Technologically Transmitted Smut

On The Cutting Edge Of Technology, 'Cyber-Sex' Is Big Business

by Gary Schanman, MBA1

Now that I have your attention, let's talk about technology's version of love. Why "Cyber-sex"? Because, its out there, a lot of companies are making money off of it, and it actually may help improve our daily lives! "But how?" you may ask. "After all, I don't partake in that behavior."

According to a recent article in The Economist (January 4, 1997), many of the mainstream technologies we use in every day life were pioneered--even completely developed by--the adult-entertainment industry. For example, the majority of videos sold to owners of home video cassette recorders in the late seventies were of adult content. U.S. sales for adult videos are still strong (about 25% of total revenues), and in Germany, 40% of the video market is pornographic. It is clear that adult entertainment in the "privacy of your own home" played a big role in growing the VCR industry.

Let's take another technological development: Pay-per-view. Everyone is quick to admit that Pay-per-view has not supplanted video stores as the movie-method du jour. However, according to The Economist, about half of the hotel industry's $350 million revenue from pay-per-view comes from adult movies--and this doesn't include pay-per-view penetration in the home. Obviously, to make their guests feel more comfortable, anonymous billing services and unique selection software have advanced with this market. These are obviously transferable outside the "adult-world."

Of course, this primitive talk leads me to the Internet. Playboy's Internet site receives 5 million hits a day alone. In addition to lewd pictures online, newer sites (so I have read) allow viewers to conduct "video conferences" and two-way conversation (deep I'm sure) with female models over a regular phone line modem.

Although the quality is not very good yet, the industry players plan to provide 12 downloaded frames per second of video (standard video is 30 frames) very soon. This video performance over standard phone lines is very impressive. The adult industry knows that there will be customers to pay for this digital compression. (The average cost of a "transaction" is about $78, garnered by credit card.)

Advances in this arena can influence the speed, flexibility, and price of every day video conferencing. The medical, education, and commercial industries will all eventually use the technology currently used almost exclusively for cyber-sex.

What about phone-sex? You've seen the ads. Well, according to the International Telecommunication Union, telephone sex has proven positive for international telecommunications growth. The reason is, due to regulations in the U.S., service providers are forced to go internationally to provide phone service. This leads to almost 1.5% of all annual international phone traffic consisting of telephone sex (about $2 billion).

The companies agree to a "settlement system" where the country of call-origin and destination both share the revenues. What this means, is there are a ton of small, impoverished countries trying to build an advanced telecommunications infrastructure to appeal to these phone-sex providers. As The Economist stated, in Guyana, a poor country in Latin America, revenues from phone-sex are equivalent to 40% of their country's 1993 GDP. And they are building one of the regions finest telephone networks! Hopefully, this infrastructure will appeal to other, more reputable firms leading to better welfare of Guyana citizens. This development is also happening in the South Pacific as well as in Europe.

Let's face it, people look for sex on the Internet. According The Wall Street Journal, sex-related websites total at least 25,000 (for Infoseek alone). A large amount of daily web hits relate to this topic (this used to be more before commercialization). Even mainstream directories and sites are beginning to consider advertising cyber-sex sites. They need the revenues, and the latest sorting capabilities allow them to better control exposure of the ads to those who want to see them (never mind poor little Billy trying to search for websites on his female anatomy paper). These revenues can help take the Internet to new places as well.

Well, it appears that people will pay more, earlier when it comes to adult entertainment. And the companies are more likely to invest in technology that will get them customers. Sounds like a little BE501. In the end, better technology can only help us. As the CEO of a so-called cyber-sex Internet channel eloquently remarked, "The two contents that drive technology are warfare and sex." I'd rather have the latter. Gee, I hope my mom reads this article so she can see what I'm learning at B-school.

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