<blockquote>
<p>Why is porn free when the demand is so high?</p>
</blockquote>
<p>Because business model of running adds and providing free content is very profitable business model that has long tradition in entertainment industry.</p>
<p>Out of world's <a href="https://pressgazette.co.uk/publishers/biggest-media-companies-world/" rel="nofollow noreferrer">top 50 media companies</a> most of them provide their content free to user and simply run advertisements. The top most profitable media company was Alphabet thanks primarily thanks to YouTube, Google and Google News which are all provided for free or free with subscribe option (see Press Gazette).</p>
<p>There is arguably even bigger demand for web search engines than for porn yet clearly, Alphabet operates google profitably while providing it free to the consumers.</p>
<p>This is because of the old adage &quot;if you're not paying for the product, you are the product&quot;. You analysis is flawed because you are assuming that the porn, or other entertainment is the product that the company sells, however, the company rather sells your attention to advertisers. You are the product, and the free entertainment is bundled together with advertising space in order to harvest your attention to make that advertising space more appealing to the customers (firms that want to run adds).</p>
<p>More technically media companies that advertise basically run two-sided markets. You can have a look at research such as <a href="https://academic.oup.com/jeea/article/1/4/990/2280902" rel="nofollow noreferrer">Rochet and Tirole (2003)</a> to understand how these markets work on more technical level.</p>
<blockquote>
<p>If demand &gt; supply, then price increases. If supply &gt; demand, then price decreases. Porn obviously has a massive and constant demand while producing videos requires money, equipment, and time as well as server hosting fees to host the videos.</p>
</blockquote>
<p>You are analysis is misleading here.</p>
<p>Aside from wrong use of terminology (you seem to talk about quantity supplied and demanded not actual supply and demand i.e. the functions), you cannot analyze two-sided market with one supply-demand model. While supply-demand model is powerful it has its limits and this is one of them.</p>
<p>One of the basic rules of two sided markets is that pricing is higher or only done on more inelastic side and lower on more elastic side (<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1177443" rel="nofollow noreferrer">e.g. see Parker &amp; Alstyne 2012)</a>.</p>
<p>It is not unreasonable to assume demand for porn is more elastic then demand for attention and data from advertising companies.</p>
<blockquote>
<p>Sure, there are paid porn. But I feel like paid services often provide value in addition to the videos. That extra value might be more customization, personalization, etc. OnlyFans, for example, allow payers to privately DM the pornstar and receive exclusive posts and text messages as if the porn star really is the payer's partner. That's a lot of additional value there to justify the price. It's almost as if merely offering videos is not enough to be charging a fee.</p>
</blockquote>
<p>There are paid porn dvd/blue ray videos that do not offer anything more than the video. Difference is that such market is not two sided market and on such market you are only consumer not both consumer and product.</p>
<blockquote>
<p>Yes, I understand that porn websites have many other ways to generate revenue and cover costs, but businesses are there to maximize profits, so if they could charge users for watching videos and earn more money, I don't see why they aren't doing it.</p>
</blockquote>
<p>Maximization of profit doesn't require high prices. In fact, in most industries and most cases a profit maximizing price will be well below a maximum possible price a business could charge. This is true even in one sided markets.</p>
<p>In two sided markets its completely normal for profit maximizing price to be zero on one side of a market.</p>
<p>In fact even in case of monopoly, when there isn't any competition, it will generally not be profit maximizing for monopolist to just choose highest possible price (you can see examples of that in any microeconomic textbook, for example have a look at some examples in Frank Microeconomics and Behavior).</p>
<p>Profit maximizing price is generally price at which marginal revenue equals marginal costs. Aside from some rare niche cases this won't be maximum price that market can support.</p>
<blockquote>
<p>Another way to think about this is that videos being free means that there's zero producer surplus and all of the surplus belongs to the consumers. I don't see why producers are not pushing the ratio to be in their favor.</p>
</blockquote>
<p>No this is not correct way to think about it. Again since its two sided market you cannot apply this simple analysis to it. It is likely that there will be producer surplus on the other side of the market.</p>
<p>Moreover, depending on market structure producer surplus is not something that firms can affect. In perfectly competitive market prices are fixed by broader market forces, firm just gets producer surplus it gets.</p>

