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If YouPorn is So Successful, Why is the Owner Trying to Sell?

So how are big adult-video companies coping with the borderless erotic geography of the Web? By creating ever more expensive product. Like their counterparts on the other side of the Santa Monica Mountains, the studios realize they can’t fight amateur with amateur. Instead, Penthouse, Vivid, and others are more committed than ever to their version of the Hollywood model—big budgets, big names, big marketing, and content distributed across a range of platforms.

Porn Valley- In a hilltop home in an affluent corner of the Valley, Kelly Holland, [pictured] the 47-year-old head of production for Penthouse Media Group, stands behind a camera monitor. She wears crisp khakis and well-worn white sneakers, and her lens is trained on a performer named Dee Lilly, who is wearing a beaded black corset. Lilly sways lazily to soft rock. Curtains billow in a fan-generated breeze.

“Beautiful, baby girl, it looks gorgeous,” Holland encourages, as she watches on the monitor 10 feet away. Sitting beside her, a beefy lighting guy stares blankly out the window at the dirty swimming pool. The rest of the heavily tattooed crew—more than two dozen—wander in and out of the kitchen, where the caterer has laid out platters of just-cooked salmon, rice, and vegetables.

James Sullivan, the chief operating officer of Penthouse, is visiting from New York. He stands behind Holland, studiously casual in dress shoes and a T-shirt. As the scene wraps up, Holland asks the actress to leave the frame. When Lilly stumbles, tripping over her towering plastic stilettos, Holland sweetly reassures her. “You’re so cute,” she says, “you don’t have to know how to walk.”

Holland’s plan for the day is to shoot two features, each cut in a hardcore and softcore edition, plus softcore and topless content for the Web and on-demand cable. Time is tight, and the director hustles the performers around the set in order to get the most footage for their day rate: usually about $800 to $1,500 for women, less for men.

Today’s shoot is a conscious counterjab at the cheaply produced, handheld hardcore videos that flood user-generated adult sites and chip away at the big studios’ bottom line. The total budget for three days of filming is about $110,000.

As Holland shoots Lilly for the softcore episode, designed to be downloaded onto a cell phone, another director is shooting a feature in a nearby room. Titled The Looking Glass, it’s the story of a young suburban couple who buy their first home, only to discover that one of its sliding glass doors is a portal into an alternate universe where people have nonstop sex.

In a bedroom done up like a Pottery Barn showroom, performers Alec Knight and Carolyn Reese are staging a crucial scene. With blond extensions and a thick mask of makeup, Reese is attractive in a girl-next-door-in-L.A. kind of way. Knight is equally average, for the most part. As they go through the motions, the cameraman urges them to act lovingly toward each other. No matter what position they’re in, they find a way to gaze into each other’s eyes.

Holland, a veteran in the growing ranks of female directors, believes women—and the men who want to watch with them—are customers she won’t lose to online viewing. “Women are more reliable, they are more loyal, and they spend more money,” she says. “For women, you have to make sure the girls have great manicures, great pedicures, and great lingerie—put them in La Perla or Agent Provocateur—and you can serve up some pretty explicit material.” Holland cites HBO’s new sexually explicit miniseries Tell Me You Love Me as evidence of just how mainstream pornography has become.

“It’s not just a man thing,” agrees Samantha Lewis, the C.E.O. of Digital Playground, who estimates that 45 percent of her Web-based sales (which include site subscriptions and DVDs sold online) are to women. “As each year goes by, we’re realizing, Oh my goodness. The percentages are climbing.”

The porn industry has long wanted to expand its female audience, but some producers concede it will take more than fancy sets, gauzy lighting, and a story line. “Women are just as unpredictable as men, only more so,” says Phil Harvey, the 69-year-old Harvard grad who 35 years ago founded Adam & Eve, a $90 million adult-film producer and sex-toy retailer based in Hillsborough, North Carolina. Harvey is a pioneer in marketing toys and videos to women and couples, having instituted a “sex positive” approach to pornographic retailing in the late 1980s. But as important as women are to Adam & Eve’s business—Harvey says 40 percent of its Web customers are female—he cautions against overgeneralizing. “At least five times we’ve tried to produce a women’s catalog, with cuddling and coupling,” he says drily. “It didn’t work.”

What has worked, Harvey says, is porn that is best appreciated on the big screen—or at least a television. Last year, Adam & Eve teamed with Digital Playground to make Pirates, an adult take on Disney’s billion-dollar Pirates of the Caribbean franchise. Shot in high definition, set to an original score, and driven by a plot involving Incan magic and sea battles, Pirates was billed by its producers as an “electrifying and swashbuckling sex tale.” Digital Playground’s Joone says the film cost the two studios more than $3 million to make—one of the biggest budgets ever for an adult video—and the resulting three-disc set initially sold for $50. Harvey credits Pirates, Adam & Eve’s bestselling film of all time, with helping to pull the company out of a five-year growth slump that he attributes directly to intense competition from free porn on the Web.

