2016 Outlook: Attorneys Share Foresights

XBIZ: What Lies Around the Corner for the Online Adult Entertainment Industry in 2016?

Gregory A. Piccionelli
Piccionelli & Sarno

The hot issues for adult entertainment will include the continuing war on sex trafficking, which now involves the Department of Homeland Security and other federal agencies investigating websites for facilitating prostitution. -Larry Walters, Walters Law Group

I think 2016 will be a pivotal year for the online adult entertainment business, as it will be for the broader entertainment industry as a whole. I believe it will be the year that we look back and refer to as the year virtual reality became reality as a new form of entertainment. I feel it will be the year we mark as the beginning of the “VR Era,” an era in which media-adaptable technological innovation will once again powerfully disrupt media business models in both predictable and unpredictable ways.

Interestingly, I have observed that technologically driven media revolutions have been kicking off, like clockwork, about every 20 years or so since the mid-1910s a century ago. Then, the innovation was the introduction of mass produced and delivered newspapers that transformed communications. That was followed by the era of mass radio communication commencing in the mid-1930s. Next was television in the mid-1950s. In the mid-1970s the VCR/DVD era got going. The mid-1990s brought us the introduction of the commercial Internet. And now, 20 years later, here comes VR, right on schedule.

Like previous eras of disruptive media innovation, I predict VR will provide both foreseeable and unforeseeable opportunities across the spectrum of entertainment. But in this case, as my good friend Brian Shuster says, perhaps we should describe the purpose of VR content more in terms of “experience” rather than “entertainment.” I couldn’t agree more.

To be sure, many successful entertainment businesspersons currently downplay the importance of virtual reality. In fact, most people don’t even know what virtual reality is. But by the end of 2016 I predict that nearly every person connected to the Internet will know what the letters “VR” mean.

So, in sum, I think 2016 will be a great year for early VR entrepreneurs, who recognize, like the early Internet entrepreneurs did, that every now and then a disruptive mass media technology enters the picture. But no matter what, I think it’s going be a very interesting year, a VR-y interesting year indeed.

Corey D. Silverstein
Law Offices of Corey D. Silverstein

2015 was yet another busy year in the adult industry’s legal arena and I suspect that 2016 won’t have a shortfall of legal headlines.

Both 2014 and 2015 were not the years that the adult industry saw a conclusion to the Free Speech Coalition’s battle with the U.S. government regarding 18 U.S.C. § 2257; I do believe that by the end of 2016 there will be some substantial developments in the case but I also doubt that 2016 will be the year that this fight reaches its conclusion in its entirety.

There was no shortage of intellectual property protection and litigation in 2015 and I predict that 2016 will be a very busy year in the intellectual property litigation arena. I anticipate that in 2016 the adult industry will see the commencement of additional copyright and trademark infringement cases. I also believe that 2016 will be a busy year for domain disputes. Cyber-squatters continue to unlawfully register an unquantifiable number of adult industry domains but intellectual property owners have been more aggressively pursuing the recovery of their domains. I think that 2016 will produce a higher volume of UDRP complaints as intellectual property owners continue to realize the importance of protecting its marks and brands.

Internet and data privacy issues dominated both adult industry and mainstream headlines in 2015. Lawmakers across the world now have their eyes and ears wide open to the growing threat of data security and theft. In 2016 there will unfortunately be more data breaches and I anticipate seeing various countries utilize its resources to take aggressive steps towards creating tougher rules and penalties related to the abuse of personal sensitive information. At the same time, I can foresee countries utilizing laws and agencies already in existence to pursue those individuals and businesses that are either intentionally or negligently failing to protect sensitive data.

In the U.S., 2016 is a presidential election year and President Obama is ineligible for re-election due to the term limits established by the U.S. Constitution. Thus, in 2016, the U.S. is going to see a new president elected with his or her own sets of views, beliefs and values. Moving forward, this creates quite a bit of uncertainty and potential for change for the adult industry given that the current president has not been very aggressive against pornography. It will be very important for the adult industry to pay close attention to the 2016 race to the white house. Who knows what agenda the next president may have.

