Check out the ever expanding interview archives at www.adultcybermart.com/Interview.html

CyberWorld – from www.business2community.com – The industry of Adult Entertainment (referenced as AE herein) has brought with it many of the advances we use every day in the Internet, Digital Media and Advertising Industry. Don’t flush red just yet.

I know the mention of the word “porn” brings with it raised eyebrows, unsettled seat shifting and for some, total damnation. It’s a contentious word in parts of the world and a flavorful one in others. For some, the word conjures “free speech” and for others proof that this obscenity means we should not be so free.

I am not stating the AE industry invented all these innovations

However, I am stating that the AE industry has clearly utilized these innovations to their advantage and does drive technological advancement in all of them.

To recap history, in the 1980’s the AE industry helped usher in the unanimous use of the VHS tape as the standard in-home movie viewing over that of Beta. Of course as DVD media format came on the scene in the late 1990’s even VHS began to fade in its dominance, and it would be fair to estimate that soon digital downloads and streaming will give fade to DVD format just as digital downloads have led to the demise of physical CD or Albumin the music industry. Some suggest that digital will all but eradicate DVD format as early as 2015.

So what are the contributions and innovations of the AE industry to the more mainstream Internet, Digital Media and Advertising industry?

1. Video Downloads & Streaming

2. Electronic Billing

3. Digital Rights Management

4. Pop-up Ads

5. Affiliate Marketing

6. Wireless Content Delivery

7. Geo-location Software

Some of these may be surprising to you. Geo-location software? You may be thinking to yourself, “no, no, no that was pioneered by the likes of Foursquare and Gowalla.” Well, not really. Clearly Foursquare and Gowalla have become darlings of the mainstream industry and VC’s alike, but there is a darker side to location-based services. Albeit, not unintelligent.

Over the last few years I have spoken to a number of technology providers that serve both the AE and the mainstream media industries (i.e. companies like Time Warner and Comcast serve both by the way) to understand how they are implementing technology and services, creating unique revenue models and growing their businesses. I do not aspire to work in the AE industry, but I will tell you that many of the folks that do are very smart and well-versed on the ins-and-outs (it’s ok to laugh) of the Internet, Digital Media and Advertising Industry.

Yes, we all hear of the seediness of AE but these folks also know their business and their legal limits, arguably better than executives of many mainstream companies, such as Goldman Sachs, Citibank, AIG and any other high profile financial institutions that always seem to “bend the law – make that break the law.”

More importantly, these folks in the AE business are specific, detailed, know what they want, what they expect and how to measure it. They are well-organized and do make many, very smart decisions. Some of their businesses are more profitable and operate more efficiently than many mainstream publically traded companies.

The following are three examples of how the Adult Entertainment or Porn industry has provided innovation in the Internet, Digital Media and Advertising Industry.

Affiliate Marketing – the industry of Porn has all but conquered the ultimate business model in Affiliate Marketing. These companies build multiple platforms from which to share content both owned and from competitors. They squeeze every conceivable cent from potential customers all in the name of making a profit, in some cases with very advanced methodologies.

Example: If a customer on company X website doesn’t purchase company X content, then company X serves up company Y content (Y may happen to be their competitor). The focus is on revenue, and some is better than none. Imagine Jenny Craig sending customers to Weight Watchers–not likely to happen. However, some mainstream companies have embraced this approach – Progressive Insurance comes to mind. Can’t find a great rate with Progressive they’ll offer you other options, from competitors.

Pop-up Ads – ok, so not every technology or deployment from the AE industry would be considered positive or advance the Internet, Digital Media and Advertising Industry. Most all of us would agree that Pop-up Ads (don’t think this is capitalized but double-check)are akin to junk mail and fairly annoying, even potentially harmful to brand reputations. Nonetheless, the AE industry led the charge to deliver on these ads and to this day continues to thrive off of them.

(Special Note: In 2002, just a month prior to me co-founding my current company, I worked for iVillage. We were the first to publically ban pop-up ads from our web properties. This started a movement that led to the likes of Yahoo, The New York Times and WSJ, among others, following suit. This had a great impact on the diminished use of these ads today from what was, at the time, overwhelmingly commonplace.)

Digital Rights Management (DRM) – this is a key area where the AE industry is possibly further along than most all other mainstream industries in both understanding and usage. Ownership and delivery rights related to Porn not only have financial implications but also legal. Clearly there are federal and state laws against/for the use and distribution of this form of content, and the content owner,

A) does not want it stolen by a pirate, and

B) neither do they want it shown somewhere it should not be (shared or viewed) for legal reasons

Two companies have driven this innovation further than others: they include Vivid Entertainment and Private Media Group. Vivid Entertainment and its visionary founder, Steven Hirsch (I’ll refer to him as a younger Richard Branson), was the first to deliver in the DRM area by offering customers one-time downloads (burn to DVD) from a website. This is? controlled and limited use of the content by the consumer. Vivid aims to vigorously protect its content and ownership credentials.

Meanwhile, Private Media Group (PRVT – a publicly traded company, NASDAQ) CEO, Ilan Bunimovitz, was one of the first to offer HTML5 iPad optimized downloads and is also working on cross-platform delivery across multiple devices for its content. Supposedly, Private Media Group does not DRM protect any of its content because as their CEO states, “The way to fight piracy is not to limit who you sell content to…(i.e. consumers)” [but rather fight the piracy sites directly.]

So, the next time you fall in love with that really cool technology or sexy app that helps you through your day, consider where it spent the night before you.