Hollywood and Adult Entertainment Parallels
Los Angeles' entertainment industry feels threatened by "runaway productions": movies and television shows lured by economic incentives to shoot outside Hollywood, allegedly costing L.A. crews thousands of jobs and billions of dollars.
There are parallels between Hollywood and adult entertainment. Does runaway production affect e-porn?
"American companies have been hiring talent from abroad and co-venturing with companies in Europe to take advantage of the talent pool, in terms of models and software producers," says attorney Robert Sarno, of Brull, Piccionelli, Sarno, Braun & Vradenburgh (www.brupic.com). Sarno says the L.A.-based firm, which represents many adult clients, has a growing demand for expertise in overseas law, and is allying with correspondent attorneys in various overseas jurisdictions.
SykkBoy, Media President of webmaster resource Netpond (www.netpond.com), believes, "Overseas operations are an increasing adult Internet trend, although it's difficult to determine how widespread, because of industry secretiveness." Former Geishahouse.com mamasan Mika Tan notes, "I see lots of new live chat sites moving to Eastern Europe and Southeast Asia."
Back in the (Former) USSR
Since Soviet Socialism's defeat, one of e-Imperialism's prime happy hunting grounds has become the former East bloc. Social guarantees of the USSR and its Eastern European allies - full employment, medical care, and education, low rents, etc., for the working class, in a not-for-profit economy where workers owned the means of production - are largely gone. Socialism's collapse impoverished many ex-Soviet camp proletarians.
"When you visit these countries, you see people who worked for six months without being paid," says Gary Hamilton, CEO of Las Vegas-based OLS 2000 Services (www.ols2000.com). "Most of these places are havens for child pornography, extreme BDSM, slavery, bestiality, and organized crime, due to economic conditions."
The free market is a game of winners and losers. To paraphrase Marx, a specter haunts Eastern Europe - the specter of cybersex, as adult dot-kapital spreads across the remnants of the Berlin Wall. Conventional Stalinists would surely have censored the Web in general, and especially suppressed the adult Net, as bourgeois decadence. Capitalism's comeback means a more unregulated economy, along with a new morality bred by desperation.
Hamilton's OLS has produced and provided erotic animation and art since June 1998. "The work is created by 40 cartoon animators and 250 static international artists," he says. "Two percent are in America. The rest are in Canada, London, Australia, Philippines, Estonia, the Ukraine, Moldova, Belarus, Russia, Romania, and Serbia. We have a Moscow office with 12 programmers.
"Eastern European animation costs are 10-15 percent of what they'd be in America," Hamilton states.
Savings isn't the only incentive for contracting workers in the former East bloc. The Soviets and their allies developed a rich film culture. "There was a tremendous basis in animation and cinematography in Eastern Europe that paralleled American cinema and cartoons," Hamilton asserts.
Today, a new medium - with an un-Marxist message - taps into that creative reservoir. Sarno says, "There are lots of educated programmers in Europe who work on the cheap, and an enormous talent pool of models, not only in Amsterdam, but in Eastern Europe. They're fresh faces, performers unseen before, working at relatively low prices, and presumably very attractive." Sykkboy insists, "A programmer in Russia basically grows up hacking and cracking. They have to - they can't afford software programs, computers. There are e-porners who want to use that ingenuity and resourcefulness, the minds that develop new concepts and security procedures."
Direct Sex's www.russianteensex.com transmits live chat from Moscow and Vladivostok. "We basically find people who have people with the ability to do what they need to do, and we provide them with a video delivery service, billing platform, and marketing support," www.directsex.com Business Development Director Dan Winston says. In addition to sexy tovarisches, the firm contracts personnel for anti-hacker security, programming, and database management.
Hamilton, who married a Russian doctor, asserts Eastern Europeans' work ethic surpasses that of their more expensive American counterparts; he also says they are more disciplined. "Their will to succeed and loyalty is tremendous. OLS has a much higher production level because of them. Easterners don't call in sick; they're not quitting. They have lots of pride in what they produce, take it upon themselves to learn as much as they possibly can, to increase earning capacity," Hamilton asserts. He also praises the caliber of Easterners' work, noting South Park is done by a Moscow studio which was relocated to L.A.
The Wild, Wild East
Free enterprise has ushered laissez faire ways in more ways than one. Winston believes Russia has become very liberal vis-�-vis the sex trade. Tan thinks Prague is as permissive as Amsterdam and Copenhagen, and that models take nationalistic pride being online.
Sarno says, "From what I've been told, in former Iron Curtain countries, I don't know if the laws are on the books or not that would prohibit adult activities, but enforcement's very, very lax. It's probably more a question of de facto, as opposed to de jure. It's a pretty tolerant environment," he states.
