Adult Continues to Sell: 1

Alex Henderson
The early 2000s were tough economic times for the United States. The vibrant bull market of the late 1990s began to slow down, and the stock market plummeted after the terrorist attacks of Sept. 11, 2001. In contrast to substantial job growth and the robust economy that characterized the U.S. during much of the Clinton era, 2002 and 2003 saw considerable downsizing in a variety of American industries.

But one industry that continued to perform relatively well during the worst of the early 2000s recession was the adult entertainment industry.

Compared with the embattled airline and music industries, adult entertainment remained a huge market throughout the recession.

According to one recent study, the adult industry as a whole is said to be worth $57 billion worldwide.

While few would go so far as to claim that adult entertainment is 100 percent recession proof, most industry vets agreed that the business is at least recession resistant and weathered the choppy economic climate much better than other industries.

Phil Harvey, for one, had no major complaints about the performance of his PHE Inc./Adam & Eve empire in the 2000s.

"Basically, our experience at Adam & Eve has been that our business is impervious to boom or bust in the economy," said Harvey, who oversees the largest mail-order adult business in the United States. "The basic hypothesis that sexual entertainment seems to be impervious to the business cycle holds true in the case of Adam & Eve."

Harvey added that he saw little difference between Adam & Eve's overall performance during the late 1990s bull market and the early 2000s recession.

"You can always think, of course, that things could have been better," Harvey said. "But our observation over previous bear markets and bull markets is that our business just doesn't seem to correlate with good or bad times in the economy."

Katy Terrega, a journalist, adult webmaster and author of the book, "It's a Dirty Job: Writing Porn for Fun and Profit," said she does not believe the business has been negatively affected in any way by the recession.

"Porn, from what I can see, has not been hit hard by this last recession," Terrega said. "It seems to be ever expanding, as a matter of fact. I personally was not affected by the recession in the last couple of years; my income grew every year."

Colorado-based Terrega, who operates several adult websites and has written for major publications such as Penthouse Forum and Playgirl, believes that if any area of adult entertainment has suffered in the 2000s, it is adult magazines. However, she is quick to stress that the declining circulations of Penthouse and other adult magazines is not a reflection of the adult industry as a whole but only of print media, which has suffered due to competition from the ultra-convenient Internet.

Publications Take Hit
"Printed porn magazines have definitely taken a hit since the advent of the Internet, but so have mainstream magazines like Redbook and Family Circle," Terrega said. "There will always be a certain amount of people who prefer to have porn in a magazine instead of online, but I don't think it will ever be as big as it was before the advent of the Internet. Porn is so easy to get online you can have it right at your fingertips without having to go to a bookstore or a newsstand."

Laurel Hertz, Internet marketing director for the FlyntDigital division of Larry Flynt Publications Inc., also believes that the adult entertainment industry remained generally robust during the early 2000s recession but acknowledged that adult magazines have lost some ground to the Internet.

"I think that people are spending more money on adult entertainment today than they were five years ago, and the industry is continuing to rise," Hertz said. "Is there a recession in any part of the porn industry? Quite honestly, there is if you look at print publications, but there are still many people who prefer magazine porn."

Daniel L. Metcalf, director of publicity for Wicked Pictures, said that the 2000s have been generally a profitable period for the San Fernando Valley-based outfit, which is among the top adult film companies. Nonetheless, Metcalf has a hard time believing that adult entertainment or any other industry is totally immune to the effects of a recession.

"Given the ebb and flow of the economy during these trying times, I question whether any industry is really recession proof," Metcalf said. "At the end of the day, the adult industry, like the mainstream entertainment industry, is fighting for people's discretionary income. When you go into a period where the amount of discretionary income that the general public has is greatly reduced, it is all the more challenging to get a piece of that pie."

Metcalf added that the recession has affected the industry by prompting many companies to refocus their content in order to maximize profits.

"Obviously, gonzo and professional and amateur have become bigger components of the marketplace in the adult entertainment industry, as opposed to feature films, which is what Wicked Pictures is best known for," Metcalf said. "But given those changes in the marketplace, we have still done well."

In part two, we'll look at international markets and other issues.