A major media segment has indicated that the Internet has pulled down a significant portion of their profits through the proliferation of free content. The net effect of amateurs supplying content where the professionals had a near-monopoly has the industry contemplating pay-for-play Web presences, focusing on Web-exclusive content. The long-term outlook for this segment looks bleak, as its players try to revamp their infrastructure to meet tougher profitability conditions than they have faced in their entire history.
Is this the newspaper industry? Weekly news magazines? Not exactly:
"Free porn" just might be the two most exciting or frightening words in the English language, depending on your point of view.
And they're especially threatening to the adult film industry, which has made billions through the sales of DVDs, videos, and sex products.
After two decades of phenomenal growth in profits, the porn industry is facing some major challenges as its X-rated DVDs and Internet content lose out to free videos and photos distributed by amateurs on the Web.
Sales and rentals of adult DVDs fell 30 percent in the last two years and sales of Internet-based porn, while still growing, have started to plateau, according to industry estimates.
"The DVD market is a battle that we're losing," says Drew Rosenfeld, the creative director of Hustler Video Group. "Looking back historically, we're at less than half in numbers. Even a line like Barely Legal, which is our hero brand, used to be off the charts and it's gone down to a third of what it used to be a few years ago."
The porn industry has discovered an old truth passed down from mothers to daughters since time immemorial. They warned that no one buys a cow while they get the milk for free. Pornographers who helped transform the Internet into a cornucopia of pornography and leapt towards broadband as the industry's biggest distribution channel found out that the new technology is a double-edged sword.
In many ways, this mirrors the problems of the traditional media. When everyone can become their own publisher, then content explodes -- and potential customers suddenly have a lot of choices, much of it free. Newspapers and other traditional media have an advantge in that they create content outside of the reach of almost all of the New Media pioneers, hiring reporters around the nation and around the world. That creates a bright-line separation between them and the bloggers and independent journalists, even if the quality and the bias leave the product open for well-deserved criticism.
Quality counts, of course, in the blogosphere and on places like YouTube, but production values have never been exactly the porn industry's forte. They have spent decades turning out dull, repetitive crap in bright packages. It should come as no surprise that their customers can turn out equally dull, repetitive crap, and for free.
This puts the porn industry in a tough position. Having created the demand for prurience on the Web, they have undermined their position in other distribution channels, such as adult book stores and mail-order. None of the other channels have the impulse access that the Web does, and they have too much overhead to compete with the freebies and the small-business model operations that have kneecapped them. They may have helped their own industry into the grave, thanks to their former customers who feel empowered to give the milk away for free.