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Sex Sells.

Online porn is big business, its growth taking even sector analysts by surprise.

Based on an article in the Telegraph by Paul Mungo

Sex sells. This is a fact known to all publishers, filmmakers, television producers, magazine editors and advertisers. Advances in communication technology - printing, photography, films, telecoms - have invariably been exploited by those selling suggestive books, or erotic pictures. There was no reason to believe that the Internet would be any different.

Adult sites typically offer photographs, videos, real-time video sex or a combination of all three. Not all make money. An unknown percentage are hobby sites that break even at best. But for those that are established, site owners say profits are excellent, ranging between 60 percent and 80 percent of revenue.

Operators say adult sites that get 10,000 hits per day usually gross about $3,000 per month. Midsize sites attracting 50,000 hits daily bring in roughly $20,000 in revenue monthly. Large sites, with multimillion daily hits, can bring in more than $1 million per month.

According to a report issued by Datamonitor, a London market analysis company, "adult" content made up an astounding 69 per cent of the £900 million online-content market in Western Europe and America in 1998. That's £600 million, dwarfing the amounts spent on games (£38 million), sport (£16 million) and music (£5 million).

Another report, issued by the American Forrester Research, concurs. "Online adult content is big business," it says. "The 1998 market will generate between $750 million and $1 billion, with a rapid growth in the years that follow." Forrester estimates that three American pornographic sites (all networks of several URLs) have gross incomes of $100 million to $150 million (about £60 million to £90 million) annually, principally from subscriptions. One site grossed $95 million in 1997, a rise of 40 per cent on the previous year.

These are staggering figures. They also seem to have taken analysts by surprise. Forrester, for example, had originally estimated the pornographic-content turnover in 1998 at $150 million. It revised that figure upwards after interviews with site operators and credit-card-processing services, but the fact that it increased its estimate by more than 500 per cent suggests explosive, largely overlooked growth in Internet pornography. Mark Hardie, senior entertainment analyst with Forrester, says: Our figures were out by an order of magnitude. Rarely do we say there's something out there that was gargantuan that we didn't see, but the business was underestimated. It's been a robust business for a very long time, but when we worked out it was worth a billion a year, folks around here didn't believe it. They said it was outrageous.

The figures need to be put into some sort of context. Pornography makes up between 50 per cent (the Forrester estimate) and nearly 70 per cent (the Datamonitor figure) of what is refered to as the "paid-content" sector - sites that sell online services - games, sports news, music, financial advice - or, indeed, pornography. E-commerce covers goods such as airline tickets or CDs or books, that can be ordered and paid for online. The total value of all money transactions on the Internet, both goods and services, comes to something like £6 billion, meaning that pornography makes up roughly 10 per cent of all economic activity on the Internet. Another way of looking at it is, if the Internet were your local high street, every tenth shop would be a sex shop - if all shops generated similar turnover.

But in fact the Internet sex business is dominated by 10 or so big operators, most of them American. Forrester also identified what it refers to, disconcertingly, as "mom and pop sites". In American lore, "mom and pop" used to run grocery stores; now they've graduated to Internet pornography. There are said to be "at least 40,000 mom and pop sites earning a few thousand to a few million dollars yearly.

Prostitution is also said to be thriving on the Internet, though the turnover from this (generally) illegal activity is not known. Most prostitutes simply advertise their services, as they do in telephone kiosks, but there is also a proliferation online of escort agencies and massage parlours and all the other euphemistic terms for brothels. And then there are the outer fringes: bestiality and child pornography. While this attracts both media and police attention - as it should - its pervasiveness is probably exaggerated. It appeals to a very small minority, and its audience is limited. The big money - and Internet porn is all about making big money - is in mainstream material.

What the Internet has done is make pornography more easily available. People who would never consider walking into a sex shop in Soho will have fewer qualms about accessing pornographic sites in their own homes. Looking at sexually explicit material online feels anonymous and private. It's constantly available, it's varied (certainly more varied than in a sex shop), and it can be tailored to personal taste.

Without doubt, it also makes pornography more acceptable: simply knowing that there are tens of thousands of sex sites out there, being seen by people from all over the world, means you are not the only one . . . And that's acceptance - and, like it or not, that means that Internet pornography is here to stay.

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