No new content delivery systems - fancy way of saying everyone is still generating traffic the same way. Building more free sites to generate traffic is only adding to the deluge of free porn available. Is anyone doing anything new to generate visitors? .... not that I see and if they were I'm sure they're not talking about it

The restrains and challenges with Visa/MC are just starting. Some will look for ways to circumvent the new Visa regs, they will find them (Pick-a-Patsy) and that will force/encourage Visa to become even tighter and more demanding of high risk transactions. It's Visa's ball and game so they make the rules

Eventually it will come down to maybe 3 to 12 big companies providing adult on line entertainment. Those with deep enough pockets to take the hits from Acacia, Visa and whoever sees the industry as low lying fruit plus the savvy and desire to stay in the business

I don't see any of that changing and I don't see a rebound in the business - plus all the beer money types have mucked up the waters so bad - people who couldn't sell a cure for cancer to an oncology lab who have no business operating as a business and will settle for a few hundred or thousand a month

Reality sites have been a good twist to generate some hype and $, they show with original content and good promotion $ can still be made but there are many of those sites now and you really have to shout to be heard above the din of all the reality sites

TGP would be dead now if the gallery owners didn't adapt and sell gallery spaces to generate revenue from traffic that doesn't convert - still that is just prolonging the inevitable

There's more but this is enough to chew for now and it's 5:30AM here

So and sell shovels

[Carrie]

You sound like you're considering selling and moving on.

This industry moves at light speed, oftentimes setting the bar for the rest of the online world.
If adult were to stagnate, what would happen to the rest of the web?

I think you can hold out, I think I can hold out - the difference will be in who treats their members right and gives them what they promise on the tour. But traffic, ahh that's a different story - especially if the Copa laws come down and we can't even use dirty text.

It'll be interesting for sure... but I have faith that innovations will come. The sky is always falling for adult and somehow the innovations keep coming.
Have faith

[eatapeach]

Originally posted by Carrie@Oct 19 2003, 05:46 AM
This industry moves at light speed, oftentimes setting the bar for the rest of the online world.

...

It'll be interesting for sure... but I have faith that innovations will come. The sky is always falling for adult and somehow the innovations keep coming.
Have faith

i'm very fortunate that from time to time i get to chat with some extremely successful people in this business and many have mentioned a similar thought:

everyone is always saying there's no future in this business, but every year i do better than the year before.

i look at the future and see lots of opportunity.

i look at E! on cable and there's an hour long biography of Jenna Jameson, plus the parade of porn stars on other shows like Howard Stern. i see a growing acceptance of adult content in society in general.

broadband penetration in the US is still quite low, so as broadband spreads demand for high quality video and interactive content will grow.

i see that any DirectTV subscriber can now get several hardcore channels now, but all the videos being shown are "mainstream" adult, no niches. somebody is going to want that niche content, and until demand grows enough to make satellite bandwidth profitable broadband internet will be the delivery vehicle.

there will be new billing solutions coming along. i personally think micro-billing or pay-per-use is going to be huge in the future. why charge for a month when you can charge by the minute/hour? nobody seems to be talking about this, but i see evidence that it's coming, at least outside the adult internet.

these new billing systems will allow the huge percentage of the world that don't use credit cards to become paying customers. the US economy is huge, but the population is only 5% of the world population. while the US economy has slowed other countries' economies are growing.

things might look kind of bleak in the present, but the future looks quite bright

[KevinG]

Hey Vick - Stop trying to cheer us up. It won't work. :P

Are you sure you want to quit the porn biz and become a motivational speaker?

Kidding aside, both you and eatapeach have some valid points. There are absolutley way more challenges than ever; patent suits, Visa, the political climate, over-saturation of the same old porn, etc.

A large budget makes lots of things easier, but it takes way more than that for success. The people that will succeed and experience longevity in this business are the ones that treat it like a business.

I am hard at work on my 2004 marketing plan and business plan. It's one of the biggest pain-in-the-ass things I have to do. However, it forces me to look outside the little world of Internet porn and see some of the same things eatapeach mentioned.

Carrie is right that we need to provide better value to the consumer as well. Exclusive content is becoming more important too.

Summing up, there's more challenges that will help get rid of some of the less committed, less professional operators and when the dust settles the best stuff will be left and the industry will move onwards and upwards.

[ulfie]

Vick, good points. There used to be hundreds of automobile manufactures in the US. How many are left? Try to start an airline in this country. There's a new startup here every year and USAirways puts them out of business within a year because of their sheer economic might. Of course the big problem is that it costs a lot of money to build an auto plant or an airline. Webmasters get free hosting, free content, free traffic, free how-to guides, etc. As long as there are no barriers to entry to this biz and someone can make a couple hundred a month there will always be a steady stream of people doing it. That's the nature of the beast. Free hosts, tgp's, etc. aren't going to die anytime soon so you need to learn to use them. You can make the traffic convert. It's not the best but why tilt at windmills?

