FriendFinder should have advertised on Adult Cyber Mart when they had the chance; they didn’t, and we put the booga-booga on them; don’t let this happen to you.
from www.bnet.com – The stock of FriendFinder Networks (FFN) — which also owns Penthouse — tanked following its IPO, sinking from $10 at its opening a few days ago to $5.85 at yesterday’s close. Investors balked when the company announced a revenue decline of 3.1 percent to $83.5 million in Q1 2011.
The Q1 earnings report, however, gives an interesting glimpse into the economics of porn: It turns out the models make more money than the company does. Also noteworthy: Playboy, the only other company that (until recently) has traded publicly was also a money loser. Both companies actually had thriving adult entertainment businesses buried within them, but both were saddled with the costs of their dysfunctional legacy print magazines.
About 22 percent of FFN’s revenues from from a “live models” business, in which consumers can watch performers, er, “perform” on webcams. Commissions to models and their studios are 32.2 percent of those revenues. Some rough math shows that the models and their studios collectively received about $24.5 million in commissions from FFN last year. The company, by contrast, lost $43.1 million.
FFN is a big business: Just under 1 million people use its adult “social networking” (i.e. dating) sites every year, and the dating sites are only one segment of its business.
FFN generated $346 million in sales from all those customers last year, (far greater than Playboy’s $215 million, interestingly, given the disproportionate level of media interest in Hugh Hefner’s brand).
Like Playboy, FFN has a disappointing ad business. It had to spend more on advertising to get subscribers than it made by selling ads on its sites and in its magazines. Around 20 percent of FFN’s revenues go to affiliates who send the company web traffic; at a maximum, about 3.1 percent of its revenues come from selling ads in venues like Penthouse.
The lesson seems to be: if you want to make money in porn, go digital (or be a model).