Adult Industry Blog
Most individuals who have been working in the online adult industry marketplace during the past 10 years agree that making money and being successful has gotten more difficult and costly. Many of those individuals have spent a lot of time attempting to place blame on the change in the marketplace and not enough time working on either changing their aging business models or creating new products and services. On the other hand, many individuals have moved past older business models and looking for people to blame and have engineered new products, new business models and have continued to be successful in the online adult industry.
As part of reinventing and renovating themselves, more than ever, individuals and businesses have been collaborating and sharing resources in order to provide consumers with products and services that could not have been offered without the collaborative effort. In fact, many of the collaborating parties used to consider each other competitors and would have never dreamed of working together. These collaborative efforts have led to the creation of new products and services that share content, URL's, traffic, and advertising.
It is very important for collaborating parties to not neglect considering the legal ramifications of collaborations. For example, many parties have been sharing content, whereby a content producer or content owner has been providing content to a website for purposes of marketing and/or inclusion in the website's paid subscription area. In exchange for allowing (licensing) the content to the website operator, the website operator compensates the content producer or content owner via revenue share, pay per click etc. In this example both parties need to consider the substantial legal issues that could arise including but not limited to, i) content licensing issues ii) payment issues, iii) content piracy, iv) and disputes between the parties. In this instance (and all other types of collaborations), it is essential for the collaborating parties to reduce their agreement to a written contract. The written contract will not only define the rights and obligations of the parties but it can (and should) also resolve how disputes shall be dealt with between the parties (if they ever arise).
The fact is, collaborative projects frequently terminate for numerous different reasons but the majority of collaborative disputes arise because one of the collaborative parties become disatisfied for financial reasons. A solid written agreement between the parties will not only dictate how things will proceed during the good times but the written agreement will also control how things will proceed in the event of a dispute. Being lazy or cheap is the wrong approach. Stop with the verbal agreements and napkin notes that never get memorlized into a legally binding contract.
One final point that I'd like to make is that my experience has taught me that family and close friends often make the worst collaboration partners and can result in the ugliest disputes. Do not engage in a coloborative effort with family and close friends unless you are prepared to lose that relationship. Unless you are going to be prepared to lose the relationshp then walk away; money isn't everything.
It's very exciting to see how more people are realizing that the sharing of resources can often turn into an incredible product and I'm looking forward to the continued colloborative projects that result. Just don't forget to make sure to cross all of your t's and dot all of your i's before proceeding.
Thanks for reading.
Google, a name most associated with the popular, gargantuan search engine, has been making its way into the headlines for a different and much more egregious reason: censorship across its platform of products. The company recently made waves for prohibiting adult material on its advertising network, AdWords. Now, it seems, Google has expanded its censorial policies and many are wondering just where the company will stop.
Xbiz.com founder and editor, Alec Helmy, called out the search giant for its hypocritical behavior; echoing the concerns of many in the adult industry. In an open letter, Helmy wrote, “Your decision has left countless businesses in dismay, bewildered about why an ultra-progressive company that is so committed to ‘Freedom of Express’ would make such a decision. These same companies also remain concerned about what the future may hold – specifically, whether you will also decide to place adult oriented websites at a decided disadvantage in organic search results.”
Through a spokesperson, Google claims its restrictive policies on adult advertisements are not new. However, many familiar with Google and the adult industry do not agree. Theo Sapoutzis, chairman and CEO of AVN Media Network, said he was surprised by the move: “I was one of the very first advertisers for AdWords back in 2002. It’s something that’s been [untouched] for 12 years, so you don’t expect change is going to start happening.”
Tom Hymes, senior editor at AVN, agrees, noting that many in the adult industry have been abiding by Google’s rules for years and are now being abandoned by the search giant: “There are many people who say the biggest losers are the ones who play by the rules. The winners are the huge properties with a lot of free content and frequent updates – the type of actions the Google algorithms really like.” BaDoink CEO, Todd Gilder, added to the chorus with a scathing open letter to Google, noting: “When an organization as visionary, powerful and dominant as Google starts kowtowing to shrewd, faith-based special interest groups with federal lobbyists like Patrick A. Trueman at the helm, it’s a sad day for freedom and a sad day for IT.”
Now, Google is taking its censorship on advertisements a step further and directing business users to cover up “sexually explicit content” in the form of album covers. The search giant has instructed music website Drowned in Sound (DiS) to pixelate, thereby censoring explicit cover art. Sean Adams, founder of DiS said that “it seems crazy that they feel they can police our editorial.” He also wondered just far Google would go with its censorship policies in the future. Just recently, Google surprised many users when it removed several thousand links in an effort to comply with the EU’s “right to be forgotten” law.
Adams is certainly not alone in questioning the lengths and depths of the company’s censorship. Many people, both in and out of the adult industry, are uncomfortable with Google’s recent decisions and wonder what will come next. Attorney Michael Fattorosi stated, “This is another example of a mainstream company turning its back on the industry that has supported it. The question now becomes: Will they block adult content from their search results?”
Google has also previously attempted to keep adult content out of other major products: developers are not permitted to share Google Glass apps with sexually explicit content and sexually explicit materials are banned from Chromecast.
Many are speculating that pressure from conservative groups caused Google’s policy changes regarding adult content. Morality in Media, an ultra-conservative media activist group, claimed through a press release that Google’s policy changes came after a “productive meeting” between the two. Google has refused to confirm the connection. If accurate, this kowtowing to a family values group is a first for the search engine giant, which previously prided itself on commitment to free expression principles.
David Holmes, writing for Pando Daily, explains the greater problem of Google’s censorship and its impact beyond the adult industry. Holmes writes:
You may despise pornography, but the specter of “family values” has often been used to attack anything that threatens traditional Christian morality, from homosexuality to books about wizards. I doubt Google will ban Out Magazine or Harry Pottery anytime soon, but what about links to, say, a provocative work of art like Piss Christ? Or ads for birth control?
As Holmes notes, the importance of tracking Google’s policy changes is not only for their impact on industries currently hurt by the new rules, but also their potential to censor information Google doesn’t agree with in the future. Holmes colleague, Mark Ames, makes an important point: “Never in history has one corporation and one source had so much power over what we know and don’t know.”
