San Francisco- [San Francisco Chronicle]- To the list of accolades that make San Francisco the gayest city around, you can add this: world headquarters of the gay adult entertainment industry.

Over the past few years the core of that industry has shifted from Los Angeles to San Francisco, and nearly every leading studio that makes gay adult content now is centered in the city, mainly in the South of Market and lower Potrero Hill neighborhoods.

The content of the industry — that is, the movies themselves — has also shifted, from DVDs and videotapes to the Internet, and to the city at the forefront of that medium. If you download gay porn from the Web, there is a good chance that the images are coming from servers sitting in the shadows of AT&T Park.

This weekend, both transitions will be acknowledged as the GAYVN Awards — the Oscars of the genre — take place at the Castro Theatre on Saturday night and bring the entire industry, including its stars, to the city.

The event, where awards in 38 categories will be presented, is for the first time open to the public, as all eight previous ceremonies were industry-only affairs in Los Angeles nightclubs.

Buttressing that main event is a first-ever industry conference at the W Hotel and a string of parties, one of which — Colt Studio’s 40th anniversary party — will take place across the street from City Hall tonight.

Observers say these events are major changes in the multimillion-dollar industry.

“It certainly shows an acceptance of gay sexuality, but it also shows an increasing acceptance of pornography as a form of popular culture,” said Jeffrey Escoffier, a New York writer who lived in San Francisco for 15 years and is writing a history of the industry to be published next spring.

He traces the modern roots of the films to New York in the early 1970s, where pornographic movies showed in theaters in the city. The Athletic Model Guild had started in the East Bay prior to that, though it produced only photographs and still images. (Gov. Arnold Schwarzenegger was photographed by the guild in 1975, during his body building days. He wore leopard-print briefs.) About the same time, Charles M. Holmes started the Falcon studio — and idealized the blond California surfer — in San Francisco and others started studios in Los Angeles. Colt founder Jim French first took his erotic male pictures in New York before moving the operation to Los Angeles in the late 1970s.

As the years passed and the heterosexual adult industry blossomed in Southern California, many studios there created gay-themed products as well.

The industry soon underwent two major changes: The first was the introduction of home video, which expanded the market beyond only men in urban cities with porn movie theaters. With VCRs, anyone, anywhere, could order films through the mail and enjoy them in private.

The arrival of the era of AIDS in the early ’80s affected a second sea change in the industry. The look of men in the films — known in the industry as “models” — switched from an average aesthetic to that of extremely well-groomed, tanned and toned men, a representation of “health” in the midst of HIV and AIDS. However, the studios did not begin using condoms in their productions till the late 1980s and early 1990s, and many men involved in the early days of the industry, including models and directors, died because of the disease.

Los Angeles remained the center of the gay and straight industry for a while, but in the late 1990s and early 2000s several Falcon directors started their own studios in the Bay Area.

Those studios — Titan, Raging Stallion, Hot House — remained in San Francisco and soon became leaders in the industry. In 2003, former Falcon director John Rutherford and his partner Tom Settle bought Colt, which had been struggling, and moved it to San Francisco, where it once again became successful.

“Now that a critical mass of companies can be found here in San Francisco, more outside companies find it beneficial to relocate here to take advantage of the porn-friendly climate,” said Chris Ward, co-founder and president of Raging Stallion.

It is unclear how big a business gay porn actually is in the city. None of the studio heads would share their revenues, but they did estimate that the gay market was 5 percent to 10 percent of the overall adult market, which is commonly valued between $5 billion to $8 billion. That larger number is unverifiable as well, but if true it could mean the total industry could easily be worth $100 million in the city.

Studio owners say there are several advantages of being located in San Francisco — chiefly the city’s liberal attitudes toward sex and sexuality and, of course, its large gay population.

Rutherford said making gay porn in Los Angeles wasn’t always easy and that the police would occasionally disrupt shoots.

“For people who live in San Francisco, our videos play a larger part in their life, which makes it a community standard,” Rutherford said.

The city, and the Bay Area, also has innovative people who have created many of the advances on the Internet, the next frontier and the third major change for the adult industry. As with VCRs and home viewing in the decades before, the Web is fundamentally changing how people watch porn.

One San Francisco company startup opened in the 1990s to create ways for online gamers to connect through video streaming; now it has become the major conduit for gay adult content on the Web.

“We were like a lot of startups in the mid-’90s. We were a young group of entrepreneurs open to pretty much anything,” said Tim Valente, president of NakedSword.com.

“All of us would sit around working late and talk about all sorts of things. The topic came up of streaming and what you could do with it,” said Valente, who suggested they consider gay adult video. “We were in San Francisco, I’m a gay guy, I said I’d go knock on doors, and that’s pretty much how it started.”

Valente started a subsidiary of the gaming site, calling it NakedSword.com, in 2000 and the Web site “went crazy” with hits. The site now partners with all of the major studios and streams about 90 percent of gay adult content available, Valente said. The company is a major sponsor of this weekend’s events.

The Internet helps the studios, too, as they stream their own video and also sell products from their Web sites.

Revenue for Falcon Studios last year was split in half between online and wholesale sales, says Todd Montgomery, who bought the studio in 2004. This year, online money will surpass wholesale revenue for the first time, accounting for 60 percent of sales, he said.

And the Internet boom has also created an amateur porn industry of producers who can cheaply make high-quality videos and post them on the Web. Many of these producers are pushing the aesthetic of the male pornographic model away from the Uber-polished back to a more natural look. They are also producing porn in individual scenes rather than full films with through story lines, trends major studios are also following.

Some amateur producers are also pushing the line on condom use, too, creating what are known as “bareback” videos, in which condoms are not used.

Such films, produced exclusively by smaller studios, are highly controversial within the industry because of the risk of contracting HIV. Some call bareback movies “snuff films.” The Gay Video News Magazine Awards ceremony bans such films from even being nominated, though they are reviewed in the organization’s magazine.

Major studios used to refuse to hire models who had appeared in bareback films, though that restriction has relaxed. Still, none of the majors condone the production of bareback films.

A smaller San Francisco studio called Treasure Island Media specializes in bareback films, however, and “people have definitely responded to it, and we have a pretty solid fan base,” said Randy Johnson, a producer for the studio who also screens potential models for films. As for the threat of HIV, Johnson said the studio matches people of the same HIV-status and “nobody is being put at risk.”

Johnson called the industry and award ban “hypocritical” because “there are no degrees; condom or no condom, it is all pornography.”

The images and practices the studios do show sometimes concern people like John Karr, who has for 30 years reviewed gay adult movies for the Bay Area Reporter, the Castro neighborhood paper.

Karr said he wonders about the impact of porn on the sex lives of average gay men, whether it leads them into excessive fringe and fetish practices. Two movies up for awards this weekend — “Justice” and “Folsom Filth” — were both produced by San Francisco studios and portray hardcore and violent sexual acts.

“The very profusion of the gay sex film industry has led to super-performers being developed that do not represent the everyday person and the everyday person thinks that’s how he should be acting — and the circle continues,” Karr said, adding, “This is something to view in wonderment, instead of condemnation.”