A Year Ago: Erotic e-commerce vendors warn against backlash

Originally published Mon, 12 Oct 1998 09:54:11 GMT

The top adult Web sites rake in more than Yahoo! and Amazon.com. But the $1bn (£0.6bn) industry is still looking for legitimacy, as purveyors of adult content meeting here expressed concern about a possible backlash against their businesses.

They said American Express is considering cutting off its adult-content customers because of the high charge-back rates experienced by credit card companies. Charge backs occur when customers dispute an item on their statement and a credit card company deletes the charge. The charge-back rate in the adult entertainment industry is about 15 percent, compared with an average of 5 percent in other industries.

In addition to problems with credit card companies, executives bemoaned the difficult of getting financial backing for their ventures. For example, a planned IPO by the company Internet Entertainment Group has yet to materialise.

The Communications Decency Act II -- which would prevent the transmittal of any content deemed pornographic -- is wending its way through Congress. At the same time, Mark Hardie, an analyst at Forrester Research said the adult content industry could self-destruct if it fails to do a better job of self-regulation.

"I would argue that a 10-year-old could find a number of adult sites rather easily," he said. But such obstacles aren't stopping people such as Caity McPherson, who runs the adult site Samantha's Online Galleries, from pursuing new business opportunities.

Right now, about three-quarters of visitors to adult sites are males between the ages of 18 and 34. "My current project is to see if women are interested in this, and are willing to pay for it," McPherson said. In addition to financial information, adult content seems to be one of the few categories that customers are willing to pay for. Adult sites also get much higher page views than most sites. For example Playboy gets about 92 page views per visit, compared with an average of five to 10 at other sites.

Relevant Knowledge, which measures visits to online sites, estimates that 43 percent of all Internet surfers visited a pornographic site during the second quarter.

But there's no indication whether any of those visits were mistakes. For example, typing a ".com" after the words "White House" instead of ".org" will bring users to an adult site. Then again, it could be argued that much of the legitimate news stories about the White House contain adult content. McPherson said the Clinton scandal has been good for business, especially after people read about Bill and Monica and their favourite cigar. "Then they log onto my site looking for brunettes using sex toys. And I make money. Thanks, Bill," McPherson said.

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