The Innovation Show

It is difficult to grow a digital audience amidst all the noise out there. It is difficult to grow a digital audience in the face of the rise of adblocking. It is difficult to grow a digital audience without buying access to targeted audiences through social, search and display.

Now imagine how difficult that must be if you cannot use social, search, outdoor, TV, radio or traditional marketing strategies.

That is the marketing environment the Adult Industry works within.

I wrote this blog post after an interview I did with Chief Information Officer of Naughty America, Ian Paul. Naughty America is an adult content production company founded in June 2001 based in California.

Parking any prejudices towards this industry, there are some great learnings for anyone in digital content production, digital publishing and digital marketing. These learnings follow.

Days of Glory

There once was a day where the adult industry was raking in the cash. The days of VHS, the days of Cinema, the days pre-digital.

The industry was a leader in so many digital technologies. In the early days of the web, there was not much to do, there were message boards, sparse blogs and one-page websites. This left a huge opportunity for someone to seize the day, the adult industry seized in a big way.

This industry pioneered so many aspects of multimedia content. It drove video streaming, video thumb-nails, video scrubbing and even online payments. Today we here so much of MVPs (minimal viable products), Growth Hacking and Experimentation, back then everything was all of these.

Despite its early days of glory and domination, like all content businesses, once the content was available online it was open to piracy, it was open to transcription and aggregation and it was open to disruption.

The Challenges

From about 2008 onwards, what are known as “tube sites” (video aggregator sites who don’t own the content they are aggregating) took off in a big way. These tube sites devastated the traffic coming to ‘studio sites’ (sites who produced the content they provided and only made it accessible to paid subscribers). The tube sites acquired the traffic away from the studio companies content and essentially eroded the revenue stream for the original content creators. The tube sites didn’t have to spend money on content rights or studio-quality content creation, their costs lay mainly in streaming costs, technology and site design and optimisation. They made money off the advertising they sold and in some cases even made money by directing the traffic back to the sites of the original content creators.

How are the tube sites or aggregators getting away with it? As Ian explains in this weeks innovation show the law protects them in this case. For instance, if a company like Naughty America sees their content pirated and uploaded to a tube site, the law provides them a window of time to comply and take down the guilty content. Once that content is deleted it is “mysteriously” uploaded by another user and the window of time to comply starts over again.

Similarities to News and Digital Publishing

When you think about the evolution of this challenge, it is a remarkably similar one to what has happened in the digital publishing industry.

Around the same time 2008/2009 digital-first publications and aggregator sites started to pop up all over the world. The digital-first publisher model was one of a mix of aggregation, mobile-first content and snack-able distribution.

By ”aggregating” others’ content, I mean reading a piece by another journalist or blogger usually from a traditional publication or listening to a well researched piece of radio and transcribing it better than the traditional publisher where the story originated could do.

The original reporter/journalist and source of the story was usually not as skilled nor as quick as their digital-first counterpart at social and digital distribution. There may have also a bit of looking down on digital at the time, where some journalists saw this as beneath them, some may still do. At the time such a skill set is a rare one and the traditional publisher has neither the foresight, bravery nor capital to invest in a whole new division — not until it is rather late in the day that is.

As a result, much like the adult industry, the digital-first publishers won the traffic away from the traditional publishers and eroded the revenue stream for the original content creators.

A further blow to traditional publishers was that the digital first publishers learned how to maximise digital revenues and became “platishers” or platform publishers, who were a hybrid of a platform for native content, social distribution of said native content and indeed designer/creator/distributor of this content. The savvy digital publishers realised that they were selling access to their community and not simply advertising. The digital first publisher realised that they must adapt an advertisers message to their own tone of voice, so that they remained true to their brand values.

“The savvy digital publishers realised that they were selling access to their community and not simply advertising”

The digital-publisher sales rep (there was usually only one in the early days) had to educate media agencies (who were also grappling with digital formation) while selling to them. While ravenous for advertising revenues, the sales rep valued their digital inventory and did not give it away for free.

This was only made difficult because many traditional publishers some sales reps took up the mantle of digital sales rep all of a sudden. Desperate for a sale and not fully understanding digital, many bundled digital with traditional inventory and classified this bundled revenue as digital. This was usually to appease the board or to show that the digital department was succeeding in a burgeoning digital advertising market.

Just as the adult industry tube sites didn’t have to spend money on content rights or studio-quality content creation, the digital publisher did not have to maintain a legacy printing press business whilst simultaneously reinventing themselves as a digital company.

