The corporate world of the adult industry

Scaling the iceberg

Statistics, like the economists who work with them, are as vague and imprecise as the predictions of any oracle, although they do have value as indicators of important trends (just don't ask them for a telephone number). In the year to August 2008 there were 'estimated to be' over 420 million pages of adult content on the Internet (an impossible measurement I'll grant you), 13,000 new adult video releases & over 900 million adult video rentals. At this level of production we can reasonably conclude that if each video costs around $10,000 to produce and each viewer pays on average $5 to buy, rent or download a film, then there must be at least 26 million active consumers of adult content within the United States to support this level of production. This estimate doesn't take into consideration the vast numbers who watch free content online but don't buy, or indeed those with Internet or TV subscriptions who in effect pay less than a dollar to see a film. Whether avid watchers or occasional viewers, we can safely conclude that more than a fifth of sexually active adults & teenagers either consume or are exposed to adult content on a regular basis. This startling conclusion suggests that the provision of adult content has become a mainstream commodity rather than a niche market, making the adult industry fertile ground for corporate interests. Thus within a generation, pornography has made the giant leap from the seedy back street to the suburban living room, and many adult film stars, CEOs and entrepreneurs currently enjoy mainstream popularity.

The all pervading corporation

The naysayers have a case when they claim that capitalism is inhumane in that it renders all resources, human or material, into commodities which can then be branded, bundled, valued & traded. Earnings from legitimate adult companies are notoriously difficult to gauge given the private and secretive nature of their ownership. Quantifying the revenues harvested by the adult industry's corporate suppliers and distributors is practically impossible, as their adult revenues are packaged together with non-adult earnings and are thus effectively hidden within the published accounts. A breakdown of the reported earnings by the U.S. adult industry by sector is shown inset (as percentages of a $15bn market). It should be noted that the gross figure of $15bn falls far short of some estimates which place the earnings of the US adult industry at over $50bn. These figures were taken at the peak of the market in 2006, and figures for 2007 and 2008, where available, are likely to be substantially lower due to the credit crisis and prevailing recession.

The flow of revenues is naturally away from print magazines and DVDs towards the Internet, cable subscriptions, pay-per-view (PPV) and the provision of mobile content. Although earnings have fallen by 20-30% a year since 2006, even a lower estimate of $10bn still makes the adult sector comparable to the automotive industry in terms of scale. Several adult companies are actively traded on the stock market, including Playboy Enterprises (PLA), the Private Media Group (PRVT) and VCG, and there is even a hedge fund, known as 'AdultVest', which caters exclusively to the adult industry. AdultVest is a slick operation which has employed Microsoft's Washington lobbyists and was voted 'Hedge Fund of the Year 2008' on Wall street for their 50% fund returns, although AdultVest has since become mired by accusations of fraud (see businessinsider.com).

So how do mainstream corporations derive revenues from the adult industry? The answer is from the distribution and supply of adult content, as content producers depend upon 3rd party billing, cable networks, printers, search engines, advertisers, Internet Service Providers (ISPs), manufacturers and mobile phone networks to deliver their content to the consumer. Many seem all too willing to oblige given the level of demand and the larger premiums adult companies are forced to pay for their services. It is also widely known that many congressmen and senators receive political campaign donations from corporations with a finger hidden in the adult pie, and thus no senior American politician can safely claim to remain untainted by the 'dirty dollar'. Aside from adult content producers such as Playboy or Vivid, corporations which earn substantial revenues from adult content through their position as distributors, suppliers or portals include (Please note that this list is by no means exhaustive):

Despite the downturn, there are still substantial sums to be made from adult content, but who really makes the big bucks? Is it the investors, the producers, the actors, the film crews, the distribution networks, or the payment processors, increasingly taking the form of mobile phone networks and SMS billing? Some of the larger earners from the adult industry such as Google or AOL, realize their adult revenues in the form of advertising as Internet portals. Mr. Scott Coffman, owner of Pornotube, claims that it is the banks and the credit card companies who reap the greatest returns from the industry, as they are legally entitled to charge adult businesses far more than conventional ones. Many adult content distributors, such as BskyB and Virgin Media, earn substantial sums through broadcasting and handling subscriptions to adult content, although such profits are effectively masked by their accounting practices. Most hotel chains and cable networks similarly distribute adult content and take a generous slice of the revenues. The list of companies which enjoy earnings from the adult industry through distribution, billing, advertising or platform provision is perhaps more extensive than you might previously have imagined.

There are also numerous other companies, aside from adult film producers, which have a direct and widely accepted interest in the sex industry. Take for instance Pfizer (manufacturers of Viagra), Victoria's Secret (lingerie), Durex, cosmetic surgeons, tabloid newspapers exhibiting topless teenagers, and the manufacturers of baby wet wipes. As a species we are born programmed to propagate our genes. Small wonder then that so many amongst us are obsessed with faster cars, better bodies, and increasing our exposure to the opposite sex through all windows of opportunity. Pornography could thus be regarded as a medium through which we may visualize our innate desires. Perhaps then the driving moral question becomes not so much who gets their hands dirty, but rather who seeks to hide their dirty work? While Durex, Pfizer and adult content producers by and large make no secret of their activities or profit motives, there are those who appear to take the moral high ground despite having hidden interests in the adult industry. The issue thus becomes one of transparency and honesty rather than of association.