Google’s power to filter the information received by the public is vast, and its ability censor disfavored speech, dangerous. Most importantly, this is everyone’s issue, not the select few whom Google has decided to target today.
Legendary Hollywood film producer David O. Selznick once quipped that there were only two ways to make money in motion pictures — either via very cheap, or very expensive productions — illustrating how profitability across the vast middle ground of content production has remained perennially elusive.
It’s a reality that continues to shape the media landscape, adult-oriented or otherwise, as evidenced by the current state of the online adult entertainment market, where producers on shoe-string budgets struggle to compete against monolithic powerhouses that are consolidating their virtual stranglehold on professional productions and high-volume distribution channels — while middle market players have all but evaporated from today’s scene.
The middle ground, like the middle class, is seemingly fading away — and leaving the smallest and largest of firms to prosper in the wake of this seismic shift.
This is an anecdotal assumption, however, so I set out to begin quantifying some of the data by reaching out to industry leaders at XBIZ.net for insights as to today’s adult website budgets, specifically, major expense areas and the percentage of gross revenues attributed to each, to see if we can come up with an average that site owners could use as a benchmark. Although companies of different sizes and market segments will have different percentages, they do share many of the same budgeting categories.
Additionally, I am interested in identifying approximate revenue ranges to stratify results, defining what we consider to be “hobbyist” or part time sites, small companies, medium and large firms based on their revenue breakpoints in 2014. Sure, this analysis is all “how long is a piece of string” conjecture, but some basis of comparison is better than none...
According to Grooby Productions President Steven Gallon, individual operators and hobbyists that want to make a living from the industry might be happy with $40,000 per year — but anywhere up from there would depend upon the scale of their operations.
Characterizing Grooby as a small- to medium-sized company with an office in Los Angles employing eight full-time staff members and another seven full-time remote workers, Gallon says that his company earns money from website, DVD and ad sales, along with white labels and other revenue streams.
“We’re primarily a content company, so a vast amount of our budget goes there, probably close to 30 percent for models and photographers and obtaining content,” Gallon told XBIZ. “Staff costs would be next up at 20 percent, including dividends, social security, health insurance and bonuses, but much of our advertising, editing, design and social media is done in-house, so that accounts for a lot of this also.”
Other expenses include 15 percent for bank and processing fees; 12 percent for affiliate payouts; three percent for server and technical costs; close to three percent for business development, including travel, hotels, dinners and show sponsorships — with about one percent going to software and services such as legal fees and DMCA pursuits, and another percent on advertising.
“We don’t spend a lot on advertising, but if we included the Tranny Awards (soon to be renamed the TEA Awards), then we’d only be looking at about one percent,” Gallon offers, adding “The rest goes into taxes, rent and office supplies, etc.”
Gallon confides that during the darkest days of porn’s decline, the company proactively tightened its corporate belt, preventing the losses that harmed less nimble firms, while paving the way for expansion.
“We’ve had year on growth for 2012-2013 and so far in 2014,” Gallon concluded, adding “Our plan this year is for 10 percent gross growth.”
Deemented of Oliya Productions explains that typical costs for Internet businesses include the pre-opening expenses, such as company start up, development, website design and the construction of the site’s front- and backend, along with intermediary expenses such as customer acquisition and product stock, plus sales staff, miscellaneous overhead and legal expenses, plus post opening costs, including fulfillment, restocking, accounting, returns and customer service.
“Marketing as an example is a cost of customer acquisition. If you sell DVDs or post new photo sets that is fulfillment. Front end may be a portal or the site and its URL,” Deemented explains. “You can fit different items of an individual business into different slots, such as an affiliate program could either be customer acquisition or sales or both. For most web businesses after opening, customer acquisition is the largest piece of the pie.”
Barefootsies of Reality Chexxx believes that adult website budgets involve too many variables to make averaging a valuable excercise.
“For example, corporate porn is going to spend a lot more on ad buys than the ‘piss ant.’ Many do very little cash money spend, and instead work the social and link trading type of things,” Barefootsies told XBIZ. “You’re also going to have labor (plus the costs that go with labor) and other expenses a small fry would not consider, as they are probably a sole operator or a mom and pop.”
There are many different factors affecting advertising, content, hosting, labor and more, causing the figures to also vary between tube and pay sites, for example.
Barefootsies outlined two basic options for building a pay site today: the first budgets $300-$500 monthly for hosting that can handle more content or multiple servers needed for storage and encoding. Next, $150-$300 per month for Elevated X or a similar CMS which could have additional costs, as well as four to five figures each for labor and content each month.
The second option is lower budget, running $99 per month for hosting a single site (or less content), plus $29.95 monthly for Porn CMS, “free” labor courtesy of mom and pop, and perhaps $X,XXX content expenses for small time productions or less scenes.
“As you can see, there are vastly different expenses and costs involved,” Barefootsies says, noting that the same range of expenses applies to tube sites whether they use MechBunny or a different CMS.
AJ Hall of Elevated X Adult CMS fame says that rarely do customers start out budgeting $800/mo. for software and hosting.
“The actual number is closer to half that as an average with the cost of the Pro CMS version and hosting each representing about half of that amount. If you go with the same hosting but with the single site Basic CMS version, the split changes to two-thirds of the expense going toward hosting,” Hall stated. “That simple change alters the software/hosting cost split by 25 percent, and that’s a lot, depending on a company’s revenue and what percentage these items represent.”
Hall adds that as a company grows, things like CMS, hosting and processing fees (which may be as high as 25 percent for a small company) will drop to single digits, and for larger companies will drop to a fraction of a percentage of total expenses.
“Don’t get me wrong, we’ve had plenty of people over the past eight years pay $150 a month for Elevated X and go with budget hosting and make a couple grand per month off a small pay site and be totally happy, but that’s usually not their ultimate goal,” Hall told XBIZ, emphasizing what he calls the seven P’s: “Prior proper planning prevents piss poor performance,” a lack of which he says is the number one reason for every business closure or abandoned project he’s seen.
Master Ryan of Porn CMS is amazed at how many new site owners sign up for a basic account that includes the video converter and hosting for $29 per month, yet are only able to last a few months or can’t afford staple items such as content, marketing and design.
