Before you start to raise your eyebrows, shake your head and start your eyes shifting left, right and left again, I am going to puncture your presuppositions by stating that I am actually looking at their business models.
The porn industry has always been ahead of the wave when it comes to the adoption of new technology. As an industry they, automatically, overcome two of the highest hurdles in business: They have a product for which there is, arguably, a need and they have a very targeted, highly motivated clientele willing to spend but spoiled for choice. This makes porn the perfect lab for anything new which can increase customer loyalty and customer spending.
The porn industry, for example, pioneered online subscriptions, affiliate marketing, paid web-conferencing, social networking, and user-created content. They were amongst the first to experiment with HD TV, shooting high-definition film and pioneering new make-up techniques in order to deal with the imperfections shown on camera as a result. When 3-D came along and everyone was busy debating, the porn industry was busy shooting.
So when it comes to learning from their practices many a business would do well to study what they do and try and emulate it (and I am still talking about business models here). For purely research purposes I reviewed more than a dozen different porn labels and before we get into judgments here it’s good to pause and review the size of the industry. According to figures published by Forbes magazine in the United States
* Every second - $3,075.64 is being spent on pornography.
* Every second - 28,258 internet users are viewing pornography.
* Every second - 372 internet users are typing adult search terms into search engines.
* Every 39 minutes: a new pornographic video is being created in the United States.
The statistics speak for themselves but so does the playing field (so to speak) they are all in. This is an industry where clients lose interest in anything which remains static. It is an industry where freshness and novelty can draw away your most loyal customers and where you have new players coming in from practically every quarter including total amateurs and enthusiasts giving away the product for free.
So when you manage to dominate it and make serious bucks from it the odds are that your business model is no flake.
Trying to maintain this post from descending into salacious details I will, for the sake of my analysis, use the word ‘product’ when I mean porn and employ, wherever possible, strictly business terms. I really want you to focus on the business model here.
Vivid Entertainment – the world’s largest adult content producer
Annual Worth: $100 million
Unique selling position: highest paying porn employer with the best working conditions
Lesson: Uncompromising quality
Vivid have made a name for themselves by attracting and developing some of the best-looking girls in the industry. Their so-called ‘Vivid-girls’ allegedly enjoy better contracts and working conditions than any other porn studio. Their growth is the direct result of the status of their stars who have crowd-drawing power of their own.
The Vivid formula is simple enough to understand. Produce the best quality product you can. Make it available through every available channel you can (in their case DVD, cable and internet) and then let the magic of your product’s quality work on your crowd.
Just to drive the point home it is perhaps worth remembering that most of those who consume Vivid porn could not careless about the label – they just go for the product which is head and shoulders above its competitors.
SP-Company: one of the most prolific companies in the adult business
Annual Worth: $50 million
Unique selling position: high quality product at low cost.
Lesson: Increase profits by lowering costs but not the quality. In other words, add value.
SP-Company has managed to undercut its much larger, slicker competitors by outsourcing its production to a locale which does not compromise its quality. Most of the SP-Company videos are shot in St. Petersburg or Moscow.
The locale provides high-quality Caucasian girls at a very low cost when compared to their western counterparts. Unlike many of its western competitors SP-Company has won no real industry awards, yet its annual bottom line speaks for itself.
Wicked Pictures: One of the most innovative companies in the industry.
Annual Worth: Est. $75 million
Unique selling position: establish yourself as a top-end player and diversify.
Lesson: Increase market share through increased product offerings aimed at varying ends of the target market and create profitable partnerships.
Wicked is the studio which brought Jena Jameson to the masses eleven years ago and in 2008 ended up with 71 adult industry awards for the year. Despite that it has never been able to compete with Vivid in terms of quality but it has managed to diversify by creating ‘reality sex’ series and getting some of its top performers to put their names to a variety of sex toys produced under license through the California Exotic Novelties company.
Of all the adult industry companies Wicked Pictures is probably the only one with any kind of brand recognition, mainly thanks to the memorability of its name and its aptness in terms of the industry the company is in. In their own way each of the three leaders provide us with a valuable lesson about making it in a tough industry.
So next time you hear anything which has to do with porn, before you make any judgment (or even if you do not) remember that those who are active in it are amongst the most astute business people on the planet.
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