educational

XBIZ World at 100

Gregory A. Piccionelli

Congratulations are in order for everyone at XBIZ on the occasion of the publication of this, the centennial edition of XBIZ World. It is a remarkable accomplishment by publisher Alec Helmy and all of the XBIZ World staff, past and present, who have tirelessly worked for more than eight years to make XBIZ World the adult entertainment industry’s premier printed publication.

On a personal note, I would like to express my heartfelt gratitude to Alec and XBIZ for the opportunity to become XBIZ World’s regular legal contributor from the first issue of this extraordinary magazine. I would also like to express my thanks to my readers, with a special thanks to those who have taken time to comment on my articles throughout the years.

Over the last eight years, the goal of these 100 articles has always been the same: to provide the industry with useful legal information, hopefully, with an eye to the future.

Because this is the 100th edition, and I have written a legal article for each issue, this is my 100th XBIZ legal article. One-hundredth anniversaries of anything are often a time to mark, a time to pause and reflect, and a time to reminisce and look forward.

A Look Back

I started writing legal articles for XBIZ more than eight years ago, but it seems like only yesterday. Clearly, time does fly when you’re having fun. When I started in 2004 I had a full head of dark brown hair and a lot of enthusiasm for trying my hand at writing what I thought might be a useful legal column for the adult entertainment companies. Back then, my corner of XBIZ World was called “Legal Reality” and I hoped that my monthly contributions would provide to adult industry participants a kind of “legal news and views you can use” resource. Well, its nearly a decade later, and my hair color is, well, a lot less brown. But fortunately, I have not lost any enthusiasm for providing adult entertainment entrepreneurs with legal news and this lawyer’s opinions about legal matters affecting the industry.

Over the last eight years, the goal of these 100 articles has always been the same: to provide the industry with useful legal information, hopefully, with an eye to the future. Striving to reach that goal, I have written articles covering a broad range of legal topics affecting the industry, including 2257 regulation compliance , minimizing obscenity and other criminal prosecution risks, minimizing civil litigation risks, compliance with advertising and other consumer laws, patents, copyrights, trademarks and other intellectual property matters, such as content piracy, content licensing, and rights enforcement, domain name disputes, contracts, employment matters, asset protection, bankruptcy, crowd funding, and even prenuptial agreements. And of course, through the years I have been compelled to publish more than a few editorial articles, which might be more accurately described as rants in which I sought to expose and confront some of the unfairness and outrageous injustices that regularly confront this industry and its participants.

As I was contemplating what to put into this 100th article, the advice of famous 18th Century English writer, Samuel Johnson, came to mind. He is said to have once advised writers that if ever they felt particularly good about a piece of work, they should probably bury it. I am sure he is right, but as this is a special occasion, I thought it would be fitting to highlight three pieces from the past 100 anyway.

1. “2257, Of Course You Know This Means War!” (XBIZ World, June 2005).

This is one of my most reprinted and requested XBIZ World pieces. The article was written in response to the approval by then Attorney General Gonzales of revised 2257 regulations, which, if enforced as promised by the Bush Administration would have become what I subsequently termed the government’s weapon of mass destruction against the industry. I stated that the government’s adoption of the extremely onerous and completely unworkable regulations in the face of a deluge of reasoned written comments by adult entertainment companies, performers, their attorneys and civil rights activists was tantamount to a declaration of war against the adult entertainment industry.

In the article I analogized the porn industry to my favorite cartoon character, Bugs Bunny, stating that;

“Bugs Bunny is the animated embodiment of the phrase ‘right makes might.’ He is the epitome of a good fellow that obeys the law and basically just wants to live his life in peace.

He is, therefore, I believe, the perfect metaphor for the adult industry, an industry that obeys all the child pornography laws and would just as soon carry on making money without making any waves. Unfortunately, like the antagonists in the Bugs Bunny cartoons, the Administration’s unprovoked and unjustified attack on the adult entertainment industry in the form of new onerous regulations is nothing short of mean-spirited bullying and harassment. This is especially so in light of the DOJ’s acknowledgement of receipt of numerous clear and lucid explanations, arguments and other commentary regarding why the new regulations would be so burdensome, impractical, inefficient, counterproductive, unfair and even dangerous.”