“They come into this with practically nothing and want to make bank. I support them as much as I can, but there's not much I can do for people who can’t even put a minimal amount of investment into their new business,” Master Ryan stated, advising operators that wish to start a pay site that they need to budget a minimum of $1000 per month for expenses. “That’s assuming you pay next to nothing for the CMS and hosting (such as our $29/mo. package) and go with a generic design. You still need content and marketing and that amount can be a little lower if it’s a solo site and you don’t pay for content, but that’s only saving [perhaps] 10-15 percent.”
Master Ryan offers a rule of thumb where 20 percent of a budget should be devoted towards site development, including the content, design and software, while 80 percent is targeted for marketing.
“The marketing is the only part that brings in sales. even if you want to sit at your desk eight hours a day and do all the marketing yourself, it still needs to be 80 percent of your time,” Master Ryan explains. “I’ve had so many past (and a few present) site owners that spend 80-90 percent of their time on their content and tweaking their site, and they wonder why they aren’t making more than a few sales a week. Then I have very successful site owners who keep their site very basic and spend all their time promoting the site.”
“You can guess which ones run their sites full-time and which ones still have day jobs,” Ryan adds. “Making money in porn isn’t magic — it’s all about online marketing.”
Kelli Roberts of Kelli Internet Services told XBIZ the tale of two recent clients that both set out to build adult pay sites, but on vastly different budgets.
“One understood that you needed content and gladly wrote that check for $8,000, which actually he got a crazy good deal — it worked out to be about 100 DVDs, each [averaging] five scenes, so basically he spent $8,000 for 500 videos for his new site,” Kelli confided, revealing the other client was shocked to learn he had to spend money on content. “It was like, umm, then why are people going to join your site? What are they going to do when they get inside your members area, twiddle their thumbs?”
The client ended up spending around $1,500 for content, which bought him around 12 DVDs with 60 scenes in total.
“So now you have this great website, but nobody knows about it. So of course you have to factor in marketing and some basic SEO. They both spent insanely different amounts on this too,” Kelli told XBIZ. “In the end they both got what they wanted, a membership website — and both spent very different amounts doing it.”
One proponent of the low budget route is Woody of PlatinumAdultBusiness.com, who receives 65 percent of his income from designing turnkey adult websites, and notes that it only costs him $8.95 per month for hosting, plus SEO expenses.
Kelli Roberts was quick to explain that $8.95/mo. only buys virtual hosting on a shared server, saying “That may work for your first website, when you have no real traffic and just getting started, but you’ll quickly find once you start getting any amount of real traffic that you are going to need to upgrade to a dedicated, managed server and that at a very basic level starts at $99 a month and goes up from there.”
Adult Voyeur confides that on one of his sites, the average shoot cost is around $25,000, while the shoots for another site cost around $3,000. On top of this are expenses for “spec” and leased content and the bandwidth used — and those expenses are different for cam, dating, toy and other sites.
SGS of SDYPhotography tells XBIZ that while model costs have fallen through the floor, the company sees hosting as its biggest expense, but notes that this cost has come down annually, and that the firm will be seeking to make further reductions this year as well.
Explaining that UK producers of note have long gone from the adult sector, Oscar Storm adapted his business to suit the needs of models, earning himself a 20 percent return in the process.
“For me, my sites are not a way to generate income or make money, they are a marketing tool, part of the overall,” Storm says. “The costs come from my marketing budget and are small compared to the media advertising spend I do. As a cost they have to be justified in my overall business model.”
Storm outlines his expense percentages as being 50 percent for property, which is broken down to include items such as property tax, repairs, fixed costs, furnishings, lighting and laptops, etc., as well as 25 percent for marketing, including websites, advertising, emails, and sponsorships, of which websites account for only around five percent of expenses. Add in five percent for administration expenses such as general office costs and travel, and Storm is left with 20 percent profit.
For his part, Leo Karabatch of XCzech Empire offered that he started out with 50 updates featuring 10 models, and that he acquired this original, exclusive content and girls, building three sites with a custom CMS and video player, plus graphics and hosting, on a budget of $5,000 — showing frugality can lead to greater profits and lower barriers to entry — and Leo is not alone in this quest.
Self-proclaimed “piss ant” Crissy N. of Wikkid Vibes, operates an adult retail store and tries hard to keep costs low at this company run by a husband and wife team.
“Our total cost for a month is around $160. All our SEO is in house. We do our own blog. As of now we have been able to make our little piece of the adult world self-sustaining,” Crissy N. says. “We hope by keeping up with the trends selling what our customers want and providing great customer service we will grow a profitable company.”
Amelia G of Blue Blood’s SpookyCash echoed the difficulties in coming up with accurate figures, noting that “it is very challenging to get remotely accurate numbers in an industry where most of the players are privately-held.”
Looking at the wide range of expenses and revenues reported by adult entertainment companies in 2014, it is clean that size does matter; and whether you’re spending $8 or $80,000 per month or more, there are common issues you’ll be dealing with — the only difference will be your options, and profits.
The Digital Millennium Copyright Act’s (DMCA) “notice and takedown” procedure and the attendant “safe harbor” protections afforded to service providers often spark controversy and debate. Originally designed as a way to balance the interests of copyright holders and online service providers, the DMCA’s 14 year history has demonstrated that well-intended laws can quickly become outdated and misused. Often DMCA notices are sent by, or on behalf of, competitors seeking to damage another party’s business, or by those who do not understand basic “fair use” concepts. On the other hand, DMCA safe harbor can be manipulated and invoked by parties that Congress never intended to protect from copyright infringement liability.
Change is in the air, however, at least for traditional DMCA notice and takedown procedures. Recently, the United States Patent and Trademark Office opened a public forum in pursuit of ideas for improving the notice and takedown process explicated by the DMCA. The forum was to be the first of a series of such, all geared towards the ultimate goal of increased efficiency, as well as continued protection for copyright holders, under the DMCA. The public discussion came after a green paper released in July 2013 by the Department of Commerce’s Internet Policy Task Force examined problems with the current notice and takedown process.
The purpose of the forum, according to Patrick Ross, a USPTO spokesman, was to solicit input to answer the questions raised by rights holders, service providers and the public at large, as addressed in the green paper.
The speakers were from a diverse cross-section of those affected by the DMCA: The Software Alliance, the Computer and Communications Industry Association, the Artists Rights Society, Google and many others.
