Porn Industry Hits Limits of the "Freemium" Model

(MoneyWatch)  Demand for pornography seems to be still growing, considering that more women are becoming customers, according to a new study. However, like other content producers, the porn industry is also struggling to convert internet traffic into dollars. According to an article in the Los Angeles Times, porn production and distribution revenues are down by 30% to 50% since 2007. The problem: all those amateur producers and aggregators (see the blogger v. pro journalist parallel?) are undercutting the business.

For all the industries that are now pining their hopes on the "freemium" model, which argues one should give most content away for free to attract eyeballs and advertising while also trying to charge for premium content, the porn industry's struggles might serve as a warning. Although there are only a handful of "freemium" publishers (the Wall Street Journal, the Financial Times) to study as examples, the adult entertainment industry has been operating under that model since the first sites hit the web. So how has it held up?

It seems the elite actresses have fans that are still willing to pay for their work, according to the Times report. And they can leverage their celebrity statuses to sell merchandise. It's the "middle class" of the industry that can't compete any longer with free.

This suggests that only the biggest and best brands will be able to successfully convert to the "freemium" model.