Last week, I was one of the presenters at the Cybernet Expo, sitting on a panel asked to declaim on "The State of the Industry." In this case, "the Industry" refers to the "adult" industry - though nearly all of my perspectives are as applicable to other industries as they are specific to the world of porn.

But before that, let me tell you about the great business idea I've just developed. Don't let the fact that it's a "new model" throw you - for now, in fact, try to imagine that it builds on a legacy of closely-related models except for one big change.

First, here's the hypothetical universe in which my model resides: in my hypothetical universe, people have always had to pay for the water in their house - it has been hauled in by trucks, or brought home in big bottles, and it wasn't very cheap at all (I know, some people always have had to pay - others have paid only very low/flat rates, and some crazy folks like me get their water right out of the ground for no direct cost at all!). Recently, however, in my hypothetical universe the cost of wholesale water has dropped enormously. Now it's much cheaper to buy water by the mega-tonnage than it was a few years ago. However, folks are used to paying for water already and it's not at all clear how this water at the wholesale level will actually get to the homes of people who want to use it for things like cleaning or (the luxury!) showers.

So here's my business idea: I'm going to set up distribution facilities in ever neighborhood, more depots than Starbucks has stores. I'll keep costs low by having them be automated, unmanned facilities. At each one, I'll have that new, low-cost wholesale water running in a continuous stream - you can reach out and touch it! And right there I'll be selling these nice, glass, fancy bottles. All you have to do is buy the bottle and you can fill it up with water and take it home. Now, the bottles cost alot more than the "usual" bottle of course - that's the whole business plan, see? People want that "free" water so they buy one of my expensive bottles, fill it up, and they still get water at home for far less than they used to have to pay.

As far as I can see, this is a no-brainer - guaranteed success. It's cheaper than the old way of buying water, the bottles are recyclable (no problems with eco-status), and that marketing temptation of that always-running cascade of water is going to be irresistable to folks as they walk by the depot on the way home. Hot day. . . running water. . . for a few bucks, you've got your water in my nice glass bottles and you're a Happy Consumer. I'm also getting rich, of course, because I'm selling those bottles for a big margin - and that water you get for "free" costs me basically nothing at wholesale now. It's win-win!

What's that, you say? Some freeloader might come by my water depots and steal the water without buying one of my bottles? Who would do such a thing? That's theft! Surely people will see the moral issue here, right? I mean, just because that water is flowing freely there doesn't mean it's actually "free" - there's a sign right next to it that says, in all capitals, "UNLESS YOU BUY THIS BOTTLE TO PUT THE WATER IN YOU ARE STEALING THIS WATER AND YOU ARE THE SCUM OF THE EARTH." Isn't that enough to stop those sneaking thieves?

Well, anyway, if that's not enough we'll put security cameras in the depots and record whoever steals MY water. Then we'll sue them in civil court, and either they settle the lawsuits or we'll bankrupt the thieving assholes - my lawyers tell me I can send out tens of thousands of automated "demand letters" to people and most will just settle because they can't even afford a lawyer. Losers. Oh, and since I'm making all this money selling those glass bottles, I figure I can run some TeeVee ads "educating" people that stealing water is an horrific crime - it's like terrorism and murder and child rape, all rolled into one! Right, good point - I'll hire some lobbyists and maybe start the "Rippling Indignity Association of Assholes" - it'll be an astroturf/grassroots "water rights" organization that, you guessed it, lobbies against those God-damned water thieves and their thieving ways. It's not like the thieves can afford to hire lobbyists anyway - this'll be easy, like beating up a woman in a wheelchair.

Oh, wow. . . good point! Now that I've got those lobbyists on payroll and hanging out with their bought and paid for, err I mean "recipients of major campaign contribution," Senators and stuff, why don't I just go ahead and write myself some new laws against the scourge of water theft? Yeah, I know, the Senate probably has "better things to do" than just ensure I make the most money possible from my bottle/water model - economic collapse, healthcare accessibility, ecological catstrophe/ecocide - but really why should I care about all that crap? I pay my lobbyists good money to ensure that they pay "their" Senators good money to make sure MY needs come first! That's the American way, after all. Anyway, yeah, we'll write up some new laws to ensure nobody steals my water - if they even think about stealing a drop of it (without buying a bottle from me first), well handcuff the bastards and waterboard them - ha ha, ironic. Yeah, it'll be expensive to put a few FBI agents at ever one of my water depots, 24/7/3657 - but hey it doesn't come out of my pocket - that's a "taxpayer expense" and that's what I pay lobbyists for. Hell, we might just pass laws that say if we see ANYBODY drinking water out of a bottle that's not one of mine, we arrest the bastards and they can cool their heels in prison while they try to "explain" how they bought that water fair-and-square and for some crazy reason transferred it to a non-authorized bottle. Idiots, they are only getting what they deserve.

