Do you think this business is recession resistant?
 

With Home Loans taking a dump and the 2nd largest Mortgage company looking like it is doing the same, I think we may be looking at something coming that we have never seen in this business.

A few weeks ago, Allen Greenspan said we are heading for a recession. Shortly after that, he said, we "may be" heading for a recession.

Most people know I am far from Chicken Little. But, what happens to adult entertainment if a full blown recession hits the US? Wouldn't most online paysites, adult or otherwise, be the first cut out of someone's budget?

In this case, I would be very happy to be wrong.

Jim - I think that you would find that sales would increase - the "mental depression" that comes along with that type of economic change usually increases peoples staying at home and finding online stuff to do - very similar to the boosts you see from singles around the holidays

You should have seen a big drop back when oil prices skyrocketed if the case you are thinking was going to happen - and it actually increased

Throughout the last 100 years or so - entertainment has always blossomed when hit by recessions - of course we're just a part of that entire market but I think it would be a boon

I do hope you are right Linkster.

I have always said that our business is recession proof when I talk to people outside. But, who the hell really knows?

I'm not quite so optimistic. Having been through a bankruptcy, the first thing that disappeared was my credit card. If a lot of porn buyers go bankrupt they will be unable to buy porn the easiest way and will likely just settle for what everyone is giving away for free.

Who the hell really knows is probably closest to the truth, but I have to agree with Linkster. Porn may not be recession proof, but I'd bet that any lost members will be offset by new signups from people cutting back on other things but compensating with more porn. Or at least that's what we've been seeing happen everytime there's been a recession-like scare for the last 10+ years. I think it's related to the reason why you always see pawn shops and liquor stores close together.

I'd add that general porn signups may see more of a decline, while fetish niches and other "need not want" porn signups will increase.

But who the hell knows.

The demographics for porn buyers(see the $97billion thread) seem to be mainly in the upper income levels. These people would tend to be more steady income wise, and probably less likely to be involved with high ratio mortgages.

As Linster said, I figure the lower income groups may also increase their porn buying somewhat.

I think we been and still in a reccession

I see my traffic numbers go up and see a decline in my income

its taking more traffic to make the same is what I am seeing, and other webmasters I've asked see the same, unless it's us lower traffic ones who are hurting

also there's such a wide gap between the upper class and the lower middle that it's crazy

most of americans are in credit debt trouble now and are using there cards to buy food when they make a payment each month...

I think thats why the ratios are a lot more shitty now, there's so much free samples to look at, and there's a hell of a lot less people who can throw away 30 to 60 dollars a month

nothing imo is recession proof...

I wish there was a way to just slide money in your pc tower to buy a trial or a full membership, I feel most dont want more payments and interest, and dont trust the system to buy porn online

I'll throw a couple of pennies in here.

If a recession hit the States, does that mean the rest of the world would stop buying porn? If a lot of people lost their credit cards, there are still other ways of payment such as phone and check. Maybe they would gain more popularity or another type would come into play?

I also think in such a time, more people may find more time to play online as Linkster suggested. Who really knows though is what it comes down to.

Lowry's got some good points. But if a recession hits the US it will likely be worldwide eventually since a lot of major economies are based on the US dollar.
And since credit cards aren't used as much worldwide as they are in North America I'm certainly going to be looking for sponsors that offer alternatives. I'm not panicking, but I'd like to see more sponsors that pay me in Euros anyways, and offer more choices like Euro-debit and 900 #'s for surfers.
A few people in a few threads here have said that European traffic converts very well, and I get a lot of hits from Europe now, so I'd like to be able to sell to them more effectively.
If a recession does hit, I think alternative forms of payment other than cc's will save our asses, and I'd like to start using them now.

I've been flat ass busted a few times in my life
but never to broke to beat off :D

I think Linkster's right. I do a fair amount of consulting here in So. Cal with folks in the entertainment business and have been told more than once a weak economy is great for business.

Today's World Markets 3/14/2007:

Hang Seng -496 points or 2.5%
Nikkei -500 points or 3%
DAX -176 points or 2.6%
FTSE -160 points or 2.6%


While this doesn't look like much more than a "correction" to an overly inflated market coupled with the sub-prime market in the US taking a dive,we are the #1 consumer of products from China, Japan, Germany and the rest of the European market, I'd say if the US has a recession, there will be some ripple effect worldwide. The fact that the Dow came back today doesn't mean squat

However to the original question, I pretty much think Linkster is right.. it's much more "economical" to buy a 25-30.00 monthly membershiip than to spend 100-150.00 for 1 night out on the town. We may see some downturn initially but after a few weeks of unemployment and realizing that no one is hiring at their current rate of pay, then they will live in their bathrobes and look for porn.. |thumb

People tend to delve into their vice's during a recession, that's why I will be buying more stock in DEO & NOOF :D

This is exactly what I was going to say. People get down on shit and drink, look at porn, etc. to escape the reality of the situation that might be happening in their life.

