THE MONEY SHOT

Porn could have a bigger economic influence on the US than Netflix

You shell out $11 for Netflix, $15 for movie tickets, and $25 for cheap NBA seats. But how does America’s porn obsession fuel the economy?

In 2012, respondents to an XBIZ poll estimated the industry makes about $5 billion a year. According to Alec Helmy, founder and publisher of adult-entertainment trade publication XBIZ, that figure would likely be over $6 billion if the poll ran again today in 2018.

That said, revenue estimates for the porn industry vary widely. Some believe the industry does not even make $6 billion a year, while others say it makes $10 billion, $15 billion, or even $97 billion. Because most porn firms are privately held, it’s impossible to get a completely accurate estimate, Helmy says.

“The safe estimate is to say it’s worth billions, but I don’t know exactly how many billion, and no one does,” said Dan Miller, managing editor of AVN, another trade publication covering porn.

Private companies and rampant piracy aren’t the only things that make it tough to estimate porn revenues. Different researchers use their own methodologies when considering how to classify porn or adult entertainment. Some place amateur porn, web camming, sex toys, and even strip clubs into one big bucket of sex-industry revenue, while others only consider the porn industry to be comprised of money being made by professional media and entertainment companies.

How much money does the porn industry make?

The graph below shows how the low and high realistic estimates ($6 billion and $15 billion) for porn’s annual revenue stack up against other entertainment titans that drive popular culture. As you can see, the porn industry is no lightweight economically.

Despite how frequently people use porn—Pornhub alone claims it racked up 28.5 billion views last year—its economic power remains hidden among the masses. Unlike other forms of entertainment, whose news regularly gets splashed across the front page of consumer publications, rumblings within the adult entertainment industry are typically only followed by niche trade audiences. Due to the taboo shrouding sexual content, a porn company can make hundreds of millions of dollars through monopolistic practices while remaining unknown to most consumers.

Many companies that seemingly have nothing to do with sex also indirectly profit off porn. As Frontline laid bare, phone carriers like AT&T, satellite TV providers like DirecTV, and hotel chains like Marriott have earned millions by piping in smut to their customers.

“It’s the crazy aunt in the attic,” an AT&T official told the New York Times. “Everyone knows she’s there, but you can’t say anything about it.”

Meanwhile, people now surf for porn from the comfort of their basements thanks to technologies that the industry helped popularize. The internet gave people a way to privatize their unmentionable habits, and this dynamic pushed porn firms to become early adopters of many tech features, such as digital credit-card transactions, instant messaging, and video streaming. Current emerging technologies like VR are getting boosts from porn, too.

The porn industry’s adaptability also transfers to how they do business. Similar to the music industry’s woes, piracy cut into porn’s profits. Porn companies adapted by designing new business models around licensing, educational courses, live camming, crowdsourcing, event hosting, and commerce. Porn also has its own trade publications, industry events, talent agents, and lobbyists.

Cities that don’t play by porn’s rules risk losing lucrative its tax revenue. Due to concerns that HIV was being transmitted on porn sets, Los Angeles County stipulated in 2012 that porn actors wear condoms when filming. The county subsequently saw a 95% drop in porn permit requests over the next four years. Meanwhile, the number of total film productions in Las Vegas, where condoms were not required, jumped 50% from 2012 to 2013. Several observers attributed this to the condom law nudging porn production companies to leave LA for Vegas.

Seemingly unperturbed, in 2016 California lawmakers proposed a ballot measure requiring porn performers throughout the state to use condoms on set. California’s secretary of state and its nonpartisan legislative analyst’s office each warned that if this became law, it would reduce state and local tax revenues by millions of dollars per year.

Not coincidentally, the regulation never came to be.

Porn is therefore an economic contender in the US economy just as much as any other entertainment property. The amount of cash it makes, the companies who indirectly make money from it, its experimentation with new business models, and its ability to influence lawmakers attest to the industry’s economic strength. And with new technologies always looming, porn peddlers will likely find new ways to secure obscene profits.

This article is part of Quartz Ideas, our home for bold arguments and big thinkers.

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