Above all else, I'm going to repeat over and over that what I'm really for is "Water For Everyone!" Yeah, I know, I'm actually subverting the entire institution of civil governance specifically to prevent people from getting my water (without paying) - but I can by TeeVee ads and if I repeat "Water for Everyone!" enough it'll stick, trust me. I'll have so much money I won't be able to count it - maybe I can hire some laid-off Wall Street geeks to do that for me. It's sure good that, as a society, we all agree that "stealing is wrong" - now I can build a business that makes me rich and drains social resources, while at the same time encouraging fascistic, totalitarian government surveillance and subversion of civil liberties. All that crap doesn't make ME a dollar, anyway - why should I care if it's trampled underfoot? I've got a yacht to buy, and it's my RIGHT to have society pay for the police state necessary to ensure I make that money.

How do you like my business model? "Water for Everyone!" An unbiased observer might suggest that, well, I've created a "business model" that makes an easily-portable "product" freely available and easy for anybody to access. Tacking on a "rule" that only people who buy that product using an approved - and utterly inconvenient, expensive, and unmanageable - delivery service (i.e. the glass bottles) isn't going to do anything to prevent people from using that freely-available water whether they buy the bottle or not. Yes, I can call it "stealing" and wind myself up into a mouth-foaming frenzy about the dirty fucking thieves who are stealing MY water. But wasn't I the one who created a business model and a distribution structure that intentionally makes it trivially easy for non-paying folks to use the core service in the first place - and isn't part of the "profitability" of my business model specifically dependent on that low-cost distribution that simultaneously makes "unauthorized" use of the product inevitable? I mean, it'd be like putting an "honor system" fruit stand in the middle of a busy neighborhood and being shocked that there was shrinkage relative to 100% payment rates. A but unreasonable.

In fact, someone might go further and suggest that I am absolutely acting as a social parasite by creating a business model that entirely depends on the ham-fisted enforcement mechanisms of government to ensure that nobody "steals" my almost-free product, and that my "profitable business" would be a hopeless fiasco if I didn't externalize these "enforcement" costs onto society as a whole. Like someone who tears up public roads so they can re-use the recovered asphalt to pave their own, private roads. . . this is just a sophisticated form of stealing from the common good to line my own pocket. Further, when I start lobbying to pass laws specifically to make anyone who doesn't toe the line and line my pockets a criminal, I have actually made myself a traitor to democratic governance overall - it's a form of mini coup d'etat.

By now, I'm sure readers will see where I'm going with this hypothetical business model, "Water for Everyone!" When a proposed business runs smack into the utterly impractical unreality of trying to get people to pay for stuff that it's trivially easy, cost-free, practical, convenient, and culturally well-accepted to access without paying, well, it can't be a surprise can it? There's examples, in fact, of "privatized" water services in South America that tried to start charging people for water after the municipal, state-owned utilities were sold off to the "highest" (or most politically connected) bidder. No surprise, people rebelled against making some private company rich by paying for water they have received for little or no cost all their lives, and their parents' lives, and their grandparents' lives. This is not a surprise. Making a business "model" that assumes otherwise is dumb.

In a nutshell, this is the perspective I offered at the Cybernet Expo panel. This isn't a question of morality, or ethics, or "stealing." It's a simple question of entrepreneurship: does an entrepreneur put themselves in a place where they will fail - economically - without Orwellian state enforcement of intrusive, un-democratic, surveillance-state clampdowns on the usage of shared network resources? Does an entrepreneur then sit around and bemoan how "unfair" it is if the government doesn't quite act aggressively enough to behave as a taxpayer-supported enforcement arm for private economic interests? No, an entrepreneur sees the market and the market structures as they actually exist - not as they "should" exist, but how they really are - and the entrepreneur seeks ways for her company to provide real, sustainable, long-term value to her customers given the reality of the market as it stands. This seems such an OBVIOUS point that I can't believe I find myself making it in front of smart, well-informed crowds and it's received as if I've just proposed a viable Unified Theory to combine quantum and relativistic gravitational models. It's not - it's just stating an utterly basic, simple, unchanging fact.

Entrepreneurs don't exist to force markets to behave as they need them to in order to make money - entrepreneurs mould their OWN behavior around markets, in order to add value and thereby create economic gains. This fact is old as capitalism itself, as old as folks using "mediated value" to organize their social relationships.

Now, it's true that existing, well-funded, profitable enterprises will (and always have) sought to "capture" governmental institutions in order to defend their own economic interests. This should surprise nobody, it's neither "unethical" nor unexpected. It's how corporate structures behave, given their incentives and the potential costs of behaving in this manner (i.e. zero). It was the Big Three who lobbied to tear up the old streetcar lines in Los Angeles - the best way to "compete" against free public transportation is to kill it off with some well-placed lobbying efforts. This is not new. Big Oil has poured tens of millions of dollars into creating "skepticism" about global climate change, for a decade - only now, with global climate change well underway (and all but impossible to "argue against" except for flat-earth/6000-year-Genesis types anyway) are they "admitting" it exists and suddenly changing their lobbying tune. In the meantime, they have earned HUNDREDS OF BILLIONS of dollars of PROFIT (that's billions with a B, remember) by having stalled any efforts to constrain the externalization of CO2 costs onto future generations. Was it worth it for them to forestall these actions? Yep - a few hundred million, in total, in lobbying and fake 'grassroots' groups and TeeVee ads with blue skies and green fields, versus a few hundred BILLION in profit? That's a million-to-one return on investment. Not bad.