Cheers,
B

I think porn will always sell, Right after 9/11 I noticed an increase in sales

If people are home more often there will be more people on the web
which cant be bad for sales

what makes me wonder is all these prepaid credit cards
I noticed my local 7/11 selling prepaid visa's

what will that do to the recurring buisness model and what will that do as far as a COPA issue

I also was amazed at how well my 1st pay site BV did during the whole 9/11 thing and the slump in our economy afterwards. Sales never slowed down a bit. In fact quite the opposite.

Yes this is 100% correct, if you have some cash to invest.

Like the exchange sell high buy low

I had to "enjoy" first hand experience of crashed economy in my country and here are my observations:

1. Shady businesses flourish - black market, smuggling, cheating
2. Government becomes corrupted, justice system slows down
3. Inflation + shortages in retail stores
4. High budget losses
5. Financial instabilty

This factors must be considered whenever we speak about economic crisis.

What I don't know is to what extent US economy would be damaged in case of such crisis. From outside, it looks pretty solid and it's hard to believe it could suffer even from major breakdowns.

It's true that more people at homes means more signups. But who will stop sponsors shaving?

Tangent Time :)

There are a lot of CC's putting on the back & in their TOS that having a CC is not proof of being over 18 years of age.

That talked aobut this at one of the XBiz seminars last year in Vegas & how the CC companies were trying to cover their asses with "not proof of age" statements.

I read an article once which said that consumption of hotdogs increases during hard economic times. The thinking goes that a person could feed his family of 4 for under $10. True story! So I would imagine consumption of porn would decrease. You've got to feed the belly not the dick.

If you look at the stock market trends, during times of recession, oddly, restaurants and entertainment venues have had upticks. The explanation has always been that people actually go out to dinner, go to movies, etc as an 'escape'

I don't think the industry is recession resistant, perhaps more tolerant.

I think that today's issues are caused by people that lived beyond their means by sucking every bit of equity out of their house, or taking advantage of the teaser interest rates on adjustable rate mortgages. I didn't understand that trend... fixed rate mortgages had been at their lowest in years, but, in that quest to save 2% on their APR, people got variable interest rate mortgages -- knowing that interest rates probably couldn't ever go any lower and could only go up.

As a result, certain segments of the industry are probably hit harder than other segments. College grads/attendees may be less likely to whip out their credit cards.

Even though the real estate market is in a bit of turmoil in Florida, our local Aston Martin/Lotus/Range Rover dealer seems to have problems keeping enough cars in stock because they are selling too quickly.

That dealer was interviewed right after 9/11 when GM, Ford and Chrysler all started doing the 0% loans and they asked -- with the average purchase price of your cars being $120k, you still hold your interest rates at 12%, does that affect your business?

The Manager replied, I really cannot recall the last time we financed a car here.

The real estate market is having a little trouble all over the country - right now foreclosures are up 48% from this time last year - although it really started around June of last year

As far as what people will spend their money on during a recession - I tend to look at the US census/consumption data - and usually pick something like liquor/beer sales - looking back over the last 10 recession cycles, there has either been no change or an increase in spending on liquor during recessions - although overall in the US it has declined significantly over the last 100 years, the spending sure hasnt changed (adjusted of course)
I figure if the guy can go buy a six pack he can afford the 2.95 for a trial :)

I would think all this "desperate people will turn to porn" to be true if it didn't have to be paid for with a credit card or checking account...etc. Wouldn't this be the first time that a business model depended on someone having these during a recession to survive?

i dont think this bizz is recession resistant...well mmmmmmm holland went to a very bad economy the last years but still most of my sales came from the usa, USA BIGGGGGGGGGG country...holland very smal small country, now as a foreign webmaster getting paid in dollars a recession will suck big time, no use to promoot dollar paying sponsors when the dollar has a value of nothing, sure i have profit from it...cheap hosting, cheap content but sucks in payment when i have to change the dollar in euros, to prevent getting hit by a recession of the usa i would go for the european countries and change my sponsors in euro paying sponsors to get the most payment.

Although it might hurt the recurring business model, it would also open up a lot of opportunities. Theres a huge market of people that either don't have CC's or don't want adult sites showing up on their statements.

I think things this time around if a hard recessions hits will be different...

years past there was not as much to do for free as there is now...

you got tons of tv channels, pc games, console games, and a ton of free porn samples to look at... plus go rent a movie for 2.00

sure gas and cigs and beer will still sell the same, but I think the porn biz will go down a bit, I hope not...

if people will buy a 6 pack and a 1.00 or 2.95 trial how many will convert to a full monthly? and how long can the pps sponsors continue to pay that if hardly anyone buys a full? or cross sells?

