SANTA MONICA, Calif. - Treat customers like kings, not criminals. That was the message delivered by several speakers representing the adult industry during a panel discussion on adult industry business models at the Digital Hollywood trade show held in Santa Monica.
The hour and 15-minute long discussion relating to adult entertainment focused on technological advancements originating in the adult industry and issues of age verification and the industry’s fight against child pornography.
Moderated by XBiz Publisher (and former AVN Online Editor in Chief) Tom Hymes, the panel included VS (Video Secrets) Media President Gregory Clayman, Waat Media’s head of mobile TV Marc A. Brown, ClubJenna President Jay Grdina, investment banker Holt Gardiner, and AVN Online Publisher Farley Cahen.
The discussion began with each panelist giving predictions for what’s to come in the adult industry in the next five years. Most agreed with Grdina’s assessment that the adult industry is “kind of up in the air right now” with regard to new technology. “We’re going to see a lot of change in technology in the next five years,” he stated. “Different structures are starting to pup up now, and it’s anyone’s guess what’s going to happen in the next few years.”
Cahen pointed to “the next generation of VOD (video-on-demand)” as the “next big thing.” Emphasizing the huge mobile delivery movement in Europe and Asia, he stated, “The mobile industry is definitely something that’s going to break in the U.S. as carriers identify it as a source of revenue.”
The increasing popularity of social networking sites such as MySpace, YouTube and XTube were discussed, as well.
“There’s a lot of traffic that goes to those sites, and figuring out how to monetize that traffic is key,” Clayman offered, while Brown said they present both “huge opportunities and huge risks.”
Grdina agreed. “Social-networking sites are both beneficial and hindrance.” Expanding on the latter point, he offered, “The time surfers normally spend looking for adult content, they’re now using to check their MySpace pages. The question for us is, ‘How do we use that and monetize it?’”
The discussion eventually turned to the adult industry as a consumer-driven market (“The consumer is the boss in adult,” Clayman asserted) before turning to the most pressing topic of the hour: how adult pushes technology to the mainstream.
“My very strong contention is that this market is going to see a high participation of private equity groups from the mainstream groups,” offered Holt, who was instrumental in helping ClubJenna secure its recent deal with Playboy. “The mainstream private equity groups are seeing the highest influx of capital they’ve ever seen in their lives. One of the only areas that has not had any activity that has generated the amount of cash flow necessary to sustain the debt of a private equity and has the high levels of structure necessary to perform under those conditions is the adult business.”
Perhaps the most revolutionary thing said was that the mainstream entertainment industry would do well to stop looking for ways to penalize content pirates.
“Instead of looking at the people as pirates, find ways to embrace the surfer and get that e-consumer as a customer,” Grdina responded to one audience member who asked what advice the panelists had for mainstream companies. “Don’t just worry about the brick-and-mortar consumer; target those who download from the Internet. Come up with ways to advertise to attract that consumer through your e-business, and utilize that to your benefit. Give them a teaser, go to YouTube, set up a webmaster program. It’s pretty easy and simple to do.”
Brown spoke of the chief point of contention between mainstream and adult, adding, “Underlying it all is just a simple philosophical difference: In the adult industry, there’s a tendency to embrace all new technologies and to figure out how to adapt your business models to take advantage of that, whereas in music and in some of the traditional ports of entertainment, it’s, ‘How do you protect against it?’”
“Mainstream tends to hang on to their content and believes that by holding on to it and waiting and delivering it on their terms, they’ll get the most out of it and control the delivery methods,” Cahen added. “Whereas in adult, obviously, we embrace technology and want to get the content out there to those that want it, however they want it, when they want it. Embrace it, get the content out there, benefit from it, make more and better content, make it affordable, and be competitive. Don’t try to collude to control the end user.”
Clayman spoke of the importance of adopting the webmaster affiliate model.
“To be able to think that you can drive enough traffic to make a successful business on your own is just unrealistic,” he said. “You need to look at your competition, look at your price point and see what you can offer. If you can offer X number of dollars per click or per sale, that’s really one of the things that will help you grow at a really rapid rate.”
As the seminar ended, Grdina drove the point home even further. “We don’t look at another person in the adult industry as a competitor,” he explained. “We look at them as an affiliate. If I have traffic that doesn’t want to join ClubJenna, I can send them to Greg at VideoSecrets. We all generate traffic and revenue for each other, and that’s why the adult industry has been so successful online.”
