From one of their end-of-the-year wrap-up columns:

Last year may have marked the beginning of the end of the Internet’s greatest financial success story: hugely profitable pornography. While the mainstream media spent billions of dollars and nearly a decade trying to make a buck off the Internet, the porn industry raked in cash from the moment Al Gore invented the thing. But with the rise of such free sites as YouPorn (the YouTube of the pornography business), the online subscriber model is imploding. DVD sales are plummeting too, and the adult video business is actually laying off workers (no pun intended). YouPorn is now the most-visited adult site in the world, and its traffic is growing at nearly 40% a month.

Smut’s not going away, to be sure. But its industrialization may finally be in retreat.

This is aggressively stupid because it assumes that porn’s “huge” profits were the product of its industrialization. That’s twentieth century thinking, and this is 2008. Four years ago, we’d say this columnist was not paying attention. Today, he looks to be sticking his fingers in his ears and shouting “Nyah nyah nyah, I can’t hear you!” at reality.

It looks (from where I sit) to be true that the traditional business models of the porn industry are evaporating faster than sweat on Ron Jeremy’s ass. The trends that ate the industrial music industry over the course of a decade are now eating the industrial porn industry at a much faster pace — it started later and will be over more quickly, since porn lacks the sort of Leviathan corporate dinosaurs that take decades to stop twitching after you pith their brain stems.

But, has the de-industrialization of the music industry stripped that industry of huge profits? Not in the least! It’s stripped the industrial dinosaurs of huge profits, but that’s a very different thing. Don’t believe me? Ask Steve Jobs and the Apple shareholders.

In like fashion, the porn industry is going to evolve, and some of its more dinosaur-like producers may fail. (Hint: anybody whose sole product / marketing channel is DVDs in 2008 will likely be bankrupt before the end of the decade.) But people won’t stop wanting porn any more than they’ve stopped wanting music. And, unlike music, which is ubiquitous, porn has room for growth. Broader social acceptance means broader markets, plus better access to existing markets that are currently under served due to negative social pressure. Not to mention access to capital markets, which has hitherto been very difficult.