I just read this in a column in a local newspaper and it struck me as possibly wrong.
“It’s not that surprising that the porn industry – which is primarily geared towards men – has had such an impact on the reading habits of a generation of women: it generates more profits annually than Microsoft, Google, Amazon, eBay, Yahoo, Apple, and Netflix combined.”
Is the above statement accurate? I’ve no doubt that porn has been lucrative but as an industry does it surpass in profitablity those named major online businesses?
Not even close. Forbes debunked this in 2001, estimating that the porn industry had revenues of $2.6 to $3.9 billion. Apple had revenues of $35 billion last quarter, so they’re not even in the same ballpark.
If I were a teacher in a journalism class, I’d find this a great exercise for students. Those “debunking” articles are full of just as much crap as the original claim. Spending an hour pulling apart every one of those links might teach writers how to test a fact rather than simply believing that everything you read has already been vetted.
Start with the original claims.
Two words should jump out at you: “sales” and “profits”. The quotes are apples and oranges. In the early days of the Internet (and often still today) firms often brought in huge revenues and yet lost money as they had enormous costs as part of a rapid expansion. Both of those statements therefore could have been simultaneously true. But it says little about either. The shift in wording changes everything.
The second link, an article by Susannah Breslin, is immediately dismissible. It is white noise, a completely factless opinion piece. She makes comments about the lack of profitability in the industry but provides no backing for that at all. She does link to an earlier piece she wrote about the dreary reality of the industry, They Shoot Porn Stars Don’t They?. That piece was “written for a publication, but I ended up withdrawing it and publishing it myself.” My guess why is that it is exploitative crap. It contains no hard numbers about the industry as a whole, nor does it even attempt to define the industry. There’s no evidence she knows what the industry as a whole might even include. She’s a famous blogger, which is why bloggers have such a bad reputation.
The Forbes piece is more serious, an attempt to quantify numbers by business staff. That’s a good start. But the problems begin immediately.
Remember this is 2001 when you read those hilariously small numbers. The conclusion of the paragraph is built on negative information. If you don’t know “how long each visitor stayed or whether they spent a dime” you can’t say anything more. That concluding sentence is moronic moralizing. It’s the old pedantic sense of begging the question, assuming the answer before you begin. That’s a fallacy and any decent editor who hadn’t predetermined the outcome should have cut that.
It’s get worse. Pornography can’t make money on the Internet because Playboy doesn’t. Can you imagine what we’d do to a poster who made that claim?
And worse.
Wait, the adult video stores are a fringe distribution channel? Says who? This conclusion is plucked out of thin air. It might be true but we have zero evidence.
At the end of all this debunking, in fact, we still have zero evidence. We don’t know what anybody is measuring. We don’t have hard numbers. We don’t have a good definition of what the industry includes. Any conclusion - from the industry is insanely profitable to the industry is a bust to a certain segments of the industry are insanely profitable while the rest is a bust - might be true. This is not journalism. We do a lot better here.
I just consider how much I personally spent on Apple hardware, and buying stuff on eBay (times $X per item for eBay revenue), Amazon purchases, Netflix fees etc - none of this money porn-related. Then, I consider that the vast majority of people are more likely like me than like the guys who frequent the porn stores. Then I add in the revenues businesses pay - almost everyone sitting at a desk using a computer likely has Office, 2003 or later, at a few hundred a pop for Bill Gates. Every computer uses windows, quite a few bucks in revenue for each PC.
Unless there are a lot of people who haven’t figured out surfing and secretly blowing huge chunks of money on porn running their credit cards up to the limit each month - I find it hard to believe revenue matches the mentioned big companies. Profits? For whom? If the porn industry was that big, there’s be a lot more players.
As previously pointed out, it’s easy to find porn for free in the internet. I find it hard to believe there are enough people to make it truly profitable to the extent suggested.
Didn’t we have an ‘ask the…’ thread with a porn director a few weeks ago? I recall him saying the business isn’t really thriving and the ‘talent’ isn’t making that much. That last one I heard from the (w)horse’s mouth as well by the way.
Since the statistic talks about profitability rather than revenue, you can only count on perceptions like this to a certain degree.
If a porn producer sells $100 of product at a cost of $10, and BigCorp sells $100,000 of product at a cost of $99,990, then the porn producer has 10 times the profit ($90 compared to $10) even though the revenues are worlds apart.
Or you could take company X (profit of $100,000) and company Y (loss of $100,000) and say that the porn producer’s profit is higher than the sum of the two, since $90 is higher than $0.
But… the claim in the OP is clearly false, since the companies mentioned have high profits as well as high revenues and I don’t see any that are big losers.
But when you are considering “the porn industry” as a whole (sp?) what is profit? Anything that’s not external material or wages, basically; so much of the markup along teh supply chain. If the “stars” are contractors, how much of their wages is profit? And so on…
This is why gross revenue is a better indicator to check than profits.
Estimated number is currently $14 billion/year, but numbers aren’t generally publicly known, with some saying that the number is way underestimated.
Interestingly, one section of the article mentions that the industry is under severe financial pressure due to piracy and other free porn sources, then later mentions that one of the industry leaders mentions a current growth rate of 15% per year. I bet a lot of industries would love to be under that kind of “pressure.”
You realize that the number $14 billion is exactly the same number we’re debunking, right? You realize that it is completely unsourced in that article or in the article it links to, right?
There are people who research it and they mostly complain how difficult it is to get to any hard numbers. (Go ahead, snicker, I dare you.)
A more recent article on Forbes.com interviews a professor who’s writing a book on the subject.
That article seemed really weak to me. The writer’s research was apparently visiting one porn company and assuming it reflected the porn business as a whole.
If I had visited an Ames department store in 2000, I could have written an article about how the department store business was in a steep decline and on the verge of disappearing. But I would have missed the massive growth of Target and WalMart that was causing the decline of businesses like Ames.
Let’s make this simple. We’ll consider the porn industry to include all on-line porn sites, movies, stories, chat rooms, jokes, still pictures, articles about porn both pro and con, magazines like the traditional Playboy, Penthouse, Cosmo, and all the XXX video industry mags, fetish mags, swingers mags, photography mags, biker mags, health and fashion mags, all the porn on phones, including phone sex, sexting, and chat, all the porn on TV, pay-per-view, paid cable, basic cable, and broadcast, plus all the porn retailing through Victoria’s Secret type places and the XXX video type sex stores, not to mention strip joints, clothing optional clubs, nude beaches and colonies, and those old fashioned books like 50 Shades of Gray and the bodice rippers. Oh yeah, let’s not exclude National Geographic and old Sears Catalogs.
So now that the porn industry is defined, it should be easy to total up the gross, derive the costs, and arrive at net profit figures to compare to a few large companies that have to publicly report their annual profits.
I had missed that the number was the same one that was mentioned previously, yes, and thus probably from the same unverified ultimate source–but I did find the statement of a 15% growth rate for at least one of the major players interesting, given how the general message going out is that piracy and such are killing things.
Growth rates usually refer to the gross, not the net. Discovering the profitability of the porn industry could be very difficult even if the total volume could be established.
You can still add up profit even when there’s a supply chain. If I gross $100 and paid $50 of it to suppliers who paid $25 to their suppliers, who paid $10 outside the industry, we still have profits of 50+25+15 = $90 (on total revenue of $175).
I do agree that revenue is the better indicator for most purposes, which is why I wanted to point out that you were talking about revenue when the OP was talking profits. Profits are even more easily manipulated than revenues.
