We’ve all read the stories ‘Slow Summer for Porn’ .. ‘Sales are Way Off’ … ‘Girls are Getting Less Work’. I talked about it here on this site a few months back, right after AVN, that there’s simply too much product. Now the effects are being felt in a big way and it’s only going to get worse.

There have been some great stories of late on AVN, XXX Porn talk, DVD Talk talking about the issue. But be assured, this is not an ‘summer slowdown’ this is an industry correction.

The porn industry is now mainstream. It’s no longer ‘taboo’ to be a ‘pornstar’, it’s now cool to be a pornstar. So you’re seeing an influx of ‘new talent’. Eighteen years olds are coming to LA looking for fame and fortune, not as a model or a singer or an actress in mainstream… but as a pornstar! With ads in local newspapers saying ‘Make 20K a Month’ and pieces on Entertainment Tonight about rockstars and actors hanging out with pornstars, being a pornstar is the thing to do, the easy thing to do. It’s even cool to be a MILF in porn now, with an explosion of MILF titles. And the amateur market has exploded too. So instead of 20 new pornstars a month being email blasted from the agencies to production houses, there are 25 new girls a WEEK entering the business.

Gonzo titles are still 5 to 6 scenes each, you don’t see companies expanding to 12 scene movies to accommodate the extra talent pool. So all of these girls are fighting for scenes and a lot of them get shut out or are seeing their workload decrease so much that they can’t keep up with their ‘pornstar’ lifestyle. So what do they do? They dance, they escort, they network, they meet rich guys who have money to throw around. And whala, the birth of a production company. That’s a good thing, because the girls (and male talent too) are stepping into another phase of the business. A performer can’t get as much work anymore because they’ve been shot out or because there are newer, fresher faced girls, or because production companies are shooting less; so they go out and start a production company. Think about it, how many ‘pornstars’ have come out to announce they have started their own production company over the last year? A lot.

When a new production company starts up, they enter the DVD market and enter the fight for shelf space. A distributor has a weekly/monthly budget for buying new releases. When a new company enters the fray, it means someone else’s numbers have to drop. You can’t fit 100 DVD’s on a shelf that fits 50. There’s only so much room and only so much money to spend!!!

And thus begins the vicious cycle.

This doesn’t just apply to ‘pornstars’ starting companies. People who work on the inside of companies; salespeople, production managers, directors.. people who get cut loose because they can no longer be afforded by their companies, they go off and find an investor and start a production company of their own, same problem!!

I know a guy who started a big-time gonzo company just 5 years ago and after 2 years in business he was moving 4,000 units out the door at an average price of $9.00 per unit. I just heard last week that he now moves about 1,000 units on new releases and his pricing? Oh my god, you can get it for $4.00. And foreign deals? The ‘norm’ has been $5,000 for European rights on a title, this guy just made a deal for $1,500 a title. What does that tell you? It tells you people are desperate. Desperate to recoup costs, desperate to raise money to keep shooting. But the money just isn’t there. Look at most startup production companies, they blow through their initial investment capital on shooting titles and then THAT’S IT, there’s no more.

If you shoot a ‘quality’ title today, using at least 2 or 3 ‘A’ list girls, you’re going to spend a good $15,000 to have that title in your warehouse. Production costs, talent, editing, authoring, box art, sleeves, replication. To ‘make your money back’ on a $15,000 title you would have to sell roughly 1700 pieces, and to see any profit you’d have to cut a few foreign deals. Herein lies the problem and it brings me to one of the best pieces of advice I ever heard. I sat in on a meeting with a studio owner who was granting a director a release from his contract so he could sign a deal with another company and OWN his own product. The studio owner said, ‘It’s a different ballgame owning your own product. You’re no longer getting a $3,000 directing fee, instead you’re paying out all the costs and all your money ends up sitting on store shelves and you have to wait to collect." The waiting is what kills you!!

Today, it’s a buyers market in all regards. Retail stores lower their prices and offer specials because they have to compete with VOD and Cable. In turn the distributors have to lower their pricing to the stores. The distributors are the ones truly in the drivers seat because with such a glut of product available weekly (over 600 new releases a week compared to 50 a week 10 years ago) that the buyer can be picky and demand lower pricing. If the buyer doesn’t get what he wants, he’ll order LESS or order NONE and pick up titles from a hungry studio willing to sell at any price. Why pick up 100 of a number at $15, starring Tory Lane and Brooke Haven… when another company has a title with Katsumi and Roxy Jezel selling at $6.

Pure and simple, it’s a numbers game. The amount of product is up, the sales per piece are down, the price per piece is down, the profit margin is down. How do some companies respond?? "We’re making less money per title, so lets ship more titles to make up for it" …. flooding the market even more. With less profits means less shooting, with less shooting means performers make less and less, when performers make less and less they find alternative ways to make money, such as start a production company… and the vicious cycle continues.

What’s the solution? There is none. The only way this will get solved is if the market corrects itself on its’ own. Companies will run out of money and shut down. New production companies are STILL forming, even during this dark summer! The only ‘possible’ solution would be for these startups to hook up with an established company and get placed into the companies release schedule. Think of it like this. If one company releases 2 titles per week and takes on a few new production companies to distribute they can stretch the release schedule to 3 titles a week and thus picking up 4 new releases a month. This addition would NOT conflict with other titles on their release schedule and would not put any titles in competition with each other, thus giving the buyers a chance to breath! But will this happen? Nope.

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