The adult entertainment industry has always been a technology leader. It was an early adopter of distribution via home video and the VCR—indeed, some claim that the porn industry's adoption of the VHS format was the deciding factor that vanquished its rival, Betamax, in the 1980s. The adult industry was also among the first to move from distribution on videotape to the DVD format, and then to online downloads and finally to streaming.
So it is no surprise that the most creative use of the data that is produced by digital distribution comes from the porn world. The company that does this best is also the largest—and unless you are a pornography expert, you probably haven't heard of it.
Mindgeek is the parent company of Pornhub, YouPorn, Brazzers, Twistys, and many other sites. It claims to have over 115 million daily visitors to its sites, and its Alexa scores (Pornhub is #27 globally, just one step behind Netflix—and Pornhub is just one of Mindgeek's many assets) suggest these figures are accurate.
In The Second Digital Disruption, we examine in detail Mindgeek's use of viewing data. But first we explain how the porn industry changed with the advent of streaming—and how it stays alive despite enormous quantities of easily available free content. Intellectual property rights are predicated on the assumption that only with legal protection against (cheap/free) copies will creators invest in creation. So the first key question about the industry is, how, in a world of almost unlimited free porn, does the porn industry exist at all?
As we write:
As streaming high quality video became technically viable the consumption of pornography has moved almost entirely online. Indeed, Pornhub and Xvideos are today respectively the 27th and 42nd most popular websites in the world by traffic. The impact on the adult industry was rapid. As the New York Times reported in 2007, as the first "porntube" sites were gaining market share:
The Internet was supposed to be a tremendous boon for the pornography industry, creating a global market of images and videos accessible from the privacy of a home computer. For a time it worked, with wider distribution and social acceptance driving a steady increase in sales. But now the established pornography business is in decline — and the Internet is being held responsible. The online availability of free or low-cost photos and videos has begun to take a fierce toll on sales of X-rated DVDs.
In the intervening decade, this process has only accelerated. Today, pornographic DVD sales are a tiny fraction of what they once were. And revenues for the traditional producers of recorded pornography have fallen, by some estimates (likely overblown) by up to 80%. At the same time, streaming viewership has grown to enormous levels:
It's impossible to ignore the top-level stat: that Pornhub averaged 81 million visitors per day (28.5 billion visitors for the year), with 24.7 billion searches performed. That's 50,000 searches per minute, 800 per second. The global community was active as well, with over four million videos totaling 595,492 hours uploaded. If you were to watch that much porn in a continuous fashion, your eyes would be locked onto the screen for 68 years.
The adult industry has adapted to this dramatic change by transforming how it makes money. And that allows it to continue to create new content. In the paper we detail the many adaptations, include camming (which is live, and often literally directed by fans); the move to merchandising; the rise of custom pornography; and the monetization of social media.
In general, the key aspect is that content, once the core of the industry, has gone from product to advertisement. Content is what builds a brand that can be leveraged in other ways.
Mindgeek, as the world's biggest repository of free porn, is at the center of these changes. Because Mindgeek is so big, it harvests massive amounts of data about what, and how, viewers watch. It makes money via advertisements and subscriptions, of course. But what is most interesting is how it uses data to shape the production of new porn.
In the paper we detail this process of "data-driven authorship," using a script Mindgeek shared with us. Mindgeek does what Netflix, Spotify, Amazon and others also do—it uses consumer data to recommend, to categorize, and to invest. But Mindgeek goes one step further. It actually makes creative decisions based on the data.
And that process, we believe, has big implications for intellectual property law and theory. We turn to that tomorrow.