Wednesday, September 1, 1999
L.A. Economy's Dirty Secret: Porn Is Thriving
By JEFFREY GETTLEMAN, Times Staff Writer
While Hollywood is fretting about a downturn in production and the
flight of jobs to cheaper markets such as Canada and Australia, a
certain niche of the entertainment world is quietly flourishing: porn.
This summer, grips, gaffers and best boys of mainstream
movie-making are marching down Hollywood Boulevard in an effort to
save their jobs. But in the San Fernando Valley, where the bulk of
the world's adult films are made, stagehands willing to stretch a
boom over a couple in bed have zero problem finding work.
It's not an industry that civic leaders embrace, and many people
find pornography morally offensive. But the Valley's adult film
business plays an increasingly large role in the region's economy and
is having its most prosperous year ever, indicators show.
While feature-film shooting in Los Angeles County has decreased
13% this year, adult movie production is up 25% and rising, according
to the Los Angeles County Economic Development Corp.
In July, one out of five shoots was a porn film, even though
these productions cost just a fraction of a Hollywood release,
according to the Entertainment Industry Development Corp., which
oversees the granting of film permits in the area.
And though major studios are trimming the number of features
they produce annually, adult video producers are stepping up
production. This year, the industry is on track to release 10,000 new
titles, according to trade publication Adult Video News, up from
8,950 last year--an X-rated milestone that probably won't make it
into the mainstream trade magazines.
Powered by the explosive growth of the Internet and shifting
social mores, the Valley's $4-billion porn industry has proved
seemingly impervious to the bean-counting, cost-cutting culture
seeping into Hollywood.
"You may not approve of the product, but the adult film industry
is an amazingly large business," said Jack Kyser, chief economist of
the Economic Development Corp. "Given the distress in the
entertainment industry, the success of the adult segment is a welcome
anchor in the wind."
And it doesn't look like this anchor will be dropped anywhere
else. One of the biggest stories in Hollywood this summer has been
runaway production. A growing number of mainstream producers are
shooting in other countries because of foreign tax rebates and
cheaper labor costs. Last year, between $573 million (the Canadian
estimate) and $2.8 billion (the U.S. estimate) of filming skipped off
to Canada.
But for porn, there's really nowhere to run.
Canada's film and television tax credit regulation specifically
bars government subsidies for skinflicks, as well as for award shows
and reality TV programs such as "Cops."
"Pornography is not in keeping with the community standards and
social mores of Canada," said Rob Egan, president of British Columbia
Film, a quasi-government agency.
The Other Side of Hollywood
A crasser, darker side of Hollywood, the adult film industry
makes its staggering sums quenching lust--often with youth. There's
no getting around the fact that porn is a business that transforms
apple-cheeked young women, many only one or two years out of high
school, into buxom sex workers. It's a business with little
oversight, no unions and serious health and safety risks.
Los Angeles Mayor Richard Riordan wishes the industry was
headquartered somewhere else. Although he may not be planning a war
on adult businesses like his counterpart Rudolph Guiliani waged in
New York, he is "ashamed" of the porn industry, he said.
"It's a black eye on our city," Riordan said.
Many religious leaders, feminists and social conservatives
condemn the industry in even stronger terms.
"The success of pornography is a reflection of the deterioration
of American culture," said Art Croney, a lobbyist for the socially
conservative Committee on Moral Concerns in Sacramento.
But porn is entrenched here for a reason. Close to Hollywood,
the Valley's adult video industry benefits from the busloads of young
starlets coming to town, the entertainment infrastructure and the
easy morals of the region.
"Why would we want to leave?" asked Greg Alves, vice president
of hard-core producer Metro Global Media Inc. in Van Nuys. "If I need
something printed, I can go to a printer and they'll do it, no
questions asked. If I go just 30 miles from here, they'll say, 'Hey,
I don't do that.' "
A Growing, Worldwide Business
Home to the world's largest community of porn stars (around
1,600) and 50 of the 85 top porn companies, the Valley has earned the
nicknames Silicone Valley and Valley of Sin. Though nobody knows
exactly how many local jobs porn creates, economist Kyser estimates
the number between 10,000 and 20,000.
The industry has been based here amid the aging strip malls and
countless cul-de-sacs since the mid-1980s, when the home video
revolution opened up huge opportunities for porn.
Today, the Valley is full of signs of prosperity--if you know
where to look.
In Canoga Park, Jenna Jameson, a 25-year-old actress with a
tattoo below her belt that reads "heartbreaker," races around in a
$90,000 Mercedes. She and other top female performers--with stage
names such as Jenteal, Sky, Asia and Lexus--earn as much as $5,000
per sex scene, compared with the $500 a scene typically paid to male
performers.
In Chatsworth, Metro Global Media is building a
35,000-square-foot office, double the size of its current building.
The new office will even have a sign out front, a first for the
company.
Earlier this summer, the porn community celebrated its gravy
days at a Bonaventure Hotel banquet. Middle-aged executives strutted
around with teenage beauties on their arms. Paparazzi flashes popped.
