Web Replaces a Porn King with Lots of Princes

Bob Guccione isn't a happy man.

Forgive the publisher of Penthouse magazine for being grumpy, but he's reportedly been forced to put his Manhattan pad, said to be one of the largest private residences in the city, up for sale for $40 million. As if that isn't enough, he said that his world-class collection of (non-pornographic) art could be confiscated to help pay the magazine's bills.

Guccione admitted over the weekend that the magazine is in big financial trouble, which came as no surprise since the company's auditor issued the dreaded going concern warning a week ago.

The publisher was quick to lay the blame squarely on the Web's shoulders. In other words, the Internet did what antiporn activists and congressional subcommittees have tried but failed to do for a couple of decades. The Web dethroned one of the kings of porn.

The Culprit

Not too shabby. Guccione is right on target with his analysis. The Web is the culprit. With a storehouse of pornographic images just a click away, many of them free for the taking, why would anyone bother to ask the clerk at the corner store for a copy of a magazine that costs actual money?

So, the Internet killed Penthouse. Long live the Internet, right? Well, yes and no.

The problem now lies in figuring out how anyone can make money in the online pornography business. That includes Guccione, who said he's going to give it a shot once he's done paying off his Penthouse bills. And can anyone do it without resorting to questionable business practices?

Raking It In

Online pornographers have long claimed that theirs is a lucrative business, a veritable license to print money, the shortest distance to profitability and so on.

But if that's the case, why did some of the most-visited porn sites allegedly resort to placing illegal charges on customers' credit cards, as federal officials announced last year?

Just trying to make a little on the side? I don't think so. Sure, the Sex.com Web site sold for a record sum a while back, but that's proof of nothing except that companies will pay to have their ads pop up when someone visits a certain URL.

If there's so much money out there, why is venerable Playboy, one of the most recognizable brands in any industry, taking its own dot-com division in a new direction toward online gaming?

Try, Try Again

The dream won't die easily, of course. But given the thousands of porn sites on the Internet, the notion that any one of them is making anybody rich is hard to believe. Maybe one Web site can generate big bucks for a short time, but over the long run, abundant cash flow is unlikely.

Guccione will be in for a surprise if he joins the ranks of online pornographers. He'll find out what Hugh Hefner already learned: His product is indistinguishable from that of thousands of other porn pushers. Sure, the Playboy and Penthouse names might stand for something, but is that enough to prompt people to pay?

Share the Wealth

Of course, there is a democratic angle to this situation: The Internet enables more people to make money in a field where once there were relatively few players.

That seems like a good thing to me. A little bit of the Web's promise is being realized in a small but significant way.

The only problem is that Guccione's $40 million mansion might be on the market for a while.

What do you think? Let's talk about it.