As technology pros converge on Las Vegas this week for the annual Consumer Electronics Show, entrepreneurs of the carnal arts will be peddling their wares as the AVN Adult Entertainment Expo (AEE) hits the city during the same dates, Jan. 7-10, at the Sands Expo and Convention Center. Strange bedfellows indeed.

But like consumer electronics, the adult film industry is hoping its trade show can help kick-start business for 2010. Attendance was down for both shows last year, and revenues lagged for the adult industry across the board in 2009.

“There is a strong demand for this show,” says AEE’s Sean Devlin. “The industry needs it and the fans look forward to it, so people are saying, ‘OK, it’s time to go back.’”

Devlin is encouraged by registration for this year, which four weeks before the event was up 46% among trade registrants and 138% among fans, compared to the prior year.

[Considering that last year it was 40-50% from the year before, what does that mean?]

AEE features panels on novelties and adult toys, the growing influence of women working on the business side of the industry, and recent developments in adult-film law. Adult star Sasha Grey will deliver a keynote. Veteran actress Tera Patrick will be on hand to autograph her new memoir. The expo also features fan-interactive exhibits such as a seven-foot mechanical phallic symbol that replicates the mechanical bull.

But underneath the covers lie some serious problems for the porn industry, which is struggling to maintain revenues as viewers increasingly stream content for free online. DVD sales are down to half of what they were just two years ago, according to Paul Fishbein, founder and chairman of Adult Video News, the porn industry equivalent of Billboard and the sponsor of AEE.

Even with the precipitous drop in DVD sales, production companies still garner most of their revenue from that source, but the recession has greatly affected small and midsize companies. The business has been able to offset some of the losses by sending product to video-on-demand companies and working out revenue shares.

Pay-per-view buys at hotel chains are still a source of income, thanks to distribution deals with in-room content providers like On Command and Hospitality Network. Studios and producers, however, often sell to hotels for a flat fee without seeing additional money from increased traffic to a particular film.

But the revenue woes aren’t all of the industry’s problems. In California, legislators have been pushing for a tax on adult content. The industry lobbied against the tax through its trade organization, the Free Speech Coalition. Porn has now had a lobbying presence in Sacramento for more than 10 years, working to debunk myths that come up. “Obviously there are plenty of them,” says AVN Senior Editor Mark Kernes.

“I think they understand us better,” Kernes says about the industry’s lobbying efforts on legislators. “To them, we’re aliens from another planet, but in a spirit of interplanetary cooperation, they’re willing to work with us.”

The founder/chairman of Adult Video News and the expo’s chief discusses converting free-content consumers to paying customers, women behind the camera and bright spots for 2010

What’s the biggest issue the adult entertainment industry is facing in 2010?

People are watching more streaming media, and the industry is having a hard time taking consumers who watch streaming content and turning them into [paying customers]. That consumer who’s getting stuff for free isn’t buying anything. He’s just getting what he can for free and moving on.

How are women’s roles changing in adult entertainment?

You’re starting to see the female talent follow the way the male talent used to. A lot of male talent started owning their own lines. Eva Angelina and Teagan Presley started a company called Skin Works; Jenna Haze started Generation X and Amy Ried started her own company, Redemption Productions. Women producing and directing has been going on for years, but women [are] producing and directing and owning their own talent.

It’s been a tough year for your sector. Are there any bright spots on the horizon?

What’s great about the business is that everybody with product is sending it to all the VOD companies and they get revenue shares. The consumer is making the decision now. For a long time that hasn’t been true because distributors and retailers will buy based on price. Now consumers have all the choice in the world.—David Tanklefsky