Dirty Economic Indicator of the Month

Porn_070608_ms
Of all the indicators I track, this is the one that I find most concerning amusing:

"Economists are citing some dire
portents of a recession these days, but they’ve missed one indicator I find
especially disturbing: The porn business has suddenly gone flaccid.

The drop in porn rentals and sales is worrisome on several fronts: Till now,
porn has been a recession-proof business. Further, with the country already in a
dispirited mood, the fact that porn has gone limp may indicate a true plunge in
consumer confidence.

DVD porn is down between 10% and 30%, depending on which nook and cranny of
the business you scrutinize. Joy King, executive vice president of Wicked
Pictures, and a smart analyst of the business, says the smallest dropoff is in
"couples-friendly porn" — films that embrace something of a storyline. Women
account for roughly half of this audience, making their purchases in lingerie
boutiques and toy stores (no, not kiddie toys)."

I suspect that the various free porn sites (You Porn, Tiava, etc.) are competing with for pay triple X DVD entertainment sales.

>

Thanks, Gene!

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Source:
Hard times ahead as porn goes soft?
Apatow, Segel look below the belt for laughs
Peter Bart
Variety, Fri., Apr. 18, 2008, 3:15pm PT
http://www.variety.com/VR1117984246.html

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What's been said:

Discussions found on the web:
  1. wunsacon commented on Apr 23

    And after all the DVD’s I’ve been buying!

    Favorite parody title (from year’s ago, never watched it):

    Saving Ryan’s Privates

  2. schaz commented on Apr 23

    Tiava?

    That’s a new one to me!

  3. Ross commented on Apr 23

    Porn joke pile on time!

    Sign above the ‘service provider’s bed’

    “The customer always comes (sp) first”

    Service provider? Gee that’s what my AT&T Yahoo internet people call themselves. Now we know!

    Wonder if this has anything to do with Spitzer.

  4. Jonathan commented on Apr 23

    Your readers would appreciate if you post the free sites by full URL….for auditing purposes of course!

  5. Rob Dawg commented on Apr 23

    DVD porn is down between 10% and 30%, depending on which nook and cranny of the business you scrutinize.

    They are building a special circle in Hell as we speak for the author of this comment.

    N.B. It is only “dirty” if you are doing it right.

  6. Mich(^IXIC1881) commented on Apr 23

    Tiava?? Hmmm, I guess I will have to catch up with your individual posts when you post the linkfest on Sunday.

    Later,
    Mich

  7. Sherman McCoy commented on Apr 23

    This is a narrative that you shouldn’t buy into. The porn that is not selling is the same-old boring surgically-enhanced stuff, sold through boring old impotent 80’s-style VHS-era retail outlets.

    The innovative and evolved stuff (AbbyWinters, KINK.com, smaller niche producers, etc…) is selling like crazy. These producers are always coming up with new ideas and new ways to penetrate the market. And they sell by-and-large over the Internet, of course.

    Imagine that the mainstream Hollywood studios had been movies with the same type of cast and same type of storyline for 20 years, all the while selling in the same type of scuzzy retail shops. And then sales drop off. Would you say that the movie industry is experiencing a slump? No, you wouldn’t. You’d say that they f–king lazy and stupid, which most porn production shops definitely are.

  8. stuart commented on Apr 23

    Here’s some x-rated financial porn… this is not the stuff that makes up a healthy central bank and should be restricted.. unreal.

    Fed to auction $75 billion in Treasuries to ease credit woes
    By JEANNINE AVERSA – 2 hours ago

    WASHINGTON (AP) — The Federal Reserve announced Wednesday it will auction an additional $75 billion in super-safe Treasury securities to big investment firms, part of an ongoing effort to help strained credit markets.

    The auction — the fifth of its kind — will be held Thursday.

    In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities, as collateral.

    In the four auctions held so far, the Fed has provided close to $158.95 billion worth of the Treasury securities to investment firms.

    The auction program is intended to help financial institutions and the troubled mortgage market.

  9. Jon H commented on Apr 23

    Oh no! Trekkie Monster’s whole portfolio is in porn!

  10. Winston Munn commented on Apr 23

    Quote Stuart, “In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities, as collateral.

    In the four auctions held so far, the Fed has provided close to $158.95 billion worth of the Treasury securities to investment firms.” End Quote.

    Sorry Stuart, but this is beyond simple pornography – this is clearly an obscenity.

