Pornography and the Internet
The pornography industry, generally considered to be a shady, morally questionable, and borderline illegal line of business in any media, has nevertheless been a major industry, and quite familiar to mainstream America: the industry turns over $10 billion in revenues and, as one pundit states, "it's not ten perverts spending $1 billion each," but a lot more of the general population than anyone outside the trade cares to admit.
Historically, pornography has followed close on the heels of technological innovation. From the printing press, to daguerreotypes, to photographs, to film, and now the Internet, there was very little time before a technology was invented and the time it was first used for pornographic purposes.
In this sense, the Internet is just the latest in a succession of technological advances that have taken the creating and distribution of pornography to the next level of sophistication.
Representations and Definitions
The author dwells a bit on the definition of pornography - aside of the moral implications and societal taboos, it's merely a manner of expression, much like any other - however, it is this sense of moral objection that has set pornography apart from other forms of expression. Except in rare instances, few other forms of media have been the subject of legislation and moral outrage.
The author also mulls over the changing definition over time and across cultures, as to what is considered acceptable or deviant. There have historically been various definitions, to varying degrees of detail, but the bottom line is that it remains entirely subjective.
While it was not created intentionally for the purpose, the Internet is an ideal medium for the AE industry:
- There is no regulation, censorship, or central control
- The network gives producers access to a large market
- There is very little marginal cost for distribution of information (including text, images, and video) in this channel as compared to other channels
- The same (digital) product can be cross-sold, recycled, and redistributed with minimal effort
- The audience has a sense of anonymity
- The worldwide aspect gives producers the ability to locate themselves in politically-friendly environments
The VCR revolutionized the AE industry in the 1980's, as it allowed individual consumers to consume the product in the privacy and safety of their homes (as opposed to a physical space). By some estimates, as many as 800 million tapes and DVDs were rented or sold each year by 1990.
Much of this activity moved online very quickly: both film studios and magazine publishers in the AE market experienced significant decreases in consumers, while Web sites popped up like mushrooms. It is one of the few highly profitable online businesses, and is largely regarded as a white-market good in the medium.
There is some discussion of the Internet providing access to a wider audience, outside the typical demographic (20-40 year old males), and the broad reach of the Internet has provided customers of various demographic profiles access to material that suits their particular interests - not merely fetishes, but also tailor-made products for specific audiences (20-30 year old Japanese women, for example).
The AE industry grew rapidly in the last two decades of the 20th century due to the ability to deliver product to the home - through mail-delivery of videotapes and DVDs, subscription-based and pay-per-view distribution on cable networks, etc.
Some comment is made on the difference between the public face and private life of American citizens - there's a great deal of moralizing in the public sphere, in contrast with the huge amount of consumption.
While political figures periodically attack the AE industry to curry favor with the voting public, there has never been a "serious or widespread" crackdown on the industry. And with the advent of the Internet, most domestic producers have contingency plans in place to take their operations offshore should one occur.
With the size of the market, the AE industry is no longer a peripheral activity done by small entrepreneurs, but a major enterprise to which a number of corporations are exclusively devoted with film studios, magazines and even nightclubs as trading stocks on the largest capital markets.
There remains a rift between "mainstream" AE and what the author refers to as the "pariah" AE, which cater to tastes that are considered too extreme for the general public. However, while the pariah market is presently composed of small producers, with time it is expected that even these companies will consolidate, grow, or be absorbed into the corporate world.
In addition to the commercial industry, there is a substantial "gift economy" of amateur productions, generally distributed for free or in trade for the product of others. While public sources such as Flickr and YouTube currently proscribe material that is "pornographic" in nature, their standards remain highly subjective, and there are a plethora of sites that have rushed in to fill the void.
This has blurred the distinction between the producer and the consumer, and the wide market for "amateur" quality product have siphoned the market share of the commercial producers, so much so that many have shifted their produce offerings, at least in part, away from the "studio" quality film to cheaper, less "produced" product in order to have the "amateur" feel that many consumers seek.
EN: I am surprised that the author didn't follow the same line of logic as others - in the assumption that user-generated content is a serious threat, with the potential to eventually crowd out commercial production. Would be interesting to know if there's a reason he does not believe this to be an issue, or if it's something he's accidentally overlooked.
Running the Numbers
The author cautions that obtaining credible and consistent statistics on the AE industry, particularly the elements at the shadowy fringe, can be very difficult. It remains a highly fragmented industry, with many small and fly-by-night companies and few midsize or large ones. As such, some of the statistics he has provided (and will provide) are a bit shaky and based on "best guess" methods of estimation.
