distribution

This page discusses the distribution side of the online 'adult content' industry.

It covers -

• filters - the business of restricting access
• metrics, navigation and design services
• age verification services
• payment services
• infrastructure - connectivity

     filter services

A corollary of offensive content is institutions and businesses that exist to restrict access to that content. Although figures are uncertain, boasts by some vendors suggest that suppliers and operators of content filtering software and services may be the most profitable market sector.

Those products/services, discussed in more detail here as part of our Censorship & Free Speech guide, have achieved significant penetration among operators of institutional and corporate networks.

They are increasingly being promoted as part of integrated IT management systems, including firewalls and selective restrictions on access to particular sites, categories of sites or classes of content. One vendor for example claims that artificial intelligence enables on-the-fly detection of improper images accessed through email or browsers.

     metrics, navigation and design services

The emphasis on monetisation of traffic has meant opportunities for a range of metrics and navigation services.

Some metrics providers operate on a fee for service basis, supplying information about click paths (useful in tuning the site or predicting whether a casual visitor will convert to a subscriber) and other data.

Others provide those services without direct cost, particularly to smaller sites, in return for a share of any revenue when traffic is redirected to another site or an opportunity to place advertisements on the site (with rights to those ads being licenced to a third party).

The chief executive of Seattle-based metrics, hosting and design specialist Flying Crocodile, provider of the SexTracker metrics service, is described as commenting

while conventional brands spend considerable effort and resources to establish customer loyalty, when it comes to adult entertainment, user loyalty is about as common as chastity. "When you come online for adult entertainment, your mood is different every time" ... With about five seconds to win a customer, he adds, "it's awfully difficult to brand a mood."

... simply offering an orgy of choices would probably confuse and hurt sales. "We have to whittle down 250 fetishes and make it a no-brainer for the user to get through the site and consume the product," says Edmond. Thus, in addition to the ubiquitous free teaser samples, graphically worded slogans and targeted banner ads, which when clicked send users to specific pay sites, SexTracker and its subsidiary, YNOT, organize and categorize their library of back-end and front-end of adult entertainment suppliers much like the yellow pages. "The users feel like they are opening a magazine," says Edmond of the banners. "By the fifth click, we know the users price range and how likely they are to buy."

SexTracker is claimed as tracking several hundred million impressions per day - if you do some exploratory surfing you're likely to encounter its cookies - and covering several hundred thousand sites.

Navigation services offer specialist directories for consumers that direct traffic to particular sites. Most cover between a thousand and 80,000 links.They operate on the basis of paid placement, ie paid by site operators rather than consumers, inclusion or ranking in a directory does not necessarily reflect quality.

     the verification sector

Age Verification Services (AVS), also known as Adult Verification Services, are located at the intersection of business and regulation.

Several regulatory regimes require site operators to implement regimes that restrict access by minors. Those schemes typically involve verification of a visitor's age, determined through use of a password or other identifier assigned after the the AVS operator has received a credit card payment from that visitor. As we've noted in discussing AVS in the Censorship & Free Speech guide, AVS schemes are open to abuse: the visitor using the AVS identity might for example be a child using a parent's AVS identifier.

AVS are operated as businesses, not charities. Fees to consumers vary - from US$25 per month to US$20 per quarter. Typically those fees are shared between the AVS operator, the operators of sites using the AVS (with payment on a flat or per visit basis) and third parties such as payment processors. Many AVS operators offer differential access: a standard access and premium access - whether to 'better' sites or to quarantined 'superior' content within sites.

The structure of the AVS sector reflects that of the industry as a whole, with around ten major AVS operators such as AdultCheck claiming to cover between 60% to 80% of AVS-protected sites and a large number of smaller operators covering a smaller proportion of sites. Some adult sites have an exclusive relationship with a particular AVS operator; others allow access through several AVS schemes.

A more detailed discussion of AVS is here.

     payment services

Difficulties with payments for online access (or for other services and goods) is a particular problem across the industry.

Major banks and credit card groups are discomforted by criticisms from some advocacy groups, trouble with short-lived businesses and denial of liability by holders of their cards.

As with online gambling, some have accordingly stopped all direct involvement - an Australian industry spokesperson lamented in 2000 that "you can buy a dildo with your Amex but you can't watch a dildo video" paid for using that card - and instead rely on third-party billing processors. In 2000 Visa and MasterCard announced industry-specific policies, indicating that if disputed transactions exceeded 1% the groups can require a bank to drop the site operator and imposing penalties of up to US$100,000.

Consumers have expressed concern about privacy and about fee structures, with suggestions for example that some form of micropayment, nanopayment or alternative digital currency - discussed in our Money guide - would meet their needs. There has been low-key interest among some operators in digital cash schemes, potentially useful in channelling revenue without oversight by tax agencies or other parts of government.

Third-party billing services - discussed here - such as iBill have proved attractive to operators without merchant accounts and to some consumers. Typically they manage secure funds transfer, billing and record keeping on the basis of a per-transaction fee that is generally around 25% to 15% of the payment. They have faced criticism from consumers over poor security (including large-scale data losses) and other problems.

     infrastructure

Delivery of video, audio and still images imposes hardware, technical support and bandwidth costs. Major internet service providers and internet content hosts (eg businesses that specialise in the operation of server farms) have been averse to large-scale adult content hosting; in Australia it appears that many ISPs charge a premium for hosting and ancillary services to reflect concerns about liability or merely perceptions that the client can afford to pay.

It has been claimed that the two largest individual US buyers of bandwidth are from the adult online industry. However, most bandwidth is used downstream by visitors, many of whom have non-commercial access to graphics on free teaser or demo pages.

From an Australian perspective a significant issue is the Broadcasting Services Amendment Act, discussed in the Censorship & Free Speech guide on this site, which has driven hosting of much commercial adult content overseas (and may have substantially crimped amateur publication) but is unlikely to have tangibly affected consumption.




  next page  (drivers of innovation?)