In the former Workers' States, organized labor's not a major actor. "There really aren't any unions to speak of. Everything is broken down to such a desperate level economically," Hamilton says.
"The Internet is pretty independent. It hasn't been regulated yet in terms of the labor force in Russia, and elsewhere," says Winston.
Hamilton cites other advantages: "Liability insurance is tremendous in the U.S., but minimized in some overseas countries." He maintains organized crime is not a factor when it comes to erotic animation and art in Eastern Europe.
Winston believes, "The Underworld hasn't really ?got' the Internet yet."
According to Hamilton, mainstream business trickles down to cybersexers in Russia. "OLS was hired by major corporations, such as Milky Way and Snickers, to animate R-rated commercials to air on Ted Turner's TNT TV station in Moscow."
While doing business in Eastern Europe yields many benefits, it is not without challenges, such as dealing with foreign exchange. "If we look at the ruble, and currencies of Ukraine, Moldova, and Serbia, the U.S. dollar is worth double to two-and-a-half times what is was two-and-a-half years ago. OLS' payments are based on dollar value converted into their currency. But by the time you pay the conversion rate, there's really not that much of an advantage," Hamilton says.
Netpond's Sykkboy maintains that international bank wires, even U.S.-Canada ones, take longer than domestic transfers, and the size of wires can attract banks' attention. "As the adult Net runs on U.S. dollars, being based in Vancouver, with the weakened Canadian dollar, makes the money go further. You're living on Canadian funds, but your company makes U.S. funds. That's why lots of Canadian webmasters love the adult Net. Where else can you add 40 percent to your money?"
However, Winston contends, "Currency exchange is no problem in Russia or other countries we do business in. Everyone takes U.S. dollars. If you have a U.S. bank account, you can wire U.S. dollars anywhere in the world."
Tan believes the strong U.S. dollar vis-�-vis the Euro, ruble, and currencies of other former Comecon countries, enhances the desirability of working in Eastern Europe.
Language, however, can be problematic. "Because of the Cold War, only 5 percent speak English. My wife Yelena and OLS' Russian partner are extremely helpful," says Hamilton. Yet, OLS has a backlog of images requiring English translation for related dialogue and exposition.
But Winston insists, "Computer language is pretty universal. People we deal with speak English; we haven't found communications barriers."
Hamilton thinks office space and computers cost roughly the same in Eastern Europe as they do domestically. "But the Internet is very, very expensive in Russia," he laments. "We pay about $4,000 a month for a 256K line to our Moscow line, a cyber line from Golden Telecom. That comparable line, a DSL rate in America, would be $50. However, we must upload different information, we're controlling different things occurring on various servers. Right now we're testing multi-player games," Hamilton says.
"Russia is really weird," Winston agrees. "Russia charges an arm and a leg for downloading, but nothing for uploading."
The Not-So-Mysterious East: Asia
GeishaHouse.com (www.geishahouse.com) is a faux geisha house, featuring Asians in a voyeurcam "Oriental" residence. After nine months, cost was the deciding factor in relocating the house from L.A. to Asia.
"Talent is so expensive in America," Tan says. "We paid girls here $2,000-3,000 a month to participate in daily activities such as showers, eight hours a day, and provided room and board at Geisha House. The same set-up is in Asia now, but seven local girls work for $2 or $3 a day. It's so cheap to run the operation there. The house was purchased outright for a couple grand. They don't have to worry about landlords busting in. Another thing making it advantageous is how cheap bandwidth is there. It's a third bandwidth's cost in L.A.," Tan says.
In addition to models, Winston says Direct Sex contracts programmers for $50 a day in India, to do what American programmers would charge $250 an hour for. Based on an eight hour day, that's a $1,950 daily saving, or a $9,750 savings per 40 hour week.
Besides economics, Direct Sex had other motivations for transplanting. Tan claims the L.A. house had stalker problems. Winston adds, "By virtue of the nature of our content, we're touting ourselves as exotic video content. It's not your garden variety Caucasian girl next door. Our whole selling point is exotic overseas girls."
According to Winston, last November, www.asiansexchat.com went online from Manila, capital of one of Southeast Asia's poorest nations, the Philippines. "We're marketing it as an Asian brides kind of thing - in addition to immediate gratification, you can chat, correspond, and arrange to meet girls who'd love marrying Westerners," Winston says.
One of OLS' best static cartoons (www.nakedearthcomix.com) is produced in Southeast Asia. Naked Earth is from our studio in Manila," says Hamilton. "It's one of the Net's most popular ?toons. A chapter's released monthly; 20 are already out. We're now taking bids to make a 90-minute animated R-rated sci-fi movie out of it."
