In an industry where very little is taboo, piracy is a dirty six-letter word for many businesses in the adult entertainment sector. Once credited for leading the way in making money from the Internet, the adult entertainment industry is bleeding profits due to the flood of sites pirating their videos, according to industry experts.
Innovators in the market are now looking to cloud services, video conferencing and mobile technology to recoup their losses and harden profits.
Allison Vivas, president of Pink Visual, blames the ills of the industry to the proliferation of “tube sites” – adult Web sites that operate on YouTube-style model relying on user-uploaded content. The “tubes” wreak havoc on traditional revenue models because they generally dish out free and full-length pirated videos from adult outfits, said Vivas who spoke on a discussion panel entitled How Adult Entertainment is reshaping the Internet and Vice Versa at the recently concluded Mesh Conference in Toronto.
Related stories
Tech piracy can fuel innovation, says former pirate radio DJ
Red light sites give green light to IT innovation
Before the tubes, online porn was a very lucrative business. Very little money and coding knowledge was needed to set up a porn site with links to other adult web pages and through the magic of the Internet everyone got in on the action.
The traditional online model for the adult industry has consisted of paid-for sites and a network of affiliates driving traffic to those harbours. Like flashing lights in a red light district, sites able to direct paying traffic successfully receive a cut of the profits, and stand to make even more if users sign up for premium content. Over the years, the text links were replaced by thumbnail gallery pages (TGPs) and movie gallery pages (typically consisting of eight-second porn videos). The visual come on of the galleries proved to be a great traffic converter as more surfers tended to sign up as paying members for the sites.
A year after YouTube launched, the adult entertainment industry was quick to pounce on the technology and release porn tubes. The tubes offered up free content. Some of the content were licenced at minimal costs from older companies or pirated from paid sites. The tubes made money by keeping surfers on the site, selling online ads and marketing other content which were houses behind a paywall. The lure of free videos that could go on for more than 30 minutes led to surfers leaving the gallery-driven model in droves. According to the New York Magazine some porn sites loss anywhere from 50 to 80 per cent of their revenues. Live-cam sites and plummeting DVD sales also contributed to the slump.
When traditional porn companies complained the adult tubes, much like YouTube had, sought refuge in the Digital Millennium Act provision that absolved them of the responsibility from user-uploaded content.
Napster scenario
“Business has not been what it was in the last 10 years,” Vivas says.
It’s difficult to compete when you spend thousands of dollars to create content and your competitor is ripping it off and giving it away for free, she said.
Peter Nowak, a technology journalist and author of the book Sex, Bombs and Burgers, says the scenario brings to mind the game-changing impact file sharing and peer-to-peer file sharing sites had on well-entrenched industries.
“Ironically the tube sites are much like what Napster was to the music and movie industry,” he said.
One painful difference is that while industry organizations and legislators were quick to defend the music labels and movie makers, there’s hardly any rescuers for the adult entertainment industry. “The industry is still seen as something in the margins of mainstream,” Nowak says.
Porn gets geeky
But many companies like Vivas’ Pink Visual are not about to give up and are instead looking to technology once more to save their hides. Indeed, the banner on Pink Visual’s Web site and Vivas’ calling card reads: “We innovate, you masturbate.“
While Pink Visual’s production studio is in Van Nuys, Vivas’ office is in Phoenix, Ariz. That’s not so strange, she said, because since the advent of the Internet many major porn companies have branched out from California to places such as Toronto, Montreal, Miami and Phoenix.
There’s also more focus now on the backend of the business, said Vivas. “The majority of us are looking at codes and statistics and financial numbers and not at content. We’ve been in existence for 10 years and last year was the first time a porn model came to the office.”
Vivas said many businesses were caught off guard by the explosion of tube sites, but the companies are now focusing more on digital rights and copyrights of their content.
While there’s action on the litigation front, companies are also exploring emerging technologies to develop new products for consumers. For example, the company has developed what it claims to be the first optimized iPad porn site. Pink Visual also developed an app for viewing adult content on Android devices and well as 3D clips for the iPhone.
Mobile devices such as smartphones and tablets lend themselves to viewing videos, according to Vivas.
“Porn videos are something that you’re not likely going to be able to watch at home on the TV because your kids or spouse might see them,” she says. But the smaller tablet of smartphone screen can be accessed anytime, anywhere.
The company is also looking to technology typically employed by large enterprises for corporate communications and data storage.
Recently Pink Visual announced a cloud service offering called PVLocker.com. The company describes it as a “cloud-based cross-platform content distribution system” and says it enables the use of videoconferencing technology to “allow our fans to interact with our performing talent like never before.”
Vivas said her company is also looking at providing cloud storage for customers.
“Think about customers who want to store their porn content. You don’t want to keep in DVDs or as files in your computer because kids or someone else might stumble upon them,” she said. “We can offer cloud storage so that content is out of sight but available to you when you want it.”
Patchen Barss, a science and technology writer who authored the book Erotic Engine: How pornography powered mass communication from Guttenberg to Google, said innovation has always been in the DNA of the porn industry.
One of the first individuals to make money out of the Internet was a former stripper, according to Barss.
Danni Ashe set up her Web site Danni’s Hard Drive back in 1995 when many companies were still trying to figure out how to “monetize the ‘net.” The site primarily made photos of Ashe more easily available on the Web. She sold the site to Penthouse Media group in 2006 for $3 million, said Barss.
“Businesses in the adult entertainment industry were among the first firms to use streaming video, e-commerce models, online security and digital rights management as they are employed today by mainstream companies,” he said.
Nestor Arellano is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blogs on ITBusiness.ca Blogs and join the ITBusiness.ca Facebook Page.