I agree that most people bought to much on there cards the last 5 to 10 years and it's affecting the mostly service econemy that we have today, once you pay your mortage, car payments, food and high ulities bills and 2 to 4 credit cards and 3 to 6 department store cards, there's not much left to spend after all that...

those bills would be considered normal but when most of your cards are close to maxed out, then IMO people don't wanna whip it out as easy as before...

I am not gonna doom and gloom I am gonna try and figure out what porn the upper class want and promote programs that pay in euros

Porn is a special market, people will always be horny no matter what.

I have no idea how americans react to the unstable economy at all, in my eyes americans are strange people anyways (runs and hides, lol)
But the good news is: for most people outside the US, buying anything thats priced in US $ these days are give-away-cheap.....
Maybe the people in ex. Europe will open their wallets and pull out their card more often because of this....

But, guess porn is a one of a kind market, and thinking of the numbers of shows featuring girls way back in 1929 -----> , I would say people need something to just enjoy because they want to, maybe even more when times are not the best.....
That's my hope at least lol

The industry is very recession resistant.

1. With the new bankruptcy laws CC issuers have increased advertising by over 30%. They can now give cards to every one and they know that sooner or later they will get paid.

2. People will spend less money on expensive entertainment and more on cheap stuff. Instead of generating $50 in bar tabs every weekend they'll stay home, drink a few cheap beers and suddenly that $19.99 membership to a porn site really starts to pay off.

I think surfers will want more for the $$$ so bad sites will lose out but sites with content that can keep people interested will continue to do well.

No offense to any Americans (some of my best friends are American!!), but I can't understand the way Americans see and use money yet, so no idea about how the recession will effect this market. Over here, when things get tough financially, you cut down on all expenses, and fun things go out the window first. In American, people seem to retain a very comfortable lifestyle even when they are said to be "broke" or even bankrupt, so go figure.

Not just booze and cigs; don't forget what happened to National Geographic during the 1930's. |thumb

The way $$$ circulates changes all the time but human needs for sex and intimacy have stayed the same for thousands of years.

Getting a computer and plugging into the web is pretty cheap, all things considered.

i am realy not waiting on a reseccion from the usa, we had one already the last years since those stupid morons invented the euro, all prices doubled here since the euro, also we have alot of dutch companies in usa, so when usa goes bad holland will go bad too, i cant imaging it will not infect the adult industry if it already infect all industries, i already hated when years ago i went from collecting 100 bucks getting 120 euros to 68 euros, i was raley thinking to drop bizz but i didnt gave up, i am not gonna give up 6 years of working, if it will infect the industrie and i think it will i change back to euro sponsors, till now the euro is still stronger then the dollar and it will be that way for the next years specially when usa will go in a recession, one good thing is to buy dollars and wait till the usa go a good way again...oh and i forgot to say. yes a cc is important when concerning a recession and also the value of the dollar is a very big issue.......when the dollar goes down in value, people will have less to spent, and realy they have to make a choise of feeding their fam or spending the money on porn...make your pick...what would you do:D

one thing, dont think the USA cant be hurt, because they can, it happend before and it can happen again....maybe Bush think he can rule the world, but then Bush is a moron, clear fact a recession, lower value of the dollar, all will be more expensieve...also for the bigger earning money making people, but USA is a big country, now tell me that your country has more rich people then poor people then i wont worrie about the bizz, still more then 50% of the porn bizz is earned from getting sales of USA people..........make your own conclusion out of that one...when USA go in a reseccion

I don't think any business is "recession proof", but I think that the effects would be less harmful to our industry than many other luxury-type industries. It's not like we're heading into another great depression. Having a lexus is nice, but its not a primal need. No one pleasures themselves to rolex watches and mansions (as far as I know, maybe that a new niche...). As long as chicks keep being hot and guys keep enjoying looking at them, there will always be a market for porn.

Would an economic downturn cut into profit? Surely.
Is it ever going to be bad enough that its not worth it? Highly unlikely.

Just my 2 cents.|bananna|

Just Checking
 

Salman Khan
Salman Khan
http://www.google.com/
www.google.com

I reckon to the majority of the paying porn surfers porn falls into the necessities IMO along with tabacco and alcohol

So it should still get enough custom to be recession resistant I guess

Maslow's Hierarchy of Needs puts sex as a necessity right after protecting yourself from man eating tigresses. |virgohippy|

They say Sex, alcohol, and gambling are recession proof right?

I was really surprised to see that I started this thread back in March.

Now with the mortgage business really taking a shit, the dollar at a new low, oil and metal at a new high and the stock market getting really wacky, it looks like an almost certainty that the US will be going into a recession. Inflation just has to catch up with the falling dollar and we should be there.

I have never been about doom and gloom. But, I really think we are going to get the answer within the next year or two.

Oh yeah...sorry to bump an old thread :)

Any theories on the reason?
Whatever the US economy does effects the UK especially on fuel prices.
The banks have fucked up in a big way on giving credit away to bad debtors which is also the problem here, and like with anything, it always has a knock on effect on everything else.