Keys to Success

Drawbacks to the Porn Business

Speculations for the Future

The Porn Business

Sex sells. As the number one income generator on the Internet today, pornography is a ripe business that will continue to grow along with the advancement of technology. With a reported annual growth rate of 40% since 1997, and the status of being the most queried subject on search engines, pornography is a thriving industry and one of the only successful e-businesses.

For the past few years, entrepreneurs have been entering the world of dot coms, trying to find a business model that will survive on the web. However, only about one of ten Internet companies actually survives. In fact, even large companies such as Amazon.com have a hard time making a profit. Why do porn sites generate so much money? Can other companies learn from the porn business?

According to Frederick S. Lane, author of "Obscene Profits: The Entrepreneurs of Pornography in the Cyber Age," while the porn industry's profit success may be somewhat exaggerated, it is still a moneymaking industry for many reasons.

Keys to success [1]

Lane cites many reasons for cyberporn success:

1. Porn sites are more adept than mainstream sites at getting and keeping customers. A main reason is that porn customers are more open to varied marketing techniques. Customers of adult websites are more tolerant of blind linking (links where the text does not convey an obvious destination) and an infinite number of pop-up windows. These marketing techniques are not so appealing to the customers of mainstream websites.

2. Pay-per-click ads. Instead of purchasing ads per impression (what most mainstream sites do), porn sites purchase ads on a pay-per-click basis, and are only interested in ad banners that will generate traffic and sales. Therefore, if an ad banner is not generating either, it is pulled from the site.

3. Cooperation with the competition. Pornography sites remain profitable by cooperating with rival sites. This is very different than other businesses on the web which fight to compete with their rivals. What pornography sites do is "share traffic." If someone doesn't find what they're looking for on the site, the site will send that person to similar sites. Because an affiliate network exists, the original site gets paid for sharing traffic.

"In the adult world the [site] with the most friends wins."
- Mark Tiarra (president of United Adult Sites)

4. The pornography industry is at the forefront of technology. While it is not the only industry supporting technological advances, the pornography industry has invested a lot of money into the future of technology. Porn sites have been dedicated to upgrading their servers and developing broadband capabilities to make access faster and easier for their users. In addition, virtual reality mechanisms can help the porn profits rise even more. The porn business is aimed at satisfying their customers, and unlike mainstream companies, porn business has more leeway to conduct technological experiments.

Drawbacks to the porn business

While the porn business has financially supported many courageous entrepreneurs, most business people prefer to stay away from the controversial environment of Internet pornography. It is a very risky business. Since the dramatic increase in number of Internet users over the past 5 years, there have been a number of legal proceedings aimed at regulating Internet porn. (For more information on this, see the legal section of this site.) The question then becomes, do these entrepreneurs choose money over morality? Do entrepreneurs care that children have easy access to this adult content? This is a topic that is still being heavily discussed. Online Pornography: Is Filtering Software the Answer? is a great site that discusses this issue of pornography on the net.

Porn has also been under scrutiny for sending out spam e-mails (mass amounts of unwanted e-mail with disguised subject headings). When the receiver of the e-mail reads the message, they are greeted with unwanted pornography. This has become an increasing problem with the porn industry and many anti-spam organizations are trying to combat this tasteless method of porn distribution. Finally, the porn business has also been known to advertise their product as "FREE" when in fact the users get charged without knowing it. According to an MSNBC report, "The FTC took action in July to force X-pics, a nearly defunct adult Web site operator, to repay consumers whose credit cards were charged without authorization, the first time the agency has acted to stem the practice known as 'slamming'."

Speculations for the Future

With the advancements in technology, the future of the porn business can only get financially better. Current porn customers will most likely pay top dollar to try out the new virtual reality products, and these products will likely spark the curiosity of new users. Beyond more revenue, however, lies the prospects of legal action. Will advancements of technology lead to a need for porn regulation? This could pose a financial problem for porn sites.

1. Ferri, Lisa. Stocks and Bondage. [back]