Which is to say, it may make sense for existing oligopolies (i.e. RIAA/MPAA) to argue that the world is flat and the moon is made of cheddar cheese. That's what they do - they defend their existing business models until they can't afford to do so any longer. That does NOT mean they are "right," in any sense of the word - nor does it mean we need to follow their arguments like zombies after fresh brains. We must weigh their arguments, logically, and see if they hold up (in this case, they don't). We must NOT allow them to start "putting their thumb on the scale" by changing the very LAWS under which we all live solely to protect themselves against the realities of market transition! That's utterly pathological.

Look, this isn't a complex situation - there's big technologically-driven changes afoot in many markets nowadays. Anything that is "composed of ideas" (as Chris Anderson has put it, in one of is many pithy-but-useful turns of phrase) is going to see this transformative whirlwind or more likely is already seeing it. Old players in these markets will "fight" these changes the only way they can - they'll use their existing financial and political clout to try to "muddy the water" and delay any change they can, however long they can. They don't care about the societal cost of these delays - it may cost society a billion dollars in lost economic opportunity for them to make $100. From their perspective, that makes sense. From ours, not so much. . .

The funny thing about all this is that these transformative changes are opening up massive, gaping, growing opportunities for new players who don't waste their time trying to delay the inevitable - and instead survey the landscape, make some reasonable predictions of how things seem to be moving, and then hop in to try to create customer-useful products/services that actively leverage these changes to improve overall service levels and/or lower costs. An idiot stands and "fights" with a wave of water coming towards him. A smart person paddles, stands up, and surfs that wave of water for a wondrous and timeless experience - stopping only when the wave dissipates and she is left standing on the shoreline, ready to ride again.

Which are you? Are you standing, fists-up, to "fight" the wave coming at you? Good fucking luck, bro. You give 'em hell, punch hard! Ha ha, it'll be funny to watch. In the meantime, the smart folks are surfing right over your flattened ass aren't they? Who is "right" and who is "wrong?" Is the wave "stealing your right to stand up," or are you just too dumb to realize that the wave is stronger and broader and more deeply-rooted than you are? Are you going to get "the gub'mint" to arrest the wave, torture it, and "make an example" of it so other waves don't try to do the same thing? You might drop a nuclear bomb on one set of waves and wipe it out (/cough/ Jammie Thomas case /cough/) but there will be more sets, more waves, more change. How many nuclear bombs do you have at your disposal? How much of our cultural heritage are you willing to flatten with your self-centered demands that the waves stop?

The adult industry is absolutely the white-hot center of this transformative cyclone. That's why I'm hanging around in it lately - no it's not because I'm a porn hound, not even close (indeed porn speaks to me very little, for deeply personal reasons). I don't even have a "dog in the fight" in the porn world - never made a dollar from porn "content" and it's not likely I will any day soon. But it's utterly fascinating to watch - this transition, the people standing to "fight the waves" and the ones surfing right over their heads. Fortunes made, fortunes lost. Nobody "managing the process" but rather a distributed, decentralized, self-evolving system of interactions. It's multi-dimensional chess that lights up the "patterns are cool" pleasure circuits at the core of my autistic-model brain.

So, that's sort of what I had to say at Cybernet Expo. It was a great discussion - my fellow panelists were all deeply informed, experienced, and engaged in what's going on in this industry and I learned much from my discussions with them. It was great, basically - a geek's idea of a rippin' good time: let's talk business models and technological transformation and iterative evolution and inflective distribution changes, oh my! I skipped out on the porn parties afterwards, to be honest - while I try to get charged up for "Normal" sexy good times like that, in practice I was more than happy to get home to my family. Call me old - or just call me too far outside the mainstream to "get the vibe" in situations like that.

I sketched out some ideas for viable models that can utilize these industry transitions in positive, profitable, viable business models on the way home (when I wasn't taking off my shoes and belt to do the "TSA dance"). If anyone's curious, I can post my concepts here in this thread - not sure if there's an audience within the "adult industry" itself that will take the bull by the balls and run with new models like this. It seems tempting to just sit and complain about change - rather than do anything about it. If the industry doesn't spawn and embrace these new models, well, I'm quite sure someone else will. . .

Regards,

Fausty

Wow, who is the sleep-deprived-looking geek hiding behind the old, battered laptop with questionable-sounding stickers plastered across the lid?





. . . and here he is again, hanging out and pretending as if he was the author of Porn and Pong - or maybe just feeling the effects of several days' with little sleep and looking for a place to sit and rest!