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April 30, 2001 12:35pm
CanalWeb Seeks Porn Revenue
Source: The Industry Standard
by: Kristi Essick

(PARIS) -- Hit by the advertising downturn, French online television company CanalWeb has turned to paid-for services. And it has placed its bets on the only kind of content sure to make people get their credit cards out: porn.

In June, the start-up will launch a pornography and sex-related channel called MySexyTV.com. Presented by former porn star Brigitte Lahaie, MySexyTV.com will offer both "hard and soft" content but the overall feeling of the site won't be "too hardcore", said a CanalWeb spokesman. The more tame shows, such as talk shows about sexuality, will be free, while more explicit shows will be part of the subscription service. Users will also be able to purchase downloadable videos.

CanalWeb's foray into porn won't be its only paying service. "It's our first subscription channel but we are thinking about adding others," the spokesman said. By September, the company plans to roll out several subscription services, he added.

The start-up, which was regarded as one France's most promising in early 2000, is seeking to make its Web broadcasts pay. It puts out about 60 shows per week on topics ranging from gardening to the stock market. Lahaie already hosts a show about the sex scene on CanalWeb's main site.

Turning a once-free site into a paid-for one will be tough. The problematic switch from free to subscription-based services at US content sites such as TheStreet.com has shown how reluctant people are to start paying for content they've previously viewed for free. But CanalWeb has to start making money soon or it may be in trouble. The company raised 20 million euros from investors such as NeSBIC, Paribas Industrial Affairs and Bank Vontobel in May 2000, but has since spent heavily on European expansion and the development of new broadcasts.

Some observers say CanalWeb's business model which is based on selling advertising for its site, selling its technology to other Web sites and hosting Web casts for corporations isn't strong enough to survive in today's advertising-strapped market.

"Customers are ready to pay for content like CanalWeb," said Olivier Beauvillian, an analyst at Jupiter MMXI. He pointed out that Pseudo, a US company that CanalWeb modelled itself on, went out of business six months ago. In France, CanalWeb competitors Nouvo.com and Clicvision have also thrown in the towel.

"At a stand-alone destination Web site, consumers won't be ready to pay for video," Beauvillian said. As part of an overall broadband subscription package offered by an ISP, it might work, but only in the long term, he added. Today, too few people have broadband Internet connections to make watching TV on their computers very compelling, he said.

Whether it's videos or financial information, Internet users aren't used to paying for content, added Beauvillian. Even if consumers would consent to pay for online content, glitches in micro-payment technology continue to put many buyers off.

Despite the fact that the market for subscription services is very small, many content start-ups are banking on paid-for services boosting their revenues but it may be a futile last-ditch effort to stay afloat. In the short term, people will still expect to get content for free unless, of course, it's porn. But Yahoo's recent attempts to capitalise from the sale of adult videos didn't go down well with the public. Days after stating it would take a percentage of sales of adult content, Yahoo pulled its porn offering amid a public outcry.

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