Eatapeach, webfather was preaching years ago that where the online adult industry screwed up was by not following the 900 industry and making all online porn pay per view rather than pay by month. I tend to agree with him on that. I think it's too late now though except for foreign surfers that can't use their CC's online. If no one can use their CC online it would be a different story but that's not gonna happen soon.

[Vick]

Actually no one has addressed any reasons why adult on line revenue generation won't continue to decline for the majority

No solid reasons why there will be a comeback so to speak

Carrie - not yet, I'm an anomaly in this business. Could be one of the last small guys standing - due to building long term relationships with .... customers
For years I've provided what many talk about, good service at a fair price. They keep coming back, while many have to scramble for new customers I keep the old and add new. Personality and service go a long way. My first full time employee all those years ago ...... customer service
I'm not sure if Adult Sets the bar anymore, 5 years ago - yes, today it's much more widespread and I think adult is stagnate (I'm guilty as any)


eatapeach - not saying this is your situation but for example
If you make 50K last year and make 60K this year that's nice but ...... not enough
Who does Jenna Jameson being on E for an hour benefit besides Jenna? Doesn't put money in my pocket
What new billing solutions???
Take a look at the majority of your sales, I know the majority of mine come from the USA and USA buyers are Credit Card Buyers
If Visa tells us they won't process high risk tomorrow do you have any ideas on a viable solution?
Yes there would still be buyers who are willing to pay for porn but the more steps to payment the fewer who will jump through the hoops
You hint at if everyone has broadand they will start buying porn, that remains to be seen. In fact I've had cable modem for 6 years and most everyone I know has DSL or better


KevinG - funny this is I have been a motivational speaker (and a speaker at the University of Maryland)

hard at work on my 2004 marketing plan and business plan

one of the most important and best things anyone/company can do
Yes there will be unforeseen twists and turns but having those plans helps to guide and measure progress

Ulfie - you know it!


Part of what I'm getting at is I keep hearing everything will improve but no concrete reasons

What's going to change?

You think the beer money/GFY crowd is going to dry up? and then things automagically get better? (new word "automagically")

Is there some magic pixie dust due to fall?

Who's next to nip at our heels after Acacia?

What happens if Visa/MC says nope not anymore, or 10K or 100K a year per site to process with a 6 month net payment? Plus fines of $250 per chargeback over 10 per month? - Not saying that would happen but it's their game- they make the rules

What happens if laws are passed in the USA and UK to prohibit UCE? How long until those governments figure out the way to stop UCE is at the processing level - then you have some people who were making $$$ looking at how to keep that $$$ coming in


It's not doom and gloom, it's a real look at a challenging situation

[Flesh_Merchant]

Hello all!
I just had to throw my 2 cents in on this situation....

After being in the adult industry for more than a decade and a half I would honestly have to agree that things for the industry as a whole doesn't look bright BUT that doesn't mean that those who are willing to put in the time and work will not be able to continue making a good living in the industry.

With the current situation regarding Acacia and the CC processing companies I can't help but feel that the adult industry as a whole is now been extorted....Acacia asking for a percentage of total gross sales even when some or a good portion of the revenue generated may not even remotely involve their "patents" and the fact that Visa/MC seem to feel that ALL adult entertainment businesses are "high risk" from a business perspective just doesn't even make sense.

I firmly believe that new advances in technology will help (I didn't say save) the adult internet industry and if I had to put together a list of advances that will help the adult industry in the coming months it would go something like this (in no particular order):

Digital Rights Management- A lot of adult companies still have yet to fully make the most of this technology in their sales and marketing efforts.

P2P Content Distribution- We've been looking at P2P content distribution using private P2P networks over the last year or so and once some of the current solutions available mature a bit I think that many companies will opt to implement these solutions to save bandwidth costs when delivering content to site members, etc.

Wireless Porn- As the technology used in the growing number of handheld and mobile devices continues to move forward we will without a doubt see more content being delivered this way not only in Europe but here in the US as well.


The future isn't bright but the companies who invest the time and money to produce quality products and make the most of technological advances available will surely survive the storm.

[slavdogg]

Flesh_Merchant, excelent post

you beat me to it
i was gonna say DRM as well

[Paul Markham]

WOE IS ME, THE END IS NIGH

Well get off the ship before it sinks.

Internet porn is here to stay, what is gone sre the days of "Put up any old crap, throw 10,000 clicks a day at it and plan your retirement. Today the professional has moved in and with more surfers spending online, so if you are not getting a slice of it question why.

One of the reasons could be that the surfer is more sophisticated than two years ago. The increase has come at the loss from the two established porn providers, magazines and videos. These buyers were used to a standard of porn that unfortunately some sites do not provide. When a buyer has more experience using a product than a supplier, that supplier is going to have problems.

