Report: What Mainstream Business Can Learn From Porn

Apr 14, 2011 8:00 AM PST

NEW YORK — The adult industry continues to grab mainstream attention and even kudos for being innovative and in many cases smarter than most corporations when it comes to technology.

A recent report in Business Insider that offers what businesses can learn from porn, gives credit to adult for many of the advances on the Internet, digital media and the advertising industry.

"The next time you fall in love with that really cool technology or sexy app that helps you through your day, consider where it spent the night before you,” the article said.

Although skittish about  “supporting” porn, referring to it instead as “AE or adult entertainment,” the article nevertheless lauds adult for a host of innovations and the ability to drive technology.

What’s more, some adult executives get credit for being smarter than some of the brains at giant mainstream companies like Time Warner, Comcast, Goldman Sachs, Citibank and AIG.

Some key tech contributions attributed to porn were video downloads, electronic billing, digital rights management (DRM), pop-up ads, affiliate marketing, wireless content delivery and even geo-location software.

Pointing to porn's early adoption of VHS, DVD and digital downloads, the article said, “To recap history, in the 1980’s the AE industry helped usher in the unanimous use of the VHS tape as the standard in-home movie viewing over that of Beta. Of course as DVD media format came on the scene in the late 1990’s even VHS began to fade in its dominance, and it would be fair to estimate that soon digital downloads and streaming will give fade to DVD format just as digital downloads have led to the demise of physical CDs or albums in the music industry. Some suggest that digital will all but eradicate DVD format as early as 2015."

The author noted how he's been impressed with the business prowess or porn professionals noting Vivid Entertainment and Private Media as leaders in protecting online content.

“I have spoken to a number of technology providers that serve both the AE and the mainstream media industries (i.e. companies like Time Warner and Comcast serve both by the way) to understand how they are implementing technology and services, creating unique revenue models and growing their businesses. I do not aspire to work in the AE industry, but I will tell you that many of the folks that do are very smart and well-versed on the ins-and-outs (it’s ok to laugh) of the Internet, Digital Media and Advertising Industry,” he wrote.

The report went on to recognize adult’s legal smarts as well saying that “these folks also know their business and their legal limits, arguably better than executives of many mainstream companies, such as Goldman Sachs, Citibank, AIG and any other high profile financial institutions that always seem to 'bend the law — make that break the law.'

“More importantly, these folks in the AE business are specific, detailed, know what they want, what they expect and how to measure it. They are well-organized and do make many, very smart decisions. Some of their businesses are more profitable and operate more efficiently than many mainstream publicly traded companies.”

Regarding affiliate marketing, the article said porn has all but conquered the ultimate business model by making money from competitor’s content. “They squeeze every conceivable cent from potential customers all in the name of making a profit, in some cases with very advanced methodologies.”

Even notorious pop-up ads get a nod, giving credit to adult for an Internet model that thrives to this day.

Porn also shines in more tech-centric achievements like battling piracy and protecting content though DRM. “This is a key area where the AE industry is possibly further along than most all other mainstream industries in both understanding and usage. Ownership and delivery rights related to porn not only have financial implications but also legal. Clearly there are federal and state laws against/for the use and distribution of this form of content, and the content owner, a) doe not want it stolen by a pirate, and b) neither do they want it shown somewhere it should not be (shared or viewed) for legal reasons."

The article said Vivid and Private are prime examples of innovators in content protection. “Vivid Entertainment and its visionary founder, Steven Hirsch (I’ll refer to him as a younger Richard Branson), was the first to deliver in the DRM area by offering customers one-time downloads (burn to DVD) from a website.”

It goes on to give credit to Private’s Ilan Bunimovitz as a pioneer in offering HTML5 iPad optimized downloads and developing cross-platform delivery across multiple devices for its content. “Supposedly, Private Media Group does not DRM protect any of its content because as their CEO states, 'The way to fight piracy is not to limit who you sell content to…(i.e. consumers)' [but rather fight the piracy sites directly.]," the article said.

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