Free porn on 'tube sites' puts a big dent in industry

The adult-entertainment industry is in a tailspin, shattering the notion that it is one of the few recession-proof industries. The slump is especially stinging because technology — which helped adult-entertainment enterprises reap riches through innovations such as video streaming, webcameras and online payments — is contributing to the misery. DVDs and online pay sites, which make up the majority of porn-related sales, are in a free fall largely because of the rise of so-called tube sites. Knockoffs of video-sharing site YouTube, the sites serve up snippets of free porn that is often pirated. (Google's YouTube has done its best to bar explicit content.) Some 1,000 tube sites — double those of a year ago — have put a sizable dent in the estimated $13 billion porn industry, prompting a flurry of copyright-infringement lawsuits. Most tube sites run ads to make money. "We're dealing with the perfect storm: declining DVD sales, rampant piracy, free content and a weak economy," says Steven Hirsch, founder of porn heavyweight Vivid Entertainment. He says its DVD sales plunged 20% last year. "This is the worst I've seen in this industry in 25 years." The wide range of free content available — be it pirated video content or amateur-shot footage — will "continue to have a negative impact on premium providers' ability to attract and retain paying customers," says a recent report by market researcher XBIZ. It says initial orders of DVD titles by distributors have sunk, on average, to 1,500 to 2,000 now, vs. 5,000 to 6,000 in 2005.

Source: http://www.usatoday.com/tech/news/2010-03-02-porn02_ST_N.htm