In the article I argued that it was time for the industry to stop taking the government’s abuse and fight back. “I think its safe to say that the bully has crossed the line ... big time. Our response? I can see Bugs face looking directly into the camera and saying, “Of course you know, this means war.” And quoting another great American hero, Benjamin Franklin, I underscored the urgent need for unified industry action stating, “gentlemen, if we do not hang together in this time of crisis, be assured that we will all hang separately.”

The article was reprinted and widely distributed by the Free Speech Coalition and others. I was very glad to learn that it became something of an industry call to arms used by FSC to rally the adult entertainment companies to join together and financially support what turned out to be the FSC’s successful court challenge that soon resulted in a multi-year injunction of enforcement of the 2257 regulations.

2. “Mobile Adult Content Distribution II – It’s Been A Revolutionary First Year” (XBIZ World, April 2006).

Like the first mentioned article, this piece generated a lot of feedback and was broadly reproduced with permission by a number of third party publishers. But the main reason why I have singled out his piece is because it is, what I believe to be an example of the more forward looking and technologically predictive articles that I write from time to time. The piece addressed in 2006, for the second time in a year, a new content distribution platform that I thought would revolutionize content exploitation and, eventually content creation. That platform is known today as “mobile”.

Here is an interesting, and I am proud to say, somewhat prophetic analysis of the potential of mobile platforms in the spring of 2006 that was made available XBIZ World’s readers:

“But regardless of all the new features our mobile phones have acquired in the last year, it is clear, “we ain’t seen nothin’ yet.” It is likely that in years to come, we may hardly recognize what was once just a telephone.

For example, over the next decade we will see:

  Mobile memory capacity comparable to that available in desktop and laptop computers.

  Mobile bandwidth capacity and price comparable hard-wired sources.

  The development of heads-up mobile monitor “glasses” and immersive goggles.

  The development of accurate speech recognition and “virtual” input and control devices such as projected keyboards and virtual mice for mobile phone/computers.

  The use of mobile phone GPS technology in a wide variety of business models from location-based tourist assistance and shopping guides, to location-based games and gaming, such as legal online gambling when one is on Indian land or other authorized pinpoint locations, and location-based online dating services enabling participants to contact other persons who are members of their online dating service that happen to be currently located in the same bar, club, or library, etc., in which they are located.

Because of increased memory and bandwidth capabilities, and the introduction of practical audio command recognition and virtual input and control devices, mobile devices will become so powerful and user friendly that they may well virtually replace a number of common electronic devices in our personal environment.

For example, eventually, mobile devices could all but replace desktop and laptop computers. They will also likely soon be capable of receiving communications from your satellite dish or cable box in order to transmit signal to television or computer monitors throughout your house, eliminating the need for the set top box and the remote control. Soon after the immersive goggles and practical virtual I/O devices discussed above are introduced, even game boxes such as the Playstation and Xbox may be replaced by your mobile device.

Eventually, our mobile phones may even contain electronic keys to electronic locks on our doors and function as our electronic wallets and payment devices.”

3. “Failure To Enforce Intellectual Property Rights and The Oversupply Of Adult Content” (XBIZ World, April 2007).

This piece was an early warning about the problems the industry would face if it did not address the issue of rampant content piracy:

“Now, not surprisingly, after literally decades of the producers’ failure to effectively police their rights, parties that steal adult content can almost rest assured that their theft will, in most cases, never be prosecuted.

Unfortunately, if left unaddressed, the piracy problem could soon become a profit sink capable of collapsing the profitability of large segments of the adult entertainment industry. Like it or not, the business is being forced to confront the formidable challenges brought on, in large part, by its own inaction, in which rampant piracy was allowed to go unchecked.’

It pointed specifically to the threat posed by what was then a new arrival on the adult entertainment scene, the adult tube site: “Further compounding the piracy problem are a number of new sources of infringement that might soon make today’s level of theft seem small by comparison. These include, for example, adult free video sites emulating the user posting features of YouTube. Energizing the use of these new mega-infringement machines, and further exacerbating the problem, is the entrenched, and growing, perception among the young that blatant and voluminous adult content sharing is a good thing.”

