Even more so than independent film, the porn industry has always been ahead of the curve when it comes to capitalizing on new trends in the entertainment industry. It capitalized on home video early on and more recently has been in the forefront of downloadable content, content for iPods and PSPs, and the segmentation of content into niche-targeted “clips.” Now, it may be at the forefront of dealing with two challenges — the threat from user-generated free concert and the atomization of our attention spans.

Like both Hollywood and independent film, porn is facing tough times. In fact, they may be having it tougher because there’s a somewhat interchangeable quality to much filmed porn that makes the threat from free online content on filesharing or user-generated videos even more dire.

Matthew Garrahan in the Financial Times visits an L.A. porn set and talks to industry leaders about porn’s current economic challenges and how the business is confronting them.

From the piece:

With demand falling, producers are reacting by making more films, spending less on each one and selling them for knockdown prices. “It’s great for consumers,” says Fishbein. “It’s never been better because if you want to buy and own DVDs, prices are low and there’s so much choice. There are 150 websites for every niche and thousands of titles.” Porn, he adds, is easily accessible on cable, in hotels, on DVD and on the internet. “But there’s too much product … There are a thousand new titles released a month on average, compared with probably 250 [mainstream] DVDs. Margins are falling because people are selling fewer titles.” The industry, he says, has become a victim of technological change. Technology used to power the industry, he goes on; now it is eating it alive.

This is the great irony of the predicament that the porn industry finds itself in. In the past, pornographers were pioneers who paved the way for the mass adoption of new technologies. Their willingness to embrace the fledgling VHS video format in the early 1980s proved to a sceptical Hollywood that there was a market for a nascent home entertainment format. It was a similar story with DVD: porn led the way and Hollywood followed. And again with the internet: porn producers figured out how to make money from their online operations long before more mainstream entertainment companies got in on the act.

But the internet is a great leveller and porn now finds itself in a similar situation to the music and newspaper industries, which are both struggling to adapt to the online world. The profusion of free content online has shaken established business models in those industries and relentlessly eroded their profitability. Where the music industry used to make the bulk of its money from selling albums on CD, music fans now buy only the individual tracks that they want. Or often they download them free from an illegal file-sharing site. As in music, so in porn – why buy a whole movie if all you want is a clip?