Day 6

Porn-o-nomics: Drawing back the curtain on the online porn industry

Online pornography is ubiquitous, instantly available and often free. There's a lot of anxiety about the social consequences of that, but not much understanding of how this multi-billion-dollar industry actually works. This week, Day 6 kicks off a four-part series on the economic forces driving online pornography.
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Online pornography is ubiquitous, instantly available and often free. That means there are more people watching porn now than ever before, but trying to figure out how this multi-billion-dollar industry works is a little like taking apart an old watch — suddenly you get a sense of how complicated its inner workings really are.

"Because pornography involves nudity, sexuality and private fantasy, it makes it harder to talk about the industry as a legitimate and complicated business." - Shira Tarrant, professor and author

Talking about online pornography, and understanding the consequences of it, means having complicated — and sometimes awkward — conversations about something many people don't totally understand. But, as author and California State University professor Shira Tarrant tells Day 6 host Brent Bambury, there are a lot of reasons why we should be having those conversations, and having them now.

"Pornography is a lightning rod for things that are already happening in our culture," she says. "We need to see it as legitimate and try to understand what's happening in this industry."

(Oxford University Press)

               

An industry unlike others

Tarrant points to issues like copyright, free speech and sexual consent, and says that if we care about these issues then we should engage with this global, multi-billion-dollar industry. According to Tarrant, we need to view online pornography as a business with profit margins, infrastructure and a customer base just like any other industry.

On the other hand, online pornography is unlike any other industry and for many people it's taboo. Tarrant cites that discomfort level as one reason why so few study pornography.  

"Because pornography involves nudity, sexuality and private fantasy, it makes it harder to talk about the industry as a legitimate and complicated business," she says.

    

The difficulty tracking dollars and clicks

In 2015, MSNBC reported that the estimated revenue from the pornography industry in the United States was between $10 billion and $12 billion dollars.

Tarrant notes the range and says it's hard to get at firm figures because it's been understudied by economists who routinely study other industries.

She also says a lot of the companies that produce and distribute online pornography are private enterprises and under no obligation to disclose their finances.

"They may be parent companies that have all kinds of products under their corporate umbrella," she adds. "They may not specify how much of their revenue is from adult content".

Assessing web traffic is easier than tracking revenue. PornHub, the most highly-trafficked aggregator site for pornographic clips and links, reported 78 billion page views in 2014. The site says that in total, globally, people spend 12 million hours per day watching videos on its site.  

Tarrant acknowledges the volume but says that when it comes to pornography, traffic doesn't necessarily translate into revenue because a lot of those clicks send the visitors to pirated content.

"There's so much online content that it's hard to know what is stolen [pirated], what's generating revenue and what isn't," she says.  

    
The pirating of pornography

Tube sites are the most-visited adult entertainment sites on the web. They're sprawling, they're free and they get hundreds of millions of clicks every day. That makes them very contentious in the industry.

In 2008, the confluence of new technology and financial constraints brought on by the recession led to the rise of tube sites and free pornography.

The industry, once dominated by pay-per-view and DVD sales, migrated onto the Internet just as smartphones, smaller laptops, and eventually tablets, became the norm. In other words, pornography was suddenly available on fast, affordable and mobile devices.

"Salaries and revenue in the industry have drastically fallen."  - David Auerbach, tech writer

Tube sites, named after the YouTube model in which users upload advertising-supported content, became the most heavily trafficked pornography sites online.

Tech writer David Auerbach says tube sites like RedTube, YouPorn, xHamster and Xvideos made a tremendous amount of pornography available for free.

David Auerbach is tech writer and software engineer. He is currently working on a new book about the intersection where humans and computers merge.

"Some of this porn was simply amateur stuff uploaded [by visitors to the site], that was not copyrighted, but some of it was [copyrighted]," Auerbach says.

That means that movies being made by the commercial studios were then being uploaded to tube sites, making it impossible to collect the revenue.

"The effect of that," says Auerbach, "is salaries and revenue in the industry have drastically fallen."   


Power in numbers

One of the biggest players in the online adult entertainment business is MindGeek. The company is incorporated in Luxembourg, but its main office, along with 800 of its 1200 employees, is in Montreal.

MindGeek has spent the last few years in a mergers and acquisitions blitz. It now owns four of the top 20 tube sites, including PornHub, and operates nearly one hundred websites in total.

Collectively, MindGeek's sites use more bandwidth than Twitter, Amazon or Facebook.

Two of MindGeek's biggest sites are PornHub and YouPorn. MindGeek says it operates four of the top 20 'tube sites' on the Internet.

Auerbach says the company controls enough of the industry to exercise de facto control over who gets hired and who doesn't.

"If you find yourself unemployable by Mindgeek, that cuts you out of a tremendous amount of opportunity," he says.

In a segment on ABC's Nightline, adult performer Tasha Reign said she has to shoot for MindGeek because they own almost everything. She says she has no choice.

In an email statement, MindGeek says the claims that they dominate the industry are unfounded.

"Performers are free to work for any brand and can create a strong following of loyal fans with any label and at no point has a performer been denied work for engaging in an open discussion," the company writes.


An unsustainable model?

As for the future of online pornography, Auerbach says the tube site model, with reams of free clips, is likely unsustainable.

"As there's enough downward pressure, you're actually going to see more professional studios going out of business. It seems there's a slow die-off happening but it's hard to say at what rate that is occurring, or at what stage it will reach a crisis."

There is tremendous pressure on the industry but Auerbach says that the most viable current model involves niche content.

"For paid content, they may have to focus on high-loyalty, low-volume content that attracts a very loyal viewership," he says.

As for Tarrant, she doesn't think pornography is going anywhere and says we need to investigate what's happening with the industry.

"We have to think about it like a business with all the legal issues involved, like copyright and labour protections, et cetera," she says.  

"We need to investigate what's happening with this industry and how it's operating so we can improve conditions for everybody and maximize consent, pleasure and safety."

To hear Brent Bambury's conversations with Shira Tarrant and David Auerbach, download our podcast or click the 'Listen' button at the top of this page.

And come back next week for Part Two of our series "Porn-o-nomics."