One of the most common complaints from rights holders, according to the forum, is the inability of small and medium-sized artists or enterprises (SME’s) to keep up with infringement of their work. A proposed solution to this was the encouragement of collective representation for infringement research.
Additionally, one of the main and pressing topics examined at the forum was whether standardization of forms for the notice and takedown procedure would be helpful, both to rights holders and service providers. Overall, many of the participants believed that standard forms for notices seemed a good beginning, but certainly not a good end. The feeling at the forum was that there remained much work to be done. Several of the speakers, both service providers and rights holders, stressed the need to maintain balance in any solution designed to bring more efficiency to the DMCA, so that both sides would find value in the notice and takedown procedures.
Another possible solution discussed was creating “Trusted Submitter” programs, something Google has done, to more efficiently process DMCA notices. More diverse solutions were offered as well, such as the potential creation of a certification mark or badge for Internet search results, to alert consumers which pages were authorized or licensed sites for the particular intellectual property being searched for.
Given the large volume of notices received by most service providers, which often makes responding in a timely fashion difficult and costly, this is a great moment in time to examine better and more efficient methods of protecting copyrights online. The DMCA has been an important tool, for both rights holders and service providers alike, and may need to be updated to continue as such.
As discussed at the forum, it is important to keep in mind the balancing of interests that goes into any intellectual property issues on the Internet. Rights holders must be given a fair and easy way to prevent and police infringement, while online service providers must have an opportunity to efficiently and easily handle incoming notices. Those who abuse the notice and takedown process must also be held accountable.
Does the virtual assistant on your smartphone just “get you”? For many smart phone users, interacting with a natural speech-recognizing, intelligent, digital assistant - ever-present on their devices - has become a way of life. It was impossible to imagine just a few years ago that we would become a society dependent on our bots, for everything from driving to a place we’ve never been to seeking out the latest movie reviews. Perhaps predictably, some individuals prefer interacting with artificial intelligence over human beings. Others have even developed ‘feelings’ for their digital devices. Yes, there is even a name for such a fetish: mechanophilia.
For the past several years, the popular online dating website Match.com has been defending a lawsuit alleging that the company utilizes fake user profiles in order to encourage real members to renew their subscriptions. The suit also claims that Match does not adequately vet their profiles, and that the site may be filled with hundreds of profiles that are inactive or scams.
The concept of interacting with a ‘bot’ or artificial intelligence is not new. Many of us have clicked a ‘live chat’ help button, only to quickly realize that we were ‘speaking’ with a computer program designed to help resolve our issue before a paid employee was required to spend time figuring it out. But the technology driving modern artificial intelligence like Apple’s Siri is astounding – and only getting better. Soon it may be difficult to discern the difference between live chat with a human being as opposed to a programmed bot. For website users seeking purely online interaction or flirtation, the distinction may be unimportant.
The use of ‘virtual’ or ‘fantasy’ profiles is not new (or unique) to the online dating world, but recently the government has begun to question whether this practice is “fair” or “deceptive.” But is there anything inherently ‘wrong’ with individuals flirting with bots or artificial intelligence? Is it possible that some socially awkward or shy individuals may actually prefer virtual relationships rather than the thought of real human interaction?
Director Spike Jonze recently released his film “Her,” staring Joaquin Phoenix and Scarlett Johansson, about a man who falls in love with his operating system. Eventually, the OS, who goes by “Samantha,” tells the main character, Theodore, that she must leave (along with all the other operating systems). The implication is that the incredible number of relationships she was having with humans became too much for her and that she and the other systems no longer wanted to be among humans.
The question seemingly posed in the film was why any human would choose interaction with a bot over interaction with another human. A more relevant question might be: must we question why?
Many of the online dating websites using virtual profiles do so with full consumer disclosure, including statements on landing pages, in user agreements, and through distinct labels placed on the profiles and any messages they may send. Despite the disclosures, millions of individuals willingly interact with these programs, and apparently enjoy the process. The role of the government in regulating, or even prohibiting, this form of entertainment must be questioned.
This issue has increasingly made headlines. Just this month, a man petitioned the State of Florida to allow him to lawfully wed his laptop computer. In the case of Chris Sevier, the laptop wasn’t exactly his original object: His computer was filled with porn and due to this, he claims he “fell in love” with his computer and began “preferring having sex” with it over living persons. Sevier, in fact, argued that his “love” for his computer should be validly recognized by the court. While an extreme and perhaps humorous example, this case is illustrative of a trend on the horizon that can no longer be ignored: People are developing relationships with their digital devices and programs.
Maitresse Madeline, a fetish webcam model, has also spoken out about this very issue. Earlier this year, a man paid $42,000 for a single webcam session with her. Madeline believes that this exorbitant sum can be explained by the fact that individuals are actually paying for the virtual relationship, not paying in spite of it. According to CNET, Madeline told Kinky.com, "They're often paying for the ambiguity that a Webcam relationship can create and that relationship over Webcam is, essentially, their fetish." Sometimes, it seems, virtual relationships on the Internet are exactly the experience users seek. Madeline went on; "They often want to be whoever they can dream up over the Internet and prefer to only have a relationship online.”
This new world of virtual love has already been alluded to within the confines of the law. Michael Froomkin, a law professor at the University Miami, leads an annual conference called We Robot,” where the goal is simply to get people thinking about the legal implications of a world with robots in it. According to Froomkin, it’s not unusual for technology to get ahead of the law. “You design stuff to make it work and you don’t think a lot about the legal and social consequences,” Froomkin told NPR. “So by the time the lawyers get in the room, the standards are already baked and the stuff is already deployed.”
Froomkin’s point is a valid one and has played out repeatedly, as the law lags behind technology. Although we may be years off from a fully functional, human-like bot with a deeply developed personality like “Samantha,” we do currently live in the world of Siri’s and virtual profiles. The future of bots may not be here just yet, but who’s to judge how humans should be permitted to interact with the bots of their choice? The one aspect that distinguishes humans from bots is free will. As creatures born with free will, should we not have the choice to interact with, and be entertained by, our digital creations?
