Monday, February 15, 2010

Thinking long term

This post refers to the porn industry, but is really about running a business in general.

Imagine you run a shop, and you decide to earn more, so one day you start charging the customers a dollar just to enter your shop. Or you sell a $5 bread, but when they unpack it at home, the bag only contains a 99c bread.
The first week it might seem like a great idea, you are earning 20% more than the week before.
But how soon do you think it'll take before the customers find other places to shop?

Many businesses are run short-sightedly. For example the music business taking ten years to wake up to "this Internet thing". And many content industries treating their customers like criminals with copy-protected content instead of working with the customers and make it a pleasant experience to buy from them.

Now, it has always been tricky to find ways to promote, because there simply isn't any business it fits into. The closest thing is the porn business, and it's really not a good fit (many Domai members hate porn, a few even hate But anyway, sometimes in years past I have used that biz for promotion. One of the most popular ways, before the rise of the "porn tubes" site was "Thumbnail Gallery Pages" (TGPs), which is just long lists of links to free pages of pictures.

The TGP business is or was absolutely rife with shady and tricky ways of running a business. Typical tactics was to send customers off by falsely labeled links or thumbnail pictures to sites which paid by click but which the viewer had not elected to go to. And "circle jerks" which is these sites trading traffic by sending viewers to each other, again by sneaky means, so in the end, the viewer was just running in circles trying to find the actual content, or even just find any place to pay for good content!

It's been a few years since I used these sites, but I thought I'd try it again once or twice, see if I could freshen the traffic up a little (I make my living mainly by word-of-mouth traffic). And so I studied this market again, and it looks like it has collapsed by the weight of its own stupidity. The only site I found which operates like normal and where I was able to figure out how to submit a gallery for listing is the same site which was always both the biggest and the most honest and the most simple. It's a site run by a German, it's called the Hun, Dead-simple interface, simply a long list of text links. No false links, no long lists of paid banners before the content, no odd demands of webmasters even though he gets way more submissions than he can use, etc.
And by running this business in a simple and clean way, he has stayed the largest, and I'm betting he's earning a fortune on it.
Sure, it's just a simple mainstream porn biz kinda thing, but that's a business where straightforwardness and honesty is rare, so I respect him for that.


Pascal [P-04referent] said...

The same thing is happening in Lebanon. Action figures prices have jumped at least 50% in the last year here. Either you pay 50-70% more for stuff just like you used to purchase, or you pay roughly the same prices for toys twice smaller. Among the most outrageous examples are the last Harry Potter figures, sized like little G.I.Joes (about 10cm), and sold at about $18.

It's not the only example. I recently noticed the all-new Playmobil "Ancient Egypt" series, which honestly is very pretty. The biggest box, the Pyramid, is sold at 330,000 lebanese pounds, which is about U.S.$220. The same week I saw it in several leading toy stores, and always at about the same price, I saw an article in a recent French magazine, "ideas for Christmas". The toys section mentioned the Playmobil Pyramid, priced at 75 euros. That's about $100!

Four times, action figures of the hugely popular Ben 10 cartoon series appeared in all the country's stores, and vanished from the shelves in record time. Well... except for the last time. Maybe the fact that the exact same toys all of a sudden cost 50% more isn't foreign to this. (I thought during international economy crises you were supposed to CUT your prices in order to motivate the customers?????)

Same with movie DVDs or videogames: they are priced, here in our economically downtrodden country, twice to 4 times higher than in the wealthy West. While you can buy perfectly working (sometimes *identical* in quality) pirated films/games for less than $2... As a bonus, these pirated copies usually spare you the tedious agony of those @#$%&! "piracy is stealing" and "FBI warning" unskippable segments. That's their main difference! And there are obviously people who are making a decent living with such prices.

Why? Because, clearly, the national importers, along with the "legal" companies in fact, are dramatically GREEDY. And turning down their willing customers by making them feel obscenely gouged. You can burn a DVD and sell it for $2, and make a good profit from it. I'm sure at $5, you'd more than make up for the expenses of also PRODUCING the movie!!!

Counterfeit, sometimes identical-quality Chinese-made action figures can be found nationally at a quarter of the "legal ones" price (such as figures from the first Fantastic Four movie). Sometimes, I suspect they even come out of the exact same factory, because they're virtually undistinguishable, only their packaging is cheaper-made.

The thing is, here in Lebanon, there ARE people with money. Lots of it. LOADED, mah man! And, as you may guess, typically they didn't sweat much to earn it. "You just have to be connected to the right people". (*cough*POLITICIANS!*cough*!)
Therefore, my guess is, simply, that toy importers prefer outrageous margins on a small sales volume, making the (rather logical) assumption that those who will buy the Pyramid are big-time spendthrifts, and do not hesitate to spoil their children with affection-replacement impressive toys.

[Thank you, come again soon, our next collection is due any day.]

Pascal [P-04referent] said...

[Aah, nice to see you again, sir!]

But I'm absolutely certain that a smarter economical and marketing policy could bring back BIG profits to the legally-deserving companies, be they toy makers or media majors. People ARE buying. But they are within their means, and driven by the feeling of what's fair and what's not. As a result, parallel economy, being simply SMART, is flourishing.

In spite of our dedicated Government having, it seems, no bigger priority in a crime- and insecurity-riddled country, than to make much-hyped destructions of "seized counterfeit CDs". Probably seized from the hapless ones who had NOT bribed the national inspectors!
Imagine that: at less than $2 a DVD, these people are still managing, while paying off the officials, to make a rather proper living out of it! How come? Because they make BIG sales volumes.

Because they're savvy.

Even though the Lebanese are notoriously in contempt of laws and rules (except for the one law of "might makes right"), I'm positive many of them wouldn't mind feeling honest by buying genuine material instead, and paying it twice as much as the pirated stuff... but not 4 times, 20 times, or in some cases 100 times more!

I think no Western country, as in Lebanon, sees kiddie DVD movies stay at the same high price for several years after their release and their airing on half the country's televisions!
Pixar's Cars official DVDs still cost about $35 here, TODAY. Same for Toy Story. Why, oh Allah?

The politicians aren't the only ones robbing the citizens blind. You just cannot convince people to spontaneously abide by such commercial practices. Because nobody is stupid enough to believe this is fair trade. Whatever the %$#@ Laws say.

I simply mentioned toys or entertainment because they're my domain, the fields where I do much of my shopping. But the same goes for a lot of things, including food and clothing.

Don't even get me STARTED on housing... ):-(

A salesperson that makes their customers feel RESPECTED, at a basic level, is someone that earns my respect in turn. Even a smut trader.

But you can't buy much smut in Lebanon. Or, perhaps, I just don't know the right places to shop!!! ;-)
Ah well. No shortage of free porn samples on the Internet.
No shortage of high-class cathouses for the tourists, either. :-p