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Code critic
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Sex sells, doesn't it?
TALES OF FINANCIAL CHAOS AT THE HEART OF AN ONLINE PORN EMPIRE.

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By Mark Gimein

Dec. 1, 1999 | Conventional wisdom says there is no business quite as foolproof as selling X-rated photos and their multimedia derivatives on the Web. For several years the media overplayed a public fascination with online pornography, with pundits fretting that the only thing people were using the then-nascent Net for was smut. Having a dismally low opinion of our fellow citizens, we assumed that the demand for porn, the more hardcore the better, must be nearly insatiable.

And yet, while we assume that the computer in the next house is filled with steamy images downloaded through the Net, there's no Bill Gates of online porn. Heck, there isn't even a Hugh Hefner of online porn. The business of selling nude photo spreads is a shadowy one. Few operators of "adult sites" -- as porn sites are called by professional pornographers -- are willing to talk about their business.

Some people involved in the adult industry are so reluctant to speak to the press that they refer calls to their lawyers before they even know what they're about. Cybernet Ventures, the developer of an age verification and payment system called Adult Check, connects reporters directly with the company's general counsel, Tim Umvereit. After he's convinced that you're not under the misimpression that Cybernet Ventures actually operates any porn sites of its own, Umvereit will happily talk to you. But he won't say much, instead descending to good-humored but nearly comic depths of obfuscation.

Yes, Umvereit will tell you, there are some really big players in online porn. But he doesn't really know who they are. He might know some of them socially. But he can't really be sure.

Pornography is one of the biggest industries (the drug business being the obvious first-place winner) whose products few admit to consuming and hardly anyone fesses up to producing.

The one big exception in online porn was Seth Warshavsky -- a Seattle pornographer who, ever since his company, Internet Entertainment Group (IEG), acquired its infamous honeymoon video of starlet Pamela Anderson and rocker Tommy Lee, has been the public face of online porn.

In a December 1997 Wired Magazine profile titled "Sex Sells," Warshavsky outlined his simple theory of online porn. "You really never lose," the buzz-cut, 26-year-old Seattle businessman told Wired. "It's cheaper to produce than mainstream content, and it's easier to sell."

Since then, the arc of Warshavsky's career has been chronicled in dozens of magazine articles. Warshavsky told Wired that his sites took in $20 million in 1997. By January 1999, Warshavsky was telling the San Jose Mercury News that his Net ventures brought $44 million in revenues in 1998 -- and $15 million in profit.

Of course, hard and fast numbers in the online porn business are notoriously elusive. Mark Tiarra, for instance, runs several adult sites himself, consults for several other companies and is president of United Adult Sites, a trade organization for the industry, so you might expect him to have as clear an idea as anybody of how big the industry is. But although at first he confidently says that adult sites take in a total of $500 million to $1 billion in subscription fees a year, within five minutes he is explaining how one of his clients -- a company whose name he won't divulge -- takes in $40 million in subscription revenue a month. Hey, Mark, isn't that $480 million a year right there?

Next page | Does sex really sell?