Porn industry going through tough times., Free online content is cutting into the business. Rating Options

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From the Los Angeles Times

TOUGH TIMES IN THE PORN INDUSTRY
The business, centered in the San Fernando Valley, is being undercut by a growing abundance of free content on the Internet.

By BEN FRITZ, Los Angeles Times

August 10, 2009

On a recent Saturday night, Savannah Stern earned $300 to hang out for seven hours at a party in Santa Monica wearing nothing but a feather boa.

The veteran of more than 350 hard-core pornography productions took the job to earn extra cash and to network. But the word at the 35th anniversary party for Hustler magazine was not heartening, especially among the roughly 75 other women working there.

"At least five girls I haven't seen in a while came up to me and said, 'Savannah, are you working?' " said Stern, who started in the industry four years ago and, like most adult performers, uses a stage name. "I had to say, 'No, not really,' and they all said, 'Yeah, I'm not either.' "

The adult entertainment business, centered in the San Fernando Valley, has weathered several recessions since it took off with the advent of home video in the 1980s. But this time the industry is not dealing with just a weakened economy. A growing abundance of free content on the Internet is undercutting consumers' willingness to pay for porn, and with it the ability of many workers to earn a living in the business.

For Stern, 23, the rapid decline of job opportunities in the porn business over the last year has been dramatic. She has gone from working four or five days a week to one and now has employers pressuring her to do male-female sex scenes for $700, a 30% discount from the $1,000 fee that used to be the industry standard.

Less than two years ago, Stern earned close to $150,000 annually, sometimes turned down work and drove a Mercedes-Benz CLK 350. Now she's aggressively reaching out for jobs and making closer to $50,000 a year.

As for that Mercedes? She's replacing it with a used Chevy Trailblazer -- from her parents.

"The opportunities in this industry really are disappearing," Stern said. "It's extremely stressful."

Industry insiders estimate that since 2007, revenue for most adult production and distribution companies has declined 30% to 50% and the number of new films made has fallen sharply.

"We've gone through recessions before, but we've never been hit from every side like this," said Mark Spiegler, head of the Spiegler Girls talent agency, who has worked in porn since 1995.

"It's the free stuff that's killing us, and that's not going away," said Dion Jurasso, owner of porn production company Combat Zone, which has seen its business fall about 50% in the last three years.

Porn is hardly the only segment of the media industry struggling with these issues. But its problems appear to be more severe. Whereas online piracy has forced big changes in the music industry and is starting to affect movies and television, it has upended adult entertainment.

At least five of the 100 top websites in the U.S. are portals for free pornography, referred to in the industry as "tube sites," according to Internet traffic ranking service Alexa .com. Some of their content is amateur work uploaded by users and some is acquired from cheap back catalogs, but much of it is pirated.

Sites like Pornhub, YouPorn and RedTube attract more users than TMZ and the Huffington Post. The porn sites are even bigger than Pirate Bay, the top portal for illegal downloads of movies, TV shows and music.

Frustratingly for porn producers and distributors in the Valley, none of these sites appears to be making much money. Suzann Knudsen, a marketing director for PornoTube, said the site's parent, Adult Entertainment Broadcast Network, uses it to attract customers for paid video on demand.

"PornoTube isn't a piggy bank," she said. "Its true value is in traffic."

The adult entertainment business, which was previously in the vanguard of home video, satellite and cable television and digital distribution, now finds itself leading the rest of the entertainment industry in losses from them.

"The death of the DVD business has been more accelerated in the adult business than mainstream," said Bill Asher, co-chairman of adult industry giant Vivid Entertainment, who estimates that his company's revenue is down more than 20% this year.

"We always said that once the Internet took off, we'd be OK," he added. "It never crossed our minds that we'd be competing with people who just give it away for free."

There are plenty of other signs of the porn industry's pain. Attendance at the Adult Entertainment Expo, an annual trade show in Las Vegas that's open some days to the public, was down 20% this year. Pay-per-view programming, a key revenue source for the industry, has fallen about 50% from its peak three or four years ago, according to a person familiar with the cable and satellite TV business.

Reliable revenue and employment figures for the adult industry don't exist, since no analysts or economists track it. Adult Video News estimated in 2006 that it was worth $13 billion, but Paul Fishbein, editor of the trade publication, said the number was "an educated guess."

"Almost all of the companies in our industry are privately held, and they keep the cards close to their chests," said Diane Duke, executive director of the Free Speech Coalition, an industry trade group.

The effects of the downturn have been felt most severely by the thousands of people who work in the adult entertainment business.

Kelly Labanco doesn't need industry estimates to know what's happening. The makeup artist, who has worked in porn for five years, is landing half as many jobs as she did a year ago and has seen her pay drop from a high of $250 an hour to less than $100.

"A lot of companies say they don't even need makeup artists now and the girls can do it themselves," said Labanco, who has returned to her previous job doing freelance music publicity to pay the bills.

Even the industry's biggest events aren't worth what they used to be for working people like Labanco. Last year, she and a friend did makeup for a week at the Adult Entertainment Expo and earned $8,000. This year: $1,200.

Caroline Pierce, an adult film performer who lives in Las Vegas but flies to Los Angeles for work, said many companies have pressured her to do more scenes for less money.

"Instead of paying you $800 to do one, they'll pay you $1,200 for both," she explained.

As economic pressures increase, many performers have also changed their minds about what they are willing do on-screen. Previously, women earned hefty bonuses for unusual sex scenes. That's often no longer the case.

"A few years ago the girls we got were OK, but not stellar models, and we were sometimes paying $2,500," said porn director Matt Morningwood, referring to a website he shoots for that features one woman and multiple male partners.

"Nowadays some of the top-tier models will do that scene for us and you're looking at maybe $1,800. I'm happy for the production, but I feel bad for exploiting the girls' situation."

The only growth market most executives see is mobile devices, since they let consumers watch porn anywhere and in relative privacy.

Major companies that serve as a gateway to content on cellphones in the U.S. such as Verizon don't allow explicit adult content. But like cable and satellite companies in the 1990s, they may change their minds when they see the potential profit.

"Anyone betting against porn being a meaningful driver of traffic and revenue on mobile networks would be making a bad choice based on history," said Charles Golvin, an analyst at Forrester Research.

Adult performers with big followings probably will continue to prosper, since they often work under a guaranteed contract and have loyal fans who buy all their work. Business managers for Belladonna and Tera Patrick, two of the industry's biggest stars, said their clients were using their celebrity to make money in other ways, like dancing in exotic clubs and licensing their name to sex toys and lingerie.

"The economy has forced us to look in other directions such as tangible goods," said Evan Seinfeld, who co-manages Patrick, his wife, and runs her production company, Teravision.

But for the "middle class" of the industry, those opportunities don't exist.

"It seems at this point that if you haven't established a well-known name, it's really hard to keep working," performer Alexa Jordan said.

Savannah Stern is adjusting to that reality. She's shooting scenes for her own subscription website and planning a tour of exotic dance clubs to earn money from her name while she can. After that, she hopes to go to college for an interior design degree and work in her family's real estate development and contracting business.

"I wish I would have never gotten into it," Stern said of her career in porn. "When you get used to a certain lifestyle, it's really hard to cut back and realize this may not be forever."