page discusses the creation side of the online 'adult
content' industry sectors and players.
It covers -
As the preceding pages suggested, there is considerable
uncertainty about the shape and size of the adult content
industry - "they exaggerate everything, especially
the size" - and relationships between different sectors.
That reflects the social marginality of much consumption,
the evanescence of many enterprises and the lack of market
transparency. Few enterprises are publicly listed (of
value for insights into revenue and profitability) and
there are few agreed benchmarks.
It is probable that the industry involves a few large
enterprises (with some, for example, operating hundreds
or thousands of web sites) and a large number of very
much smaller (and more transient) enterprises. It encompasses
bodies that are directly involved in the production and
distribution of adult content. It also encompasses bodies
that provide services such as hosting and payment processing
or that exist to restrict access to industry services
and products (eg vendors/operators of content filtering
The profitability of the industry is uncertain. Claims
of huge turnover and high margins have been questioned
by skeptics who note for example that Private Media Group,
supposedly one of the largest US operators (and unusual
in being listed on NASDAQ), claimed revenue of US$34 million
and profits of US$7 million.
of Internet Entertainment Group said that in 1998 IEG
made a US$15 million profit on US$50 million revenue;
both figures have since been questioned.
NASDAQ-listed New Frontier, supposedly one of the largest
groups, reported aggregate revenue of US$61 million in
2001. It had acquired Interactive Gallery Inc (IGI), supposedly
one of the largest content distributors for around US$27
million in 1999; IGI at that time forecast profit of around
US$6m on $21 million revenue. In February 2003 New Frontier
announced 3rd Quarter sales of US$8.6 million, with operating
earnings of US$1 million.
Offline producer Vivid claimed annual revenue of around
US$100 million in 2006, from around 60 movies per year
(with a per film production cost of US$50,000 to US$300,000
and marketing & distribution cost of US$20,000). In
2004 80% of Vivid's income reportedly came from DVD sales,
down to 30% in 2007, at which time most revenue came from
pay-per-view TV, internet video-on-demand, subscriptions
to Vivid.com (40,000 subscribers paying US$30 per month
for US$15 million annual revenue), merchandising and mobile-phone
In 1999 German sex shop chain Beate Uhse forecast
internet and tv revenue of €50 million; actual sales
in 2001 were €5 million. A year later Cyberotic
Media, characterised as Uhse's leading competitor in online
content, went bust after reporting €2.5 million
sales from 150 sites.
arrivals, departures and concentration
A recurrent theme in popular writing about online porn
is that it is a quick way to make lots of money with little
expertise and even lower investment. Supposedly all you
need is a good domain
name, a server and what Peter Lorre described as "feelthy
pictures", with the latter bought/licenced from a
competitor or simply stolen.
Eric Schlosser's Reefer Madness (New York: Allen
Lane 2003) thus quotes one industry figure's comment that
the only barriers to entry are "a sense of embarrassment
and the lack of a good lawyer".
Asia Carrera opined
that the net
giving the smaller players in porn - namely, the talent,
like myself, as opposed to company owners and distributors
- a chance to market themselves and to profit off the
marketability of their own names. One of the things
that always annoys me about making movies is that the
talent only gets paid once for a shoot, while some guy
behind a desk profits again and again, selling the movie
rights to hard-core distributors, cable channels, and
selling CD rights, DVD rights, compilation tapes, Internet
content, etc. It's hard for talent to rise to the level
of the guy behind the desk because launching a production
company is so prohibitively expensive. But starting
up a website costs virtually nothing for anyone who
owns a computer, and I can tell you firsthand that there's
money to be made as long as you're willing to invest
practice the industry appears more complicated, with considerable
demand offset by competition from established players
and new entrants (driving margins down) and difficulty
in cheaply sourcing some services.
A 1998 Salon item
thus noted that although "anyone can put together
a rudimentary adult site for under $1,000 by purchasing
a CD-ROM of pornographic photos and slapping up a Web
page" (with bottom-of-the-market image compilations
priced at 5 cents per snap), turnkey construction is more
rudimentary site with pictures and ad banners goes for
as low as $3,499; $4,999 will get you a video feed;
$34,999 will get you an e-commerce subscription service
indication of market saturation is provided by a name
search at DomainSurfer:
53,194 domains in the com/net/org gTLDs
with the word 'porn', 167,171 for 'sex', 3,288 for 'smut'
and quite a few for terms you wouldn't use in talking
to your mum, kids or dog.
