As we come to the end of the Bush administration, it appears that in the coming years intellectual property theft will likely pose a greater challenge to the survival of most adult entertainment companies than federal obscenity prosecutions. Recognizing this reality, the Free Speech Coalition, in association with the Global Anti-Piracy Agency, presented the adult industry's first antipiracy roundtable at the Phoenix Forum in March.
The primary purpose of the event was to provide attendees with basic legal and practical instruction to help them combat the growing problem of online copyright infringement and other forms of content piracy. I was honored to be asked by FSC's President Diane Duke to deliver the Roundtable's keynote address and to participate as one of the seminar's four group instructors.
Clever adult entrepreneurs will exploit legal tube sites to convert the traffic they generate to upsells.
In my keynote presentation, I expressed my optimism for the future of the industry with the end of the Bush administration in sight and the prospect of industry-wide prosecutions diminishing daily. I also stated that for me, as one of the industry's first intellectual property attorneys, the refocusing of the industry on content protection and exploitation issues felt like I was coming full circle in my representation of the industry.
I know that for many of our readers, like many attending the antipiracy roundtable who had entered the business after President Bush was elected, references to the intellectual property side of my law practice might come as something of a surprise. I knew that many in the industry primarily identify me as a free-speech advocate because of my roles in FSC's 2257 and Utah email registry lawsuits, my meetings with the 2257 FBI inspectors in Washington, our 9th U.S. Circuit Court of Appeal obscenity spam case appeal, and the many legal panel appearances I've made where the focus has been on criminal law enforcement issues that confront the industry.
Fortunately, with the threats of widespread governmental prosecutions hopefully abating, I am looking forward to writing and speaking more frequently about intellectual property matters, an area of law I love and know well. For I am, like most entrepreneurs in the adult business, an owner and exploiter of intellectual property rights myself, albeit primarily in the areas of technology and music.
More importantly, however, what really inspires my affection and respect for intellectual property law is my sincere belief that intellectual property rights are nearly as fundamental and important as free speech rights. In fact, I strongly believe that the U.S. has become the greatest nation in the history of world in no small part because our laws strongly protect both our right to express ideas and our right to make a buck from the exploitation of those ideas.
But being a committed advocate for both robust intellectual property rights and free speech rights, I am deeply concerned about the somewhat ironic situation now facing the adult entertainment business. After the industry has successfully weathered decades of governmental attacks on its rights of expression, now, on what seems to be the eve of victory against its oppressors, the industry is forced to confront formidable new challenges to its survival precisely because its success and social acceptance has produced a global glut of content and a plague of unrestrained content piracy.
This dilemma was prominent in my consideration about what I would speak about in my keynote address. I didn't want to go to Phoenix just to warn of the potential demise of the adult industry as we know it, or to rail against those who stubbornly cling to collapsing business models that depend on profits from the sale of piratable content. Besides, I was sure that everyone attending the event already knew the industry was in dire straits due to rampant content theft anyway.
Instead, in my keynote address, I elected to tell the folks at the Forum the plain and simple truth: There is no panacea for digital piracy, and there is no slam-dunk way to prevent online content theft.
In fact, there isn't even any surefire way for a traditional adult-content business to survive the difficult times ahead.
But I also told those in attendance something else that I sincerely believe: In the next chapter of the adult entertainment industry, many companies will survive, many will thrive and a few will get so big that they will probably redefine what it means to be an enormously successful adult entertainment business. This latter group, I predict, will likely point the way to future profitability by exploiting what I describe as a simple two-part strategy composed of both effective branding and effective exploitation of new technologies and the new business models they will generate.
Companies that have established strong, widely recognized brands like Vivid, Hustler, Penthouse, Playboy, Digital Playground, