Blinded by the Light

Adult entertainment and the people who produce it fascinate those looking at the industry from the outside. Although the products themselves weren't the subject of polite conversations or widespread media attention until relatively recently, the amount of money "blue movies," "men's sophisticate magazines," "titty bars," and other adult revenue sources generate has fascinated economists and market-watchers for decades.

With the dawn of the Internet Age, the adult industry found itself thrust out of society's seedy back alleys and into a new, higher-profile role: that of standard-bearer for technological innovation. During the decade that began in 1995, all eyes were on adult as mavericks and upstarts turned garage-based operations into megalithic entertainment companies using little more than their ability to wield a camera and their willingness to take risks the cautious mainstream thought foolhardy, if it could comprehend their implications at all. The limelight was nearly blinding, especially for people unaccustomed to public accolades, but adult-industry denizens rapidly adjusted to the glare and learned to relish their newfound reputation as trendsetters and technology catalysts.

By the early part of the new millennium, hardly anyone bothered to deny that without the adult industry, the Internet might not have become as big an international sensation as it did, and with record speed. Within a few short years, though, the bloom seemed to be falling from the rose. Adult stopped getting all the mainstream pats on the back, mostly because big, new, exciting developments stopped emerging from the bowels of the beast with dizzying frequency. Instead of finding new ways to shake up a world growing tidier by the minute, adult appeared to have turned its attention to keeping its ever-increasing bulk afloat, thanks in no small part to innovations of an entirely different ilk: content piracy, phishing and billing scams, and legal battles not only with governmental authorities, but also inside the industry.

The hush that fell over adult generated one big question: "Where have all the bright ideas gone?"

WTF happened?

Even before the majority of the world embraced the Web as the quintessential medium for modern entertainment and communication, smut peddlers began invading what later would become known as cyberspace. Beginning in the late-1980s, computer bulletin board services - or BBSs, which connected small networks of computers through independent hubs attached to banks of dial-up modems - sprang up like wildfire as desktop computers became affordable for the average home user. A good many of the most profitable electronic communication interfaces were dedicated to sexuality in all its many forms, and quite a few featured hardcore pornography.

As users drifted toward the World Wide Web in the mid- to late-1990s, many mainstream businesses were surprised to find adult entertainment had beaten them there. Still wondering how this brave new electronic medium could benefit their bottom lines, they watched in awe as adult entrepreneurs defined concepts that today seem old-hat: traffic acquisition and management, e-commerce, community building, and content delivery mechanisms, among others. The adult industry was credited with creating the affiliate model and with at least providing a proving ground for forward-thinking technologies such as online payment systems and video streaming. Everyone who aspired to create something new for the Web wanted to catch the attention of an adult company or two (although most didn't want anyone to know), because adult entertainment impresarios had scads of money and were willing to fund development.

Then, along about the dawn of the 21st century, adult insiders began to notice a slowdown in the appearance of new whiz-bang technologies and marketing methods. In the middle of the first decade of the new millennium, talk about how unrepentantly adult "pushed the envelope" died off. Mainstream media still credited adult with innovations of the past, but suddenly no one was pointing at the industry as a model for the future. Even adult-industry insiders, in whispered conversations that the outside world couldn't hear, wondered what had become of their brazen technological pushiness.

Adult seemed to have lost its edge, and no one could figure out exactly why. Theories abounded, though: governments finally caught up with technology and began trying to regulate smut out of existence; content piracy began putting an enormous dent in porn's profits; too many people had discovered how easy making bank online could be, so the Web was glutted with content; adult entrepreneurs got too fat and happy to scramble for a buck any longer; the industry, despite its relative youth, was "too old" to comprehend the desires of the next wave of young adults.

Adult fell from favor with the Internet gods. Suddenly, mainstream entities such as Amazon, YouTube, Facebook, and Google were the innovators, and adult was scrambling to follow their leads.

"In the Wild West days innovators gravitated to adult, where taking risks on cutting-edge technology offered huge rewards," said David Valentiner, who has worked as a Web designer, developer, and consultant for both mainstream and adult companies since 1995. "Few mainstream companies understood the potential of this untamed Internet culture, so they treaded lightly. Brick-and-mortar companies feared the loss of their profitable franchises, so they too stayed away. But some major software companies [such as Microsoft] created ‘black ops' divisions to test and learn from adult. Third-party billing companies found a niche that allowed entrepreneurs entry into the blossoming adult market at a much lower entry price than previously available, so adult launches and innovations prospered."

And that, according to insiders who have participated in the industry since its infancy, is where the trouble started.

 "The adult industry got into a comfort zone, and demand for our products really hasn't driven any important new Web technologies in recent years," said YNOT President Connor Young, who has operated in a number of capacities within the adult industry for 10 years. "Adult companies seldom put profits into [research and development]. Once we find a business model that works, we tend to stick with it until it doesn't work anymore. In other words, we've become victims of our own success.

"You also have to consider that when we were driving technologies online, we didn't have a lot of competition from mainstream because the actual users of the Internet weren't looking for mainstream products online yet," he added. "Porn was one of the only things that actually sold."

What now?

"Adult does indeed seem to be in the creative doldrums of late, and I think many of the models that once seemed fresh have indeed become stagnant," remarked Tom Hymes, an independent adult-industry analyst who previously held high-level positions with the industry's two trade journals and its political voice, the Free Speech Coalition. Hymes has watched adult grow and change since 1998, and he said no one should have been surprised when adult took a breather from the manic pace the industry enjoyed during its salad days.

