As previously discussed in Kikabink News, many Internet marketers regard the online adult entertainment industry as being at the cutting edge of online marketing. But how many of us really know what developments online adult entertainment websites have pioneered, and why and how they came to do so?

Well, a recent presentation by Fiona Patten of the Australian-based Eros Association provides some clues. If it’s true that adult entertainment sites have led - and will continue to lead - innovations in Internet marketing, then Ms Patten offers some interesting insights for all Internet marketers.

Firstly, a bit of background to this article…

The Churchill Club - a non-profit organization for technology entrepreneurs started in Silicon Valley - has a chapter here in Melbourne, Australia. Like its Silicon Valley counterpart, The Churchill Club regularly organizes events where visionaries and technology entrepreneurs come together to listen to a presentation from a thought-leader, and then engage in a question and answer session.

The Churchill Club’s most recent event involved the presentation by Fiona Patten, executive and founding officer of Australia’s national adult retail group, the Eros Association. My husband / business partner was going to attend the event but couldn’t make it. Instead, he received a recording and some notes about Ms Patten’s presentation.

We’re not allowed to link to, or distribute, this recording, but I think Kikabink News readers will find some of the key points from Ms Patten’s presentation quite interesting.

While Ms Patten talked about adult entertainment sites in Australia, given the global nature of online adult entertainment I suspect similar forces are at work in the industry throughout the world.

The first key point is that many of the past innovations in online adult entertainment were driven out of necessity due to extreme market and regulatory forces.

For example, the industry was so quick to embrace the Internet largely to solve distribution problems. While laws restricted the sale of adult entertainment products in various places in the ‘real’ world, the Internet was (originally, at least) a huge distribution network unfettered by such restrictions.

Similarly, the reason online adult entertainment purveyors brought third party payment gateways to the fore was due to the refusal of banks to deal with them!

Many current innovations were also led by adult entertainment sites. They were among the first, for example, to deliver content via Flash players on their websites.

Right now, adult entertainment sites are also adopting more user generated content, where they share revenue with users on a revenue share basis. They are using revenue models ranging from monthly memberships to pay-per-clip, pay-per-minute and free, advertising supported models.

In terms of where the online adult entertainment industry is headed, shorter clips are becoming more popular than full-length movies, with 7 minute clips becoming the norm. Adult entertainment sites are also giving viewers more power of how and what they watch, even giving viewers the ability to select the camera angle for the content they watch.

More generally, the online adult entertainment industry is dividing into tighter niches, with the development of community sites based on user generated content. There is also a move towards offering a mix of online and off-line products.

Not only is this targeted at fighting piracy, but presumably it’s also aimed at addressing consumer demand and marketers’ desire to build more comprehensive relationships with their customers, and not be so reliant on the online channel.

Any of this giving you ideas for where your niche may be headed?

Source: Fiona Patten, “Lessons From The Edge,” The Churchill Club, December 4, 2008, The Churchill Club

The New York Times reports that, in just a few weeks, orders for both business and consumer tech products have collapsed, causing technology companies to lay off workers.

How serious is this? Serious enough that tech executives are comparing the situation with the dot-com crash in 2000, when hundreds of companies disappeared and nearly a fifth of all Silicon Valley jobs were lost.

Source: Ashlee Vance, “Tech Companies, Long Insulated, Now Feel Slump”, The New York Times, November 14, 2008

When the volume of spam hitting my inbox dropped suddenly last week, I thought it was just me. It seems, however, that Internet users around the world have seen a significant drop in spam. And now the intriguing story behind the sudden drop has emerged…

Brian Krebs, reporting in the Washington Post, says that at about 4:30 p.m. EST last Tuesday, the volume of spam being delivered across the world dropped by about 65 percent. It seems that various Internet service providers discovered that a web hosting company in Silicon Valley called McColo Corp. was hosting organizations responsible for much of the world’s spam.

