Issue v0.8: How The Internet Created a $97 Billion Porn Industry

The Internet is really really great… FOR PORN!
I’ve got a fast connection so I don’t have to wait… FOR PORN!
There’s always some new site… FOR PORN!
I browse all day and night… FOR PORN!
It’s like I’m surfing at the speed of light… FOR PORN!
The Internet is for porn!
The Internet is for porn!
Why you think the net was born?
Porn! Porn! PORN!

In 2003, these lyrics were heard on the Broadway stage courtesy of Jeff Marx, Robert Lopez and the puppets of musical show Avenue Q. It would quickly become a famous Internet meme and catchphrase, thanks to two things. First, the song is hilarious, and two, and most importantly, there is a definite kernel of truth to it.

But how did porn make the successful leap from the hidden and shameful secret of lonely men and horny teenage boys, to a worldwide entertainment industry worth billions of dollars?

Analogue Porn
Before the Internet, porn meant foil-wrapped magazines on the top shelves of service station newsagents, dark, plain-fronted shops full of erotic literature and pay-per-view satellite channels with ten-minute titillating previews every hour or so from about 10pm. It was hushed, hidden and private. It was something you did in secret.

Secrecy normally means doing something alone and keeping it to yourself. But as computers became connected and networks began to emerge, consumers of pornography found that secrecy could exist with other people.

Today, discovering new things we like and sharing them with other people is an essential component of the social web. But these things became a reality for people who enjoyed erotica online many years before MySpace.

Porn’s First Home
Text-based discussion boards BBS (Bulleting Board System) programs and later Usenet were the first homes of pornography online. Here, erotica took to the Internet like a teenager finally escaping the restrictive clutches of its childhood home, where it would hide away in its room. Porn had moved out into a cheap, rented flat where it could begin to express its true self and realize its potential.

Usenet groups were the predecessor to the forums and message boards that we use today, and enabled the sharing of images before bandwidths increased and the world wide web truly created a network where users could exchange pictures as easily as they did text.
There were many restrictions to get around (due to the technology, not arbitrarily placed rules) so files had to encoded in ASCII before posting and decoded back into an image after download. File sizes were also massively restricted, but anyone with the know-how and a bit of tech (most importantly, a scanner) had the ability to share pornography. These were the beginnings of pornography becoming truly accessible, something that had always been a problem for porn companies, who had trouble distributing porn to customers who wanted to protect their anonymity.

The Internet allowed for any niche, no matter how deviant, to be represented. Porn magazines and companies creating porn films already catered to the more “mainstream” fetishes — big breasts, BBW (big beautiful women), racial preferences, schoolgirl attire — but now anyone could create or find a group of anonymous, like-minded individuals, and share and discuss erotic material.

Anybody could share what they had – either for free, or a price. Commercial porn distribution found its beginnings on the BBSes. Users would dial into a remote computer via a modem even slower than the 56k dial-up modems many of today’s Internet users were introduced through, and connect with others through that server. Since the BBSes would allow users to download files, users could put their pictures up, sometimes using a payment gateway (though not always with an age verification process).

The Internet at this point was an extension of pornography offline, and the technology didn’t yet exist to produce digital amateur pornographic content such as digital cameras or webcams.

But there was ASCII. ASCII is probably the first example of people creating – as opposed to mere sharing — pornographic content online, using ASCII text code to generate (often surprisingly realistic) images. While not in demand today ASCII porn does still hold interest to people and there are several forums and archives for anyone interested. Today, it has a distinctively retro feel, given that it was usually modeled after 80s porn stars who were modern at the time.

We’ve always had to adapt what we want from technology to the limitations of technology, and porn is no exception – in fact, it’s always been a big driver of that. ASCII art is just one example of the lengths we’ll go to for some porn.

Still, porn had a long way to go before it was able to become a lucrative industry online.

Porn Driving Technology
Pornography is often credited as the fuel behind technological innovation, or at least as a major driving force behind technology adoption.

It is often — not unfairly — blamed for many of the negatives of online life, such as pop-ups throwing hardcore images in the faces of unsuspecting Internet users, malware infecting our computers and, of course, that spam about penis enlargements, Viagra and busty women filling our inboxes. But porn has pioneered positive developments too.

Do you stream video online? Most likely you do, without even really thinking about it. Porn companies were trying to perfect this technology long before the mainstream media, in order to offer live sex performers that could be streamed directly to consumers. Better tech meant better quality, which meant higher prices.

Live chat, between porn consumers and performers, is the logical step up from this, and porn companies were driving this technology that we use almost daily today to conduct business and to stay connected with our loved ones. Performers could sell these one-on-one chats at high prices. It’s no wonder the industry pushed to perfect the technology.
Some claim that we have porn to thank for the fast broadband connections that allow us to download large files in seconds and stay constantly connected. Whether or not that’s true, it is hard to argue that the adult industry didn’t help render dial-up difficult to use by advancing the state of media on the web.

