Among the most venerable of online adult brands, Charlotte, North Carolina-based adult video on demand provider Adult Entertainment Broadcast Network (AEBN) has marked its first two decades of successful operation this year — and the company’s legacy seems poised to continue well into the future.
Founded in 1999, the company is focused on delivering the best possible experience for its customers by staying on top of trends, partnering with top studios and affiliates, and by building a staff that embraces the big picture without losing sight of the details.
As consumer tastes mature and as their disposable income increases, their time becomes more valuable to them.
Serving millions of users, AEBN has long been at the leading edge of adult entertainment content as well as the technology for its delivery. The company has a range of brands, including powerhouse gay icons Falcon Studios Group and NakedSword, and relies on diligent number-crunching to analyze the newest trends in user demand from the copious statistics it collects — all of which drive its long-term approach to growth in an ever-evolving marketplace.
For a deeper dive into the diverse ingredients of AEBN’s two-decade-long legacy of success, XBIZ turned to company co-founder James S. for his insights.
XBIZ: What led to the launch of AEBN and its business model?
James: Prior to the inception of AEBN, we were running an online video store selling adult VHS and DVDs. We wanted to add [streaming] videos to the site, but internet bandwidth and online video delivery were still in their infancy. As video delivery through platforms such as Real Networks emerged, we realized that we now had a viable solution to facilitate our vision. Even at that early stage, we knew that streaming video delivery had the potential to outpace and eventually eclipse the VHS/DVD market, so we began working on video streaming as a splinter project separate from the online video store.
As work progressed on the streaming project that would ultimately become AEBN, we were watching the market and began developing the foundations of our initial business model. Our goal was to provide something unique, and to be honest about our product. We made a conscious decision early on that we were not going to utilize misleading and deceptive marketing trends that were common practice with many sites of that time. We felt that offering users the opportunity to “pay as you go” at a reasonable price point and with no ongoing commitment, along with free previews to ensure the user was able to see and test the product and technology prior to purchase, was essential to building a sense of trust and providing a better experience overall. This is ultimately how the concept of AEBN began.
The original group started with three people. Two of us have been best friends since high school, and we spent the majority of our time developing platform prototypes in our garage, while our “pitchman” was focused on making business contacts, finding seed money and bringing potential investors by the house to show them what we were working on.
At the time we had no name and no audience to speak of, but we did have several pre-existing relationships with content brokers and studios from the online store. These contacts agreed to license us their content for online delivery and expressed genuine interest in the streaming platform we were developing. Realizing the importance of getting traffic to the platform to generate actual sales, AEBN started out focusing primarily on a business-to-business model that would allow webmasters and studio sites with existing traffic to present self-branded custom integrations of our delivery platform for their users under a revenue-sharing agreement.
Since we were working under revenue-sharing agreements with our content providers, this also allowed those content partners with sites to generate revenue on both sides, earning money from every minute that their content was viewed, as well as earning a percentage of each sale that was generated through their own users. That was the beginning of our affiliate partner program.
As the product was rolled out in the initial phase, we realized that we needed a name and URL where potential business partners could find us. Since we were primarily a b-to-b company at the time, we decided that the name was less important than something that was easy to type and remember. One day, one of the founding group walked in with a list of “all the four-letter domain names that were still available” at that time. After a thorough scan, it was suggested that AEBN could work and be short for Adult Entertainment Broadcast (or Broadband) Network. Always keeping an eye toward the future and evolution of the company, getting into the broadcast market was on our radar even way back then.
Once we registered the domain and officially launched the platform with a handful of partners, things took off very quickly. Being a part of the explosive growth as the internet, media technologies, and demand for adult video evolved is something incredible to be a part of.
XBIZ: What defines AEBN and makes it stand out from a sea of free tubes and premium paysites?
James: Free content is appealing to users initially, but over time, many free users will eventually convert into paying consumers as they realize that nothing is truly free. Consumer awareness is beginning to rise in the wake of privacy concerns with social networking sites. If you aren’t paying for the products you consume, then you are the product.
Modern free porn sites are not in the porn business as much as they are in the advertising business. If the consumer wants to be constantly pitched and distracted by flashy ads, then free sites probably fill their temporary needs. As consumer tastes mature and as their disposable income increases, their time becomes more valuable to them. Hunting through a sea of repurposed clips doesn’t provide the value they seek, so consumers migrate to paid services if the price is fair and their expectations of consistent quality are met.
AEBN is focused on providing the best products and experience at a reasonable price for consumers of adult video, and on being a vital and reliable revenue-generating platform for our partners. We feel that our focus on these goals has been a defining aspect of our corporate identity over the past 20 years.
XBIZ: Where is most of AEBN’s business coming from? Are affiliates still a key part of the mix?
James: AEBN started as a B2B platform and quickly evolved an extensive affiliate network. Affiliates have found decades of value in sending traffic to the platform through custom-branded versions of the theater interface.
