Bangkok Haunts

Americans buy or rent more than $4 billion a year worth of graphic sex videos from retail outlets and spend an additional $800 million on less explicit sexual films—all told, about 32 percent of the business for general-interest video retailers that carry adult topics, according to compilations done by two trade organizations that track video rentals. Chains like Tower Records now stock nearly 500 titles in their so-called erotic category, far more than films about history or dinosaurs.
    On the Internet, sex is one of the few things that prompts large numbers of people to disclose their credit card numbers. According to two Web ratings services, about one in four regular Internet users, or 21 million Americans, visits one of the more than 60,000 sex sites on the Web at least once a month—more people than go to sports or government sites.
    Though estimates have been greatly inflated by some e-commerce sex merchants, analysts from Forrester Research say that sex sites on the Web generate at least $1 billion a year in revenue, providing a windfall for credit card companies, Internet search engines and people who build Web sites, among others in the commercial food chain.
    Some of the most popular Web properties—which feature quick links to sites labeled “Virgin Sluts” and “See Teens Have Sex”—are owned by a publicly held company in Boulder, Colo. That company, New Frontier Media, has stock traded like any other, and it expects its video network to be in 25 million homes within a few years. It does business with several major companies, including EchoStar and In Demand, the nation’s leading pay-per-view distributor, which is owned in part by AT&T, Time Warner, Advance-Newhouse, Cox Communications and Comcast.
    Another company, LodgeNet, whose chairman is Scott C. Petersen, does $180 million in annual business selling sex videos and other forms of room entertainment to hotels. LodgeNet is a major employer in Sioux Falls, S.D., its home base. It is a client of the accounting giant Arthur Andersen, and nearly a fifth of the company’s public shares are held by a Park Avenue investment firm, Red Coat Capital Management of New York.
    “We feel good about what we do,” said Ann Parker, a spokeswoman for LodgeNet, which trades on the Nasdaq market. “We’re good corporate citizens. We contribute to local charities.”
    The biggest provider of hard-core sex videos and adult Web content, Vivid Entertainment Group of Van Nuys, Calif., whose founders and principal owners are Steven Hirsch and David James, has been making the rounds of investment bankers of late, preparing for an initial public stock offering next year that could ultimately lead to the first porn billionaire.
    “The adult entertainment business is just exploding,” said Bill Asher, the president of Vivid, whose offices are in a new granite and glass building that houses investment and venture capital firms. “Right now there are a lot of people making a lot of money. Somebody’s got to take control of it, and we figure it might as well be us. We see ourselves as the designated driver of this business.”
    To the astonishment of Mr. Flynt, who began in the pornography business by selling poor-quality pictures of naked girls as a way to build interest in his strip clubs, his competitors in the $10 billion annual adult market are mainstream corporations whose board members are among the American business elite.
    “We’re in the small leagues compared to some of those companies like General Motors or AT&T,” Mr. Flynt said. “But it doesn’t surprise me that they got into it. I’ve always said that other than the desire for survival, the strongest desire we have is sex.”
     
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    Thirty years ago, a federal study put the total retail value of hard-core pornography in the United States between $5 million and $10 million—or about the same amount that a single successful sex-related Web site brings in today. It seemed likely that the industry would remain where it had always been—largely out of sight, but profitable, and faced with consistent legal problems.
    What kept the market relatively small, in the view of people in the industry, were the barriers between consumer and product. Typically, a person would have to go to a run-down part of town, among people considered less than savory, to find hard-core adult films or bookstores. These retail outlets frequently were raided by law