Tuesday, November 20, 2007

Forget Sub-Prime: The Real Action in E-Bankruptcy may be the Struggling Adult Industry

A recent article in Conde' Nast Portfolio.com, written by Claire Hoffman details the financial struggles of the heavy-hitters in the adult industry, such as Vivid Entertainment, as a result of the growing phenomenon of free Internet pornography. According to the article, the adult industry, which hit its peak with the advent of the VCR and later the DVD, is now facing spiraling losses from sites such as YouPorn (the illicit cousin of YouTube), who are giving away what companies like Vivid are accustomed to selling.

One particular focus of the article, and lord knows you have all been reading this far just for the article, is the see-saw dilemma faced by content providers like Vivid faced by the "on-line freebies" of YouPorn type competition. On the one hand, free content sites can present a demonstrable threat to the bottom line of a more traditional content provider. To shore up these losses, or along the lines of an "if you can't beat them, join them" strategy, free content, user-generated content, and social networking sites have been gobbled up by the highest bidder. The real trick is figuring out how to monetize a site that users quickly become accustomed to as free. The Portfolio article indicates that YouPorn traffic was likely to pull in 15 million unique hits in the month of May, 2007 (surely E-Everything is just as provocative...?), resulting in a potential market that is just too damned big to ignore. Even as the current business model evaporates just as quickly as it developed, simply purchasing, or weathering the onslaught of the "free peeks" by YouPorn won't save the traditional content provider because there already exist other free sites that likely are growing almost as quickly as YouPorn; and in the E-Everything age, there is an entire generation of programmers sitting in their Mom's basement right now working on the next generation or application of technology likely to unsettle existing industry players.

While far less intriguing than the adult industry, technology is roiling media and content providers nearly across the board. One need only watch a Letterman re-run tonight, given the Hollywood Writer's strike (Power Brothers!) to see the effects.

Long time readers (thanks Mom) will recall that all I wanted for Christmas last year was the new Sony Reader, which is essentially an electronic platform for books old and new. Now that Harry Potter is married with children, speculation is running high that the publishing industry is coming out of remission and may be back on death's doorstep. If I can just get my novels finished and named as selections for Oprah's Book Club before she finally packs it in, life will be grand. In the mean time, the Sony Reader chugs along in a bit of obscurity. E-books are cheap and quickly downloaded, and more and more books are becoming available for free through Project Gutenberg. Given the prohibitive price of the Reader, and the relative ready access to e-books on the cheap, the publishing industry may indeed have something to fear. Why would I spend $6 for a cheap paperback classic at Barnes and Noble when I could have the same thing for free on my Blackberry?

The most dramatic battles may just be opening in the music industry. After years of falling CD sales (oddly, occurring in the same years that the music industry has produced a great deal of aural crap), the artists are starting to figure out for themselves how to cut out the middleman and go straight to their market, even employing market forces to set the value of the end product. The recent free release of Radiohead's latest album may produce the death knell for the music industry. For my own part, this is the same industry that, nearly from its inception, ripped of and exploited an entire generation of Blues musicians, so they won't find much sympathy in these quarters.

Cold weather is coming to North Texas. I believe I will hunker down with a tub of popcorn, download some free content, and ponder the solvency of the entertainment media...

No comments: