The Year It Got Serious: 1

Gregory A. Piccionelli
A year ago, a small upstart publication that many said could not possibly survive the competition or the difficulties of operating a print publication in the era of e-commerce, published its first issue. A year later, XBiz World is one of the most widely read and most trusted sources of news and information for the adult entertainment industry.

In just 12 months, XBiz World has become a universally respected, and much beloved, monthly chronicle of the business of "the business." A truly extraordinary achievement, for which publisher Alec Helmy and his talented staff have worked tirelessly. So to Alec and everyone else at XBiz, congratulations. Well done. And thank you.

It has been my privilege to write this column and to be a part of XBiz World's remarkable first year, which just happened to be a most unusual year for the whole industry — the year it got serious.

A Tale Of 2 Realities
"It was the best of times; it was the worst of times." So begins Charles Dickens' epic "A Tale of Two Cities." I think that timeless phrase might be a fitting description for the last year in which the adult entertainment industry has had to endure a relentless barrage of important legal news that has both positively and negatively affected adult businesses. From landmark decisions in the areas of obscenity and copyright law to unprecedented enforcement activity by government agencies such as Cal/OSHA and the Federal Trade Commission, to an all-out war with the government over the new 2257 regulations, all has not been quiet on the legal front.

Paralleling this dramatic acceleration of legal activity, and probably fueling it, has been unprecedented worldwide adult industry growth, paired with ever-increasing levels of hostility toward the adult entertainment business by religious organizations, lobbying groups, politicians and repressive governments around the world. Consequently, while the past year has seen worldwide acceptance of, and demand for, adult entertainment reach record levels, resistance to the industry has never been more vocal, more organized or more determined.

The Worst Of Times
If you are an American company in the adult entertainment business, you are at war with your government. If you are an online adult entertainment company, you are probably also at war with a substantial fraction of the member states of the United Nations. Here is just a sample of the anti-porn frenzy that has confronted the industry in the past 12 months:

  • Nov. 18, 2004. Longtime anti-porn crusader Sam Brownback (R-Kan.) conducts Senate "hearings" designed to convince the public that porn is an addictive substance and that it is psychologically and socially harmful.

  • March 11. In a 54-page, 23-count indictment Edward Wedelstedt, his company, Goalie Entertainment and six others, including his wife, are charged with distribution of obscenity, racketeering and tax evasion. If convicted, the defendants face decades of incarceration and forfeiture of more than $50 million in assets.

  • March 28. The Seoul Central Prosecutor's Office in South Korea indicts 38 alleged Internet pornographers charged with distributing hardcore videos through online search engines such as Yahoo. Korean officials promise that this will only be the beginning of an all-out war on web-based pornography. Reporters are told they could expect to see more than 100 additional indictments by year's end.

  • March 30. A group of U.S. senators including primary backers Sam Brownback and Hillary Clinton (D-N.Y.) introduce legislation earmarking $90 million for a research study on how the adult material available online and in other media affects children. In an interview, Clinton opines: "We are causing long-term public health damage to many, many children... [t]his is a silent epidemic."

  • May 24. The British High Court rules that sex shops in the United Kingdom cannot send videos or DVDs through the mail or sell them online. In doing so, the court upholds restrictions requiring face-to-face transactions as a means to protect minors.

  • June 15. Xinhua, the Chinese Government's official press agency, reports that "China has successfully shut down more than 1,800 pornographic websites in one year in a nationwide campaign."

  • June 25. After virtually dismissing all the finely reasoned comments provided to the Justice Department by dozens of free speech attorneys and other concerned parties in response to proposed revisions of the federal record-keeping and labeling laws, virtually all of the proposed regulations, and a few new ones, go into effect. Along with the previously existing regulations belonging to 2257 law (18 U.S.C. § 2257 and 28 CFR 75), the new regulatory regime imposes the most onerous and burdensome controls on presumptively protected free speech anywhere in the world.

  • July 1. Michigan and Utah "child protection registry" laws go into effect criminalizing the sending of adult content or any advertisement for "adults only" goods or services via email or telephone to any "contact point," such as an email address or mobile phone number, listed in their respective registries. The laws also allow private parties to sue senders and recover damages of up to $5,000 per message, even if the recipient asked for or otherwise authorized the receipt of the message.

On the same day, U.S. Supreme Court Justice Sandra Day O'Connor announced her resignation, providing President Bush with the opportunity to appoint a more conservative justice. Such an appointment could disastrously affect the outcome of the many adult cases expected to reach the court in the next few years.

  • July 27. Sen. Blanche Lincoln (D-Ark.) introduces legislation that would require websites to use age verification means to ascertain the age of visitors subject to 2257 law. The bill also imposes a 25 percent tax on all amounts charged by such websites.

  • July 29. FBI headquarters issues an electronic communication to all 56-field offices around the country seeking the recruitment of agents for its anti-obscenity task force. The announcement describes the initiative as "one of the top priorities" of Attorney General Alberto Gonzales.

  • Aug. 25. Three prominent adult industry webmasters are charged with criminal violations of the Can-Spam Act, distribution of obscene material, money laundering and criminal conspiracy. Additionally, one of the defendants becomes the first person indicted for violation of 2257.

  • Sept. 4. Chief Justice William Rehnquist dies, providing President Bush with a second Supreme Court appointment opportunity.

  • Sept. 14. The House of Representatives passes the Children's Safety Act of 2005. Attached as a rider to that bill, and therefore also passing the House, is H.R. 3726, introduced two days earlier by ultra conservative Rep. Mike Pence (R-Ind.). If enacted, H.R. 3726 will amend several federal laws and dramatically affect adult entertainment businesses. In fact, from the industry's perspective, the bill might well be the single most damaging legislative proposal in history. Among its numerous anti-porn provisions, the bill extends the 2257 regulations to depictions of simulated sexual conduct, it remedies the DOJ's secondary producer definition problems at the heart of our attack in Free Speech Coalition vs. Gonzales and it makes obscenity asset forfeiture much easier for the government.

  • Sept. 20. The Washington Post confirms the administration's formation of an FBI anti-porn task force to prosecute the distribution of allegedly obscene matter to willing adults requesting the material. The initiative reportedly targets constitutionally protected materials depicting only adults (i.e., not child pornography). Regarding the wisdom of diverting government resources from anti-terrorism to the administration's War on Porn, one exasperated FBI agent comments: "I guess this means we've won the war on terror. We must not need any more resources for espionage."

  • Sept. 20. NBC News reports that inspectors from the California Occupational Safety and Health Administration (Cal/OSHA) will make onsite inspections of all adult entertainment shoots and require the use of condoms, dental dams and gloves. While Cal/OSHA disclaims the report, there are ongoing cases that have levied large fines against two adult video production companies.

  • Oct. 4. The Seattle City Council passes one of the most restrictive sets of regulations of gentlemen's clubs in the nation. Among its many restrictions: no lap dances, dancers must stay at least four feet away from patrons, and dancers may not directly accept tips. Further, nightclub owners must now install "parking-garage style" lighting throughout the interiors of their clubs.

  • Oct. 5. FBI agents out of Washington served a search warrant issued by the Child Exploitation and Obscenity Section of the DOJ on Max Hardcore's home/office in California and the company's ISP in Florida. Five videos and a number of computer hard drives were seized.

  • Oct. 9. More than 100 churches around the world engage in the first observance of "National Porn Sunday." The organizers claim that the event is intended to raise international awareness regarding what its organizers call "the problem of pornography."

In part two, we'll look at some of the good news to come out of the past year, and what the future holds.

Gregory A. Piccionelli is one of the world's most experienced Internet and adult entertainment attorneys. He can be reached at Piccionelli & Sarno at (310) 553-3375 or www.piccionellisarno.com.

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