Shhh ... It's Our Little Secret

This article is a departure from my former pieces, and may be a bit too racy for the puritanical. Read on if you dare … but don’t say I didn’t warn you.

As an investment professional, I’ve always got my ear to ground looking for new opportunities. Recently, I got an e-mail that intrigued me. It was from Adultvest.com, which touted itself as America’s only venture capital firm specifically aimed at promoting adult-based businesses.

One of the “dirty” little secrets of the internet, is that the revenue generated by the porn industry blows the doors off of everything else on the web. By the end of 2007, worldwide porn revenues --- are you sitting down --- topped $97 billion. Even though porn is banned in China, it accounted for roughly 28% of worldwide gross revenues, followed closely by South Korea at 27% and Japan at 21%. Apparently, the slumping U.S. economy also hurt domestic porn revenues, because we only accounted for about 14% of the global internet sales.


Let’s put this in perspective. Last year, internet powerhouse Google ginned about $11 billion in gross revenue, eBay, the web’s biggest swapmeet brought in nearly $7 billion, Yahoo, no slouch by any means, settled for a measly $6 billion, while giant internet discounter Amazon generated $14.84 in gross revenues.

These, of course, were their gross revenues. This means that their ultimate net earnings amounted to a fraction of these figures. Although there are currently no figures on the net income realized by the internet porn industry, most analysts agree, that other than salaries commanded by its biggest and most popular assets, their costs are marginal.

Even though the U.S. only consumes less than 15% of porn worldwide, nearly 89% of all internet adult products are conceived and created in the old US of A. Nearly 269 new porn sites go online every day!

The center of the porn universe has been and continues to be the San Fernando Valley, right here in Los Angeles. As a native Angeleno, it kind of makes me proud, in a perverse sort of way. Some folks call it the “Hidden Hollywood.” If I were an exec at Disney or Time-Warner, I’d sure like figure out how I could bring this burgeoning industry out of the closet, so that I could get a piece of the action for my stockholders.

Here’s what’s really troubling me … How can the U.S. be so successful and pioneering in an industry like porn, yet be eons behind the rest of the world in everything from manufacturing advances to higher efficiency transportation. As any computer geek will tell you, the porn industry has been ahead of the curve in nearly every tech innovation on the web. There has yet be a pop-up blocker or spaminator that can keep all the smut at bay.

The growth in the industry hasn’t come from multinational conglomerates backed by a host of global investment banks. Quite to the contrary, porn has grown on the backs --- forgive the allusion --- of societal outlaws and misfits whose entrepreneurial spirit should be the envy of MBA’s far and wide. If we’re looking for solutions to our economic malaise, maybe we should ignore the usual cast of Harvard, Yale and Stanford eggheads,
and look no further than those tempting little e-mails that all of us pretend to ignore, but secretly want to explore.

As any Madison Avenue sales exec will tell you … sex sells!

For your entertainment and educational pleasure, I have included two "must see" video clips. Don't worry, both are rated "G."

The first is the solicitation I received from Adultvest.com, and the second is an innovative display of critical business statistics that would make any marketing professional proud.

COME ON ... CLICK IF YOU DARE.





To learn more about my market recommendations, visit my website at:www.globewestfinancial.com.