Pornography: the rising star of corporate America

Once confined to the top shelves and the back of cupboards, pornography was the domain of dubious men in raincoats. But the industry in the US is changing, and even the biggest corporations are getting in on the act. Since the Seventies, “adult entertainment” has grown from a small niche industry into a multi-billion dollar business with mainstream appeal, despite the puritanical streak that runs through much of the country. Last year, Americans rented more than 750 million adult films on video or DVD, and watched millions more on cable and satellite at home or in hotel rooms. In addition, they spent more than $2bn (£1.2bn) accessing movies and pictures on the internet’s estimated 100,000 pornographic sites.

New hi-tech delivery systems have allowed major corporations to get a piece of the pie without having to get too close to the product. Major organisations such as AT&T, General Motors and many top hotel chains are getting their share of the profits by helping to get the product to consumers. At the same time, a new generation of highly educated entrepreneurs (many of them women) are bringing ambitious business strategies to the industry.

The adult entertainment industry is often regarded as one of the most advanced when it comes to harnessing technology. From print to VCRs through camcorders to the internet – pornography was there at the start and has continued to advance by embracing the new.

Adult content providers are also considered to be some of the best and most advanced marketers around, both onand offline. Their industry was the first to use “pay-per-click” advertising banners and offer secure payment facilities for customers.

Furthermore, adult entertainment has always been one of the most (and the few) profitable internet channels. Forrester Research estimates that the internet pornography industry is worth at least $1bn (£630m) a year – and growing. The more mainstream sites gain credibility by offering something rather more tasteful. Libida.com, for example, is a website which was set up using Silicon Valley venture capital money. It offers “sex toys, sex tips and erotica for women” and is run by some extremely well-qualified and experienced business people and women’s sexuality experts – almost all of them women.

Libida.com is an example of one interesting trend that has completely changed the face of the adult entertainment industry – products created by women, for women. Another is CakeNYC, the inspiration of two well-educated twenty-something women who decided that the sex industry had nothing to cater for them. Cake describes itself as providing “entertainment for women”. This “entertainment” generally takes the form of “porn parties” and “strippathons” in trendy New York nightspots, where women are encouraged to join in and express their sexual side along with the other club-goers. The Cake events have become such a success that queues form hours before the events begin.

Now the company has made it across the pond, and last week held its first CakeLondon event, which, according to organiser Emma Jeynes, was a huge success. “The response was overwhelmingly positive. We had to turn away over a hundred people who hadn’t pre-registered on our website,” she says.

With a steadily growing following on both sides of the Atlantic, Cake’s management team is now focusing on how to develop “a brand aimed at women which might produce designer sex toys and books full of literate smut”. Jeynes adds that she is “keen to explore the similarities and differences between British and American female sexual culture, and how women respond to issues raised through Cake.” Sex brands aimed at women could be the next big thing, but Ann Summers can probably rest on her laurels for a while yet.

As internet connections and cable coverage have increased, and with digital distribution networks delivering adult content at the press of a button, almost any US household can tune into pornography on a whim. The profile of the typical consumer has changed as a result of this. The anonymity provided through online, pay per view and telephone lines has allowed marketers of adult material to target groups that would never have braved the top shelf of a newsagent or seedy video stores. Thanks to the technology, adult content providers can develop a one-to-one marketing relationship with consumers and build up a profile of their buying habits, building an impressive database of users in the meantime.

But the arrival of new technology has put some branches of the adult entertainment industry at a disadvantage. Print

media is now the main loser in the sector: sales of top shelf magazines have declined significantly in recent years and many industry observers predict they will eventually die out altogether. With Bob Guccione’s Penthouse Empire rumoured to be teetering on the verge of brankruptcy, it is clear that even the most well-known adult brands are fighting for survival in the magazine world.

Long-distance telephone service giants AT&T and MCI WorldCom have been leaders in the “1-900 market”, which is dominated by phone-sex services. Although AT&T is discontinuing its 1-900 service by the end of this year, the company is still making money from pornography on its cable services, which carry several adult pay-per-view channels, including Playboy’s Hot Network. According to AT&T, only a small number of its customers buy adult films. It may be small but it is undoubtedly very profitable – though that is not something the company would want to shout about in its advertising campaigns.

Another unlikely blue-chip company that profits from porn is General Motors, whose 225-channel DirecTV satellite service includes, among other adult channels, the Hot Channel. The adult channels reportedly generate $150m (£94m) in revenue for DirecTV.

It seems there are few areas of technology and industry that remain untouched by the adult entertainment sector. In their marketing as well as in most other aspects of their business, porn pushers leave many other industries in the shade. Just a few years ago it would have been hard to imagine that this industry would have been viewed with anything approaching respect. But as well as being almost sole survivors of the dot-com crash, it now seems that much of corporate America is cashing in – even if it is on the quiet. Whether the moral majority like it or not, adult entertainment is here to stay and its marketing is coming off the top shelf and into everyday life for millions of Americans.

Polly Devaney is a former Unilever executive now working as a freelance business writer