Facing the social malaise

No discussion of the adult industry can ever be free from the ethical debate that surrounds it. Prohibitionists continue to argue that young women are exploited by a male-dominated adult industry which rakes in the lion's share of the profits made. This is in fact largely untrue, as more than a dozen top adult content producers, owners and CEOs are in fact women, and hundreds of adult film stars earn over a hundred thousand dollars per year, many even taking home millions. In contrast their male counterparts are generally poorly and sorely paid. The idea that the majority of young women are directly coerced into the adult industry is also misleading, as most leading adult content producers are overwhelmed by applicants and so employ agencies to filter new 'talent' for them. Doubtless many debutantes later come to regret their career decision, although the comfortable notion that attractive young women are entirely free of sexual exploitation within mainstream careers is also a myth, as any seasoned lawyer, PA, financier or nurse will attest 'off the record'. The reality is that attractive young women born outside of wealth or intellectual aptitude face a stark choice between earning less than $10 an hour within the service sector or earning hundreds, even thousands per hour working in the adult entertainment industry. For many the choice is not a difficult one. Even college students, many of whom face potential bankruptcy from the costs of attending college and paying tuition fees, are tempted to turn to the adult industry to pay their bills and still find time for their studies. The plain truth is that there is an ingrained social pressure for young people to exchange their sexuality for money. This dynamic is in fact deeply engineered into our socioeconomic system. If society genuinely wished to dissuade young people from entering the adult industry to work as 'strippers', call girls or adult film stars, then they would put in place policies to prevent their exploitation such as a minimum wage, universal access to affordable health care, and the promotion of union activity within the service sector. If a young person could actually take home $700 from a fifty hour week within the service sector, then the adult industry would become a lifestyle choice and not a necessity.

Demonising the adult industry for 'exploiting' the social malaise of poverty fails to address the root causes of extreme asymmetries in wealth distribution and the alienation of young men by an affluent and highly sexualised society. At least one could claim that the adult industry is transparently obvious in its objectives. While extreme pornography may provide fertile ground for psychiatrists, the contention that pornography serves as a trigger for rape denies the primal nature and origins of the crime and echoes the widely held contention that Ted Bundy was an avid consumer of pornography, a suggestion that could not have been further from the truth. In fact a study conducted across the U.S. prison population indicated that those who had not been convicted of sex crimes revealed a greater exposure to pornography and sexual experience/education than those remanded for sexual offences.

Is human sexuality the ultimate market?

It would appear that it was not just the prevalence of adult content that broke the Berlin Wall of public acceptance. Hefty profits paid for professional lobbyists, campaign donations and heavy media coverage. The Free Speech Coalition served as one such vehicle, and this campaign made substantial headway in clearing congressional and judicial roadblocks in the wake of the eighties pogrom against the adult industry. There has also been the seeping pervasion of pornographic imagery and celebrities throughout the mainstream media, including such high profile channels as Howard Stern, MSN and MTV. A tsunami of adult content has thus exposed the issue of human sexuality and pornography for all to see, overturning centuries of puritanical repression. What once happened behind locked doors and closed curtains has now entered the public domain, and high society's veil of sobriety has been torn down with the general public's eyes wide open. Once quaint notions of chamber maids, wards, hand maidens, gentlemen's clubs and 'daughters' have all been revealed in their true light. Some suggest that the adult industry has in effect 'liberated' youthful sexuality from servitude, enabling many young people to seek their fortunes within the adult world. When high society rails against the adult industry there is always the lingering suspicion that their grievance relates to control of a coveted commodity rather than to any genuinely held moral issues. This argument is by no means a justification of the breadth and scope of sexual imagery made available to an impressionable and confused youth, but it does at least bring the broader issue of human sexuality into the public domain. Once the surge of adult content has abated, as it doubtless will, we will at last be able to hold a balanced and healthy debate as to the place of sexuality and sexual imagery within a humane society free from the shackles of false morality or prohibition. Perhaps then the myth of human monogamy and the notion that our sexuality serves solely as a route to procreation rather than as another form of social grooming will finally be laid to rest.

In conclusion

It might appear to some that a golden age of innocence has drawn to a close, or perhaps ignorance was bliss. Morality and nostalgia aside, corporate interests are clearly cashing in both directly and indirectly on the adult industry bonanza. As for any mature market, wealth is created and shared through distribution, and the production cost of the commodity itself represents only a fraction of the market value. Meanwhile, within the pyramid of human consumption it appears that there will always be apex consumers and those whose services are consumed...

Primary sources

The Price of Pleasure: Pornography, Sexuality & Relationships 2008 http://www.youtube.com/watch?v=LZcrXab7lFc
BBC TV: Hardcore Profits (2009)
http://www.pbs.org/wgbh/pages/frontline/shows/porn/view/
http://www.itfacts.biz/?id=P7960
http://wapedia.mobi/en/Stag_film