by Peter Nowak
At first, cable companies launched adult-oriented channels that customers could subscribe to for an extra fee. This set-up proved problematic, as morality groups argued that the content could be accessed too easily by children. A compromise was reached in the late eighties when cable companies switched to offering the majority of their X-rated channels exclusively through a pay-per-view ordering system, which effectively filtered out minors. Pay-per-view allowed cable providers to beam compressed, scrambled signals to subscribers; when the customer ordered a showing of a movie or event over the phone, the signal was unscrambled.
The technology first showed up in the late seventies and took off after a 1981 boxing match between “Sugar” Ray Leonard and Thomas “Hitman” Hearns. In 1985 a number of cable providers banded together to service the burgeoning market by launching several channels devoted exclusively to pay-per-view, including Viewer’s Choice and Cable Video Store. Viewer’s Choice II was launched shortly afterward to cater to a more mature audience with R-rated and soft-core pornographic films. Viewer’s Choice II changed its name to Hot Choice in 1993 and, by 1996, was one of four adult channels, led by Playboy and Spice Networks, that controlled the business, collectively bringing in about onethird of the $600 million American pay-per-view market.28
The reason for their success was simple: for the first time, cable brought the product to the consumer, rather than the other way around. The porn buyer no longer had to sneak into a peep show in a shady part of town or sheepishly buy a magazine at the corner store, enduring the shopkeeper’s disapproving looks. Now the consumer could simply order pornographic movies and enjoy them in the privacy of his or her own home. The trend was repeated in the late nineties, when cable providers spent hundreds of millions investing in new fibre-optic networks that enabled two-way digital television communication. With new digital technology allowing cable subscribers to order movies and watch them whenever they wanted, rather than at pre-defined times, cable providers continued to look to porn to help pay for their investments. In 2000 porn brought in an estimated $500 million, more than 15 percent of all pay-per-view revenue.29
The same principle—bringing the product to the consumer— was responsible for the massive success of the home video market, which began with a war of technologies. Sony was first to market in 1975 with a home video cassette recorder (VCR), its Betamax player, followed two years later by the Video Home System (VHS) from Victor Company of Japan, or JVC. Netherlandsbased Philips released a third format, the Video 2000, in Europe only. VCRs defied traditional rules of consumer electronics and flew off shelves despite the technology war, which carried with it the risk that buyers would be stuck with an obsolete product if one format lost the battle. The gadgets were also expensive; in 1979 VCRs sold for between $800 and $1,000, or about $2,300 to $2,900 in today’s terms.30 Still, more than 800,000 households had a unit before the seventies were through.31
Video players introduced several new experiences to the home. For the first time consumers could record television programs for repeated or later viewing, and buy and rent videotapes. At first, movie and television studios were apprehensive about licensing films to a format that could be either sold or rented, since this meant that their products could easily be pirated. In 1983 Universal Studios and Walt Disney Productions sued Sony and claimed the VCR encouraged violations of their copyrights. In what became known as the “Betamax case,” the U.S. Supreme Court ruled in 1984 that making copies of television shows for time-shifted viewing was fair use and did not constitute copyright infringement, clearing the way for the industry’s further development.
The studios later flip-flopped and came to see videotapes as a significant source of revenue, but in the early days they only grudgingly offered up their movies for transfer to videocassette. That left a void that was rapidly filled by porn. The June 1979 issue of television technology trade magazine Videography listed two porn titles, Deep Throat and The Devil in Miss Jones, among its top-ten-selling films (MASH led the list, followed by The Sound of Music). According to rental store owners, there was little doubt that porn was driving the business: “We’re selling fifty times as many porno tapes as any of the other material,” one New York store owner said. “We have all ages, all types ... [most are men] but some women are buying the porno tapes too.”32
Merrill Lynch estimated that half of all pre-recorded tape sales in the late seventies were porn, a percentage the genre held until mainstream movies finally caught up in the mid-eighties.33 As with cable television, the secret to porn’s success on the VCR lay in the fact that it brought the product to consumers, again saving them from visiting seedy or disreputable establishments. Most rental shops set up discreet sections where customers could browse porn titles. “There are some people who would like to frequent sex theatres, but for various reasons they don’t. They’re either ashamed to go in, they don’t want to take their wives with them or whatever,” said Joseph Steinman, president of Essex Distributing Company, one of the largest porn producers in the seventies. “This way, they’re able to see the X material in the privacy of their own home, and it doesn’t seem so distasteful to them.”34
VCRs also had a huge impact on the porn industry itself. Shooting straight-to-video was dramatically cheaper than using film. While the average feature-length film cost $100,000 to $300,000 to make, video brought that cost down tenfold. By the mid-eighties, the cost was again halved to around $15,000. The barriers to entering the pornographic film market were suddenly and dramatically lowered, leading to an explosion in production. In 1976 about one hundred new porn features were released; by 1996 that number had climbed to more than eight thousand a year.35
The sexual revolution may have begun in the sixties with the hippies and their mantra of free love, but it reached its climax— so to speak—in the late seventies and early eighties, when sex went fully mainstream. In the mid-nineties, New York mayor Rudolph Giuliani took credit for cleaning up Times Square by driving out all the drug dealers, prostitutes and pornography shops. The truth is, the job had already been half done by cable television, pay-per-view and VCRs, which had all allowed porn to go to the consumer, rather than the other way around. The shady, two-bit peep-shows that had proliferated in Times Square for decades were already feeling the pinch. By the time the nineties rolled around, porn was firmly ensconced in the home.
