Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Think Porn Is a Legitimate Business? Think Again

By

While it's unknown exactly how much the industry is raking in, the often-cited $14 billion figure is a stretch.

PrintPRINT
True or false?

  • The porn business generates some $10 billion to $14 billion a year in annual sales and is a "bigger business than professional football, basketball, and baseball put together."

  • The porn business is a business like any other.

  • That a series of adult movie production companies in Southern California's San Fernando Valley recently halted production after an unnamed adult performer tested positive for HIV is evidence that the industry is more responsible and ethical than mainstream businesses.


If you answered "true" to any of the above, you'd be dead wrong. In fact, the business of making porn is a business like no other, and if there's anything the adult movie industry has excelled at in recent years -- while its profits have plummeted -- it's convincing the public that it's a legitimate business. In reality, it's anything but.

For starters, Forbes debunked the widely disseminated myth of the porn business raking in as much as $14 billion a year in sales back in 2001. That unsourced number was pulled from a 1998 Forrester Research study on online adult content and was mentioned in passing. So how much money do Americans spend buying and renting adult movies? The answer: Nobody knows. The mega-billion-dollar numbers you see repeated in the mainstream media come from Adult Video News, the porn industry's trade magazine, well-known for its propensity to exaggerate pretty much everything having to do with porn.

Since, the bottom has dropped out of the adult video business. The widespread availability of low-cost video cameras meant anyone who could afford one could make a porn movie, and the market was quickly saturated with adult content. Contrary to the popular belief that pornographers have remained ahead of the curve when it comes to technology, early on, pornographers failed to recognize the threat that the Internet posed to their businesses, and online content pirating hit the industry hard. A series of federal obscenity indictments under the Bush administration also induced a chilling effect in Porn Valley that didn't help matters. By the spring of 2009, most adult directors and producers that I spoke with told me they were seeing profits dropping by 30% to 50% across the board, and adult companies were folding left and right.

While some porn companies, such as Private Media Group (PRVT) and New Frontier Media (NOOF), operate like any other business, most aren't run like Fortune 500 companies. In truth, much of the porn business operates a lot more like the drug business. You will be hard pressed to find pristine halls in towering skyscrapers wherein neatly attired businesspeople churn out reams of porn. The majority of adult video businesses are small operations run out of nondescript warehouses on unremarkable streets in the northwest corner of the San Fernando Valley.

I visited one such business last year. In the foyer, there was an abandoned desk and a candy machine. In the next room, there was a green pleather sofa with a box on it that contained two lifelike silicone breasts. The handwritten sign on the door of director and producer Jim Powers' office read, "Do not ask Jim to borrow money!!! I mean it!" When I took a tour through the adjoining warehouse, DVDs spilled out of brown boxes, a giant vagina costume hung from the rafters, and little stirred amid the dust.

There are those who are in porn because they love porn, actresses who star in X-rated movies because they love the sex, and bigger adult video production companies like Vivid Video and Wicked Pictures that are run like legitimate businesses. But by and large, they aren't the rule. In porn, businesses come and go, as do its performers. One day, I suspect the porn industry's rise and fall will look a lot like the business of selling crack in Oakland in the '80s. For a while, business was booming. Until it wasn't.

It's commendable that a handful of companies have stopped production while performers who came into direct or secondhand contact with the HIV positive colleague are tested, but it's too little too late. Most porn companies don't require performers to use condoms on set, putting their workers at risk. Those who make porn usually believe the presence of prophylactics kills the fantasy for the viewer at home. Performers are required to get tested for HIV every 30 days and must present a valid test before they go to work in front of the cameras. But this rule isn't always enforced. A few performers have been caught faking tests. Every few years, it seems, another performer turns up HIV+.

When it comes to the oftentimes messy business of making hardcore movies -- where body fluids are exchanged like workplace emails -- anything goes, and ethical business practices get lost in the chase for the almighty, increasingly elusive porn dollar.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE