Note: I use porn and adult entertainment interchangeably. Also, there are no pictures because it’s impossible to find something worth publishing without screening millions of photos that shouldn’t be.
The Weakonomist doesn’t really like to talk about adult topics. But I’m making an exception because today it makes for an interesting discussion.
With people being laid off in every conceivable industry and investments down all over the place, any website that mentions money has to do a list of “recession proof industries and jobs.” It’s mostly fodder for content in my opinion, that’s why I did it. You aren’t going to just switch industries based on a list from “myunheardofmoneyblog.com” or something. I’m not saying these lists are bad, they just don’t really teach you much. Today isn’t about teaching either, it’s food for thought.
Adult entertainment is showing itself to remain stable in this economic environment. A hedge fund is claiming their porn investments were up 50% in 2008. Though this number is unverifiable, the claim carries certain weights. Let’s look at why porn would stand to do well in a down economy.
You have to start by looking at porn’s history. As long as civilization has existed porn has been a taboo subject, but a strong industry. Humans are biologically wired to enjoy porn, only the rules of society make the industry a closet success instead of commercial success. Something that has been around as long as humans have been around is likely to remain more stable in an economic downturn than other industries not nearly as old. This is why you see technology and financials tank.
Of course then look at the target audience. That is mostly male, likely single, and living alone. This is of course a generalization but you can’t argue against it. Single guys living alone often have more disposable incomes than the married guy with the mortgage and the leased Lexus. This allows them to toss around money more liberally. They also have more time to devote to the hobby than their otherwise busy counterparts.
Though it can be observed that most highly paid executives are married, statistics escape me for middle-management and analyst roles in companies. Think about the system administrator whose 40 and makes $80,000 a year. Sure his boss makes twice that, but he’s putting his kids through private high schools and is in the process of a bitter divorce. Sys-admin guy doesn’t have those expenses, nor a family to support at all. A single guy making anything above $50,000 a year can likely support any expensive habits he chooses. He runs just as much of a risk of being laid off as anyone else, so that point can’t be used for or against the argument.
The next factor that contributes to adult entertainment’s success in any market has to do with what we’re doing in an economic downturn. We go out less and stay indoors more. Staying at home saves money. Though I’m not going to take the time to research how much a porn habit might cost, I can expect that it’s much cheaper than attending concerts, sporting events, and even movies. When we’re at home more often the distractions of the outside world can no longer hold back the primal instincts in the human body. The evidence is in the birth rate during the summer and early fall months compared to others. Why then? Because they follow nine months after the coldest time of the year. As I said, we’re inside more often.
One can also look at the industry’s ability to remain profitable during economic downturns. The adult entertainment industry can downsize expenses relatively quickly. Like most forms of entertainment, employees and actors are hired on a contract basis. If you focus on actors, there are known celebrities in the porn world but the industry is so vast, there is likely no shortage of people willing to work for cheaper. Because contracts expire, an content company can simply not renew the contract if they feel they can find a better deal elsewhere. At large corporations, layoffs take years to complete. Severance is required by law for salaried employees, but those paid on contract do not have that luxury. Because set locations and storylines are probably of little importance this can be scaled back too as needed.
By the time you read this I’ve probably already gotten an angry email or two. But all that means is I’ve touched a nerve, which is good news for me. If someone has taken the time to write in and complain they will only validate the points I’m making. So the porn industry does present a compelling argument for a recession proof sector of the economy. Though everyone suffers in an economic downturn, some are able to absorb the hit better. Content production aside, other businesses could stand to improve their ability to face a downturn by studying the business models of the various aspect of adult entertainment.
Here’s the story about the porn investing hedge fund (also safe to read at work).
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