My last prediction for 2016 actually comes from an article that I read quoting the cybersecurity firm, IID. IID is anticipating a large series of domain registry failures due to the lack of gTLD popularity. The firm predicts that by 2017, bankruptcies and abandonment of registries will lead to the “demise of websites relying on them.” I believe that too many gTLDs now exist and that IID’s prediction is not only accurate but I predict in 2016 we will see troubled gTLDs begin to falter.

Larry Walters
Walters Law Group

The hot issues for adult entertainment will include the continuing war on sex trafficking, which now involves the Department of Homeland Security and other federal agencies investigating websites for facilitating prostitution.

The broadening scope of this repackaged war on porn could have a significant impact on the adult dating, live webcam and online advertising industries.

The revised Cal/OSHA regulations mandating condoms for adult performers will come to a head early in 2016, as the regulatory board considers the proposed regulations.

The viability of 18 U.S.C. § 2257 is still in play, with the Free Speech Coalition continuing its legal challenge to the federal records-keeping law at the 3rd U.S. Circuit Court of Appeals.

Finally, I believe that online privacy issues will take center stage, as website operators struggle with implementing legally compliant security protocols after the infamous Ashley Madison data breach.

Clyde DeWitt
Law Offices of Clyde Dewitt

Undoubtedly 2016’s most significant event impacting the adult industry will be the Nov. 8 election. The White House and the Senate are in play. Moreover, local legislative elections will designate some of those who will redraw the district lines after the 2020 census.

Since 1980, every Republican administration has brought federal obscenity prosecutions and supported 18 U.S.C. § 2257; but during that time, Democratic administrations — Clinton and Obama — initiated materially zero obscenity prosecutions and essentially ignored 2257.

It has been projected that, assuming that the president elected this November will serve two terms — as four of the last five presidents have — four Supreme Court seats will be up for grabs. Thus, the future balance of power in the court almost certainly will be determined this November.

Joe Obenberger
J. D. Obenberger and Associates

1. In 2016, the 3rd U.S. Circuit Court of Appeals will reach its decision concerning 18 U.S.C. § 2257 on rehearing. It has some potential to reach that decision in a way that may have far-reaching, dramatic consequences outside and beyond adult video and websites. It is unlikely in the extreme that the adult industry’s position will be worse than the result of the now-vacated May 2015 decision and there are decent odds that it will be a better decision for the adult operators. However, the 3rd Circuit decides, it is likely that one party or the other will seek review in the U.S. Supreme Court and there are better-than-average prospects that the high court will finally take a look at 2257. There is also potential that Congress may react to the decision by amending the statute; if Congress does that, there will likely come another round of administrative rulemaking to implement those changes, a process that can be expected to take many months or a year. Nothing concerning 2257 will be finally resolved in 2016, though there is hope that this saga will conclude in 2017 with a final result better for the adult industry than the status quo.

2. There will be no obscenity prosecutions commenced by the Department of Justice in 2016. The present administration has shown no interest, and as a result, domestic content with a much harder edge and greater legal risk has started to come out of the shadows, probably for competitive advantage: An increasing number of significant, domestic websites have begun to feature themes centering around abduction, force, and incest, all of them niches described in the Cambria list and traditionally avoided by adult producers during the past five decades. If there is an eventual governmental reaction to these sites — one or more prosecutions — it will wait for a more conservative, Republican administration. Such an administration might be willing to attempt obtaining a conviction despite a purportedly softening post-shoot interview. The election in November will determine the attitude of the Department of Justice toward pornography during the next four years. If that administration decides to take on porn, expect to see indictments by late 2017. Of the Republicans, my hunch is that Trump and Rand Paul are the Republican candidates least likely to adopting a moral crusade agenda against porn, if elected. There are two things that can reduce criminal obscenity statutes to unusable relics whose existence on the books is an embarrassment: Actual prosecutions that generally result in acquittals and a failure to prosecute the most extreme kinds of content. One or both of these eventualities are likely in the long run to take obscenity prosecution out of the realm of the practically feasible.

