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How one for-pay porn site is surviving in 2016

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For over a decade, the porn studio Naughty America has operated on a subscription model. Yes, in an age of rampant piracy when nude bodies are a Google search away, people still pay for porn. But the business isn't what it used to be. The studio and other porn sites now face the threat of extinction at the hands of tube sites, YouTube knockoffs that stream free porn alongside and behind ads for sex toys, dating apps, and more free porn.

"[Porn] tube sites have their origin in piracy," says Ian Paul, the CIO of Naughty America. "When tube sites first launched, they contained tons of pirated content." The tube site would when notified take down pirated content, but by that point, Paul explains, a new stolen video would be uploaded by a different user, ready to take the original's place.

Mindgeek controls a major share of internet porn

A handful of tube sites struck gold, and gradually acquired for-pay studios. Mindgeek, for example, now owns PornHub, Red Tube, and YouPorn, along with Brazzers and many other pay sites, including serving as an online operating partner for Playboy. MindGeek is one of the top 10 consumers of the internet’s bandwidth.

Naughty America and independent porn sites that operate on a subscription model face, in monolithic companies like Mindgeek, an existential threat. But Paul is optimistic, and believes for-pay porn has an advantage over free porn: the studio can focus on creating content, without aggregating or cannibalizing it.

"The first problem for tube sites," Paul says, "is that there aren't as many studios in existence producing new content for them to utilize anymore. If you've noticed, the quality of content on tubes has declined a lot lately, with a lot more recycled content or content poorly shot in hotel rooms. The second problem is the use of ad-blockers is severely cutting into their ad revenue. Even PornHub is experimenting with a subscription-based premium service, perhaps because they're feeling the pressure."

None of this matters without visitors though, so we asked Paul to explain how a for-pay site attracts a new customer in the age of free porn.

Step 1: introduce your brand to potential customers

Before a website can turn people into customers, it must make them visitors. The traffic of a typical web business thrives on visibility — search engines, word of mouth on Twitter, membership to Facebook pages, television commercials. A typical site, including the one you’re reading right now, nurtures many different streams, each sending different visitors.

But for porn studios, this method doesn’t work, not in a traditional capacity.

Naughty America can't rely on traditional promotion strategies

Search traffic has floundered as an investment for Naughty America. The competition amongst porn distributors to appear on the first page of search results is fierce, and according to Paul, Google and other search engines no longer allow paid search marketing that directs to adult websites. As for the traffic Naughty America does net from search engines, Paul says the return on investment is comparably low. He speculates that when people search for porn, they want free porn. And so search is dominated by and most valuable for free tube sites, which spin revenue off banners and pop-up ads.

Because search isn’t reliable, and because the typical person doesn’t share their favorite porn on Twitter and Facebook the way they’d share a BuzzFeed link or a new game they bought on Amazon, the company relies on a more targeted social media strategy.

When casting a scene, the company factors in the size of their performer’s social media following. There's an expectation that performers will promote their work, as there is an assumption the studios will market their performers. It’s not so different from mainstream celebrities: an Ashton Kutcher fan might not publicly share their love of his work, but will still quietly follow him on Twitter, awaiting news of his next project.

Step 2: make a "good" trail of breadcrumbs

Paul’s team researches what he calls the user’s journey. "When people start searching [for porn], they don't always know what they are looking for."

Naughty America’s goal is to guide the user through this path of discovery by creating supplementary content that acts like a trail of breadcrumbs that culminates at the subscription page. "It can be ancillary images, promotional clips, and searches that lure visitors. Even affiliate sites are viewed as part of the the path towards paid commitment."

It’s a twist: a for-pay porn studio’s best bait is a curated path of free content.

Breadcrumb content isn't limited to what's on Naughty America's site

Based user data, collected from a several analytic systems, different supplementary is crafted to appeal to a variety of personas. Though Paul isn't comfortable explaining how the company targets specific pockets of customers. Trade secrets and so on.

Step 3: introduce a for-pay product with a "perceived value" greater than free content

There’s an obvious moral reason to pay for porn: pirating content is theft, and it damages the industry, impacting everything from the rates of performers to the total number of films made in a year. But the strongest way to counter piracy simply is to offer a better option. It’s the logic that has made success of streaming services like Netflix and Spotify: they’re simply easier and better than their illegal counterparts.

Naughty America's advantage: experience in creating content

The trouble a for-pay porn studio like Naughty America has in comparison with a competitor like MindGeek is depth of catalog. Where Spotify and Netflix host thousands of works from a variety of creators and genres, Naughty America is limited to its creations and those of subsidiary brands. So even here, the studio must be more adventurous than its mainstream counterparts.

It can’t have the biggest selection, but because it can create its own media, it can be the first to try new things. Virtual reality video is Naughty America’s most recent play to offer a product that isn’t readily available on free tube sites. "Even customers that see porn as a free commodity," says Paul, "don't expect VR to be free. VR has raised the bar and is giving more people a justification to pay for porn."

Before virtual reality, the studio had made the switch to 4K video downloads and streams, and before 4K the platform offered HD in a time when free porn was streamed at low resolutions. Naughty America also signs contracts with established porn stars, sort of like how the golden age Hollywood system locked in top celebrity talent.

For viewers who want to see certain performers in the newest formats, for-pay is the option.

Step 4: make the most of lost customers

One site's lost subscriber is another site's new member

A number of large for-pay porn sites also cooperate in a referral partnership that recommends competitors to paying customers who are terminating their subscription.

"If you know a customer is going to leave you," says Paul, "and there is nothing more than you can do about it, then why not refer them to your competitor and earn additional revenue? The referrals go both ways so we gain new customers this way, too."

"Generally speaking," says Paul, "the typical customer funnel is: awareness, interest, consideration, purchase. Those phases map in various ways to search engines, social media, affiliate sites, and [the homepage]. The ideal path is movement across all four stages."

Though he makes room for another scenario: "The ideal customer path is typing in naughtyamerica.com into their browser and signing up."