There are huge variations in the numbers reported in mainstream media. Consider the following estimations of revenue:
- $20 billion (Guardian)
- $16.2 Billion (Perdue Study)
- $11 Billion (Forbes)
- $10 to $14 billion (Fortune, Forrester)
- $10 billion (AVN)
- $4 to $10 billion (National Research Council)
- $8 billion (US News)
- $3.9 Billion (Adams Media Research)
Insofar as the online market is concerned, estimates here vary as well
- $10-$12 billion (Free Speech Coalition)
- $7 Billion (Caslon Analytics)
- $3-4 bnillion (Financial Times)
- $2.5 Billion (Perdue)
- $2 Billion (Lane Report, AVN, Thornburg)
- $1.4 Billion (Datamonitor)
- $1 Billion (Forrester)
- Under $200 million (U.S. Congress)
- $176 Million (Jupiter Research)
- $4 - $10 million (A. Edmond)
Likewise, the estimated number of sites vary
- Over 4 million (Hungerford)
- 1.3 million (protectkids.com)
- 500,000 (the Industry Standard)
- 400,000 (Thornburg)
- 280,000 (American Demographics)
- 74,000 (Caslon)
- 40,000(National research Council)
The size of the audience:
- 15 billion page views (com score)
- 1.5 billion monthly file downloads on p2p networks (filter review)
- 72 million worldwide visitors (Filter Review, protectkids.com)
- 68 million daily search engine requests on about.com (Hungerford)
- 25 million Americans spend 1-10 hours per week (MSNBC)
- 15-20 million users (Media Metrix)
- 13 million visitors (Rampell)
The wide variance in these numbers is often due to the subjective nature of what is considered to be "pornographic", but also reflects different methods of estimation and measurement, and is clearly exacerbated by the desire of certain sources to make the phenomenon appear grander or smaller than it actually is.
The AE industry comprises "many minnows and a small number of relatively large fish" - both of which have grown in number and size with the growth of the Internet. Factors such as low entry costs and access to niche markets make the Internet a haven for experimentalism and entrepreneurship - whether by new firms or established firms branching out into new genres.
There are also a blend of traditional AE companies that have adopted the new medium. In some instances, it has enabled small production companies to vertically integrate into direct distribution. In other cases, some companies have been "born digital," growing from a small-scale operation to a sizable online empire.
It is suggested that the industry is "in the throes of a major makeover." The industry is converting from a pyramid-style structure (a small number of producers and a large number of distributors) to a more vertically integrated market (with a large number of producer-distributors).
Theorists are divided over whether the industry will, through consolidation, revert to an industry of a small number of large firms, or continue to disintegrate into a large number of small conmapnies.
Some Major Players
The author looks at a handful of the major players in the current market:
- Private Media Group (PMG) - Founded in Sweden in 1965, this company began in the print and video world, and has grown to include the Internet. The company currently has roughly $50 million in annual sales and a market capitalization of around $138 million (trades on NASDAQ). The company is a distributor, acquiring distribution rights to images and video produced by independent studios and distributes them in various media.
- Playboy Enterprises - Founded as a magazine by Hugh Hefner in 1953, this company has grown to include magazines (the flagship is the most widely distributed in the industry), video, cable networks (under several brands), and pay-per-view. The company owns its own production facilities. The company earns over $300 million per year and has been listed on the NYSE since 1981. AS a domestic business, it is highly vulnerable to shifts in politics, and generally shuns the fringe markets in favor of mainstream, soft-core offerings that are less likely to draw fire.
- New Frontier Media - A video producer that branched out into cable channels and pay-per-view video services, buying the product of independent producers. Annual revenues are about $45 million and the stock is traded on NASDAQ, and has a significant number of institutional investors. Its genre selection and business profile is very similar to that of industry-leader Playboy, to whom it has been losing significant market share, and the company is vying for new members by branching out aggressively into new media.
- Club Jenna - A popular internet star (called the Martha Stewart of the adult industry) started this firm by creating a private site, but the major streams of revenue are peripheral merchandise (sex toys), which are marketed online and through a chain of branded retail outlets, plus nightclub operations. The firm produces traditional media, but does not mass-produce or distribute (its content is licensed to other firms). The company remains private, so its books are closed, but estimates of revenues are in the $30 million range, which is impressive for a relative newcomer to the business.
- Vivid Entertainment - A privately-held company that is one of the largest adult film producers. The firm began in 1984 with the expectation of going public, but has remained private. In addition to film and DVD production, the company operates a cable network and pay-per-view through hotels. While its hard-media products are distributed through other channels, the company remains the exclusive online distributor of its own products. Current revenues are estimated at over $100 million per year.
EN: Interesting facts on the industry leaders, but I don't see what conclusions the author is drawing from this exposition.