Someone said the key is exclusive, well I'm afraid that is 40% of the key. The key is quality, be it amateur porn or Penthouse it has to be good. Amateur has to look like the models were doing it for fun and not like the local stripper/crack whore earning $100. And Penthouse end has to look like someone spent more than $100 on the setting.

The problem is too many think what worked yesterday will work tomorrow and that is not true in any business especially the Internet. Unless you operate a dialer system you can no longer expect a member to be happy with a flash tour and little behind it. Today sites need to be put together with care, attention and love, not just thrown up because the surfer will pay $30 if you give him 100,000 pictures from a blow out sale you bought last year.

Assume prospective members have been a joined a site before they found your site, in fact assume they have been members of many sites. Assume he has been jerking off to porn for ten years and to the one niche. Treat him with respect not as just another loser and you may find your income improving.

We’ve only been selling content on the Internet for two years, but in that time trebled our companies turn over and see sales improving all the time. But then I’ve been shooting porn 25 years, sold to most of the teeny porn mags and that makes the difference.

[Carrie]

Originally posted by Vick@Oct 19 2003, 09:45 PM
Actually no one has addressed any reasons why adult on line revenue generation won't continue to decline for the majority

That is the main reason *why* I'm happy, in a way.
I don't think it will continue to improve for the majority. The crowd in this business is thick and it's hard to be heard above the din when you're trying to attract a surfer.

Take away the crowd, and what happens? Shades of '97-'99, I'm thinking.

I've sent you signups that have rebilled for what seems like forever.
I have a few other sponsors where there is almost *never* a rebill.
Methinks when the dust settles your site will still be here and theirs won't - simple culling of the herd.

Look, I'm not afraid to name names. I went into Lightspeed18 last week and sat there wondering if I should even try to count all of the upsell plugins. I am hoping it's just because it's Steve's generic site and that his other sites are more focused on giving the customer what he saw on the tour. I know they shoot a bunch of exclusive content; I was just left wondering where it was. I still look at member's areas as if I were a surfer and to me, that member's area was really lacking.
People tell me the inside of Silvercash's sites are even worse, and Silvercash is one of my best sponsors - of course I only do PPS with them.

I got SO mad at Brad Shaw a year ago when he said on GFY that anyone who wants to get into this business should have to pay $5k just to enter. My thinking was, that puts 99% of the amateur girls out on the street. Plus it takes smaller would-be site owners who *can* deliver quality stuff and tosses them out, too. But I see where Brad is coming from. Anyone can throw up a paysite and water down the market, piss off the members they do get, and turn those members off of ever signing up for porn again. It got a little harder when Visa brought down the $750 fee and $100 - $500 business registration costs... Brad is getting his wish.

My own wishlist to make things better will never happen. Sponsor programs have grown too dependant on the webmasters to bring them traffic and as such, are groveling at the feet of the webmasters - whether they've proven themselves able to send signups or not. So they end up doing everything *for* the webmaster, who in turn never learns to sell, never learns to actually do the work, never even has a reason to refine his technique and get better. It reminds me of an old commercial about a guy being on cocaine. He buys coke so he can work harder and longer. So that he can buy more coke. So that he can work even more. So that he can buy more coke. So that he... it's a never-ending circle.

The sponsors give *everything* to the webmasters so they can get more of the traffic that's out there. By doing so, they make the traffic situation worse. So they give the webmasters even more. And make the situation worse. Lather, rinse, repeat.

In the end all you can do is focus on your own business and not worry about the majority. Sure, some of your friends' businesses might end up being casualties, but business is business. Customer service has *always* been key.
Wal-mart moves into a small town and within 6 months, most of the mom and pop stores are gone. But some survive and get even stronger, even with that goliath supercenter right down the street; even though they can't compete with those bulk-bought prices. What's the difference between the ones that survive and the ones that end up working for Wal-Mart?
They don't find a new way to charge the customer, they don't form co-ops with the other businesses so they can have more buying power... they keep and strengthen their focus on the customer and use *that* to set themselves apart.

Anyway I'm rambling and this looks like a russian novel already, even though I'd love to keep going. It's too early in the morning for people to read long posts like this

[spazlabz]

This thread is the reason I have registered and continue to browse and post on Oprano.

spaz

[Carrie]

I wanted to address some specifics.

P2P looks promising, but it is far too easy to spam. I think it's *already* overloaded with spam; folks looking for certain content can't find it because everyone and their brother have put in those keywords for the content they've got up.
-Some would say this is a good thing, it'll frustrate the surfer into buying a membership and giving up the free porn routine, but I disagree. If the surfer can't find what he's looking for, what makes you think he'll sign up to a generic site that still doesn't have what he's looking for?