"This is a business," he noted, "and when companies find something that works for them, they tend to stick with it. When things go south and the old methods start to lose their effectiveness, the whole industry starts to look anemic." In addition, he said, a confluence of outside and internal factors contributed to adult's malaise. "Today fewer and fewer companies are stable enough to be able to make investments in leading-edge technologies," thanks to content piracy, cannibalization from within, and a global economic downturn. Where most adult companies must rely on their own sales to generate revenues that can be invested in exploration and testing, mainstream outfits, particularly in technology sectors, have been very successful in attracting other people's money with which to play.

One other big change allowed mainstream industries not only to catch up with adult, but to take the innovation reins: an apparent shift in the Web's balance of power toward the younger end of the spectrum.

"With the eventual visibility of Amazon and eBay, mainstream started to see the potential of the Internet," Valentiner said. "The acceptance of everything electronic by Gen X and the emergence of Gen Y created a rising tide of new consumers, who also were much more adept than their predecessors in figuring out how to work the system to their advantage. The success of sites such as Google and MySpace further demonstrated the potential for online success and led the way for ‘community' sites such as Facebook, YouTube, and many others - which are exactly the kinds of interactive experiences the youngest Internet users crave."

In addition, Valentiner said, the mainstream may have taken awhile to get the hang of electronic media, but once it did, it built on adult's early successes with a vengeance. "In the early days, adult video companies saw the Internet as another distribution vehicle while mainstream movie companies bickered among themselves over which technology to try, so nothing got done [in mainstream]," he explained. "Hollywood also factored in obscene, obsolete profit margins and accounting practices that completely discounted the [return-on-investment] incentive enjoyed in adult. After watching adult for a while, though, mainstream got its act together. The things that prevented their online success a few years ago don't any longer. In fact, they've overtaken adult in pushing some of the envelopes in areas like community building, sponsored content, and real-world tie-ins."

With fortunes now being made in the mainstream, the rebellious, ambitious youngsters with all the bright ideas no longer feel as drawn to the defiant, if comparatively long-in-the-tooth and stagnant, adult industry, Valentiner noted. "The ‘young guns,' while still in college, saw potential - and still do - in the now-much-more-accepting [of erotic content] mainstream markets without the stigma and potential liability of [hardcore] adult," Valentiner said. "Today, opportunities for innovation are as available in mainstream as adult - and with lots fewer raised eyebrows and uncomfortable conversations around the holiday dinner table."

And the future?

So how is all that likely to play out in the future? Young said nobody can be sure, but if adult wants to get its groove back, it should strive to become better at watching consumers' signals - and then acting on them before mainstream has a chance. "Mainstream is usually slow to embrace something new until they know it can work for their bottom line," he said. "Until that happens, they let smaller companies take the risks knowing [big mainstream companies] can always buy out [the little guys] later. Now that consumers are more comfortable making various kinds of purchases online, that the Internet's importance is solidified, mainstream is putting its tremendous muscle in the area of R&D into play in ways we never could. We need to pick up the pace in that area.

"Mainstream is putting a lot of work into developing new ways to market to viewers online," he continued. "They've tried a lot of things that don't work, but at least they're trying things. We're stuck with the same old tricks. Additionally, mainstream understands the value of social networking online - something only adult dating programs have really tapped. We could do a much better job in providing services that cause people to interact; help them to meet new people online who share their interests. It doesn't have to be just dating."

One company that has invested heavily in R&D and community-type environments is video-on-demand powerhouse AEBN. The company's recent introduction of haptic technologies that add a new dimension to sexually explicit content has created a size-large buzz both inside and outside the adult industry. Marketing and communications director Jim "GonZo" McAnally - another "old-timer" in adult who's been circulating in the industry for about 15 years - said he thinks the impetus adult needs is more akin to a swift kick in the butt than a crystal ball. "I think we are still seeing a lot of innovation in this industry, but it's being clouded by a lot of unethical practices like card slamming instead of [forward-thinking developments]," he opined. "The people within this industry became complacent after years of doing what worked to make the most money. That meant taking fewer risks, which has lead to less innovation. However, this industry has stepped up in the realm of interactive experiences. Things like our RealTouch indicate that. It took us five years in development to get that product to market, but the mainstream still doesn't have anything like it and probably won't for a while," McAnally said.

"The industry still deserves its reputation [as a group of innovators], because in a lot of areas we're still waiting for mainstream to catch up," he concluded.

Hymes said he thinks the combination of innovative stagnation, legal challenges, and global recession ultimately may be exactly what the adult industry needs to inject renewed vigor. "In the face of financial Armageddon, throwing caution to the wind and pushing the boundaries as far as they'll go seems like an increasingly rational thing to do, as long as you stay on the legal side of the fence," he said. Times like these "probably are when people start tinkering with ideas that have just been percolating or shoved in a desk. The fact that AEBN is willing to invest resources [in experimental products like the RealTouch haptics device] says a lot about both the company and the industry.

"As far as the mainstream, oddly enough, I think they are better at interacting with their customers, readers, and viewers," he added. "In that way, they are adapting to the new realities of the marketplace better than even the online smut merchants. Of course, they also have far greater resources, but I think that's only a part of the answer. As incomplete a response as this is, and as nauseous as it makes me to say, I think a lot of them simply ‘get it,' while too many of us are still fumbling with our zippers, so to speak," Hymes said. "That said, I think our halcyon days are ahead. I really, really do."

This article originally appeared in the April 2009 issue of AVN Online. To subscribe, visit