CC BY-SA 4.0
2024-09-20T07:31:02.700Z
You are referring to *maximum possible price* and *highest possible price*. Is that not $\infty$? If so, what sense do these concepts make? I am a little confused.
Richard Hardy
CC BY-SA 4.0
2024-09-20T11:04:29.067Z
@RichardHardy I was referring to maximum price that market could support. $p_{max} = \max p(q), s.t. q>0$
1muflon1
CC BY-SA 4.0
2024-09-20T11:31:10.580Z
Thank you! All clear now.
Richard Hardy
CC BY-SA 4.0
2024-09-19T14:03:15.097Z
2024-09-19T14:03:15.097Z
1muflon1
<p>If demand &gt; supply, then price increases. If supply &gt; demand, then price decreases. Porn obviously has a massive and constant demand while producing videos requires money, equipment, and time as well as server hosting fees to host the videos.</p>
<p>I have a hard time imagining how the supply of porn can be greater than its massive demand. Granted, videos don't expire, so the total amount of supply if we include old videos is pretty big, but I also think many people demand not just videos, but new videos.</p>
<p>So how are websites like ph and xhamster free?</p>
<p>Sure, there are paid porn. But I feel like paid services often provide value <em>in addition</em> to the videos. That extra value might be more customization, personalization, etc. OnlyFans, for example, allow payers to privately DM the pornstar and receive exclusive posts and text messages as if the porn star really is the payer's partner. That's a lot of additional value there to justify the price. It's almost as if merely offering videos is not enough to be charging a fee.</p>
<p>Yes, I understand that porn websites have many other ways to generate revenue and cover costs, but businesses are there to <em>maximize</em> profits, so if they could charge users for watching videos and earn more money, I don't see why they aren't doing it.</p>
<p>Another way to think about this is that videos being free means that there's zero producer surplus and all of the surplus belongs to the consumers. I don't see why producers are not pushing the ratio to be in their favor.</p>
<p>There must be other factors going on, so what's happening?</p>

CC BY-SA 4.0
2024-09-18T22:04:22.023Z
Why the -1 ? I think this is a perfectly legitimate question. I also think it is relatively easy to provide possible explanations. The only problem is to give one and only one answer. But that is a problem of the SO format for social science where potential explanations are often pluralistic.
Jesper Hybel
CC BY-SA 4.0
2024-09-18T22:48:08.767Z
What research did you did to come to conclusion that porn sites are not maximizing profit by offering free videos and running adds? That is a quite profitable business model, many regular TV stations operate that and most of the internet companies (e.g. Facebook, Google etc) operate this way too. I don’t see any interesting puzzle here. You just assume they are not behaving in profit maximizing way and just supporting it by imagining they could be more profitable using different business model, without providing any support for the idea that the paid business model would be more profitable.
1muflon1
CC BY-SA 4.0
2024-09-18T22:48:50.437Z
The trivial answer to this question is that unless you have evidence to the contrary there is no obvious evidence these firms do not maximize profit. Profit maximization $\neq$ product price maximization. In fact in most industries and market structures, price that maximizes profit won’t be equal to maximum possible price $p^* \neq p_{max}$, only in rare situations those two will coincide. Providing free product and getting paid by advertisers is perfectly consistent with profit maximization.
1muflon1
CC BY-SA 4.0
2024-09-18T23:52:50.603Z
One could analyze it as a phenomenon of advertising. There is substantial literature on why companies advertise (https://www.sciencedirect.com/science/article/abs/pii/S1573448X06030287). The answer to that  question is hardly trivial.
Jesper Hybel
CC BY-SA 4.0
2024-09-19T01:07:22.877Z
What's so unique about porn sites? Youtube is free, a lot of social media sites/platforms are free. Being free attracts lots of users, which in turn lures advertisers. The larger the user base of a site, the more advertisers are willing to pay to run ads there. As 1muflon1 said, this is a tried and tested business model.
Herr K.
CC BY-SA 4.0
2024-09-19T12:49:23.917Z
@HerrK, I suppose your comment could be posted as an answer.
Richard Hardy
<supply-and-demand><consumer-surplus><producer-surplus>
Why is porn free when the demand is so high?
No Name
# Why is porn free when the demand is so high?

(Asked by: username_0 on 2024-09-18)

If demand > supply, then price increases. If supply > demand, then price decreases. Porn obviously has a massive and constant demand while producing videos requires money, equipment, and time as well as server hosting fees to host the videos.

I have a hard time imagining how the supply of porn can be greater than its massive demand. Granted, videos don't expire, so the total amount of supply if we include old videos is pretty big, but I also think many people demand not just videos, but new videos.

So how are websites like ph and xhamster free?

Sure, there are paid porn. But I feel like paid services often provide value *in addition* to the videos. That extra value might be more customization, personalization, etc. OnlyFans, for example, allow payers to privately DM the pornstar and receive exclusive posts and text messages as if the porn star really is the payer's partner. That's a lot of additional value there to justify the price. It's almost as if merely offering videos is not enough to be charging a fee.

Yes, I understand that porn websites have many other ways to generate revenue and cover costs, but businesses are there to *maximize* profits, so if they could charge users for watching videos and earn more money, I don't see why they aren't doing it.

Another way to think about this is that videos being free means that there's zero producer surplus and all of the surplus belongs to the consumers. I don't see why producers are not pushing the ratio to be in their favor.

There must be other factors going on, so what's happening?