In the article, I concluded that “Unfortunately, the part of the content glut attributable to the availability of pristine pirated copies of producers’ content will continue until there is a substantial change in attitude towards infringers by the industry as a whole.

Consequently, I believe that the adult entertainment industry would benefit substantially from an industrywide intellectual property protection summit to commence discussions about how content providers and reputable users of the content can best address the piracy problem.

I have proposed such a summit to the Free Speech Coalition. It is my fervent hope that it will become a reality soon.”

I am proud to say that the FSC did in fact take such action, and while the piracy problem is by no means solved, thanks to the efforts of the FSC and others, the industry is now fighting content piracy on a number of fronts. And that, thankfully, is a far cry from the way things were back in April of 2007.

A Look Ahead

But while the occasion of XBIZ World’s 100th publication is a good time to look back, it is also a good time to look forward. Therefore, before concluding my centennial XBIZ article, I thought that it would be appropriate to provide you with some brief thoughts about what I think is ahead for the adult entertainment industry.

On the positive side:

  I think that while President Obama is in office the federal government is not likely to file any new obscenity prosecutions, and if it does, it would likely be limited to one or a few actions against distributors of extreme content (e.g., depictions of beastialitybestiality, rape, torture, etc.)

  2257 record inspections and enforcement of the 2257 regulations are also very unlikely under the current administration.

  Revenues generated by adult products and services that are less vulnerable to piracy and the glut of recorded adult content, such as live cam content, online dating, virtual world services, adult toys, etc., are likely to continue to outpace revenues generated by products vulnerable to piracy, such as DVDs and other recorded content.

  Improvements to touch sensing and transmission technologies (i.e., haptic technologies), such as those used by Real Touch, particularly in association with live content, virtual worlds and games, will likely also open up numerous new opportunities for adult entertainment entrepreneurs.

  Accelerating development of virtual worlds technologies, such as that used by Red Light Center, in association with the development of photorealistic avatars and the incorporation of haptics will likely provide new opportunities for adult entertainment companies in a number of areas, such as online adult dating.

  Over the next few years, the introduction or enhancement of several new entertainment platforms, such as 3D and 4X super high definition television monitors, interactive TV, and improved heads up displays will provide new content creation and distribution opportunities for adult companies.

  Over the next few years we are likely to also see a substantial amount of capital for adult entertainment projects are likely to come from socalled “crowd funding” sources. Federal legislation was enacted in 2012 that will provide for equity crowd funding of companies and projects subject to some limitations (such as the amount an investor may invest in such projects in a year). It will go into effect after the Securities and Exchange Commission promulgates rules, which are expected later this year. The implementation of new crowd funding regulations is likely to significantly expand the scope of capital formation options for small businesses. I personally believe that the evolution of online crowd funding, and the impact of the new federal crowd funding law, if implemented properly, will be nothing short of revolutionary both within and without the adult entertainment industry.

On the negative side:

  There will likely be a continued, if not accelerating diminution of value of content that is vulnerable to piracy or over-supply. The value of many types of sexually explicit adult content will likely continue to decrease toward a level roughly corresponding to value as marketing material for products and services less vulnerable to piracy and content oversupply.

  The adult entertainment industry will likely be under increasing pressure from a new set of antagonists, such as patent trolls, class action lawyers, cash-strapped states seeking payment, for example, of worker’s compensation, unemployment, and other tax payments from adult companies that have incorrectly characterized talent as independent contractors.

It has been a great honor to be a part of the XBIZ team and to have contributed in my small way to the success of XBIZ World, the XBIZ website and XBIZ in general. Thanks again to Alec and everyone at XBIZ. But now, as they say, the past is prologue and its time to look forward to the exciting journey ahead. XBIZ World number 101 coming up.

Gregory A. Piccionelli is an intellectual property attorney specializing in adult entertainment matters. He can be reached at Piccionelli & Sarno at (818) 201-3955 or greg@piccionellisarno.com.

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