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I do not think paysite subscription model is flawed - yes you sell your entire content base for $30-40, but it has already paid off. Whatever you get for it is pure profit. And if customer rebills, he pays about the same price for your updates as he would at VOD sites (if you update weekly).
Also providing a huge base of movies helps getting repeated customers - they'll rejoin not only to download fresh stuff, but also to download what they missed previously, or already deleted but want to view that movie again. It is unlikely customer is going to keep all of your stuff at his HD for a very long time - so he'll use your server as an online storage place where he can redownload from.
Sure we all want more money for our stuff, but let's be reasonable. If average paying customer spends $60/month on porn it won't turn $200 overnight if we all switch to VOD. Subscription based model is well balanced in terms of customers/producers/affiliates interests and I'm pretty sure will serve as our industry's backbone for a long time to come. Maybe even forever.
But getting more use out of VOD model will surely help to diversify income sources and get more money from those customers who prefer buying exact match, or do not like recurring or both. It will not magically increase your sales by 200-300%, but 20-30% is possible if marketed properly.
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