Adult film stars are reportedly having their bank accounts systematically closed by JP Morgan Chase bank, for no other reason than their connection with porn. According to industry publications and more directly, tweets from adult film performers, Chase has been busy sending letters to hundreds of performers, arbitrarily closing their accounts with the financial institution. One actress, Teagan Presley, attempted to open another account at Bank of America after her termination at Chase but was immediately denied. Our law firm has received numerous similar stories of account closures or denial of banking services.
This is not the first time financial institutions have targeted the adult industry. Last year, adult performer Chanel Preston reported being denied a loan from City National Bank in Los Angeles due to her status in the adult industry. Earlier that month, industry producer Marc L. Greenberg was also denied a loan from Chase on what the bank called “moral” grounds. Years ago, PayPal turned its back on the adult industry, and refused to process payments for most adult-oriented products and services. More recently, blogs have noted that online payment processors such as Paypal, along with WePay, have ramped up their hostility towards erotica, by shutting down accounts of bloggers involved in merely publishing content of a sexually-oriented nature.
In response to these discriminatory banking activities, a popular Change.org petition has been created, demanding that Chase reverse these decisions. The public pressure on Chase previously caused the bank to reverse its decision on the denial of payment processing services, through its subsidiary, Paymentech, to a condom sales company who challenged the action. The outrage felt by adult industry performers and publishers is certainly justified, but is the activity illegal? Certainly, private banks can do business with whomever they choose, right? That’s partially true, but there’s more to the story. Initially, there are some restrictions imposed on the banking and financial community when it comes to illegal discrimination. For example, banks cannot systematically deny loans and other services to disadvantaged minorities, without running afoul of federal law.
However, the stunning truth is that these account closures appear to be motivated by none other than the U.S. Department of Justice (DOJ), which created a leaked program dubbed “Operation Choke Point” designed to pressure banks into denying service to certain disfavored industries including “pornography.” Vice News notes that megabanks and other financial institutions, like Chase, are responding to this pressure by closing adult performers’ accounts, and denying services to other adult businesses. The banking industry, itself, seems to be uncomfortable with this governmental overarch into the financial sector. American Bankers Association CEO Frank Keating wrote a Wall Street Journal op-ed noting that the banks may have no real say in the issue, since the choices are either to comply or get slammed with a penalty. William Isaac, the former chairman of the FDIC has even called Operation Choke Point “way out of control.”
The government’s efforts in applying thumb screws to federally-regulated banks in order to snuff out erotic businesses engaged in First Amendment-protected entertainment constitutes censorship - pure and simple. Instead of falling into the realm of discretionary private business decisions that would ordinarily be protected from legal liability, denial of banking to adult industry participants at the behest of the DOJ likely violates federal civil rights conspiracy laws, including 42 U.S.C. § 1985. This infrequently-invoked federal statute prohibits two or more individuals (or government actors) from conspiring to deprive a person’s civil rights or equal protection under the law. While the statute has primarily been used in the context of racial discrimination, it could well provide a legal vehicle for claims against banks and others who have conspired with the DOJ to discriminate against adult performers based solely on their participation in erotic expression. This sort of retaliation against citizens for participating in constitutionally-protected activity is intolerable, if not illegal. The idea that our government would use the full force and intimidation of the Department of Justice to pressure banks (who are now largely indebted to the feds for bailing them out in 2008) into terminating customers it finds politically advantageous, represents a new low in governmental censorship.
Restricting the ability to access fundamental banking services can spell disaster for any business, and the DOJ presumably knows this. In fact, the author predicted this sort of governmental interference in the financial system as a means to impose censorship of erotica as far back as 2002, in the article entitled “A Chokehold on the Gatekeepers.” Cut off the ability to move money, and the business dries up.
Far from achieving its perhaps original purpose of curbing money laundering and other illegal activities, Operation Choke Point has become a means for the federal government to use banks to do its own dirty work of censoring adult businesses – something it could not do directly, thanks to the First Amendment. While affected performers and businesses may suffer in the long term, the continued popularity of digital currencies like Bitcoin and Litecoin may prove to be an important alternative for the adult industry to stay in business. Already, it has been reported that the affected businesses are flocking to Bitcoin to avoid the banking problems. While accepting Bitcoin as a payment method has inherent risks, and no one alternative currency is the perfect solution, this is another example of the Internet routing around censorship. So long as creative solutions are considered by the affected industries, the banks will lose some of their ability to control the content of entertainment and free expression.
I'm not sure why it took so long, but on May 1, 2014, the State of Michigan joined a growing number of states in seeking to criminalize "revenge porn".
(1)(A) Post on the internet any sexually explicit photograph, drawing, or other visual image of another person with the intent to frighten, intimidate, or harass any person.
(1)(B) Having posted on the internet any sexually explicit photograph, drawing, or other visual image of another person, regardless of whether the posting was with the intent to frighten, intimidate, or harass any person, refuse or otherwise fail to remove that explicit photograph, drawing, or other visual image from the internet upon the written request of that other person. This subsection applies regardless of whether the other person consented to the posting of that photograph, drawing, or other visual image unless that other person knew or had reason to know the photograph, drawing, or other visual image was sexually explicit and signed a release knowingly allowing that photograph, drawing, or other visual image to be posted on the interney by that person.
The State of Michigan does propose the following affirmative defense:
(2) It is an affirmative defense in a prosecution for a violation of subseection (1) that the person took all reasonable steps to have the photograph, drawing, or other visual image removed from the internet immediately upon the written request of that other person under subsection (1)(B).
The State of Michigan also attempts to define "sexually explicit":
(3) As used in this section, "sexually explicit" means displaying a person's genitalia or anus or, if the person is a female, her nipples or areola.
As an attorney who regularly practice criminal defense in the State of Michigan, I'm a little surprised by the holes that the drafters of this proposed law left wide open. Couldn't the image of a girl in a sexually provocative position or wearing revealing clothing or lingerie be just as damaging to her as an image that fits within Michigan's definition of "sexually explicit"? Is there some reason why the drafters left out the words "video" or "videotape" or "film"?
Nonetheless, it's clear that as each week passes, another jurisdiction is either passing laws or writing laws that attempt to put an end to "revenge porn". In fact, Arizona Governor Jan Brewerm just signed one of the most aggressive "revenge porn" laws enacted thus far.
In June's edition of XBIZ World magazine, I will be discussing the potential impact of "revenge porn" laws and their potential impact on commercial adult websites.