Youporn—the site Stephen Paul Jones tried to sell to Vivid in May—is a strange and mysterious business. There are no links to founders’ biographies, no contact information, no hint of who is behind this booming Web entity. Its domain is registered using a service designed to mask the registrant’s identity.

Back in July, I sent an email to the lone address on the site. It went unanswered. I asked around and, after a series of dead ends, was told that a Stanford alumnus—an outsider to the industry—had started YouPorn. A porn producer gave me the man’s cell-phone number. I left a voicemail. Jones called back a few hours later.

“It’s a brave new world, man. People are crazy. What can I say?” he said, during a freewheeling two-hour conversation that swung wildly from the subjugation of female porn stars to federal regulations governing obscenity to the existence (or nonexistence) of God. Jones insisted that the site was not intended to make money. “It’s not a profit center; it’s more of an experiment. If you wanted to be philosophical about it, it’s kind of an exploitative industry, and this is sort of the opposite.”

Jones said that “Stephen Paul Jones” was an alias. He said that he was 27 years old and worked at a Newport Beach, California, hedge fund, where he managed billions in assets. He used the alias, he said, because his bosses would fire him if they knew about YouPorn. He said he wasn’t the owner of the site anyway. He said it was founded by “a German” who wrote the underlying software and now runs the site’s day-to-day operations.

Still, Jones seemed proud of YouPorn. “People have been telling me that this site would die and the traffic would go away, and they’ve all been wrong,” he said. “When a new model enters the market and impacts other companies’ business by 15 percent of their revenue in a year, that’s historymaking.

“Porn is recession-proof,” he went on, “so if other companies’ sales are going down, there’s a reason. If the reason is the world saying ‘We like to blast ourselves over the internet,’ and the consumers of the world saying ‘We like the amateur stuff better,’ then that’s significant. You could call it a revolution.” He liked the sound of that. “Sure, why not?”

It turns out there is a Stanford alum named Stephen Paul Jones. But he’s fortyish, not 27, and he lives in South Lake Tahoe, California, not Newport Beach. In the past two decades, this Stephen Paul Jones seems to have had no connection to the adult-entertainment business. Public records show that he was involved in a handful of security companies. According to Stanford alumni records (he earned his M.B.A. last year), he enjoys skydiving, stunt piloting, and snowboarding.

Meanwhile, the man who says he’s 27 and uses Jones as an alias has stopped returning my calls. So I drive north to Lake Tahoe.

I knock on the door of a lodgelike three-story house with an enormous backyard. A blond, barrel-chested man answers, an entourage of children in tow. I tell him my name and ask to speak to Jones. “Wrong house,” he says, as his face goes hard. His wife asks what this is about. I say I am a reporter writing about an internet company. “Oh,” she says and gives him a look.

He hustles his family inside, grabs a pack of cigarettes, and comes back outside to yell at me. And from the minute he starts talking, I recognize his voice and his patterns of speech. This is the man I spoke to on the phone. This is the same Stephen Paul Jones.

Jones confirms this, apparently without meaning to, saying he knew during our phone conversation that I had an agenda because I told him that I didn’t like porn. (I told him no such thing.) He threatens to sue me, saying he has “Google’s lawyers.” Then he asks if we can talk somewhere farther away from his home. He drives his S.U.V. about a mile down the road, with me following. For the next 2½ hours, in a diatribe that is always convoluted and occasionally hostile, he keeps returning to one theme: his amazement at the sheer number of people who visit YouPorn every day. And he repeatedly insists that he is not the site’s owner.

But in his emails to Vivid executives, Jones had described himself as “the decisionmaker at YouPorn” and said that he and his Malaysian partner, Zach Hong, “own 100 percent of the company.” (Hong, when reached at his home in Australia, confirmed his involvement with YouPorn but declined to answer further questions.) In these emails, Jones sounded like a no-nonsense M.B.A. with an articulate, if familiar, vision for growing his Web 2.0 company. Among other things, he said he would follow “the Skype model” and cited a quote he attributed to one of Skype’s founders: “If we have 100 million users, and if just 1 percent of them give us $10 per month, we will have $120 million in revenue.”

Now, though, leaning against my car on a dark country road, Jones refuses to answer the most basic questions about the financial particulars of YouPorn or his plans for its future. As the conversation wears on, he sounds proud of the site one minute and worried about tarnishing his family’s reputation the next. After all, he says, he has five kids. He seems deeply conflicted about being in the sex business, much less a mastermind of the most popular adult site in the world.

Back in the Valley, Vivid’s Steve Hirsch says that while he envies YouPorn’s traffic, he has no plans to buy the site, mainly because of the legal exposure associated with hosting user-generated pornography. But he also says that he can’t figure out how to make money through YouPorn and that it would be inconsistent with his strategy of focusing on high-end feature films. A.E.B.N. was also approached by Jones, says an executive there, and passed on YouPorn too.

According to several industry executives who say they would have heard otherwise, YouPorn hasn’t been sold. After our conversation near his home, Jones continued to deny that he owns the site.

As this issue went to press, YouPorn’s Alexa rank was 51—and rising.


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