In recent years, the traditional affiliate market has contracted somewhat, due to varying factors that we are all familiar with. These days affiliate partners still account for a very significant portion of our overall traffic and revenue. Affiliates are important to us, and we are constantly looking for ways to help and support our affiliate partners.
AEBN was never intended to be a consumer brand. Over the years, AEBN has become a consumer-facing brand organically. Hundreds of thousands of copies and custom variations of AEBN’s theater have been created and so consumers eventually realized that the original version was at AEBN, which accidentally became a consumer-facing brand — even though we had ourselves promoted several other consumer-targeted theaters like SmutNetwork, MovieMonster and Xobile.
XBIZ: How has the market for video and premium online content changed over the past 20 years?
James: The landscape has seen many changes over the past two decades and continues to evolve rapidly even today. Most significantly, and possibly the most challenging of all is the advent of free content and piracy options, and the effect that has had on the common consciousness of the newer generations of viewers.
At one time, “free” was about introducing users to your content and/or technology so they knew what they would be getting for the price that was being asked. Today’s culture of users expecting everything to be free is an unrealistic and unsustainable model and we believe that things will eventually settle in a place that is more balanced and sustainable. We all need to be able to adapt and take advantage of new opportunities and strategies along the way.
Beyond the challenges of converting free users to paying consumers, I think one of the other major changes we are seeing is an evolution of the public perception of adult entertainment and its place alongside mainstream entertainment. Twenty years ago, people were not as open about adult entertainment. Now we often see mainstream celebrities, prime-time shows, and regular people openly discussing adult entertainment and sharing their opinions publicly, and some adult brands have attained household and mainstream familiarity which was virtually unthinkable a few decades ago.
XBIZ: As a follow-up, AEBN has made a wide range of stats available to the public. How important is it to share this data — does it lead to better affiliate promotions, new partner acquisitions, consumer awareness/sales, or all of the above?
James: AEBN has always seen the value in collecting and analyzing data to make informed decisions for the best possible outcomes. For example, we used our data to identify gaps in niche content that was trending in popularity, which eventually led us to share that data with our content producing partners.
Data collection and analysis have become common practice and are being used by companies like Netflix to determine what content to produce with the greatest likelihood of success and we feel that our own content partners could benefit from certain data that we are collecting. We are now providing granular data at the scene level to our partners, identifying the most popular scenes in any given piece of content along with the related metadata associated with each scene.
We plan to continue to develop and refine the data we make available to our partners as many are finding it useful. We are here to help our partners to be as successful as possible, as our mutual success is intrinsically linked. By helping our partners identify the things that truly resonate with our users who are paying for content, we hope to assist them in determining a formula for success with future productions. In this scenario, it can be a win-win for all involved.
XBIZ: On the subject of partnerships, how important are exclusive content licensing deals for AEBN?
James: Exclusive releases are important to our network. The opportunity to be the first to provide high-quality content to consumers ahead of the typical street date is a big part of our business. Years ago when there was less competition we used to contract with studios to get all of their content 30 days ahead of time and at a slightly increased percentage and agreement to increase exposure. These days we tend to hand-select individual titles from premium brands based on the consumer trends we see. Data have helped us to be better focused on the content that we pursue for these premium deals.
XBIZ: AEBN has a reputation as an early adopter of content delivery tech. How important is it to invest in technical advantages and what are the challenges and opportunities of doing so?
James: AEBN has always attempted to stay at the forefront of emerging technologies and trends. Everything from video encoding and delivery technologies, consumer devices, and emerging standards is important to stay ahead of the curve and ultimately deliver a better product. Historically, our needs and vision have often preceded what was currently available, and in some cases, we have helped to drive the evolution of some of these technologies through strategic partnerships. We have also developed unique in-house solutions rather than waiting for commercial products to roll out to the market.
It is often difficult and time-consuming to integrate new technologies with a platform that has been evolving over so many years and has lots of moving parts. We often equate it to “changing a tire on a moving car,” so getting an early start on testing and prototyping is essential. Falling behind the technology curve and trying to catch up is extremely difficult and is not a position anyone wants to be faced with, so being at the forefront as early adopters has always been our goal and an integral part of our corporate identity.
XBIZ: What do you consider to be the single biggest achievement for AEBN? Are there any other “wow” moments that come to mind?
James: At this point, I would have to say that the very fact that I am writing this and reflecting on more than two decades is a “WOW moment” in and of itself. The time seems to have passed so quickly. Still being involved in the daily operation of the company and keeping an eye on our vision for the future, I rarely take a moment to just step back and consider how far we have actually come from those first days in the garage to where we are today.
XBIZ: What does the future hold for AEBN?
James: AEBN will continue to evolve and adapt to the ever-changing market. We have long-term plans to continue growing our business, provide new services and broaden support for content creators. Our goal is to see another 20 years as a valued partner and resource for the adult industry.
