Even when the internet was in its infancy, observers predicted online profits
would come from 'pills, porn and poker'. A decade or so later, that prophecy
has proved remarkably true. The adult internet industry generates over £1
trillion of revenue a year, accounting for 13 per cent of total online
turnover, making it the most lucrative internet business.
The rapid adoption of new technology coincided with a relaxation in the
regulations surrounding pornography.
In America alone, more than $5 billion a year is spent on hardcore DVDs. Some
commentators claim the speed with which consumers dumped VCRs for DVD players -
at a far faster rate than previous moves from old to new formats - owed much to
pornography.
While thousands of internet entrepreneurs have built profitable businesses
charging monthly subscription fees for pornography, some of the giant
publishing empires have been slow to adapt.
Last month, Penthouse, the US title set up to compete with Playboy, filed for
bankruptcy protection. Although its financial problems owed much to the
extravagant lifestyle of founder Bob Guccione and an ill-conceived casino
investment, the business had been slow to move its content online.
Like other print media, adult publishers need to invest huge sums to ensure
their content is available on a range of platforms. Jolyon Barker, media
partner at accountant Deloitte, says: 'A key challenge for the wider publishing
industry is to transform its culture from being print-oriented to becoming
multi-media brands. While print will remain important for many years to come,
it will no longer be the dominant channel to market.
'In some cases, it may even become the "window display" that drives consumers
to paid-for content ... In future, previously paid-for print copy may literally
become a [free] flyer driving users to paid-for television or internet sites.'
Playboy, the world's best-known adult brand, has survived by reacting quickly
to technological change - building a portfolio of pay-TV channels and filming
photo shoots for distribution on DVD. The magazine, which still has a
respectable circulation in dozens of countries worldwide, acts as a marketing
tool for other products in its multi-billion adult empire.
'It is no longer sustainable for publishing companies to create for print, then
copy and paste into a web channel,' says Barker. 'The publishing houses that
succeed will be those that can apply the brand value of their titles over a
range of media, with print and online among the most important, but with radio
and television also [crucial].'
Express Newspaper's owner Richard Desmond, whose Northern & Shell magazine
group was one of the UK's largest adult publishers, was also quick to absorb
the lessons of the multi-media age. He chose to shed his adult magazine titles
after a long search for a buyer, but retained his profitable TV channels, which
include The Fantasy Channel and the Red Hot brands.
The digital revolution has only just begun, and the latest generation of
internet-enabled mobile phones will also use porn to drive revenues. Mobile
operators have accepted that one of the few ways of recouping the huge sums
spent on their 3G licenses is by supplying pornography. (The industry is
predicting $4bn revenues annually from this.)
In the meantime, the steady increase in internet usage represents the greatest
threat, or opportunity, for purveyors of adult content. According to US
consultancy Pew Internet, almost all of today's young people have access to the
internet. In the US, 87 per cent of 12- to 17-year-olds were using the internet
in 2004, up from 73 per cent in 2000. The frequency of teens' online usage has
also risen by 51 per cent since then, and the number of teens who say they use
the internet daily is up from 42 per cent in 2000.
But while hardcore pornography has found a natural home online, it is unlikely
to disappear from newsagents. Much of the adult content has simply migrated
from the top shelf to the bottom in the form of 'lads mags' like Loaded and
Maxim. They contain acres of naked female flesh, and are often sold with free
titillating, soft-porn DVDs mounted on their covers. Unlike their predecessors,
they provide a more acceptable soft porn read, with similar content, but none
of the stigma attached to top-shelf titles.
Girlie mags haven't disappeared; they've been reborn in a more palatable form.
