How is the Porn Industry’s Business Model so Successful?

By KC

It’s often said that porn is a “$[Insert random digit here] billion industry.”

A recent article published by business news site, Quartz, tends to agree. The article places the industry’s value at anywhere between $6 billion and $97 billion, with the more realistic estimates ranging from $6 billion to $15 billion.

Regardless of what the actual value of the porn industry is, we’re still talking about an absolute ton of money—especially when you take into account the fact that those are possible values for the industry whose main product is shown to harm the lives of its consumers and suppliers (more on that later).

Why, then, is the porn industry so valuable?

Why the porn industry is worth so much money

To put it simply, the industry is loaded with individual porn businesses that generate a ton of money.

Two of the biggest markers for business value, according to Forbes, are recurring revenue and growth. The former speaks to the amount of money the business makes through “automatically recurring contracts or subscriptions,” while the latter looks at how fast the business is growing.

The porn industry is chock-full of porn businesses that receive a lot of recurring revenue and are growing significantly.

Related: Tube Sites Are Free, So How Does The Porn Industry Actually Make Money?

With porn businesses, however, these two business value markers are heavily intertwined.

A huge part of that has to do with the way that porn businesses, and therefore the porn industry, make their money.

How the porn industry makes their money

Porn businesses generally make money in two ways.

The first way is subscription-based. Every month, the customer pays a predetermined amount of money in exchange for access to the product or content the business provides—think Netflix, but with porn. In order to draw customers in, businesses that use this model pay other businesses to advertise their product or content.

The second way is ad-based. These businesses offer free content to their customers, but must sell space on their website or application to businesses who desire to advertise their product or content in order to make money. This time, think YouTube.

Related: Death To Porn: How The Internet Is Killing The Porn Industry

The problem for a porn business, however, is that non-porn business aren’t often interested in selling ad space to a subscription-based porn business, nor in buying ad space from an ad-based porn business. This is because porn is often blocked from traditional advertising outlets.

So, what do the two types of porn businesses do? They sell and buy to and from one another.

And this is where Forbes’ business value metrics really come into play.

How recurrent revenue and growth intersect in the porn business

That’s a lot of fancy jargon, so let’s break it down.

If an ad-based business is growing quickly—that is, it has more and more customers viewing its free content every year—subscription-based businesses will be more willing to pay to advertise their own product or content.

Related: Which Is Better: Paying For Porn Or Watching It For Free?

And when a subscription-based business is growing quickly—that is, it has more and more customers regularly paying for its product or content every year—it will have more money to advertise its product or content on ad-based business’ websites or applications.

Because porn consumption, or growth, is consistently on the rise, more money, or recurrent revenue, will flow into both ad-based and subscription-based porn businesses.

Basically, all porn businesses win when more people view and when more people pay specific sites. Therefore, so does the porn industry at large.

Why this matters

As the porn industry’s value increases, so does its influence—and not necessarily for the better.

In 2012, Los Angeles County made it a requirement that porn actors wear condoms when filming for greater protection from sexually transmitted infections. The law led to a “95% drop in porn permit requests over the next four years.” Subsequently, porn film productions in Las Vegas jumped significantly during the same time span.

Related: How The Porn Industry Quietly Fought To Stop Keeping Official Records Of Performers’ Ages—And Won

Four years after the LA law, however, California lawmakers went ahead and proposed a similar measure “requiring porn performers throughout the state to use condoms on set.” But, due to the significant potential reduction in state and local tax revenues, the proposed law was shut down.

In other words, the porn industry is also dictates how states are run because of how much “sway” their pockets carry.

Will they buy you, too?

In the porn industry, not much else matters but money and growth because money and growth translate into value and influence in society and consumers’ lives.

That means the industry and its businesses don’t keep track of how much harm they can contribute to in their consumers’ and suppliers’ lives—as long as the consumers keep coming back because they are addicted or because performers keep performing.

So, we have one question for you: will you let the porn industry buy you, too?

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