Then of course you've got all of the regulations coming down for P2P - not that I think it will ever go away; you can't kill open source. But it does squash each "big" network as it rises to the top and you're left with the smaller ones... at least until *they* get to the top

DRM - also promising but the pricing structure right now puts it out of the hands of most all but the big guys. Hopefully the pricing will come down soon as most technology does come down in pricing after the first year or so.

PPV and VOD - definitely an important part of the future, unfortunately it's hard to find a processor that can handle this type of thing. If you go with your own merchant account you can do it, but then you're getting dinged like crazy with per-transaction fees.

If Visa goes away... so what? Sure, it's made things a lot easier, but online porn was around before online cc processors. Snail-mail checks, online checks, other cc companies, token systems and their ilk, pre-paid subscription cards... the solutions are out there, it's just that folks aren't using them. CC acceptance is too easy to make them bother looking for other solutions. But no matter what, sufers will find a way to pay for porn if you simply offer them a way to do it.

I think generating your own traffic - whether on your own or with your own in-house webmasters or small group of hand-picked affiliates - will be a big plus.

I agree with Vick re: broadband. I've also had cable since '97 and was managing a national DSL installation company in '99... the high speed surfers have been there for years and there has been no overwhelming demand for content that takes advantage of these connections.
I think what most people forget regarding high-speed is that it's still expensive to the *normal* surfer. Sure, we can afford $30-$50 per month for high speed... but your *normal* surfer CANNOT. If they *do* spend the extra money to treat themselves to a fast connection, they certainly won't have money left over to pay a $30/mo porn membership. $10? Probably. $20? Not likely. $30? Nope.
Get out of the thinking of what *you* can afford and what your computer can do and think about the majority of your surfers... it becomes a lot more clear. Pretty flash, broadband content, etc etc --- KISS, unless you want to cater only to the rich surfers. No harm in that for sure, but you're leaving money on the table.

Acacia - yes, there are two companies waiting in the wings to see how those patent cases unfold. I just wish things would move along a bit more quickly and we could have some damn court dates set. The longer we keep waiting on the court dates, the more opportunity Acacia has to send out their packets and spread their disinformation.

I am waiting - drooling, nearly - for SMS to make its way to the US. It's widely used in Europe for everything from online purchases to getting a Pepsi out of a machine in the middle of nowhere. Why the hell don't we have it yet? You want to talk convenience? It's the ultimate in convenience. Plus it nullifies chargebacks as there is a only a charge if the *customer* initiates it from his phone which is all fully trackable.

Wireless porn - eventually, but still not yet. Yes, in non-US countries (like SMS), but not the US yet. Hell, over a year and a half ago Aga was showing me his cool-ass phone that could take pictures and email them. Those are just NOW exploding onto the scene in the US along with video phones. We're so frigging behind in everything. But before the demand, you have to have at least moderate saturation, and the US isn't even close to that.

US regulations - yeah, this will hurt, but there are still ways to be in compliance and make a sale. Some are looking forward to it, as it will possibly force a more softcore landscape that only leaves the surfer the choice of signing up if he wants to see hardcore. If that's the case, bring it on! But on the other hand, there are plenty of servers in the Netherlands where anything goes and the US regulations won't force the free hardcore behind "pay first" doors.

As for myself, I'm focusing on niche and leaving the generic megaporn to the hundreds of thousands who are willing to fight each other for it. I'm focusing on retention and upsells that add value rather than force payment for what was promised to be included in the cost of membership. As an affiliate, I have always had lower traffic numbers, but my traffic converts and my ratios are higher. Webmasters who don't will soon find themselves out on the street, not even able to drudge up beer money.

And if only the sponsors would stop giving the webmasters everything for free... but that's an hour-long rant all in itself...

[eatapeach]

Originally posted by Carrie@Oct 20 2003, 02:46 AM
I am waiting - drooling, nearly - for SMS to make its way to the US. It's widely used in Europe for everything from online purchases to getting a Pepsi out of a machine in the middle of nowhere. Why the hell don't we have it yet?

in the summer of 1999 i was living in vancouver and enjoying life selling gin and tonics at the nude beach.

one day i picked up a business magazine and read about a new wireless technology called "bluetooth" that would allow you to use a cellphone to pay for purchases without using cash.

fast forward to january 2000 and i'm sitting in a classroom in kansas city learning how to program java so that i can write applications for bluetooth enabled devices.

lucky for me i learned about porn websites while i was waiting for bluetooth

[nlphoto]

Originally posted by ulfie@Oct 19 2003, 12:12 PM
Try to start an airline in this country. There's a new startup here every year and USAirways puts them out of business within a year because of their sheer economic might.

was born in the "burgh"...

STILL amazes me what became of two "off the radar" regional airlines...

Allegheny and Mohawk...

[Carrie]

Originally posted by eatapeach+Oct 20 2003, 02:20 PM-->