3. Expect the FTC and the DOJ to continue to look at dating, sugar daddy, and escort advertising sites. And it’s possible that nothing more than continued investigation will take place, but there is some significant chance of the prosecution of sites which have not taken the hint and arguably engage in dishonest practices. Efforts will continue in Congress and in the state houses to clap a lid on some variants of these sites. In that regard, DOJ may seek sealed indictments of foreign operators and pursue cooperation from international partners.

All in all, 2016 is likely to become a transitional year. Its themes will set the stage for bigger changes that lie on the horizon for 2017.

Marc Randazza
Randazza Legal Group

I think there will be an increased movement of the industry out of the U.S. With consolidation continuing to march forward, and a combination of the legal environment and the regulatory environment making the U.S. less business friendly, I am finding more of my clientele happens to be outside the U.S., and in particular in Europe.

In fact, most of our industry clients are located in the E.U. now, which is why our attorneys are increasingly focused on E.U. law, and we have made agreements and alliances with E.U.-based firms so that we can offer truly international service to the industry.

With that shift, I am expecting that there will eventually be “privacy trolls” going after the industry — as very few American adult entertainment companies seem to be taking E.U. regulations seriously.

The Charter of Fundamental Rights of the European Union is the equivalent of an E.U. Constitution, and with the Lisbon Treaty of 1 December 2009, it became a legally binding primary law of the E.U. The charter contains provisions protecting private and family life (Article 7), and establishes a right to data protection (Article 8). The combination of Articles 7 and 8 raise privacy issues to the level of fundamental rights for all Europeans. While they are balanced by free expression concerns, protected by Article 11 of the charter, privacy and free expression rights are equal partners in the European constitutional landscape.

If U.S.-based companies want to continue to earn euros, they should be ready for the eventual data breach, and/or privacy litigation trolls coming after them.

I do not expect many will protect themselves until there have been a few high-profile suits though, as I believe that the prevailing view is “it won’t happen to me.”

Karen Tynan

2016 brings questions and some intimidating answers for adult entertainment companies.

In February, we will see the final stages of Cal/OSHA regulations specifically written for the adult industry. Those regulations may or may not be implemented depending on our ability to convince the state that these regulations are poorly written.

We have a probable 2016 ballot initiative sponsored by AHF that would not only require condoms in scenes but also create record-keeping nightmares and a crazy new system for consumers to sue distributors, performers, and production companies. We are in for quite a bumpy ride.

Jeffrey J. Douglas
Criminal Defense Attorney and Chair of the Free Speech Coalition Board of Directors

With candidates for the presidency challenging well-established, fundamental civil liberties (ironically under the guise of a return to the “real” American Constitution), there is ground for concern that the more than 20 years of government disregarding the adult industry may change.

But with Michael Murray’s insufficiently heralded victories challenging 18 U.S.C. § 2257, we have little fear of a sudden attack from the federal government.

The longer term is a cause for concern — the American political pendulum swings from the center to the right, while the adult industry is way over on the left.

The assaults on the industry are coming not from the federal government but from some state governments and from nongovernmental entities. The regulations Cal/OSHA is considering is entirely industry-hostile. This is a battle that must be won.

Financial institutions (banks, credit cards) are more troublesome than they have been in years, arbitrarily closing accounts and more frequently deeming adult transactions high risk.

Worse, the deceptively named AIDS Healthcare Foundation is engaging in a semi-declared war on every aspect of the industry. Unlike the banking and credit sector, AHF can be defeated, but only if the industry unites.

As always, technology will open new doors but also disrupt existing models of commerce.

The adult industry has been admirably adaptive over the decades. The requirement of extraordinary flexibility in such a dynamic environment will be a challenge for all of us.

Institutionally, the industry has the opportunity to grow and prosper. The Free Speech Coalition (of which I am the board chair) has accomplished great things in the last few years, especially 2015.

With the hiring of a new executive director to replace the universally admired Diane Duke after her nine-year tenure, FSC will have new opportunities to grow, as well as undertaking the great challenge of fighting the Weinstein ballot initiative.

The maturation of APAC — the Adult Performer Advocacy Committee — is vital to the health of the production side of the industry. Knowledgeable and participatory actresses and actors insure the long-term health of the industry. Support these entities! They deserve your support and you benefit from the strength that your participation creates.

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