Wednesday, December 08, 2010

What Internet Startups Can Learn From Comics And Porn Stars

It's no secret that media businesses have struggled with monetization in the Internet era. Journalism, for example, is famously in free-fall. But all the hand-wringing conceals a simple fact: There is a very successful model that has been around for decades, and it still works today.

All we have to do is learn from porn stars and stand up comedians.

While these two groups may seem dissimilar, they both follow the same successful business model: Give away content and sell the experience.

Content is valuable but difficult to monetize. You can't get people to pay for things they think should be free. Instead, use content to drive non-monetary value, such as awareness and loyalty, which you can monetize by charging them for things they are willing to pay for.

Take porn stars. You would probably be surprised to learn how little porn stars earn from appearing in films. A woman might make $500 per scene. To earn $100,000 per year, you would have to shoot 200 scenes per year. You don't even want to consider the plight of male porn stars who might earn $100 per scene.

So where does they money come from? Porn stars make their money in two ways. First, they build their own websites, and charge their big fans for subscriptions which entitle them to attend live broadcasts where they can interact with the star. Second, they hit the exotic dance circuit as "Featured Dancers", who are paid to dance because they bring in bigger audiences. The tips aren't bad either. Give away content, sell experiences.

The same holds true for standup comedians. You've probably seen those comedy specials on Comedy Central. How much do you think the comic gets paid for those specials?

About $1,000. And no royalties.

Comics make almost nothing from appearing on TV. What those appearances do is help them build awareness so that they can go on the road and make their money by touring.

When a comedian books a tour, they get paid a portion of the gate; their ability to build a fanbase is directly correlated with their ability to get paid.

Give away content, charge for experiences.

How can you apply this lesson in your business?

4 comments:

Paul said...

Spot on ... Rush Limbaugh employed the same model to become the most listened to radio host. Radio needed content, he gave it to them for free - he just gets to sell his own spots. Radio keeps local. His latest contract was for well north of $400 mm.

Chris said...

It's amazing how many people let ideology get in the way of talent assessment. Rush Limbaugh is a pioneer and one of the best in the business, but those who disagree with his politics refuse to learn from him.

acgourley said...

It doesn't seem like a stretch to equate that model with a freemium pricing model.

It gets easier if you rephrase the comic/porn stars approach as, "Exchange your talent for exposure when possible, and then sell premium experiences once you are well known."

John J. Walters said...

Great article, Chris.

And well summarized, acgourley.