UNIVERSAL CITY, Calif. — Two industry leaders yesterday addressed a crowd of adult production company owners, directors, content producers, webmasters and other industry members at the Free Speech Coalition’s piracy summit at the Universal Sheraton.

The seminar that kicked off the afternoon’s presentations, “Thinking Outside the Box” featured panelists Steve Hirsch, founder and co-chairman of Vivid Entertainment, and Scott Coffman, founder and president of the Adult Entertainment Broadcast Network (AEBN). Sex.com news director and FSC board member Tom Hymes moderated the discussion.

Titled “How to Survive and Thrive in the Digital Environment … From the People Who Know,” the summit consisted of a series of five seminars, which addressed the topic of piracy in the digital age from both adult and mainstream angles.

Of much interest to the adult community was Hirsch and Coffman’s session. Leaders in both the video and web sectors respectively, both titans agreed on one thing right off the bat — piracy is irreparably harming their businesses and there is no magic bullet to stop it.

First addressing the magnitude of the problem, Hirsch said that piracy — illegal online content distribution, mostly done through tube sites — has gotten exponentially worse in the last year and a half.

Tube sites, along with torrent sites and other peer-to-peer file sharing methods, are ripping members areas and illegally copying scenes from DVDs for surfers to view for free. The ability to download “a la carte” as much adult content as your hard drive can hold ostensibly trains a whole generation of potential adult consumers to expect porn for free, much like Napster did for music.

“As a content producer that makes high-quality movies, how can I now sell something that is being given away for free?” Hirsch wondered. Already acknowledging troubling economic times and the precipitous across-the-board decline of physical media, piracy drives another stake through the heart of adult content producers who are battling deep drops in sales of their main revenue stream — DVDs.

Hirsch admitted that Vivid’s DVD sales were down 50 percent from the previous year and that video-on-demand only picks up a small portion — maybe 10 percent — of that loss.

Vivid, known for producing glossy, star-driven adult features is now faced with a new dilemma. “Declining revenue hampers our ability to produce quality content,” Hirsch said.

An inherent problem with adult content is the content itself. Coffman said that adult content is easier to steal and share on the Internet because since so much of it is gonzo, or scene-driven vignettes, surfers don’t have to wait to download a full-length movie like they would a Hollywood feature — all the need is a clip or scene to get off. Coffman said that most consumers don’t need to watch adult content in high-definition on a big-screen TV; adult content drove many people to watch video on the computer in the first place.

“We’re more like the record industry than like Hollywood,” Hirsch said. “They used to sell albums, now they sell songs. We used to sell movies, now we sell pay-per-minute.”

Adding a controversial wrinkle to the discussion was when moderator Hymes brought up the now-settled lawsuit between the panelists. Hirsch sued Coffman last December alleging that AEBN-owned tube site PornoTube.com was illegally hosting and sharing more than 30 excerpts from Vivid productions. Vivid dropped its lawsuit Oct. 20, which sought about $4.5 million in damages.

Coffman asserted that PornoTube.com’s business model has changed. The site no longer allows user uploaded content and only posts clips from approved content providers. The site also limits the length of the clips because as Coffman said “you can’t upsell if you give too much away.”

While the business relationship between Vivid and AEBN survived, Hirsch noted that most tube sites “don’t care about the industry like AEBN. It’s a business model based on theft. They say ‘How long can we keep this clip up until we get a letter ordering us to take it down?’”

Coffman said that if he launched PornoTube today it wouldn’t be successful because there already is too much competition, but he did have an idea on how to help combat piracy.

“You see all those ads on tube sites?” Coffman asked. “Well, don’t do business with them!”

Hirsch also had an idea. He said he was in talks with different software companies about developing a “fingerprinting” method to track his company’s content. Right now Vivid employs people to surf the Internet, track down illegally uploaded and shared Vivid content, and send a takedown notice. But that’s a game of “wack a mole,” the panelists said, because the content gets taken down, but then reappears on another site the next day.

“As content producers we have to protect and control our content,” Hirsch stated. “We’re all dealing with the same issue and we have to come together.”

Among those listening to Hirsch and Coffman speak were Wicked Pictures’ Steve Orenstein, Adam & Eve’s Bob Christian, X-Play’s Jeff Mullen, Evil Angel’s Christian Mann, Pure Play Media’s Richard Arnold, VCX’s David Sutton, Antigua Pictures’ Todd Blatt, Playboy’s Bob Johnson, Plaid Bag Media’s Peter Reynolds, directors Roy Karch and Mike Quasar, Evotum’s Mara Epstein, Falcon Photo’s Jason Tucker, ASACP’s Joan Irvine, Sparta Video’s Holly Ruprecht, publicists Wayne Hentai and Shari Beaumont, XBIZ’s Alec Helmy, and attorneys Clyde DeWitt, Paul Cambria, Greg Piccionelli, Al Gelbard and Michael Fattorosi.