Profitability appears to involve scale (securing high
traffic figures) or niche markets that often attract regulatory
attention. Contact with some practitioners and analysis
of the literature, such as it is, suggests that globally
there are around 150 to 400 major operators (often utilising
a large number of sites, many of which primarily point
to each other), with revenue derived from subscriptions,
advertising and provision of content - such as outright
sale or licensing of images on CD - to smaller operators.
It is unclear whether the major operators are making significant
investments across regional borders. Many are reported
to pay the minors for directing traffic to them.
A 2001 paper on Censorship Rules: The Topology &
Data Topography of Australian Adult Websites (PDF)
by David Harte & Mark Brogan suggested that as of
late 1999 Australia's online adult content industry was
highly concentrated, identifying 23 operators and around
250 sites. 98% of Australian sites were portals to offshore
hosts (principally located in the US). 67% used subdomain
or subdirectory domain names. 219 of the sites were hosted
in the US; almost all content for sale was hosted outside
Jason Hendeles forecast
in 2001, on the basis of private information, that by
number of adult webmasters - firms that operate at least
one adult-content site - will likely rise from the current
figure of between 30,000 and 45,000 to more than 110,000
... We believe the higher present-day figure to be the
more accurate. These webmasters range from very large
concerns (one, iGallery one of the top ten online adult
content providers, has registered approximately 1,500
second-level domains) to small, home-based operations
(registering on average between 9-18 domains each).
At the moment, about 25 webmasters dominate the field,
with the lion's share controlled by the top ten. By
2003, according to data from Forrester and NSI Registry,
our estimates suggest these webmasters, and others who
will emerge in the meantime, will likely have registered
an astonishing 2.1 million domain names worldwide, up
from approximately 640,000 in 2000.
would appear that churn at the bottom end of the industry
keeps pace with churn among customers, many small sites
being dependent on relations with major operators or simply
going out of business - to be replaced by new hopefuls
- because they are uneconomical.
As we've suggested in discussing questions of space
and the 'death of distance', location matters in cyberspace
- with businesses and support services gravitating to
friendly jurisdictions, sites with advanced infrastructure
and places with managerial or other talent.
As yet no-one appears to have produced a comprehensive
geography of the online adult content industry. It is
clear that much content comes from Eastern Europe and
South East Asia, that management resides in traditional
entertainment entrepots such as Los Angeles (or Sydney),
and that depending on particular jurisdictional concerns
the servers are located in the US (reflecting free speech
provisions and technical expertise) or second/third world
Claims of large-scale involvement by the Russian mafia
or other organised crime have not been substantiated.
The plethora of sites featuring images of Eastern European
boys, girls (and sundry livestock) may instead reflect
a weak economy, low cost expert labour after the disintegration
of the Soviet Bloc, outsourcing of content production
to a new cottage industry.
Industry revenue embraces three spheres of activity
of tangible products such as DVDs, videotapes, clothing
and things that buzz (ie the online version of mailorder
known as etailing)
to end-users of access to information such as erotic
stories, still images, webcams and interactive entertainment
(whether through subscriptions or on a pay per play
primarily by major industry participants rather than
entities such as Telstra, Ford or Coles Myer
retailing is primarily of interest through its
exposure of jurisdictional quirks and quibbles, such as
that which has made Canberra the X-rated video capital
of Australia (distributing tapes and disks to consumers
across the nation and overseas), and the migration online
of retailers such as Germany's Beate Uhse.
Most industry revenue appears to be attributable to end-users
who typically use a credit card to subscribe to a site,
with subscription on an annual or month by month basis
and priced at between US$10 to US$100 per month.
Pricing does not necessarily reflect the 'quality' or
uniqueness of content on the site and there appears to
be considerable churn between sites, with suggestions
that 50% of subscribers fail to renew (or cancel) the
subscription to a particular site each month and 90% have
left after six months. The US National Academies study
noted claims that "the average subscriber" uses
the subscription 1.5 times per month, with a single session
typically involving 75 to 100 pages.
is the second major revenue model for site operators.
