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Dirty Business PDF Print E-mail
News/Features - Feature Stories
Written by Robert Jackson Jr.   
Tuesday, 10 October 2000 18:00
Looking for the one ingredient that’ll make your Web site “sticky” – that elusive amalgam of graphics, text, and audio that keeps online visitors from leaving? The answer lies in online content, and of all the Internet truisms, the truest is the Content Is King. And if content can be considered the engine that drives interest on the Internet, online pornography must still be considered the cyber equivalent of rocket fuel. So you thought the Internet’s seamy, seductive dens of iniquity were only frequented by the morally bankrupt and socially maladjusted who walk among us? Well, wake up and smell the suspicious credit-card charges. It’s worse than you think.

Business Is Booming

The commercial juggernaut that goes by the name of e-commerce owes as much of its success to dot-coms whose names include “xxx,” “girlz2go,” and “hot1” as those that include “amazon,” “priceline,” and “ebay.” If you have content of a sexual nature, you can rest assured that folks will beat a path to your door – usually a credit card in one hand and a restless mouse in the other.

Kate Delhagen, analyst for Forrester Research, estimates that the cybersex trade is one of the most profitable areas on the Internet. According to Forrester, Web porn sales totaled $140 million in 1997, and will rise to $366 million by 2001. That constitutes more than 10 percent of all online retailing.

Sex sites rank among the most visited on the Internet. Researcher Relevant Knowledge, for instance, found that 13 percent of the 57 million surfers over age 12 visited at least one of the top 10 sex sites in May.

Baremuffin (obviously not her real name) is suddenly very quiet. Having consented to this interview more than a week ago, she’s now having cold feet. Considering the full-body exposure her previous line of work guaranteed, cold feet was the least of this former exotic dancer’s occupational hazards. “I got into the cyberporn business the same reason I started stripping – because the money was really good,” she says, warming up to the topic. “I had some health issues, was ending a bad relationship, and needed a steady stream of income that would allow me to be home with my children. Stripping really doesn’t allow this to happen.”

How easy is it to get started in the cyberporn business? Baremuffin started yourpaysite.com, one of a handful of adult content providers that supply a host of free services that include but are not limited to Web-site hosting, a secure server for credit-card transactions, shopping-cart and chat-room technology, bulletin boards, streaming adult videos, and pornographic pictures that cover numerous categories – all in exchange for 50 percent of the revenues. The only catch is that the marketing onus is on you, and if you don’t have sufficient traffic, yourpaysite.com will take down your site.

With staggeringly low barriers to entry, it’s a not surprise that there are estimated 500,000 adult Web sites that open for business each year. According to porn-site operator Kim Nielsen, most of them are small-time operations that generate less than $1,000 per month.

Netrepreneurs looking to the cyberporn industry to generate million-dollar fortunes would love to have the track record of Nielsen. In 1996 this former University of Florida grad started with a Dell computer, a $50 monthly account with an ISP, and 40 pictures he bought from a photographer he found through Usenet postings. Last year the business grossed $900,000, and he expects to gross around $3 million this year.

Nielsen claims his site gets 22 million hits daily, and that he generates $250,000 monthly while spending $150,000 on images and $40,000 on server and network costs. The rest is essentially profit.

Not bad for a guy who started the site as a way to test his theories of marketing in his graduate-business-school dissertation.

Government Policing

In this mostly conservative political climate, it’s no surprise that Congress has passed legislation that attempts to curtail the cyberporn industry. The trick is to draft bills that pass constitutional muster.

In 1996, Congress passed the Communications Decency Act, outlawing the transmission of indecent material to children. But the Supreme Court struck down the law 9-0. Earlier this year, the 3rd U.S. Circuit Court of Appeals upheld an injunction that prevented the Child Online Protection Act from taking effect on the grounds that the law’s censoring provisions were overly broad and impacted even nonpornographic Web sites. Both rulings essentially placed the Internet under free-speech protection.

Undaunted, in late July the House approved legislation by Rep. Steve Largent (R-OK) calling on the Justice Department to broaden its prosecutorial efforts beyond child pornography.