In a not-so-surprising, albeit disappointing, decision affecting the adult entertainment industry, the 9th Circuit Court of Appeals recently upheld the obscenity conviction of fetish producer, Ira Isaacs. Isaacs was originally charged with violating federal obscenity statutes in 2007, after the distribution of several of his fetish films via U.S. mail. Isaacs’s 2008 trial was placed on hold and eventually resulted in a mistrial, amid judicial controversy. Judge Alex Kozinski, who presided over the obscenity prosecution, recused himself within days of commencing the trial, after it was discovered that the Judge had been maintaining a personal humor website exhibiting sexually explicit images. After another attempt to try the case in 2011 was delayed when prosecutors added more charges, the Isaacs case eventually went to a full trial in March of 2012. For a second time, however, a mistrial was declared after jurors deadlocked on the verdict, 10-2 in favor of the government. The case was tried for a third time in April of 2012, which resulted in conviction and is the basis for the recent appeal.
In general, the Obama administration has been decidedly less interested in obscenity prosecutions than was its Republican predecessor. Since 2009, the administration’s prosecutors have tried only two adult obscenity cases, in contrast to the volumes of obscenity prosecutions that took place under President George W. Bush. Notably, Obama’s Department of Justice has not initiated any of its own obscenity prosecutions, but merely followed through with pending cases initially filed by the prior administration.
Isaacs’ most recent, unsuccessful appeal relied more on procedural due process arguments, as opposed to disputing his guilt of violating obscenity laws. The numerous due process claims were rooted in allegations of uncertainty directly related to the Miller Test; specifically, the concept of "prurient interest" as set out in the first prong of the test. According to the ruling, the District Court adopted a proposed jury instruction defining an “appeal to ‘prurient interest” as “an appeal to a morbid, degrading, and unhealthy interest in sex.” After a question was posed by a juror, the Court revised the instruction to read “morbid, degrading or unhealthy.” Isaacs argued that the change “undermined the credibility of his lawyer,” as the attorney, in closing argument, referred to the original instruction. The District Court rejected this contention, finding that the attorney had in fact used both formulations of the instruction during argument so it was “unclear how the revision might have implied to the jury that Isaacs misled it as to applicable law.” Further, the District Court noted that while Isaacs argued that it was error for the Court to correct the instruction, there was an obligation on the Court to clarify issues for the jury, so that they did not abuse their discretion in doing so.
The 1973 case Miller v. California established the standard that is still used today for what defines obscenity. The Miller test, as it is known, has three essential prongs:
- Whether ‘the average person, applying contemporary community standards’ would find that the work, taken as a whole appeals to the prurient interest
- Whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law and
- Whether the work, taken as a whole, lacks serious literary, artistic, political or scientific value
Miller has been a source of controversy and debate in the adult industry, since its inception. The difficulty with the average juror understanding and applying the inherently vague terms of the Miller test can produce unpredictable results. Unfortunately for Isaacs, the odds were against him from the beginning, given the nature of the content at issue. Scat material has typically been some of the most difficult to defend, and explain to juries who tend to be shocked when exposed to the content. While some fetish material has survived obscenity prosecution, this case resulted in a conviction, and now an affirmance on appeal.
Any time an adult industry participant is convicted of obscenity, discussions ensue regarding the continued viability of the Miller test in today’s world, and whether the industry should support a constitutional challenge to the test. Given the Supreme Court’s repeated validation of the Miller test for obscenity, even in recent years, it is unlikely to be changed any time soon. But even if the Court was inclined to replace the current obscenity test, the question becomes: With what? Outright abandonment of the well-entrenched concept of obscenity laws is an unlikely result of any such case brought to the Supreme Court, despite some of the encouraging language in Justice Scalia’s dissent in Lawrence v. Texas. If the challenge was based on the claim that the Miller test was insufficiently clear for common understanding, one could envision the Court handing down a crystal clear, bright-line prohibition on the depiction of specific sex acts, fetish behavior, or BDSM activity, under the guise of more clearly defining obscenity for adult content producers. In situations like this, it is always wise to reflect on what the parties are really asking for – because they might just get it.
While Miller suffers from its vague concepts and outdated language, it has provided opportunities for creative arguments, and stunning victories. While the test is difficult on defendants, it is equally difficult for prosecutors, who are used to well-defined criminal offenses that are not dependent on notions of societal tolerance or considerations of literary value. Obscenity prosecutions have dwindled to a virtual halt in modern times, and the difficulty in applying the Miller test in today’s society may be partially to thank. The “community standards” element suffers from outdated concepts of unified values and social mores based on geography, which arise from something out of Andy Griffith or Leave it to Beaver. Today, neighbors have more in common with their Facebook friends spread out across the world than they do with their neighbor – most of whom they never met. Fortunately, the decision in U.S. v. Kilbride recognized this inherent weakness of using local community standards, and required juries to apply national standards – at least in online obscenity prosecutions. With tweaks like these, Miller may be more of a benefit than a hindrance to producers of erotic content, as compared to some other bright line test. Certainly, all obscenity laws are forms of censorship, and antithetical to First Amendment values. The Miller test does little to logically separate specific types of content from constitutionally protected speech. However, it may be as good as it gets for the time being, even if it results in the stray, unfortunate conviction.
So what’s next for Ira Isaacs and obscenity prosecutions? Isaacs recently petitioned the 9th Circuit Court of Appeals to rehear his case, with his lawyer arguing, among other things, that the case was not given the “special care that the First Amendment requires.” The likelihood of Isaacs’ petition for rehearing being granted, however, is slim. Assuming it is denied, the chances of the Supreme Court accepting the case are not promising, either. However, should the Court take interest in the case, it would likely be for the sole reason of again affirming the viability of the Miller obscenity test. For Isaacs and his counsel, they have every reason to try, and should not be faulted to doing everything in their power to undo the conviction. But in the off chance that the Supreme Court takes the case, it’s time to buckle up. If the decision results in anything other than a re-affirmance of Miller, things could get dicey.
Perhaps the Isaacs case will be the last federal obscenity prosecution for a while, as the futility of reigning in the human desire for sexual expression begins to set in for the DOJ. But as long as we have laws on the books that permit the government to put people in cages for making movies involving consenting adults, the guardians of liberty must remain ever-vigilant.
