The fascinating economics behind Playboy’s decision to drop nudes from its magazine

Starting with the March issue, due to hit newsstands this weekend, Playboy magazine will no longer feature explicit nudity. It sounds like an April Fools’ joke, but it’s not: The New York Times was given a copy of the latest issue, and what used to be an NC-17 publication is now more like PG-13.

This isn’t about prudishness so much as it is about money: Playboy CEO Scott Flanders believes the Playboy brand can transcend its salacious origins and become a lucrative vehicle for selling mainstream products. There’s already a wide variety of Playboy-branded clothing and jewelry out there, and the Playboy brand is particularly popular in China, where pornography is officially illegal.

Playboy tested this strategy with the Playboy.com website, which has been free of explicit nudity since 2014. The company says it’s been a big success, attracting a much bigger and younger audience. Now it’s hoping to expand on that success with what used to be the country’s most popular pornographic magazine.

Beginning with next month’s issue, there won’t be any explicit nude images of women in the US edition of Playboy magazine. The Times reports that there are still some naked women in the issue but that the images are “shot in ways intended for strategic concealment” — much like men’s magazines such as Maxim and Stuff.

In 1953, Playboy made its mark by being one of the first mainstream magazines to feature pictures of nude women. In the pre-internet era, porn was a lot harder to obtain, so there was a big market for pornographic magazines. The magazine grew to more than 5 million subscribers by the 1970s and attracted a bunch of competitors.

But the internet has totally transformed the pornography industry. Today, any kind of porn you can imagine is just a Google search away and in most cases is available for free. So over the past couple of decades, the value proposition of paying $19.95 a year to have a few dozen nude images delivered in dead-tree format each month has become less and less compelling. By last year, the magazine only had around 800,000 subscribers.

On the other hand, Playboy has always aspired to be more than just a pornographic magazine. Over the decades, those 5 million subscribers allowed Playboy to do interviews with a wide variety of famous people, including Martin Luther King Jr., Jimmy Carter, and Steve Jobs.

There’s a long-running joke about people “reading Playboy for the articles,” but Playboy’s non-pornographic content really has been pretty good over the years. Now it won’t be such a joke anymore. Playboy will tone down the nudity while beefing up its coverage of other topics, including a new sex column and expanded coverage of the liquor business.

Playboy used to look like a conventional media company with a stable of magazines, websites, television stations, and so forth. But that business model hasn’t done well in the internet age, and it reached its nadir in the wake of the 2008 financial crisis.

So the company began downplaying its media properties and focusing instead on promoting and licensing its iconic brand. And Flanders started to wonder whether distributing pictures of naked women was becoming a business liability. “You could argue that nudity is a distraction for us and actually shrinks our audience rather than expands it,” he argued in 2014.

Lots of people are attracted to the risqué vibe of the Playboy brand, but there are situations in which outright pornography isn’t allowed. Apple’s App Store, for example, doesn’t allow apps to have sexually explicit imagery, for example, nor do Facebook and Instagram.

So last year, Playboy overhauled its primary website, Playboy.com, and took out all the explicit nudity (there are still plenty of racy near-nude shots of the type you’ll find in other men’s magazines). Playboy executives told the New York Times that this was a huge success: Traffic quadrupled, and the average age of readers fell from 47 to 30.

In other words, young people who grew up in the porn-saturated world of the internet aren’t that interested in Playboy.com as a place to get porn. And the existence of naked women on the site made it awkward to read Playboy articles at work — where many people spend time goofing off online — or share Playboy content on social media sites. Dropping the naked women dramatically expanded the potential audience for Playboy.com without significantly reducing its appeal.

More traffic and a younger audience are big successes in their own right, but even more importantly, the shift helps make the Playboy brand more mainstream. There’s already a large demand for Playboy-branded merchandise, and Flanders is betting that that demand will grow even more if Playboy becomes less associated with explicit pornography in the minds of the public.

The decision to drop nudity from the magazine is best seen in this light. The goal isn’t so much to make the magazine itself more successful — though presumably its owners would like to do that — but to make the magazine a more effective sales tool for the Playboy brand more generally.

Playboy’s magazine hasn’t been a big moneymaker in years. Flanders told the New York Times last year that the US edition of the magazine lost around $3 million last year. But Playboy’s efforts to cash in on its brand — and particularly its famous bunny logo — are paying big dividends.

Playboy’s brand is not only widely known in the West, it’s also surprisingly popular in China. In 2014, Playboy-branded products generated $1.5 billion in revenues in China, about a third of the worldwide total. Playboy merchandise is available in 3,500 retail outlets in China — which is particularly remarkable because pornography is officially illegal there.

Flanders hopes that making the magazine less porny and more mainstream will help make the Playboy-branded products more mainstream as well — and dramatically expand the market for them.

There will no longer be naked ladies in Playboy magazine or at Playboy.com, but that doesn’t mean we’ll stop seeing explicit imagery distributed under the Playboy brand.

In 2011, Playboy signed a deal with the internet porn company Manwin, since renamed MindGeek, to manage many of the company’s online properties and television channels. Playboy later regained control over the Playboy.com site, but the rest of Playboy’s pornographic empire, including the Playboy Plus subscription service and Playboy TV, continues to be operated by MindGeek.

This might mean that Playboy can have the best of both worlds: It could enjoy the commercial benefits of a more mainstream image while continuing to profit indirectly from its pornography business.

On the other hand, if dropping pornography from the website pays big dividends for Playboy’s licensing business, it’s possible the company will seek to shut down its other pornographic properties as well. That might be tricky, since Playboy’s licensing agreement with MindGeek runs for 15 years (meaning Playboy might not get control back until 2026). But if Playboy becomes determined to separate itself fully from the pornography business, it might be able to cut a deal with MindGeek to end the deal early, or to choose a new brand name for its pornographic content.