Working in Asia also has disadvantages, such as strict obscenity laws in countries like Singapore. Tan says real geisha houses are in Japan, but laws forbid such wired domiciles there (costs would also be prohibitive); Hamilton adds, "In Japan, it's illegal to make hentai cartoons, and assert authorship"; Winston says while Bangkok enjoys a wide-open reputation, laws prohibit e-porn from Thailand.
Tan adds, "Quality of bandwidth and transmission is not as good." Winston states, "There's no central hub in Asia, so we pay lots of money for bandwidth, 20 times what we pay in America. But since labor is so much cheaper, in the end, it's far more affordable to do it overseas."
"Finding trustworthy technicians and other employees who can be relied upon from afar is important," Tan stresses. "And as the new house is across the International Date Line, time is a big issue. When the girls are awake, everyone in the U.S is asleep, so Geisha House tries changing the girls' sleeping habits. Prime time for chat is six p.m. to midnight, California time," Tan says. But Winston counters, "It's such a small problem compared with all the benefits."
In that spirit, Hamilton had scheduled a December trip to Vietnam to contract animators.
Mi Casa Es Su Casa
The growing popularity of Latino entertainment, from Jennifer Lopez to Ricky Martin, impacts cybersex. Users log on to la vida loca via voyeur houses featuring Hispanics.
Miami-based Carlos Perez is President of Latin Online Entertainment Group, Inc., which launched www.latinahouse.com September. The residence, wired with 12 24/7 cameras for shows such as showers, plus live chat, is located in San Juan, Puerto Rico. Most viewers are in America. "Puerto Rico is a U.S. commonwealth, uses U.S. dollars, is on EST, and is very U.S. friendly," says Perez.
He went on to say, "There's not much Latin content, and we add Latin flavor to live video streaming. Being from Puerto Rico, a different ethnicity calls more attention to it, as opposed to the American and Amsterdam markets. The Latin thing is hot and in now. Economically, it's lots cheaper to operate in Puerto Rico. The only down side is crime and bandwidth, the technical side - our streams to our hosts. Most countries outside the U.S. are not that technically sound, especially Latin American countries," states Perez. Nevertheless, the firm is launching www.livelatinsex.com in January, featuring live feeds of one-on-one shows out of Venezuela. (However, Perez, who is Cuban, is concerned about Venezuela's leftist President.)
Tampa-based Entertainment Network, which created www.voyeurdorm.com, established www.voyeurcasa.com in Costa Rica. The wired residence provides shows and live chat that is bi - lingual, that is, in English and Spanish. This taps into the growing Hispanic population in America and international use of Spanish.
World Without End
OLS produces casino software as a joint venture with Interactive Solutions of Las Vegas, and TriNet in Estonia and Israel. "We have just put some lines into Antigua, where it is live online," says Hamilton. There are no American credit card processors who process gaming computer software. This island is the most popular destination for large casino operations to operate at. It's $50,000 a year, and 3 percent of net profit to do business there. Anybody thinking about going to any stock exchange in the world will locate on Antigua," insists Hamilton.
He went on to say, "In Australia, we produce a monthly four-minute installment of the Nasty Jack flash cartoon series. We have other monthly flash cartoon series coming out of Melbourne, about a Japanese porno escort, plus the sci-fi Weird Galaxy. Australian animators provide consistent, excellent work, always meet production deadlines, and have uncanny knowledge of American pop culture," Hamilton states. In OLS' London studio, animator Chris Pizzinga produces The Adventures of Nasty Nessa, porn star Vanessa Del Rio's story in comic book form.
From Hawaii, Direct Sex transmits www.hawaiiliveo.com and www.directsex.com, live chats featuring Polynesians and Asians.
Lax laws entice some investors. "Scandinavia pretty much has the same attitude as the Netherlands," says attorney Sarno. "The Dutch have a long tradition of liberal, legal attitudes towards sexuality. Because in Amsterdam it is de jure, it's much easier for companies to set up there and not run afoul of the law." Hence the popularity of live streaming video from what may be one of e-porn's first offshore locations by firms such as Toronto-based Python Communications, Inc. (www.pythonvideo.com), which advertises itself as "Home of the original Amsterdam live sex show." (By the way, Sarno says Canada is stricter than America.)
Overseas permissiveness could have legal advantages, as Sarno believes companies abroad may not be subject to U.S. jurisdiction. But he warns, "The mere fact that Americans set up foreign corporations does not make them exempt from possible prosecution. It's a risk assessment � they think ?if the government goes after the adult industry, they'll probably go after the easier targets, and operating offshore will make it more difficult for the government to figure out who we are.' But all it does in reality is make it a little harder for the government to figure out who they are. They've gained insulation as to their identity, but not legal insulation," Sarno counsels.