[An Update at the bottom of this page from Marc Randazza....]
No matter what you may have heard, there are only two states in the continental US where you can legally record real people having sex for money onto film, tape or memory card with the intent to sell those images. Those states are California and New Hampshire. New Hampshire remains untouched by condom wars at this point.
New Hampshire? Huh??????
Yes, there are production companies that get away with producing adult content in places like Florida, Nevada, Georgia and Texas. . . But that does not mean that it is legal to produce porn there. It is a matter of if/when you get caught. And when the law comes knocking on your porn set door, you will face legal fees, loss of income and a lot of valuable time while the law figures out if you were engaging in an illegal activity or not.
Filming real people having sex on camera for money is legal in California due to the legal precedent created in 1988 when the California Supreme Court decided the case of “California v. Freeman,” by declaring that producer and director, Harold Freeman was not engaged in “pimping” or “pandering” when he hired consenting adults to appear in “non-obscene” sex acts. This verdict makes the filming and producing of hardcore pornography legal in the State of California. While the State of California has tried to overturn this verdict, it still stands that it is legal to produce sexual content for sale to the public in California.
In 2008, the New Hampshire Supreme Court also declared that in the case of “New Hampshire v. Theriault,” defendant Robert Theriault was not engaged in “pimping” or “pandering” when he hired a consenting couple to appear in “non-obscene” sex acts. The ruling cited that the defendant had not solicited the couple “to have sexual intercourse for the purpose of sexual arousal or gratification as opposed to making a video.” Part of this decision was based on precedent set by California Supreme Court’s ruling in “California v. Freeman.” There are allegedly plans to appeal the New Hampshire decision. However at the time of this post, it is legal to produce hardcore porn in New Hampshire.
In both of the above cases, First Amendment Rights of Free Speech in America also played a role in the ultimate decisions. Creating “art” is defended as a category of Freedom of Speech.
So, after watching the California drama playing out from our Wasteland.com home based in New Hampshire, I thought it might be helpful to put in a pitch for studios moving to the "Live Free Or Die" state rather than Nevada. (and yes, ironically, "live free or die" is our state motto on our license plates, stamped out by incarcerated prisoners here. Oh dear....)
But first, let's take a look at Nevada. The obvious choice for studios wanting to flee California and that strange little man with his condom agenda that now is making this a decision point at gunpoint.
At the surface, Nevada looks like a great alernative to LA and CA in general. Kinda-sorta liberal. Lots of cheap real estate (with black mold) and a hop skip and a jump to get performers in from LA for shoots. Nice airport! Good entertainment on the strip! But, filming porn in Nevada is illegal, and falls under the prostitution and pandering laws. And maybe worse, Vegas is a 100% Union Town. If you thought CalOsha and Wienstien were a pain in the ass, just wait till the Teamsters knock on your door to make sure the guys you have hauling cables and handing out pizza have a union card at 1000% the expense of the kids you had doing it in LA.
Sure,common knowlege is that Vegas is all "corporate now", divested of its rat pack, made-men beginnings, but what is worse? Frank Sinatra or Steve Wynn having their hand down your pants to rip your wallet out of your ass "for protection"?
Anyway, let's move back to the topic at hand of the great "Granite State" of New Hampshire being your new porn home......
Location, Location, Location!
NH is a lovely state, situated equidistant between NYC and Montreal (4.5 hours by car to either). If you consider moving here, do what we have done - move to the southern edge bordering Massachusetts. The NH/MA border is known as the "thin line between comedy and tragedy", but if you locate more than 30 miles north of the Mass border, you just might run into some scary people. Look at Manchester, Nashua, Portsmouth and other small cities clinging to sane life on the Mass border. Everything north of that is right out of a Steven King novel. Bring your own banjo and albino creepy guys.
Taxes, Taxes, Taxes!
If you do consider moving to New Hampshire, be sure to rent both your home and commercial property. When Angie and I moved up here 20 years ago, we loved the concept of no sales or personal income tax, but then discovered the annual tax bill on our 5000 sq foot home was over $12k. ouch. RENT!
Culture, Culture, Culture!
One of the nice things about being in Southern NH is being so close to Boston, NYC and Montreal. Great arts and entertianment towns. The one thing you will find, being a busy pornographer though is that after the first year, it will all get kind of dull and after the first time yoiu go to a Red Socks game and have a drunk Irish guy puke on your shoes for no reason, you'll probably just stay home and watch HBO.
Talant, Talent, Talent!
This is the odd one.... New Hampshire is 35 miles north of Boston, and 4.5 hours from both NYC and Montreal. Boston is sort of a wash for performers. It's very conservative there and most "nude models" are in Harvard Law School and have more sense than to do video porn which will come back at them eventually); but...NYC has a large pool of talent, as does
Montreal, but bringing talent in from Canada violates the "Mann Act" ( federal crime for transporting models over international borders). NYC performers tend to think outside the porn box, making for odd negotiations.
Climate, Climate, Climate!
New Hampshire has a wonderful climate 5 weeks of the year!
Lovely 74 degrees.
Bugs the size of your puppy, but fine.......
The rest of the year sucks. Beware.
(oh, heating costs this winter were about $1500 a month for our house and studio. Painful!)
So, that is my insider report from the Great White NorthEast!
Maybe it's time to move? But where, if you have elderly parents or community ties in the USA and want to live a normal life? Prague/Hungary/Madagascar/Mozamique are lovely for about two weeks, and then you miss "home".... Oh. And there is that "out for the frying pan, into the fire" varable. Careful. careful......
UPDATE From Attorney Marc Randazza....
It is legal in Nevada. They tried to change the prostitution statute to fit adult film, and we showed up at the state assembly meeting and not only got them to change back, but the Atty. Gen. noted in the legislative history that they did so because they considered people versus Freeman to be good law in Nevada as well.
Also remember that half of people v. Freeman was a reliance on the First Amendment. That still applies in all 50 states, DC, Puerto Rico, the Virgin Islands, and the Commonwealth of the Northern Marianas Islands.
At this time, if it has an American flag flying over it it is legal to film porn there.
However, it is a good idea to examine the states prostitution statute to see if you need to rely on the First Amendment or if you just need to rely on the statutory construction of the prostitution statute in that state.
That said, I would fucking kill to move to New Hampshire. I love it there.