Of course as regular readers of The Thursday Thought will appreciate, new ideas are the easiest part, it is letting go of the past which is where the difficulty lies.

Low Barriers to Entry

With the evolution of the web came the natural lower barriers of entry to many aspects of publishing. Initiatives like WordPress made creating a website very easy and accessible to everyone. Smartphones made everyone a potential videographer and social media made everyone a potential publisher. User generated content (UGC) was on the rise.

In the adult industry this was no different. Amateur content rose in prominence, for the most part this was free, low quality and unregulated. As Ian states in our chat, the adult industry is a highly regulated one and non compliance can close companies. When people object to adult content, this is mostly the content of the unregulated UGC realm.

As is Ian’s nature he looks to the glass as half full and looks for opportunities in UGC, what can he learn from it, how can they interweave UGC into their business.

Social, Breadcrumbs and Process Innovations

While publishers can have a large social following with radio, press, web or TV, the personalities or journalists also have a strong relationship with their audience. Savvy publishers tap this opportunity, as do savvy personalities. They both realise the value of this and that this helps their personal stock price.

This is no different with the adult industry, a performer with a large social following trumps one with a lower social fanbase.

With restrictions for the adult industry with audience acquisition around social and advertising, they have to think outside the box.

They will adapt appropriate content for each different channel, like any brand should. They will use Snapchat and Instagram very differently.

However, Ian cites how they adapted the workflow of content creation as the real triumph. Like many creative agencies with attest there is nothing worse than receiving a piece of traditional content, a TV advertisement for example fait accompli and be expected to adapt it for digital. This is a nightmare for a creative. It is very hard to adapt a piece of content that is specifically shot to tell a story on a platform like TV or a press ad and be expected to retrofit that content and make a YouTube, Facebook, Instagram and various other display ads from that original piece of content. What is worse to be expected to do a great job.

“Like many creative agencies with attest there is nothing worse than receiving a piece of traditional content, a TV advertisement for example fait accompli and be expected to adapt it for digital “

Naughty America moved the digital content capturing for digital along the work stream to the point of creation. To this end, they have a photographer on set, they capture multiple scenes within the one workflow for a multitude of platforms. Those who have worked in digital agencies will be familiar with that old request.

Content is King

Naughty America is a subscription based revenue model. This means that their offering has to be strong enough to win customers away from free.

This means that their user experience has to be awesome, high quality streaming, high quality content, well shot, well performed, well executed.

This is akin to the news sites who have weathered digital transformation, The Wall Street Journal, The Financial Times. These publishers have content that cannot be easily replicated, they also have remained true to their brands, they have developed further propositions beyond publishing such as events.

Furthermore, I often cite the Financial Times as a hero model of a publisher who went all in with data, who went all in with mobile and who were brave enough to do it right. This is a major reason why it was acquired for $1.3 billion by Nikkei in late 2015.

Naughty America sees remaining true to their content quality as their differentiator, but only when coupled with innovation.

Innovation, Virtual Reality and Balancing both Formats

Content needs to be so much better and higher quality to survive in a world where free is king.

To that end Ian’s team provide content in HD, 4K and POV (point of view) Virtual Reality. For the latter, this is now baked in to the workflow much like the team has done with social breadcrumb content.

The way the team look at their customer is that they are omnichannel and omnipresent. Their value proposition to the subscriber, to differentiate themselves amidst the tube sites and the adult VR start up is as follows.

To the VR customer: “Hey, you are in interested in VR, we not only have fresh high quality content, but we have a huge back catalogue of this content and you get this too (as part of your subscription).”

The the 2D customer: “Hey, you are in interested in 2D, we not only have the highest quality content, but we also have this VR content and if you ever get one of these devices you get this too (as part of your subscription).”

If you are in London this week, I am speaking at VRAR World today Thursday 20th at 11:30, say hello.

Otherwise see you at OneZero, the pundit arena event in the RDS, Dublin, where I am chairing a panel at 3pm tomorrow Friday 21st.

On the Innovation Show this week we talk to Naughty America’s Ian Paul on Digital Publishing and Innovation in the Adult Industry with a ton of lessons for anyone in the content business.

One of Irelands pioneers in VR James Corbett talks to us about the evolution of VR, his experiences and his company Simvirtua and his meetup 3DCamp.

Chairman at GconnTec & President Host in Ireland, Garry Connolly tells us about Host in Ireland and the value of Collaboration and Coopetition.

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