**Tags:** supply-and-demand, consumer-surplus, producer-surplus

> **Comments:**
> **username_1**: Why the -1 ? I think this is a perfectly legitimate question. I also think it is relatively easy to provide possible explanations. The only problem is to give one and only one answer. But that is a problem of the SO format for social science where potential explanations are often pluralistic.  
> **username_2**: What research did you did to come to conclusion that porn sites are not maximizing profit by offering free videos and running adds? That is a quite profitable business model, many regular TV stations operate that and most of the internet companies (e.g. Facebook, Google etc) operate this way too. I don’t see any interesting puzzle here. You just assume they are not behaving in profit maximizing way and just supporting it by imagining they could be more profitable using different business model, without providing any support for the idea that the paid business model would be more profitable.  
> **username_2**: The trivial answer to this question is that unless you have evidence to the contrary there is no obvious evidence these firms do not maximize profit. Profit maximization $\neq$ product price maximization. In fact in most industries and market structures, price that maximizes profit won’t be equal to maximum possible price $p^* \neq p_{max}$, only in rare situations those two will coincide. Providing free product and getting paid by advertisers is perfectly consistent with profit maximization.  
> **username_1**: One could analyze it as a phenomenon of advertising. There is substantial literature on why companies advertise (https://www.sciencedirect.com/science/article/abs/pii/S1573448X06030287). The answer to that  question is hardly trivial.  
> **username_3**: What's so unique about porn sites? Youtube is free, a lot of social media sites/platforms are free. Being free attracts lots of users, which in turn lures advertisers. The larger the user base of a site, the more advertisers are willing to pay to run ads there. As username_2 said, this is a tried and tested business model.  
> **username_4**: @HerrK, I suppose your comment could be posted as an answer.  

---

## 1 answers

### Answer by username_2 on 2024-09-19. Score: 1

> Why is porn free when the demand is so high?

Because business model of running adds and providing free content is very profitable business model that has long tradition in entertainment industry.

Out of world's [top 50 media companies](https://pressgazette.co.uk/publishers/biggest-media-companies-world/) most of them provide their content free to user and simply run advertisements. The top most profitable media company was Alphabet thanks primarily thanks to YouTube, Google and Google News which are all provided for free or free with subscribe option (see Press Gazette).

There is arguably even bigger demand for web search engines than for porn yet clearly, Alphabet operates google profitably while providing it free to the consumers.

This is because of the old adage "if you're not paying for the product, you are the product". You analysis is flawed because you are assuming that the porn, or other entertainment is the product that the company sells, however, the company rather sells your attention to advertisers. You are the product, and the free entertainment is bundled together with advertising space in order to harvest your attention to make that advertising space more appealing to the customers (firms that want to run adds).

More technically media companies that advertise basically run two-sided markets. You can have a look at research such as [Rochet and Tirole (2003)](https://academic.oup.com/jeea/article/1/4/990/2280902) to understand how these markets work on more technical level.

> If demand > supply, then price increases. If supply > demand, then price decreases. Porn obviously has a massive and constant demand while producing videos requires money, equipment, and time as well as server hosting fees to host the videos.

You are analysis is misleading here.

Aside from wrong use of terminology (you seem to talk about quantity supplied and demanded not actual supply and demand i.e. the functions), you cannot analyze two-sided market with one supply-demand model. While supply-demand model is powerful it has its limits and this is one of them.

One of the basic rules of two sided markets is that pricing is higher or only done on more inelastic side and lower on more elastic side ([e.g. see Parker & Alstyne 2012)](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1177443).

It is not unreasonable to assume demand for porn is more elastic then demand for attention and data from advertising companies.

> Sure, there are paid porn. But I feel like paid services often provide value in addition to the videos. That extra value might be more customization, personalization, etc. OnlyFans, for example, allow payers to privately DM the pornstar and receive exclusive posts and text messages as if the porn star really is the payer's partner. That's a lot of additional value there to justify the price. It's almost as if merely offering videos is not enough to be charging a fee.

There are paid porn dvd/blue ray videos that do not offer anything more than the video. Difference is that such market is not two sided market and on such market you are only consumer not both consumer and product.

> Yes, I understand that porn websites have many other ways to generate revenue and cover costs, but businesses are there to maximize profits, so if they could charge users for watching videos and earn more money, I don't see why they aren't doing it.

Maximization of profit doesn't require high prices. In fact, in most industries and most cases a profit maximizing price will be well below a maximum possible price a business could charge. This is true even in one sided markets.

In two sided markets its completely normal for profit maximizing price to be zero on one side of a market.

In fact even in case of monopoly, when there isn't any competition, it will generally not be profit maximizing for monopolist to just choose highest possible price (you can see examples of that in any microeconomic textbook, for example have a look at some examples in Frank Microeconomics and Behavior).

Profit maximizing price is generally price at which marginal revenue equals marginal costs. Aside from some rare niche cases this won't be maximum price that market can support.

> Another way to think about this is that videos being free means that there's zero producer surplus and all of the surplus belongs to the consumers. I don't see why producers are not pushing the ratio to be in their favor.

No this is not correct way to think about it. Again since its two sided market you cannot apply this simple analysis to it. It is likely that there will be producer surplus on the other side of the market.

Moreover, depending on market structure producer surplus is not something that firms can affect. In perfectly competitive market prices are fixed by broader market forces, firm just gets producer surplus it gets.

> **Comments:**
> **username_4**: You are referring to *maximum possible price* and *highest possible price*. Is that not $\infty$? If so, what sense do these concepts make? I am a little confused.  
> **username_2**: @RichardHardy I was referring to maximum price that market could support. $p_{max} = \max p(q), s.t. q>0$  
> **username_4**: Thank you! All clear now.  

---