  11. Florida commented on Apr 23

    Oh, I remember the hilarious feedback Barry got the last time he posted about porn. I can’t wait to see what he gets this time around!

    :grabspopcorn:

  12. Barry Ritholtz commented on Apr 23

    You Porn!

    That was about a year ago, and it led to Felix Salmon concluding that XXX% of my traffic was porn related.

    For few weeks, the You porn post was 3% of traffic, but it quickly faded. Its now the 27th most popular link on the blog.

    Still, I haven’t done a post in quite some time on the topic!

  13. VennData commented on Apr 23

    This is a indicator that assures me we’re going to get G-DPed.

  14. stuart commented on Apr 23

    Yup, nice catch Winston. thanks.

    How apropoe to disclose it here on this post, cause we’re all getting royalty screwed.

  15. bdg123 commented on Apr 23

    I actually saw a case study on how Porn 2.0 has destroyed the business model of pay-for-porn.

    http://en.wikipedia.org/wiki/Porn_2.0

    Portfolio magazine also had an article about how free porn is killing pfp.

    Schumpeter lives.

  16. Luke commented on Apr 23

    The internet is absolutely killing the mainstream porn market. Porn experts believe that porn dvd’s will not be around in three years. The free content is mainly the killer, but there are a few pay sites that are shooting out the lights.

    The following is from http://www.lukeisback.com, a website that follows the business side of porn. The site is NSFW, so be sure to disclose that if you link. (It is a free site).

    April 11, 2008, 1:09 PM

    Porn Valley Is Doomed

    By LUKE IS BACK | Comments (99)

    Very succinct and clear article from The Huffington Post on why the business of content is dying.

    “Content is king,” many people believe, meaning that films, television shows, music, news and information are more profitable assets than the technology used to deliver them. But there’s an older, cautionary aphorism that applies as well: “Uneasy lies the head that wears the crown.” Content may be king, but, ironically, its perceived value today is being driven towards zero. In the eyes of consumers, content is becoming a commodity — more a commoner than a king.

    The more I talk to traditional DVD-centric porners, the more I am concerned that their children will not have the opportunity to attend Ivy League schools and receive BMWs for their 17th birthdays. As the DVD business atrophies at a dizzying pace (3-4 years seems to be the agreed upon life expectancy for DVD as a viable business model), these old school smut peddlers are scrambling to evolve. Blu-Ray and any other high-definition physical model is going to be an afterthought. A never-ran. These companies continue to cash their $5000 AEBN royalty checks, a model in which they are getting paid 15-20% of gross. Of course in the process, they are teaching their customer that spending $35 on a DVD is absurd.

    The smart ones partnered with web-savvy companies years ago, or spawned their own competent web divisions. New Sensations/Digital Sin has done it as well as any. Their affiliate program, NSCash, is strong and well-supported within the web industry. Others have tried. Wicked, Vivid, Evil Angel, Anabolic, Shane’s World have all started up their own web divisions, and went through multiple incarnations before arriving here today.

    Most independent producers (Jules Jordan, Erik Everhard, Brandon Iron, etc.) have partnered with companies like Braincash and Meatcash so that they can focus on content production. But again, they are giving up somewhere in the neighborhood of 50% for the privilege. Compare that to the traditional 30-35% that DVD distributors take.

    Web-based companies like Brazzers and RealityKings spread their riches around in production circles, which in turn keeps production costs on the upslope. At some point, the 20% of VOD royalties and the 50% of paysite revenues won’t be able to justify the cost of shooting high-priced gonzo movies. Foreign and broadcast money is almost non-existent, due to the high supply and low demand for the content.

    When will this simple arithmetic break Porn Valley?

  17. mhm commented on Apr 23

    You really appreciate the internet delivery model when you want a foreign movie (general, not just porn). Why wait 1 week for the disk if you can download it in 1 hour (be it free or not)?

    Also, in the US market specifically, you can’t lawfully buy some good foreign movies… Some Studios buy the movie script and the international distribution rights for the original and never release it. Why? To make the American version and then distribute it (the new one) 3 or 4 year later. I want the original, I want the local cultural aspect… the only option left are the likes of pirate bay and the Studios still wonder why it is popular…

  18. dnt commented on Apr 24

    Yes I read several articles about the shrinking offline porn market

    especially sites like http://www.japaneseporntube.net and tiava com have a big influence. youporn is more amateur

  19. james commented on Apr 24

    So..I happen to own a porn shop. I’ve only been open since November though, so I can’t provide any YoY data. Sales for us are up slowly but surely, but its a result of marketing and us growing our business.