Companies need a way to get their product to their consumers, and as the Internet took off in the mid-1990s the big players in porn needed a way to get their content out there, easily and quickly. Access to porn, which had increased exponentially since the days of adult book stores and mail order, would count for little if it took you hours to download a few images. Anecdotal evidence (as so many of the numbers surrounding the industry are) suggest that this rush to distribute high-res pornographic images fuelled broadband development, and a 2004 Nielsen/NetRatings study found pornography (along with online music sharing) to be one of the biggest factors behind broadband penetration in Europe.

Payment for Access
But it is in the area of online commerce that pornography has arguably had the biggest impact, and in fact it is that innovation and driving adoption that has been the primary force behind the growth of the “adult entertainment industry” online.
As we talked about earlier, enterprising BBS users were setting up payment gateways long before users were buying anything else online. It was Richard Gordon who founded Electronic Card Systems in the mid-1990s.

At this point, sites like Amazon (launched in 1994) and eBay (1995) were still just starting up, and it was Gordon who worked with many clients in the pornography industry to set up ways for them to make money through distributing their wares online rather than their traditional revenue streams such as satellite pay-per-view. Electronic Card Systems made lots of money processing sales for sites such as ClubLove, who published the famous Pamela Anderson/Tommy Lee Jones sex tape.

The big players could now make some serious money distributing content to paying consumers who could access porn in the comfort and, most importantly, privacy of their own homes. The demand was there, always had been, and now the technology was making the industry boom.

Illicit Desire, Legitimate Business
When we think of porn our thoughts often stray to illegality, and while there is a lot of porn that is illegal (and it’s the sort that makes the headlines) it is, after all, a legitimate business. It is backed up by legitimate companies who have helped the industry grow and who allow it to run.

These important businesses, separate from the actual adult entertainment production companies, are concerned with two things – access verification and payment processing.
In 2001 there were a handful of these companies that were imperative for the industry’s existence: Adult Check, CyberAge, CCBill and Internet Billing Co.

The credit card was key to this whole operation. Previously endorsed for age verification by the government in the Communications Decency Act 1996, the credit card became like a magic wand. If you had one, you could enter your details and have access to porn in minutes. And by requiring one, porn industries could immediately side step anyone accusing them of displaying porn to minors.

If the porn industry grew in a garden, then these middlemen were the gardeners. The desire for porn was already there, the growth of the Internet was creating accessibility, and the porn companies were pushing the technology to further that access and to create new and better experiences for consumers. Companies like CCBill acted as middlemen between banks and porn producers, making the commerce of smut possible and weeding out anything that could damage it, such as fraud or illegal, obscene content.

Porn Today
British documentary filmmaker Louis Theroux has twice investigated the porn industry. The first time, in 1997, he visited LA where porn companies like Vivid were making millions and millions. It was an industry that, while still hidden to many people across the world, had become successful to the brink of mainstreaming. The Internet had made superstars of people like Ron Jeremy and Jenna Jameson. Porn had its own A-list.

It is hard to know where the industry stands today. Some statistics put its revenues as high as $97 billion a year, with US revenue at around $13 billion. But within the industry people like Vivid Entertainment founder Steven Hirsch are describing it as the worst they’ve seen the industry in 25 years.

Why would this be? The general state of the economy doesn’t help, but that couldn’t be a driver for a massive loss of revenue; stress releases like alcohol and porn tend to survive recession well.

It is more likely to have to do with the ease with which consumers can find adult content, thanks to sites like YouPorn and RedTube. These sites brought the YouTube philosophy to pornography, and anybody can upload content to them. They make their money from advertising, while porn DVD sales have dropped considerably.

In fact, sales of DVDs have dropped so dramatically that several people cited it as a factor in the suicide of Jon Dough, a porn star that British documentary filmmaker Louis Theroux interviewed in 1997, and whose widow he spoke to earlier this year.

Much of what is affecting the porn industry is simply part of the inevitable trend of technology disruption. Music, journalism and movies are all becoming much more democratic. Getting content for free is easy, and generating that content is easy too. In fact, amateur content is some of the most popular; after decades of bleached blonde hair and fake breasts, people want authenticity.

Internet = Porn
Ultimately, the same characteristics of the Internet that created a multibillion dollar porn industry are enabling its disruption. We’re seeing a significant shift away from the days of glamorous brands like Playboy and Vivid taking all the profits with their line-up of stars forming the A-list.
Even more interesting is how intrinsically tied together pornography and the Internet are. The Internet is not “just” for porn, as Avenue Q so musically put it. The Internet is, in many ways, because of porn too.