Documenting the decline of the porn industry

Falling Porn Sales Hurting Cable, Satellite

Noting that pornographic movies represent "one of TV providers' most profitable segments," the Wall Street Journal today (Tuesday) attributed the downturn in video-on-demand and pay-per-view revenue by such providers as DirecTV and Time Warner Cable to a significant drop in the number of viewers watching pornography on their TV sets -- and a greater number watching it on the Internet. Time Warner Cable, it noted, attributed a drop of more than a third of its usual revenue for video-on-demand to "shrinkage in the adult category." The Journal noted that cable and satellite providers generally charge more for porn than they do for Hollywood blockbusters. Time Warner Cable in New York, for example, charges $9.98 to rent an adult movie, while other movies cost $4.49 to rent. "There is no question that free [adult] content is eating into cable companies revenue, Tom Hymes, senior editor at Adult Video News, told the newspaper, noting that there is a glut of pornographic content on the Web these days, much of it free.

The porn industry, as a whole, is thought to generate roughly $14 billion in revenue per year, but revenue from films has been shrinking, due to piracy and an abundance of free content on the Internet.

"The nature of the industry is we don?t make nearly as many products as we did once," says Scott Taylor, president and founder of New Sensations.

Sex toy sales, though, remain strong, particularly high-end adult novelties. Designed with medical grade silicon and often looking like something that sprung from the labs of Apple, these products are now offered by mainstream retailers such as Brookstoneand featured in publications such as "Women's Health" and "Glamour."

Sex isn?t selling

If the porn industry can?t survive Web 2.0, what hope is
there for mainstream media?

Diane Duke, a frank woman with short hair and big jewelry, was driving with her college-age son.

?Austin,? she asked him, ?do you pay for your porn??

He spluttered: ?Um, yeah, I think so.?

His mother was unconvinced. ??I think so? means you don?t,? she chided, perhaps the one mom in existence disappointed not that her son looks at pornography but that he doesn?t plunk down a credit card beforehand, like an honest customer.

As executive director of the Free Speech Coalition, a Los Angeles-based lobby group for the porn business, Duke, who previously worked for Planned Parenthood, leads many of the industry?s anti-piracy efforts. She admits it?s difficult to convince the average consumer to feel guilty about cheating pornographers. For many viewers, it feels far less immoral if they?ve ?happened upon? the material rather than paying for it. But that doesn?t change the fact it?s stolen property. This spring, her organization released a public service announcement warning: ?If no one is willing to pay for the movies we make, they won?t exist.?

Predicting the extinction of an eons-old industry may seem hyperbolic, but the prognosis for the skin trade is indeed bleak. Smut peddlers once bragged their business was recession-proof; now they face tumbling profits, layoffs and salary cuts. Established producers report revenue has fallen by as much as 80% in the past three years. Playboy, the industry?s patrician grandfather, lost $1 million in the first quarter of this year and has shed more than 12% of its workforce. Vivid Entertainment, famed for its celebrity sex tapes, saw a 30% drop in its revenue last year, having once claimed $100 million in annual sales. Performers who commanded $2,000 for a single scene now make closer to $1,200. ?Between 1986 and 2008, pornography could be a full-time job,? says Nina Hartley, an actress who started in 1984. ?You could work full-time as performer, or in shipping, or in makeup. But we?re all hurting. It?s going back to being a part-time job.?

Porn?s woes can be partly blamed on the economy. In the years leading into the recession, estimates suggest the U.S. adult entertainment industry produced as many as 6,000 films annually, or roughly 16 new releases every day. ?There was a bit of a porn bubble,? says Ernest Greene, a veteran director. This mad pace of overproduction could not be sustained as the economy worsened. Consumption dropped farthest in the United States and Britain. ?It?s not hard to see that the guy who?s worried about losing his home or his job probably isn?t spending a lot of money on porn,? one producer noted.

But the industry is also the victim of a wider cultural shift. Media saturation has effectively killed the oldest truism in business: sex no longer sells. The porn industry?s current state is merely the most extreme evidence of that. The characteristics that once made sexual content a valuable commodity ? the inaccessibility, the taboo ? have evaporated. Cable television now offers naked vampires (HBO?s True Blood), naked gladiators (Starz?s Spartacus) and naked polygamists (HBO?s Big Love). Ads released last month for the Marc Ecko clothing line offer an excellent look at Lindsay Lohan?s breasts. Singers like Lady Gaga and Katy Perry wear outfits that would make Madonna blush. Even the CBC last year promoted its banal sitcom Being Erica with promises of a hot lesbian sex scene ? and when the Mother Corp thinks girl-on-girl action makes acceptable prime-time viewing, it?s a sure sign that sex is no longer shocking.

Steve Lightspeed, the nom du porn of Steve Jones, delivered the conference?s keynote. A dude in his 40s with a sparse goatee and a fondness for baseball jerseys, Lightspeed operates a string of solo girl websites, each focused on a particular performer. He opened with some mock advice: ?Give up, quit, get out of the industry while you can. There?s no hope left.? The crowd chuckled, but the joke underlined the unsettled mood. AVN, an industry trade publication, once estimated the adult entertainment market in the United States was worth $13 billion, but more reasonable guesses place total revenue at the industry?s peak someplace between $3 billion and $5 billion. ?It?s very well possible that domestic revenue has dropped below $1 billion,? says Alec Helmy, publisher of Xbiz, a trade journal of the status quo.

Hard times for porn industry

The adult entertainment industry was viewed by many in the industry as ?bullet-proof? when it comes to recession, but this opinion has shifted over the past 12 months.

Mark Kernes, editor of Adult Video News, has been covering the world of porn for over 30 years. He says the industry in the United States was worth around $6 billion before the recession but now estimates filming on new productions is down by as much as 50 percent.

?"It?s the first time I am aware of that the industry has been affected by a downturn in the general economy,? he said.

"At its height I would say there were about 5,000 people employed in various positions, from warehouse people to executives. And perhaps another thousand performers."

But this has changed, he says, with staff being cut and performers now earning much less as budgets are slashed.

Leading porn producer Wicked Pictures has also pointed to the damage being done by piracy, with products being leaked to the Internet and viewed for free.