April 8th marks the end-of-life for Windows XP, but what will happen to the millions of boxes still online — including my own, faithful and trustworthy 10 year old Dell XPS?
This isn’t an insignificant question, with an estimated 30 percent of desktop PCs still using this venerable operating system (OS), with third-world users the largest install base.
Without any further support from its creator, Microsoft, Windows XP, the company’s most successful OS, will soon become an even more attractive target for criminal hackers — and will slowly see dwindling support from third-party hard- and software vendors.
While Microsoft’s end-of-support announcement caused much concern among users, the situation is not as dire as some predict — at least not immediately. XP boxes will run just fine on April 9th — and for many years beyond that date.
They will not suddenly cease operating, and no one is being forced to upgrade.
Writing for the Trustwave Blog, Dan Kaplan notes that all good things must come to an end, including the 13 year old Windows XP, noting that vast publicity surrounding this shift in computing means it shouldn’t come as a big surprise to tech-savvy organizations — and indeed, it hasn’t.
“Of course, a number of companies currently running XP surely will be taken aback when the deadline arrives. But a much greater majority that hasn’t transitioned to a newer platform across their environment likely has done so on purpose,” Kaplan explains. “After all, such a migration is costly and complex, and runs the risk of breaking things due to incompatibility issues. Because of those reasons, and because XP is so widespread, expect to see it in use for many years to come.”
Most analysts agree that XP will live on for a large number of users.
“In truth, nothing will immediately change,” Matt Smith wrote for Digital Trends. “End-of-support does not negatively impact existing XP installations in any way. No features will be disabled, no upgrades will be forced, and even technical support will still be relatively easy to come across.”
Smith says that users shouldn’t plan to stick with Windows XP forever though.
“Eventually, you’ll need to upgrade or replace hardware with newer equipment which doesn’t support XP, or you’ll fall victim to a security flaw Microsoft never patched,” Smith concludes, adding that “You don’t have to jump to Windows 8 immediately. With some planning and perseverance, you can likely squeeze another year or two out of your existing setup.”
But is this practical reality “practical,” however, especially for adult webmasters that visit “questionable neighborhoods” when online as part of their work and play?
“Entities that fail to update are doing so at their own risk, both from a security and risk perspective, as well as a compliance standpoint,” Kaplan adds, citing the specific issue of Payment Card Industry Data Security Standard (PCI DSS), which will preclude users from relying on systems running XP. This is an important consideration for some paysite owners that may find themselves suddenly without a way to handle transactions…
All of this only reinforces the obvious need to upgrade — but what are the options?
The easiest option is to do nothing until sparks start flying out the back of my PC (this happened to my friend’s old ‘486 machine as it expired, making loud “backfires”), and relying on the skills of the Norton folks for my safety — but this isn’t the best option, as there are many other good reasons to upgrade at this point besides “having to.”
Clearly, Microsoft wants XP users to move to Windows 8.1, but this is a move that many will eschew due to the bad press surrounding Windows 8 — despite the fact that the 8.1 release addressed most of the early complaints about the new operating system.
Indeed, many on the upgrade path may opt for a Windows 7 installation, but that is only a temporary workaround at best, since you can soon expect a new Windows flavor that will leave 7 at least three generations behind the times, and such stagnation kind of renders the point of upgrading moot. And some PC pundits are already proclaiming the imminent demise of Windows 8.x — so the future may hold at least one OS upgrade for any new or soon-to-be purchased PC.
There are alternatives for continuing the use of legacy hardware, such as moving over to Linux or another OS, but that still leaves me running a 3.20GHz Pentium 4 with 3GB of ram and 320GB RAID, which cannot be considered a “performance platform” in 2014.
From an offline media server to a driver for a digital microscope (handy for my rock analysis and gardening), to use in video production with the aid of Black Magic tools or to drive a teleprompter, to even automate my model railroad — the variety of offline uses that these old machines will be put to is staggering.
This leaves me looking for a new “work” box and the choice isn’t an easy one, since changing operating systems leaves a learning curve and also means changing software — whether it involves a move from XP to 8.1, or to Mac or *nix platforms.
With the vast difference between XP and its newer brethren, learning one is the same as learning another, so going from XP to 8.1 “because you know Windows” won’t help as recourse for having to learn Linux or OSX.
Software is expensive and compatibility issues are very real, so for many XP users, the process of upgrading is not limited to hardware, but includes software and training — and while I am on the subject of “extras,” although my two digital 24” rotating flat panels (I love the portrait mode for articles and editing vertical photos) are still up to standards, you really need a fancy new touch screen to make the most of the new Windows OS — and this is a pricey option that eats up a lot of desk space (the 27” Dell is around $800).
My desk is 10 feet (3 meters) wide, so space isn’t a major issue; but every “option” raises the bar for acquiring and deploying a new system.
So what’s a boy to do?
The first thing I did was to install the latest version of Norton Internet Security and ran a full Windows Update (and drivers too) to make sure that everything is kosher on my XP box, with Norton promising continued antivirus support.
After much deliberation on this thorny topic, I have decided to go with Windows 8.1.
I started using Windows 3.1 when I moved over from IBM’s OS/2 (which I loved, but the writing was on the wall), and 8.1 marks perhaps the last milestone for me with the OS — I was damn close to going Mac, as I love my iPad 3 and iPhone 5S — but my two Dell workstations and one Dell laptop have been reliable performers, so the company will find another repeat sale to a loyal customer.
Perhaps staying in the Windows fold is psychologically comforting to me, as it lends a small degree of consistency to a rapidly evolving workflow and business environment — I’m not afraid of or resistant to change, I just like it in small doses that I can “control.”
For the technically curious, the box I ordered (my third Dell XPS) has a 4th Gen Intel Core i7-4770 Processor (8M Cache, 3.4 GHz); 32GB of Dual Channel DDR3 memory at 1600MHz; a 3TB 7200 RPM SATA Hard Drive (6.0 Gb/s); plus a 256GB SSD that’ll be great for video captures; and graphics from an AMD Radeon HD R9 270, 2GB GDDR5.
I should have it up and running before the XBIZ Summit in Miami and will keep you all posted on how this little adventure turns out — and if you are also looking to upgrade an XP system, I hope my story helps you to make the best choice…