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COMMUNITY TO BE SERVED

As defined before, the .xxx TLD is intended primarily to serve the needs of the
global responsible online adult-entertainment community (?Community?).

The online adult-entertainment community is primarily defined as those
individuals, businesses, and entities that provide sexually-oriented
information, services, or products intended for consenting adults or for the
community itself. The terms "adult-entertainment" and "sexually-oriented" are
intended to be understood broadly for a global medium, and are not to be
construed as legal or regulatory categories. Rather, the referenced Community
consists generally of websites that convey sexually-oriented information and
for which a system of self-identification would be beneficial.

Although some individuals may have personal or moral objections to the
Adult-Entertainment industry, statistics demonstrate unequivocally that sex is
an integral part of the Internet. It is clear that the Community is comprised
of persons and entities that have needs and interests in common, which are
clearly differentiated from those of the general, global Internet community.
Our research indicates there are around 100,000 individuals businesses or
entities that make up the Community and that, on average, each of these manages
around 10 to 20 domains.

? According to the Nielsen/NetRatings, in August 2003, over one in four
Internet users in the United States (34 million) visited a pornography-related
web site.
Source: Sex sells, especially to Web surfers, CNN, Jeordan Legon, December 11,
2003.

? The updated statistics for December, gave similar results with 35.4m
visitors. These figures are in line with our own research that indicates around
25% of all Internet search queries are of a sexually-oriented nature.

? In 2002, Reuters Business Insight forecast an estimated US$3.3 billion would
be spent on online adult-entertainment services in 2003, making it the fastest
growing segment of the adult-entertainment industry with a projected US$4.6
billion in global revenues in 2006.
Source: Online Adult-entertainment, Reuters Business Insight ? Technology and
ecommerce, Authored by Datamonitor, 2002.

The impact that the online adult-entertainment industry has had on the broader
adult-entertainment industry is significant. In a recent interview with Wired
News (?Life, Liberty and the Pursuit of Porn,? ? February 19, 2004), Larry
Flynt discussed the transformative impact of the Internet on the industry.
According to Mr. Flynt, in the 1980?s traditional publishing constituted 80% of
his business, now it is just 20% with the Internet or video accounting for the
other 80%.

An Associated Press article (?Porn Mag Sales Go Limp,? ? November 10, 2003),
reported on the recent filings under Chapter 11 of the US bankruptcy code by
the parent companies of Penthouse and Screw magazines. These filings
underscored the importance of the online market for the industry, and
demonstrate why industry members are increasingly focused on the Internet. One
magazine publisher, Al Goldstien of Screw said, ?We are an anachronism; we are
dinosaurs; we are elephants going to the bone cemetery to die? The delivery
system has changed, and we have to change with it if we want to survive." This
article also referred to Professor Samir Husni, head of the magazine program at
the University of Mississippi's journalism school, who noted that several
hundred new adult websites launch each month, as compared to about 30 new adult
magazines for all of last year.

Today there is no one authoritative body representing the online adult
industry. On the contrary, many adult webmasters are small independent or niche
operators who do not actively participate in any forums. The majority of these
smaller operators tend to affiliate with larger companies that provide a full
range of turnkey solutions (such as content, services, transactions
information, news) much of which is typically private-labelled before being
presented to the consumer.

SUPPORT

Over the past four years, ICM has worked with the key constituents within the
Community to develop support for the concept of a non-profit entity
representing responsible members of the online Adult-Entertainment community.
At the time of submission, many of the world?s leading adult-entertainment
companies have expressed support for this application. In particular, as
specifically requested in the RFP, ICM has detailed letters of support from
major providers in the USA, Canada, Australia, UK, and Continental Europe,
expressing support for the sTLD, for the sponsoring organization and for the
proposed policy-formulation process. These supporters either supply services
to, or themselves manage, the majority of adult entertainment on the Internet.
See Part C, Business Risks and Opportunities for further details.

Following the industry outreach that ICM undertook in 2000, it quickly became
apparent that the creation of an adult-oriented TLD could in fact also
establish a framework for bringing together members of communities that had
traditionally existed independently and in isolation from one another (such as
child advocacy, privacy, free expression). ICM also realized it was partly this
failure in communication that prevented the members of the online
adult-entertainment community from working together with other interested
stakeholders to establish responsible business practices.

The proposed .xxx TLD deals with perhaps the largest sector of the Internet in
terms of traffic and usage. It is only by establishing a workable,
consensus-driven framework around the new TLD that all interested stakeholders
can work together to serve the needs not only of the responsible online
adult-entertainment industry but also of the Internet community as a whole.

In turn, there is a letter of support from IFFOR, as the sponsoring
organization, for ICM?s application.

BENEFITS TO THE COMMUNITY

ICM and IFFOR believe that the proposed TLD offers a number of potential
opportunities to serve the unique needs of the responsible online
adult-entertainment industry. Some of these potential benefits include
potential defenses in domain-related litigation, enhanced acceptance by
search-engines and therefore increased functionality, better opportunities to
negotiate with credit card and transaction providers, and new marketing
opportunities.

In terms of possible domain name related litigation, ICM and IFFOR believe that
registrants may be better positioned to use an affirmative statutory defense in
connection with prosecution under newly enacted US law. Under Section 108 of
the Protect Act, entitled Misleading Domain Names on the Internet (aka Truth in
Domain Names), it is now a crime in the US to knowingly use a domain name to
deceive a person into viewing obscenity or to knowingly using a domain name to
deceive a minor into viewing material that is harmful to minors. However,
Section 108 further provides that ?for the purposes of this section, a domain
name that includes a word or words to indicate the sexual material on the site,
such as `sex' or `porn', is not misleading.

CONSUMERS OF ONLINE ADULT-ENTERTAINMENT SERVICES

Although many people may have a stereotypical image of the typical consumer of
adult-entertainment products and services, several recent studies have revised
this image. In fact, new information reveals that those individuals interested
in adult-entertainment are much more mainstream than many people would likely
believe. In addition, research into search engine usage has shown that over any
reasonable time period, 25% of all search terms were adult related.

One of the benefits the proposed TLD will give to both providers and consumers
is an environment in which responsible consenting adults can purchase
adult-entertainment services online with increased confidence. Unfortunately,
as with many industries, some of the online adult-entertainment community have
engaged in illegal and/or questionable business practices, such as unlawful
redialers, credit-card fraud, breaches of consumer privacy, email spoofing,
SPAM etc. ICM and IFFOR will incorporate a best business practices provision
into the registrant?s domain name registration agreement and will develop
compliance mechanisms to address non-adherence.