Unfortunately, the relief is likely to be temporary. Those spammers are likely to find other hosts! But Brian Krebs asks a reasonable question: why did it take so long for anyone to work out that a firm in the heart of the Internet and computing community - we’re talking Silicon Valley of all places - was distributing the bulk of the world’s spam?

It appears that McColo - which has not been charged with any crime - hosted a number of key Internet servers (i.e. computers that host websites and send out email, etc) which controlled networks of computers. These networks were used by their various owners to turn hundreds of thousands of compromised PCs into spam distributors or ‘botnets’.

McColo effectively ran the ‘master servers’ that the various dodgy spam organizations used to take over the botnets which, in turn, were used to send out all the spam. When McColo’s Internet service providers took it offline, the master servers went offline… which meant the botnets could no longer be used to send out spam.

Source: Brian Krebs, “Answers Trickle Out as Spammer Networks Remain Compromised”, November 19, 2008

Legendary Silicon Valley venture capitalist John Doerr, polled executives from the companies his firm, Kleiner Perkins, has funded, and came up with 10 tips for new and struggling tech startups in the current economic environment:

1. Act now and act fast, including, if possible, raising more capital.
2. Whatever tough decisions you make, be careful to preserve the vital core of the business.
3. Save or raise 18 months or more of cash.
4. Defer capital expenditures. For example, instead of buying more PCs or more software, use web-based applications.
5. Negotiate with suppliers and vendors to get more favorable (longer) payment terms.
6. Get everyone in the company selling - not just your products and services, but your ideas and the company itself. Focus on increasing revenues.
7. Replace cash-based bonuses with equity-based bonuses. Consider a voluntary salary deduction program to keep staff on.
8. Invest cash in a safe place e.g. Treasury bonds.
9. Monitor indicators of whether and the extent to which revenues are coming in. Ideally, you’ll want indicators that tell you whether you’ll be getting revenues or not 90 days in advance.
10. Regularly communicate with staff, investors, and customers.

Source: Jason Kincaid, “VCs Speak On The Economic Downturn: Batten Down the Hatches”, TechCrunch, October 29, 2008

In 2000 it was the dot-com crash. Right now it’s the death of Web 2.0.

According to Michael Arrington, writing in TechCrunch, the recent crisis on financial markets has ended not just easy credit, but more importantly for many startups, easy capital.

Just as occurred following the dot-com crash, it seems that venture capital firms will have less capital to invest in startups, be much more choosy about which companies they do invest in, and will be more actively involved in how the capital they have invested in startups is used.

With less money available, Michael Arrington predicts startups will start laying off people, with the ‘bulging marketing and communications departments’ the first to go.

Apparently that’s not such a bad thing since these are not only ‘the very people who make Silicon Valley such a nasty place to be in the boom times’, but as ‘the number of startups dwindle, it won’t be so hard for them to get attention from press and users, so those marketing and PR flaks won’t be missed all that much.’

Of course, it’s my view that tough times call for more marketing and selling - and less techie perfectionism – so I’m not sure that slashing and burning in the marketing department is the best idea.

Then again, we’re talking about people who equate ‘marketing’ with fluffy, irrelevant, non-direct response advertising and PR. Hardly real marketing, is it?

Meanwhile, this quote from Michael Arrington is priceless:

“We’ll look back in later years and think of this most recent boom as the Web 2.0 period, when we were wowed by the magic of user generated content, copyright violations on a massive scale, and neat little widgety things that used Javascript and Flash to turn web pages into pretty close equivalents to the old desktop apps. Of course there were other evolutions as well. Advertising technology has advanced steadily, particularly in tailoring ads to an individuals needs, and tracking them properly. This is the period that social networking as we think of it today was born, and we’ll never be rid of it in our lifetimes.”

Dot-com. Web 2.0. Boom. Bust. At the end of the day, no business survives without… marketing.

Source: Michael Arrington, “An Ignoble But Much Needed End To Web 2.0, Marked By A Party In Cyprus”, TechCrunch, October 10, 2008