The VCR format war was finally settled when Sony threw in the towel on Betamax in 1988. JVC’s rival VHS format offered longer running times and was cheaper to produce, and had gradually increased its market share to nearly 90 percent; only about 21 million of the 170 million VCRs sold to that date were Betamax, while Philips had gained only a sliver of sales with its format.36 In the aftermath, the war became one of the most studied cases in marketing and business courses, spawning a plethora of theories to explain why Sony had lost despite being first on the market with a strong product. Some analysts pointed to the influence of porn and the fact that, at first, Sony had refused to license its technology to producers on moral grounds. Porn producers also leaned toward VHS because it was cheaper. Others argued that Sony misjudged the market for VCRs, mistakenly assuming that the main use for the device would be recording television shows rather than renting and buying movies. As it turned out, consumers picked the latter use, for which VHS, with its longer running time, had the edge. Both theories are good, but regardless of which you favour the fact remains that in its early days, like so many new technologies, the VCR was supported by porn producers, who stepped into the breach created by hesitant mainstream studios.
Porn had a similar effect on video cameras, the first of which was released by RCA in 1977. By 1984 several of the largest American camera companies, including Kodak, RCA and General Electric, had partnered with Japanese manufacturers such as Hitachi and Matsushita (Panasonic) to release compact “camcorders” that sold for between $1,000 and $2,000.37 The manufacturers marketed the gadgets as perfect for taping live events, but industry observers believed their
main uses lay elsewhere. Assessing the emerging market for video cameras in 1978, Forbes magazine suggested that despite official marketing efforts, “it is an open secret that the biggest market is [visual sex].”38 Indeed, most of the earliest camcorders had low light capabilities, which didn’t exactly lend themselves to filming sporting or family events. As Jonathan Coopersmith, a technology professor at Texas A&M University, puts it: “If you think about it, there are very few children’s birthday parties which are really done with very low levels of light.”39
Some entrepreneurs also cashed in on the popularity of using camcorders to film sex. Starting in the eighties, brothels offered customers “fantasy rooms” equipped with a video camera and VCR.40 Fuelled by such uses, camcorders sold quickly. Sales for 1986 hit one million, nearly double the 517,000 sold in 1985. “The camcorder has quickly established itself as a potential billiondollar business in only its second year of broad existence,’’ said William Boss, vice-president of RCA’s consumer electronics division.41
Prices continued to fall in the eighties, with the average camcorder costing less than $1,000 by 1986. That further spurred acceptance by mainstream buyers, who actually did use the gadgets to film children’s birthday parties and baseball games. By the time the camcorder was ubiquitous, buyers with primarily sexual uses in mind made up just a small percentage of the total market, but porn’s impact on the device’s early development was undeniable.
Talk Dirty to Me
It wasn’t all about the eyes, though. Along with cable television and digital photography, pornography spurred a good deal of development in phone technology, particularly in developing nations. Take Guyana, a small country at the northern tip of South America, for example. Today, the country’s economy is dependent on agriculture and mining, with sugar, rice, bauxite and gold accounting for the majority of its exports, mainly to the United States and the United Kingdom. In the nineties, however, Guyana relied mainly on exports of an entirely different product to those same trading partners: phone sex.
It started in the United States in 1982 with a decision by the Federal Communications Commission (FCC) to end phone companies’ monopolies on recorded messages. “Diala-porn” providers wasted no time in sprouting up, using new phone technology to offer customers recorded sex through 976 numbers for a fee. They also wasted no time in becoming immensely profitable: one phone-sex provider received 180 million calls in its first year and raked in $3.6 million.42 In 1985–86, Washington-based C&P Telephone pressed the issue by saying it had not only earned $1.7 million through phone sex, it had also benefited the community at large by helping to keep basic calling rates low.43 The story was similar in the United Kingdom. The industry began there in 1986; in 1987 it generated an estimated eighty million pounds in revenue.44
Phone-sex services were easy for children to access, so the moral question soon cropped up. In 1985, New York–based Carlin Communications was the first to be charged by federal prosecutors for interstate transportation of obscene matter. Authorities tried to shut down the $2-billion-a-year industry in 1988 with a law that made it illegal to offer either obscene or indecent messages for commercial purposes. The Supreme Court, however, threw a wrench into the works a year later when it ruled that banning “indecent” phone calls violated the constitutional right to free speech. “Obscene” calls could be banned, but the discrepancy would have to be judged by local juries according to “community standards.”45 The FCC got involved in 1990 with new rules that forced providers to adopt age-verification technologies, including credit-card authorization, access codes and scrambling.
