Sleeping with the enemy
That adage, if you build it they will come, has taken on a whole new meaning in the ever-popular world of adult websites. While most Internet companies are slashing costs and laying off staff, many unemployed dotcommers are doing the unthinkable: seeking refuge in the seedy, but profitable companies that run pornographic sites.
"Adult entertainment" companies across the US are reporting a surge of CVs from unemployed computer "techies" and nervous employees who fear they'll be next to receive the dreaded pink slip. Nervous Hollywood technicians, such as cameramen and lighting operators, are also looking to adult websites for employment.
Just one year ago, few high-flying Internet employees would have considered working in the world of pornography populated by colourful characters such as Hustler's Larry Flynt and Playboy's Hugh Heffner. But one year is a long time in an economic cycle, especially where the Net boom-and-bust is concerned.
So-called "entreporneurs", or "traffic developers" as some prefer to be called, say the migration into their x-rated world of tooty-fruity pictures, hanky-panky online videos and erotic stories shows that porn is going mainstream. But it's more likely that this apparently recession-proof industry offers one thing romantic, mainstream dreams of being the next Barry O'Callaghan (Riverdeep) or Samir Naji (Horizon) can't buy - security. (To paraphrase Jack Lemmon in Some Like It Hot.)
Take Los Angeles-based Wicked Interactive. According to this "adult entertainment" company, it interviewed eight computer programmers who recently found themselves jobless after the online venture, eToys, went out of business.The industry had revenues of about $1 billion last year and is expected to generate up to $3 billion this year, with some of the largest sites making an annual income of $150 million. This includes high-end sites with all mod cons to the lone "star" at home with a webcam in their bedroom.
So, the $1 billion question remains: how come adult websites appear to be recession proof? Industry experts say the reason is simple: sex sells, even during an economic slowdown. Sex - like food, water and cheap alcohol - will always be in demand. Adult websites gain most of their money from subscriptions - not advertising. In fact, few mainstream sites charge users to access their content. This business model is now being used by other organisations. WSJ.com (the Wall Street Journal) and Salon.com are among the few online news organisations that have successfully managed to attract viewers to pay-per-view content.
Mainstream content websites have struggled to introduce subscription models, but not just out of fear of losing readers, says Sheila MacDonald, publisher and founder of high-tech news service Electricnews.net. "Managing and administering a subscription service is a full-time job. Plus, if readers are paying, they demand more for their money." The trick to prevent traffic flowing to other sites, she says, is to introduce subscription services slowly and carefully.
For its part, Electricnews.net gets its revenue from corporate publishing, syndicating its online services and advertising. It also sends more than 10,000 personalised newsletters to readers' e-mails and will eventually start charging for this service next year. "We want to get people addicted to this," MacDonald says. People will pay for "information tools" such as an archive service and links to related stores, she adds: "But basic information will always be free."
MacDonald also offers news over WAP phones and "Electricnews Radio" over a premium rate telephone line. "Because we are a small company with six staff, we can move faster. We have a readership of 30,000 per month the equivalent of nearly 250,000 page impressions, up from 19,000 in July. We're staying small, staying lean and staying flexible in order to keep innovating." From a news perspective, the Net downturn has provided lots of fodder. "The boom was great," she says. "But the bust is even better."
Meanwhile, other mainstream websites, such as Britannica.com, have even gone full circle by charging for their content again. If this trend continues, the Net will become more like subscription-based cable television. But the floodgates have already opened, unleashing a load of free information into the public domain.
From the early days of the Net, adult websites have wisely charged for content. Even smaller websites, which may provide free access, make money by redirecting excited surfers to larger pay-per-view sites.
They also mastered the art of online marketing with just one company frequently registering hundreds, even thousands of domain names all linked to its site (or, better still, stable of sites). Not only that, many registered frequently mis-spelled names or "typos".
Colorado-based New Frontier Media, for one, has an enviable track record. It owns a staggering 1,300 domain names and claims to have 60 million visitors to its 30 websites . . . per month! Also, according to the company, about one out of every 800 visitors to New Frontier will buy a $12-per-month subscription, entitling them to unlimited access.
They are also easy to set up. Better still, they don't need to hire expensive, high-profile columnists like Salon.com. "It's not a very difficult industry and doesn't require a huge amount of technical know-how," says Bettina MacCarvill, senior consultant at Amβrach Consulting in Dublin.
"They scan in photographs, upload video and put web cameras in their bedroom. They are fairly immune to the downturn in terms of traffic," she adds.¿ "It's an industry that doesn't have to try too hard. The key is having a good web address, something that people will remember. For example, there is a website called womeninwaders.com, which is very popular. I haven't checked it out myself, but it's a memorable name!"
Whitehouse.com is one of the more infamous sites. This website has a banner running across the top, saying, "This White House has been featured on ABC News, CNN, CJNet, MSNBC, NBC-Dateline and Newsweek." The site probably owes this publicity to its domain name rather than the brokering skills of its public relations advisor. The ethical/legal debate over the name launched a thousand articles (and opportunities for publicity).
With high-profile closures, such as Eircom's Rondomondo - another unfortunate example of a site without a straightforward mainstream domain name - the media has largely ignored the slow, steady success story of adult websites.
This isn't surprising, as few people admit to having checked one out. "We ask 1,000 people every quarter what sites they visit," MacCarvill says. "Over the course of three years, only about five people have admitted to using the Net for adult entertainment."
For sites that rely on advertising revenue, adult content is a risky business. One of the world's largest search engines, Yahoo!, had quietly sold x-rated products for more than two years before the media picked up on the story, causing outcry among its members and, worse, its advertisers.
Earlier this year, Yahoo! relented, saying it would stop selling x-rated products and eliminate sex-related message boards and online clubs. Similarly, msn.com instituted a strict "no go" policy on pornography.
These cutbacks have enabled adult sites to buff up their sordid reputation by flying the flag for freedom of speech and access to information.
While many of these sites are destined to float while others sink, they're not totally immune to the Net fallout. With consumer confidence taking a hit worldwide, users too are tightening their purse strings.
And as adult sites reach saturation point, the larger companies have more financial clout to keep their names at the top of the list in search engines, pushing out the newcomers.