    The question is, is this a sign of recession, or a sign of the porn business being hurt just like anything else that is better delivered via the internet (and free).

    That said I’m not concerned, there will always be enough people to keep us in business,

  20. John commented on Apr 24

    Finally! I knew if I kept reading BP I’d eventually catch a tip I could use.

  21. Whats in a name? commented on Apr 24

    You have exposed! :-P Err.. the loss of Adult companies.

    What about strip joints.. do they make a good business now? [Wears his business hat]

  22. George commented on Apr 24

    “. . .the smallest dropoff is in ‘couples-friendly porn’ — films that embrace something of a storyline. Women account for roughly half of this audience . . .”

    That’s surprising–I would have assumed that for women, porn is a discretionary budget item, and they’d cut back when times were bad. For lot of guys, porn’s a staple.

  23. Harry Reems commented on Apr 24

    Why on earth would ANYONE pay for pron. Its ALL available free on the net. HD DVD quality rips. Bl0gspot links to free hosting sites. Streaming vids. Fast connection rates. DVD burners. Big screen computers.
    Same rationale as to why ANYONE would pay for mainstream movies or music ever again.
    Bloomberg’s piece on surfthechannel nailed it.

  24. someone else commented on Apr 24

    Hard times for the porn business, or so it would appear. I suspect many in the industry are choking and gagging at this very moment, and others will join in later.

  25. John Zbesko commented on Apr 24

    Once again, price declines to the marginal cost of production, i.e. in this case, distribution. The marginal cost of distributing “content” over the internet is next to nothing. Only those producers able to enlist the strong arm of government to control supply, through patents, copyrights, DRM, etc., will be able to make any profit.

    The porn industry does not have the resources of Microsoft, or the MPAA, or the sympathy of elected officials to restrict supply. The porn industry was the first to benefit from the internet and indeed was responsible for much of the internet’s growth and, apparently, will be the first to suffer from it.

  26. Eddie commented on Apr 24

    I have not rented a porno in many years due to the free content EASILY available all over the web. This is a non-issue here.

  27. RowdyRoddyPiper commented on Apr 24

    Tiava ? That’s a new one.

    Barry, how about providing us your entire internet porn roll ? We know there has to be more sites that you’re keeping to yourself. Consider it your gift to those of us limping around in a weakened economy.

    With unemployment on the rise, people have more time to browse the web. Seems to me that the internet porn business should see some growth.

  28. Anonymity Is Underrated commented on Apr 24

    For the industry as a whole margins have been tight in the porn business throughout this decade. Last century porn was a license to print money due to production not keeping up with demand but the internet changed that. Producers faced mushrooming global competition while distribution became every man’s business (piracy in other words).

    Another thing to keep in mind is that it’s
    notoriously difficult to estimate the size of the porn industry. There’s an organization that makes up some numbers but it’s pretty much an open secret the stats can’t be trusted. In the absence of valid statistics it’s difficult to say whether the industry as a whole is in trouble, just the traditional outlets or if it’s limited to one corner of the country.

    Concerning “couples-friendly”… nothing was said about how much of the business that niche represents. If half the customers are female then it’s probably not a big niche. The few shameless hussies that actually buy or rent (instead of downloading like all the good girls) are probably loyal customers.

  29. ef commented on Apr 24

    Internet, cable, satellite and all sorts of alternatives. How’s GGW or PB doing? Maybe it’s a demographic thing. Or maybe more people are aware of the dark side of the industry and choose not to finance it. Maybe the pendulum is shifting back to “Rat Pack times” (i.e., Wynn hotel, Michael Buble, Cirque du Soleil, etc). Like StarBucks not recognizing that maybe their sales are down because their basic coffee was awful, maybe the same is true here. Sometimes its the product, and people want a better value for their buck.

    Nightline did a story on the Pawn Industry. They do ok in good and bad times, but not so hot in terrible times.

  30. rickrude commented on Apr 24

    things have got to be really, really bad if
    the porn sales are down.
    We are not far from the end of civilization

  31. Dervin commented on Apr 24

    It makes sense for “Couple-Friendly” porn to stay strong, while others go limp. I think it would be difficult for a couple to watch a porn movie on a computer screen at the desk.

    You could burn a DVD, but the time and effort for that isn’t really cost effective against buying a $20~30 DVD and dropping it in the disk.

Read this next.

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