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Adult business takes a hit; Cybernet Expo cut back on sponsorships, parties and dinners

CHICAGO — Whoever invented the marketing maxim “Sex sells” must not have been thinking literally.

After more than a year of recession, sex isn’t selling any better than anything else.

From Internet pornography to strip-club lap dances to Playboy magazines, business is hurting. The notion that sex would flourish in hard times has met its match in the anything-but-titillating details of gross domestic product and a 9.7 percent unemployment rate.

“Sex is equally susceptible to hard times as any other business,” said Vladas Griskevicius, a marketing professor at the University of Minnesota’s Carlson School of Management. “If you have only $20 and need it to pay for electricity, you’ll pay for electricity.”

The utility bills evidently have been coming due for potential customers of Playboy Enterprises Inc., which offers everything from hard-core sex videos to high-end apparel with the famous rabbit-head logo.

“In the past we’ve been pretty impervious,” explained Martha Lindeman, Playboy senior vice president. “This time, consumers are watching every single dollar they spend.”

Even its best business — licensing the Playboy brand for clothes, fragrances, clubs and the like — has felt the heat lately, putting additional pressure on new Chief Executive Scott Flanders to stem the Chicago company’s seven consecutive quarters of financial losses.

“There is a market for sexy, fun entertainment for adults, and I believe we can grow and compete successfully in that market,” he told Wall Street analysts last week.

But it’s tougher when even sex is losing steam.

At the recent Cybernet Expo show for the online porn trade, attendance was up, but sponsorships, parties and dinners were all cut back from prior years, in keeping with an industry under stress, noted Jay Kopita, its director of operations.

A gasping economy has aggravated the biggest problem in the Internet sex biz: the piracy of copyrighted content from pay sites.

“People are looking to get whatever they can on the Internet for free,” Kopita said. “They aren’t spending money like they used to.”

News reports in recent months have highlighted the financial troubles of legal brothels in Nevada and strip clubs in Florida, where dancers accustomed to making $350 to $400 a night are collecting less than half that.

Under the headline “Sex doesn’t sell in Whittier,” California’s San Gabriel Valley Tribune editorialized about an adult-themed shop that had prompted local protests when it opened a year ago. It recently shut down for lack of business, proving that “the laws of economics” are working to enforce community standards, the paper said.

The same laws apply to condoms too. Chicago data service Information Resources Inc. reports that since July 2008, dollar sales of male contraceptives have fallen about half of 1 percent in supermarkets, drugstores and mass merchants, though the smaller categories of over-the-counter female contraceptives and sexual enhancement devices have seen an uptick.

Of course, selling sex and sex-related products differs from using sex to sell, as the hamburger industry can attest.

Burger King, Carl’s Jr. and Hardee’s all have turned to suggestive advertising lately. A risque TV spot about inappropriate nicknames for Hardee’s new sugar-coated biscuit holes led to an angry complaint from one of its largest franchisees.

Minnesota’s Griskevicius considers such marketing efforts misguided, no matter how desperate the competition for sales.

Research shows that men respond to sexual appeals in advertising, but only for flashy products that help them show off for the opposite sex, “like a peacock’s tail,” Griskevicius said. Trying to use those cues to sell burgers and biscuits is “doomed to fail,” he said. “Who buys fast food to show off? Nobody.”

Hardee’s said in a statement that it has no plans to shelve the ads, which air only after 9 p.m. and target a core audience for the quick-service chain: “Young, hungry guys.”


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