Some advertisers simply pay a flat fee for display of
their content (eg a banner that's a link to a major site),
pay on a click by click basis or share subscriptions from
'conversions' through the site.
Pricing is apparently in line with mainstream cost per
million (CPM) and cost per acquisition (CPA) fees such
as US$5 to US$45 per 100,000 clicks on an ad.
The model is heavily weighted towards high traffic volumes,
with 'winner takes all' characteristics. Site operators
seek to maximise the number of eyeballs and conversions,
which is why surfers encounter a very large number of
sites/links that direct them to a major site whose content
is only accessible on a payment.
Some of that direction involves unpopular practices such
as "selling exit traffic" (aka mousetrapping
or browserjacking). That is particularly problematical
when a visitor has unintentionally encountered an adult
site - eg its registrant has changed and an innocuous
site has "gone porn" (discussed in Ben Edelman's
on Domains Reregistered for Distribution of Unrelated
Content) - and merely wants to leave without further
exposure to the content.
The more traffic through a site, the higher its advertising
rate, with operators seeking to maximise a new site's
traffic before the end of its halflife. Edelman notes
that 4525 distinct domains redirected traffic to a particular
site. Porn's Parallel Web Universe, a 2000
article in Upside magazine, advised
you spend $100,000 on ads and get $100,000 in 30-day
subscriptions, those subscriptions die at the end of
the month and the process must start again. On a typical
adult site, if that $100,000 is for recurring subscriptions,
70 percent will continue the next month, 50 percent
for the third month, and 30 percent will remain for
the fourth month. Provided you can continue to add $100,000
of new subscribers with a $100,000 ad expenditure each
month - given the vastness of the Net, this can continue
for many months - at the end of four months, $400,000
in advertising has generated $770,000 in revenue. But
without recurring billing, the balance sheet is just
National Academies study notes that payment regimes "can
be (and usually are) adjusted on the basis of the value
of the user to the advertiser", with conversion of
particular demographics being rewarded through a bonus.
The report notes that the emphasis on raw numbers in some
remuneration schemes - the maximum number of hits, irrespective
of conversions - means that most operators have "few
incentives to refrain from differentiating between adults
and children" and that one operator allegedly earned
up to US$1 million pa from selling traffic.
What do adult sites contain? Typically they feature still
images and/or prerecorded video. Some also include text
(eg stories and chat)
and live video or webcams, often of the 'voyeur cam' variety.
Image collections comprise photos - generally in
colour - and other graphics such as drawings or cartoons.
Most collections involve one or more actors (animate or
otherwise), with content arranged by category or photosets
The major sites usually offer thousands of colour images,
often delivered from fast servers. Photosets are sometimes
exclusive to the site; categorised images are often sourced
from a range of online and offline locations (eg scanned
from magazines or repurposed from adult videos).
Prerecorded video encompasses everything from home
movies to ambitious studio productions (archival or new
features that are also distributed on tape and DVD). It
is delivered as streaming or downloadable formats (short
clips or full-length), with viewing quality affected by
factors such as the delivery format and broadband access.
It is often syndicated rather than exclusive to a particular
site. Perspectives are provided by Robert Morse's 2000
thesis Streaming Media: The Technology & Business
of Short Films & the Internet (PDF),
Michael Genovese's 2000 thesis Video on the Internet
- The Ultimate Promise of Global Communications? (PDF),
Dan Rayburn's Streaming and Digital Media: Understanding
the Business and Technology (New York: Focal Press
2007) and Webcasting Worldwide: Business Models of
an Emerging Global Medium (Mahwah: Erlbaum 2007)
edited by Louisa Ha & Richard Ganahl.
The past five years have seen a proliferation of voyeur
sites that deliver streaming video of feature ostensibly
live unscripted performances by individuals/groups.
For privacy advocates a
particular concern is the more recent emergence of webcam
sites that provide access to archival or real time still
and video surveillance images of individuals, eg activity
in elevators, toilets and change rooms.