This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

The Digital Skeptic: Who Takes Gold in a Year of Bad Ideas?

Stocks in this article: AMZNGOOG

Silver medal: Pretending there's any money at all in the music business.
This was the year the music industry officially became the blue whale of the information age: big and beautiful, but seriously endangered.

Just consider the band that the U.K.'s Guardian and Slate, just to name a few, say was the biggest in the world: Mumford & Sons. Indeed, the English folk rock boy band posted some gaudy stats this year, including a near-record 600,000 first-week unit sales for an album called Babel.

Sure, that sounds fab -- except when you factor in the stunning ginormity of the digital music industry.

As of the end of 2012, according to Scrobble, a music consumption tracking app by London-based online music service Last.fm, Mumford & Son's content was sampled by users 50.9 million times on its service across all devices since 2002, which is when Scrobble began tracking.

Let's assume these 600,000 units sold at $16 each, a CD-like price. Forget the fact that a mere 1.1% of all those people listening to Last.fm converted into paying customers. Do the math and you'll see the world's "hottest band" makes just 19 cents per sample of their wildly popular tracks.

And don't forget, this data is just for Last.fm. If you bake in digital consumption across other digital platforms -- iTunes, Grooveshark and all the rest -- revenue per sample rates probably fall well below a cent.

Even in the age of digital pennies, that's pocket change.

Gold medal: Hoping sex will sell.
But the far and away winner for what was not working in webonomics in 2012 goes to the Web's oldest profession: adult entertainment. Data in this sector are always murky. But I really have to hand it to Extremetech, which this year reliably pegged the shocking scale of porn sites such as Xvideo and YouPorn, which can fetch 4.4 billion page views per month -- about triple CNN's traffic.

But according to published accounts, nobody's making that traffic pay.

According to the 2012 XBIZ Research Report from Los Angeles-based XBIZ, which tracks trends among 6,000 adult industry members, a full 44.2% said this sort of free online content was their biggest concern.

Stephen Yagielowicz, an editor at XBIZ, posted a slide for an upcoming SXSW panel that should be awfully familiar to those in the publishing and movie businesses: a diagram on how the industry must adapt to fewer paying customers and more Web freeloaders.

There is talk of live Webcam services that resist digital commoditization -- it was a hot topic at what was likely the first virtual adult entertainment convention, held back in February -- but this was the year pornographers got intimate with the reality of life in the digital age: doing more for less.

"Stars that used to make $1,500 a scene are now making half that," is how Michael Stabile described the practical effects of the technology on Salon.com. "But the small-time producer, a ubiquitous part of the industry during its boom years, is almost extinct."

The Playboy Mansion it ain't.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs