Can Online Porn Withstand the Recession?

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In hard times, people often turn to vice for a little consolation. But lately, even the online offshoot of one of the world's most successful professions--and the intimate cousin of the oldest--is finding the going a little rough. Once thought to be recession-proof--the last stronghold of booming businesses when money gets tight--adult entertainment lulls us into escapism, the theory goes, and actually gains in appeal when we're down on our luck.

But in the face of consumers' mounting unemployment and debt, it seems that the revenues for providing a little basic pleasure isn't coming through for online entertainment companies. In January, Hustler publisher Larry Flynt infamously called for a "porn bailout bill," $5 million in government money to pull the adult industry out of a slump that's brought down revenue at leading studios by 20 to 30 percent.

One of the biggest reasons the recession has hit traditional studios so hard is their reliance on old, expensive forms of media -- such as DVDs and magazines. Nobody buys those these days, says Brad Abram, head of online adult video game Virtually Jenna (adult, NSFW), so they can't compete with the Internet.

"The demographic has changed," Abram explains. "Younger porn consumers aren't used to going to the store to buy DVDS when the Internet is so full of porn at their fingertips." Compared with traditional adult media companies like Playboy, Abram's sex simulation game has no cost of hard goods, and no physical media to distribute. Nothing stands between him and his customers but a subscription fee, and the same goes for all paid Web sites. So is online porn the real recession-proof industry? Not exactly.

Who Doesn't Like Free Porn?

Unfortunately, those same young consumers who aren't used to buying DVDs are getting increasingly finicky about paying for porn at all. Subscription video sites are being pushed aside by "tube" sites--YouTube clones full of short clips that are entirely free. Piracy of subscription content has also become a huge issue. Internet goers grab tantalizing tidbits from professional sites and repost them elsewhere.

Competition from free sites and piracy-prone message boards are putting a firm squeeze on studios that publish their content exclusively online, since consumers can get off to the same videos and photos elsewhere without ever having to hand over a credit card. Take (adult, NSFW), for example--a large alternative studio with 17 fetish sites, each of which requires a separate membership. At the beginning of February, public relations manager Thomas Roche said the company was "still going strong," and that higher-ups were "cautiously optimistic." Three days later Roche was laid off, along with 11 percent of Kink's staff.

Brad Abram is quick to debunk the myth that porn, in its current state, could ever be recession-proof. It's a big business just like any other, he says, and as such it has the potential to fall. While it may appear that porn makers abound, a wave of consolidation has actually left the industry with a small number of large companies running lots of subsidiaries. Even the tube sites have banded together, says Abram, leaving only a handful of sites whose content makes up 80 percent of what people see when they're out surfing free porn. When one of those companies suffers losses, the effects ripple through the industry like a jiggle through a silicone implant.

Deviant Encounters

Though both traditional and online porn vendors have seen portents of approaching doom--luckily the four horsemen of the apocalypse have yet to be turned into a skin flick (that we know of)--there's still hope for adult entertainment on the Net. Companies that take an even higher-tech approach are emerging from the woodwork, and doing well. Why? Because they offer consumers something they can't get on the tube sites, something they're still willing to dish out cash for: interactivity.

Allen Stein makes mechanical sex machines. In his latest endeavor, he's combined his most famous invention, a large machine called TheThrillHammer (adult, NSFW), with a live cam Web site. On one side of the Webcam, women sit with the machine poised to interact, while potentially thousands of miles away, customers pay to control the devices, deciding what kind of stimulation to dish out. This combination of machinery and online tech has provided Stein and his performers with a steady income at a time when his old-school comrades are scraping the barrel. "Live cam sites are having a really good quarter," he says. His site in particular offers "a new level of intimacy… People come back again and again because they've consummated their relationship with the performers."

Also seeing consistent sales is Trixie, the star of (adult, NSFW), a personal site that provides members with not only photos of Trixie but also live shows and 24/7 spy cams into her home. Businesses like hers often start when performers decide to break off on their own from large cam conglomerates. Hosting her own site gives Trixie the control to decide her own content and build personal connections with her members. To be fair, Trixie says her revenue hasn't gone up in 2008, as it had in past years. Still, she feels she has a leg up on privacy due to the home-grown nature of her site. She compares herself to a neighborhood espresso stand taking on the Starbucks of big-name porn. "When money is tight, people feel more resentful towards anonymous corporate entities and want the dollars they spend to go towards people they can relate to," Trixie reasons.

Digital Titillation

Virtually Jenna's Brad Abram may have the most resilient model of all, though. He reports that membership sales on his erotic simulation games are "humming along." Last year "was the first year the sale of gaming software exceeded the DVD and Blu-ray sales," he says. "That's a giant freight train, and we just have to go along with it." Even the young consumers who won't pay for porn are used to paying for games. It should come as no surprise, then, that studios have started approaching Abram to team up in adapting to new technologies. Since the budget for video games is so high, they probably won't make their own games, Abram predicts ($250,000 makes for a very large budget in porno, whereas video games regularly reach into the millions), but they may personalize existing games to their brands. The next step: "Offering exclusive content within our world," says Abram. "Our game becomes a wrapper. You can view things on monitors in-world. We can do more for privacy and security than these other methods can."

There is one thing that all of these adult entertainers agree on: The recession is biting into their industry, and not in a good way. "Consumers are becoming more savvy… It's going to weed out a lot of the small studios and the inferior products," says Stein. "It's a cleansing. A lot of people who were marginal players will disappear." Still, consumers need not fear this economic trial-by-fire will knock out potentially innovative porn makers, according to Abram. "The recession is promoting survival of the swiftest and smartest," he says. The push to new technologies is sparking new ideas that make businesses more competitive. And what could be more pleasurable than that?

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