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In hard times, people often turn to vice for a little consolation. But lately, even the online offshoot of one of the world's most successful professions--and the intimate cousin of the oldest--is finding the going a little rough. Once thought to be recession-proof--the last stronghold of booming businesses when money gets tight--adult entertainment lulls us into escapism, the theory goes, and actually gains in appeal when we're down on our luck.
But in the face of consumers' mounting unemployment and debt, it seems that the revenues for providing a little basic pleasure isn't coming through for online entertainment companies. In January, Hustler publisher Larry Flynt infamously called for a "porn bailout bill," $5 million in government money to pull the adult industry out of a slump that's brought down revenue at leading studios by 20 to 30 percent.
One of the biggest reasons the recession has hit traditional studios so hard is their reliance on old, expensive forms of media -- such as DVDs and magazines. Nobody buys those these days, says Brad Abram, head of online adult video game Virtually Jenna (adult, NSFW), so they can't compete with the Internet.
"The demographic has changed," Abram explains. "Younger porn consumers aren't used to going to the store to buy DVDS when the Internet is so full of porn at their fingertips." Compared with traditional adult media companies like Playboy, Abram's sex simulation game has no cost of hard goods, and no physical media to distribute. Nothing stands between him and his customers but a subscription fee, and the same goes for all paid Web sites. So is online porn the real recession-proof industry? Not exactly.
Unfortunately, those same young consumers who aren't used to buying DVDs are getting increasingly finicky about paying for porn at all. Subscription video sites are being pushed aside by "tube" sites--YouTube clones full of short clips that are entirely free. Piracy of subscription content has also become a huge issue. Internet goers grab tantalizing tidbits from professional sites and repost them elsewhere.
Competition from free sites and piracy-prone message boards are putting a firm squeeze on studios that publish their content exclusively online, since consumers can get off to the same videos and photos elsewhere without ever having to hand over a credit card. Take Kink.com (adult, NSFW), for example--a large alternative studio with 17 fetish sites, each of which requires a separate membership. At the beginning of February, public relations manager Thomas Roche said the company was "still going strong," and that higher-ups were "cautiously optimistic." Three days later Roche was laid off, along with 11 percent of Kink's staff.