Porn industry leaders – what there are of them – have taken notice. In an effort to mitigate any draconian legislation that could hamper their profitability, two of porn’s largest moguls are trying to clean up the industry before the government does it for them.

Danni Ashe and Andrew Edmond testified this summer before a panel of commissioners who will be helping Congress rewrite the nation’s child-pornography laws later this month. Ashe, the owner of danni.com, is the holder of the Guinness world record as the most downloaded woman on the Internet. How insatiable is our appetite for Danni images? According to the Web site mostdownloadedwoman.com, since 1996 Ashe’s image has been downloaded more than 841 million times.

Edmond is chief executive officer of Flying Crocodile, Inc., which has a stable of more than 280,000 adult-entertainment sites in cyberspace. The problem, according to the two of them, is that the cyberporn industry is made up of thousands of mainly small, home-based Web sites that have complicated traffic-sharing agreements.

At the heart of these agreements are e-mail lists containing millions upon millions of e-mail addresses lifted from newsgroup postings or picked up from cookies. (A cookie is a small piece of data that is sent to your browser from a Web server and stored on your computer’s hard drive. A cookie can’t read data off your hard disk or files created by other sites, and it cannot damage your system. Cookies are used to identify which pages on a Web site you have visited so the next time you visit, those pages can be readily accessible.)

These lists inadvertently contain the e-mail addresses of children. The lists are bought and used to solicit for extremely violent, graphic, and illegal forms of porn, and are then passed among cyberporn entrepreneurs like a fan in a mosh pit. These e-mail misuses are at the heart of the most egregious problem facing anyone trying to regulate this industry.

The other problem is that the cyberporn industry is years ahead of the rest of the Internet when it comes to innovative e-marketing. Most of the online marketing techniques we take for granted have their roots in cyberporn. Animated banner ads, Web-link rings, pop-up boxes, the automatic opening of new browser windows, password-protected areas, streaming video, and many other e-commerce tools all started with Internet porn sites.

New innovations include porn sites that play dirty tricks on the search engines by deliberately adding country names or the word “girls” to a Web site so they will show up on search results. For instance, if you go to webcrawler.com and search for “German girls,” the sites that make up your returned-results string aren’t necessarily the ones with young children dressed in lederhosen. Another new trick is setting up “mushroom URLs” that exist only long enough to send out thousands of porn-filled messages and links.

The industry’s willingness to police itself might be too little, too late. Besides Congress, other government agencies and legitimate businesses are scrutinizing the industry. According to Federal Trade Commission (FTC) attorney Stephen Cohen, the industry is coming under increasing scrutiny for use of fraudulent or deceptive business practices, which he said are used by roughly 10 percent of online adult Web sites. “We continue to see problems with the use of the world ‘free,’” Cohen said. “A lot of these sites are advertising free content, but then when you get down into it, it turns out not to be free.”

The FTC took action in July to force X-pics, a nearly bankrupt adult-Web-site operator, to repay consumers whose credit cards were charged without authorization, the first time the agency has acted to stem the practice known as “slamming.” If you’re thinking about using your credit card to pay for those pictures of Dr. Laura in her birthday suit, don’t bother reaching for your American Express card. In termination letters mailed out in late May, American Express informed all of its adult-Web-site merchant accounts that it would no longer allow AmEx credit cards to be used to pay for access to cybersex sites.

But before you start handing out Morality Medals, American Express’s decision boils down to simple economics. While online merchants themselves have to foot the bill for phony charges, American Express has to pay administrators to process the disputes.

And a lot of porn-site charges are disputed. Fraud accounts for some disputes. Another problem is that many porn sites bill using business names that are different from the Web site name. And many porn surfers deny they’ve made the charges when confronted by a spouse – something pornographers refer to as the “gak factor.” (Husbands run up a credit-card bill at a smut site, then go “gak” when their wives see the monthly statement.)

MasterCard and Visa also have cracked down on “charge-backs” – transactions that are canceled because of disputes or credit-card fraud – levying substantial financial penalties against merchants that are unable to keep their rates below 1 percent.
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