The court and regulatory actions, emulated in the United Kingdom, did little to shut down the operators—they simply moved them overseas. Phone-sex providers got around regulations by routing calls to phone banks in other countries, which then re-routed them to a third country where the call was actually answered. The migration began in the eighties, and by the end of the decade, international sex-related calls were pulling in nearly a billion dollars, or the equivalent of the entire domestic call market in Europe.46 Phone-sex providers chose to route calls through small, poor nations because those countries needed the money and because the three-digit country codes of places such as Guyana, Moldova and the tiny Pacific island of Niue resembled North American area codes, so most callers didn’t even realize they were dialling overseas. The system paid off handsomely for the developing countries; Guyana alone generated $130 million in 1995 from routed phone-sex calls, nearly 40 percent of its gross domestic product.47
Phone sex fell off considerably with the advent of the internet, which catapulted the porn industry to another, much higher level. Family Safe Media, an online tracker of pornography, estimated that phone sex combined with cable, pay-per-view, hotel-in-room and cellphone porn to bring in about $2.6 billion in revenue in 2006, only slightly more than it was averaging on its own during its heyday a decade earlier.48
The decline, however, may be only temporary, as the rest of the world catches up in developing telephone systems. As of 2006, only about 13 percent of Indians and 23 percent of Chinese had access to a phone.49 As the world’s two most populated nations add phones, phone sex is sure to follow. China is already facing the issue in its early stages, about twenty years after the United States and United Kingdom. In 2004 the Chinese government began a crackdown on phone-sex services, shutting down nearly a hundred operators in the second half of the year. “With the rapid development of the paid call service market in China, some lawbreakers make use of this form to spread obscene information and even conduct prostitution,” said Wang Xudong, China’s Minister of Information Industry. “This depraves social morals, and especially brings great harm to the country’s young minds.”50
At the close of the first decade of the twenty-first-century, industry analysts expected Chinese phone-sex operators to follow their earlier American counterparts by moving offshore. The story there is only half written.
The spread of phone-sex systems in the developed world during the eighties and nineties had two far-reaching effects. First, phone sex allowed a number of developing countries with seemingly little going for them to attract foreign investment. Guyana, for example, benefited in 1991 when U.S.-based Atlantic Tele Network acquired an 80 percent stake in Guyana Telephone and Telegraph, the nation’s biggest telecommunications company. Even though the phone sex wave largely came and went, Atlantic Tele Network has maintained its interest in GT&T and has since rolled out internet and mobile phone services. While Guyana’s internet and mobile usage is low compared to the rest of the world, both are higher than they should be considering the country’s GDP, which is among the lowest in the region. The initial investment in phone sex may have helped establish an enduring telecommunications legacy in the country.
In the developed world, phone-sex providers also pioneered a good deal of calling technology, including touch-tone-based credit card and access code verification. The next time you check your voice mail or order a pizza over the phone with your credit card, remember that the technology was first rolled out to give men a way to reach out and touch someone (or, rather, themselves).
In recent years, the term phone sex has also taken on a very different meaning. Porn producers are currently stampeding onto newer, more advanced cellphones that can access the internet. Up until a few years ago, porn producers were largely at the mercy of cellphone providers, some of whom—particularly in sexually conservative North America—prevented their content from being accessed on moral grounds. In 2007 Telus, one of Canada’s biggest cellphone providers, launched a service that allowed customers to download adult content onto their mobiles for a few dollars a pop, but shut the feature down a month later after it encountered outrage from the Catholic Church. That’s why porn producers cheered the arrival in 2007 of Apple’s iPhone, the first cellphone that successfully replicated the websurfing experience of the desktop computer in a mobile format. While Apple refused to allow custom-made downloadable porn “apps” for t
he iPhone, the device’s browser allowed users to view whatever websites they wanted, without interference from their cellphone provider. Porn producers quickly reformatted their websites for optimized viewing on the iPhone and the other “smartphones” it inspired. The market for mobile porn is consequently exploding. Analysts, who calculate mobile porn revenue separately from that found on the web, expect the global market to hit $4.9 billion by 2013, more than double the $2.2 billion it earned in 2008.51
The reason for the big growth follows the logic of why VCRs and pay-per-view did so well in the realm of porn—cellphones not only allow the content to come to the consumer, they also allow it to come to them wherever they are and whenever they want. “You don’t want somebody sitting next to you on the plane watching it, but sometimes if you’re travelling and you’re in the hotel room it’s easier than getting out the laptop,” says Hustler president Michael Klein.52 Kim Kysar, brand manager for adult producer Pink Visual, sums it up simply: “It’s the most private piece of technology you own.”53
7
THE INTERNET: MILITARY MADE, PORN PERFECTED
The way you know if your technology is good and solid is if it’s doing well in the