Champagne glasses clinked.
"The thing about this business," said porn star Richard Pacheco
in a speech, "is that when even when it was bad, it was good."
Since the mid-1980s, porn hasn't seen the ups and downs of
mainstream Hollywood where major studios often produce a string of
big-budget features one year and then fiercely cut back on production
the next. Revenues for top porn players have steadily risen in
lock-step with adult video rentals and sales, which climbed from $1.6
billion in 1992 to $4.1 billion last year, according to Adult Video
News.
And porn is global, with Valley producers typically making a
third of their profits by selling rights to foreign territories such
as Germany, France and Brazil, several producers said.
"The audience keeps growing," said David Leibowitz, a managing
director at Burnham Securities Inc. in New York, who follows some
adult companies. "Adult entertainment now has more acceptability in
the mainstream, and with the Internet and other new formats, this
product can be delivered into people's homes without anyone being the
wiser for it."
Porn Expands Into Internet Market
Twenty years ago, sex movies were found only in seedy movie
theaters. Today, porn is sold on the shelves of Tower Records and
Fry's Electronics. X-rated material is among the fastest-growing
areas on the Internet, with $1 billion in sales, according to
Forrester Research Inc., a Cambridge, Mass.-based Internet tracking
company.
Soon, porn producers say, people will be able to download any
adult film ever made via the Internet or video-on-demand services
provided by cable TV companies.
Porn, it seems, is poised to keep expanding.
"I don't see how this business can be cyclical with demand
growing the way it is," said Ken August, an entertainment consultant
with Deloitte & Touche.
The insatiable demand for new titles is driven by men, who watch
the movies to see their favorite female stars, which explains why
women make much more than men in this business. An evolving trend
among top producers is more couple-friendly porn, graced with plot,
shot on 16mm film and often costing more than $200,000 to make.
Still, 71% of sex videos are watched by men by themselves, according
to Adult Video News.
Though the business is rapidly evolving, 1999 wasn't a perfect
year. Adult video sales and rentals leveled off to $4.1 billion last
year, down a touch from $4.2 billion in 1997, partly because porn is
available via the Internet, cable TV and digital versatile discs.
And while the proliferation of new titles--175 to 200 released
each week--may be a dream come true for skinflick junkies, it means
lower prices for producers. A common refrain is that the glut of
adult product, much of it amateurish, has dragged down prices from
$70 per new release five years ago to $40 today.
Still, there are few flops in the adult world.
"You have to try really hard to lose money in this business,"
said Steve Orienstein, president of Canoga Park-based Wicked Pictures.
But porn may not be bulletproof, and industry insiders
acknowledge concerns about government intervention. Though an FBI
spokesman said there is little indication today that pornography is
controlled by organized crime as once widely believed, porn companies
are still vulnerable to obscenity prosecutions. The Clinton
administration has pursued few, but some producers said they worry
about a return to the days of the Reagan era anti-pornography
commission, especially since porn now can easily be downloaded by
minors over the Internet.
A Computerized Sex Suit?
Most porn companies, though, are betting that won't happen. Take
Vivid Video Inc., whose aggressive, well-capitalized pursuit of
technology may revolutionize the mainstream DVD business.
Since it was founded in 1984, Van Nuys-based Vivid has been a
consistent porn pioneer, recognized within the industry as the first
company to sign a contract star, the first to specialize in
plot-driven sex films, the first, even, to encourage its women stars
to wear little gold necklaces with the company name.
The necklace practice has evolved as a way of creating brand
identity among the different companies--and, porn detractors might
say, a way of treating women as marked property.
Now Vivid, which claims annual revenue of $50 million, is
leading DVD production with 600,000 porn discs made in 1998--and
twice that this year. Vivid's DVD technology is so advanced it's
almost disturbing. Sex scenes can be viewed from four camera angles,
viewers can customize fantasies they watch, and the image quality is
as sharp and lifelike as anything on TV.
Vivid programmers are trying to invent three-dimensional,
interactive DVDs that would be viewed with special glasses for the
most virtual sex yet. And David James, Vivid's co-founder, is
developing a computerized sex suit that would enable people to
stimulate partners via the Internet.
No doubt porn still has its stigma, which it carries to the
financial world as well. A handful of porn companies have gone
public. Stock prices for some, such as New Frontier Media Inc. of
Boulder, Colo., and Sioux Falls, S.D.-based LodgeNet Entertainment
Corp., have more than doubled this year. Nonetheless, mainstream Wall
Street isn't biting.
"It's like alcohol and gaming," said Leibowitz, the securities
analyst. "Porn stocks are perceived as sin stocks and well-known
brokerage houses won't get involved because it could scare away
potential clients."
But porn has plenty of its own loyal clients. At this minute,
hundreds of people are pulling down adult Web pages, popping in sex
videos, watching porn on a hotel room TV and flicking through X-rated
movie catalogs that grow thicker each month.
"This has always been a dynamic business, but right now is an
especially good time," James said. "I don't think any of us are going
to be out of work any time soon."