This week both Playboy and the distributor of Penthouse U.S. video got hammered in the business press for lackluster results. The Street.com downgraded Playboy stock to a sell, and Motley Fool said New Frontier was having trouble pitching its X-rated movies because, well, too many sites give porn away for free.
The irony of all this is brand porn names led the way to the web. Then, information moved to the free, competitors gave away better content, and the old business models faltered. Purveyors of porn are now being followed off the online cliff by newspapers, magazines, the recording industry and TV broadcasters. Who will follow?
In the past businesses made a profit by removing friction. In essence, a huge rocky expanse lay between where goods began (say, risqué photos or news from India) and where consumers consumed them. If you could bridge that gap, you made money.
We know what the internet did to content models. So here’s a test. What about your business? Can any parts of it be made purely digital and easily created, duplicated or copied? And if someone does, and gives that away for free, what will happen to your profits?
(Photo: Playboy cover from 1966.)