The lawyer also says tax and data haven concerns factor into e-porn quests for offshore sanctuaries in the Caribbean and elsewhere. Sarno believes if servers and content are in a hospitable foreign environment, it could preclude seizures and prosecutions by the Feds. But the attorney also warns fringe cybersmut elements, such as child pornographers, may go offshore for illegal purposes. Sykkboy adds Lichtenstein has favorable banking laws.
E-perialism
E-perialism is a growing, profitable trend for e-sex that mirrors globalization. Nevada-based OLS' Internet empire is largely overseas, and Hamilton claims OLS is very successful. "We started in 1998, with 700 unique visitors a day, and now see 750,000 daily. We currently hold $8 or $9 million worth of assets, with a cash flow of probably $2.5 million annually. We plan to be listed on the Frankfurt Stock Exchange next year, with an IPO up to $40 million," Hamilton boasts.
As for host countries, employment is the main benefit, and derivative taxes and consumer spending. While workers are paid than Americans, relatively speaking, they receive higher rates in local economic context. In addition to foreign investment, host nations receive infusion of infrastructure, information, and training.
In addition to other drawbacks already cited, organized crime and official bribery can be major factors. Travel presents opportunities to see the world, but can be costly, time consuming, and wearying for cybersex's frequent flyers. Hamilton said as of October, he'd been to 16 countries and spent 150 days across the seas. Winston traveled abroad October through January on business.
Foreign Competition?
Hollywood craft guilds contend runaway productions cost workers jobs at the heart of the industry. The San Fernando Valley is ground zero for e-porn: could models, computer programmers, etc., in L.A. and elsewhere in America lose jobs to overseas competition? Is U.S. talent pricing itself out of the market?
Tan, who modeled for www.geishahouse.com and www.hollywoodasians.com, thinks so. "It's getting really expensive to pay by the hour for live chat," she asserts. "Lots of chat companies are moving to a commission, split 50-50 with performers. The whole chat arena is changing this past year. They can't afford the overhead anymore. Models are too expensive. Because their rates in the U.S. - they expect $25 to $40 an hour. Otherwise, they can do stripping, hostess bars, make that amount of money and more, without blasting themselves online and masturbating on camera. So monthly membership fees for chat are dropping; there's so much competition now. They'll either drop to commissions, or move elsewhere," Tan predicts.
As for shooting content, Sarno says Hollywood production costs are far greater than those of e-porn video. "The adult industry is so well entrenched in Southern California, there's so much support for it, that the costs are manageable, and still profitable without running abroad," he says. "However, computer programmers, sophisticated graphics and CGI people, etc., might be challenged by the talent pool in India, Bulgaria, Romania, Czechoslovakia, Hungary, and Russia," warns the attorney.
Winston asserts: "The U.S. Internet market is so competitive, in terms of personnel. We're paying people just out of college $10,000 a month to do basic HTML stuff, and for more than that, you're paying more. But in places like India, Russia, or Thailand, there's perfectly qualified people, even with Ph.D.s, willing and able to work for less than a tenth of what we pay Americans. With all this IPO stuff, you pay some American kid $225 an hour for programming, or pay some Ph.D. in Russia $50 a day for the same work. The guys in Bangalore are on the cutting edge, outstanding. They're just waiting for us to give them commercial applications for their skills," gushes Winston.
He adds, "It's not just a money thing, it's also a matter of time, which is of the essence. If you need something done in America in a week, it's rare you can find anybody available. Whereas programmers abroad are able to do the work we need in the time we need it by. They turn things around quickly," Winston maintains.
Netpond's Sykkboy declares, "Overseas is an untapped goldmine of talent. There's a whole world out there full of webmasters ready to pounce on the adult Internet. Someone growing up in Germany, Russia, can have a fresh, different view, which can help your company from turning stale."
Winston broadens the runaway analogy to high tech workers in general. "The visa quota for 2000 for importing them into America was filled by April. Their minimum starting annual salary: $60,000. Big companies - Compaq, Intel, HP - filled 2001's visa quota by August. If you're a small company, you can't bring any wired workers in at all," Winston grouses. He stresses it's easier (and cheaper) for Americans to hire them to work in their home countries. "All it takes is an e-mail - to programmers posting resumes online, or companies which offer ASP, PHP, Java, services. It's simple," Winston asserts.
As for importing performers, Sarno cautions there's a possibility this could be construed to violate the Man or Federal Travel Acts, which prohibit crossing state and national borders for illicit activities such as prostitution. This is another incentive for the mountain going to Mohammed.
North American investment in overseas e-porn for Western markets gives new meaning to Lenin's dictum "imperialism is the export of capital" - one which would make the revolutionary spin in his mausoleum. And in the 21st century, to update and paraphrase another Lenin quote: "E-perialism is the highest stage of e-commerce." *
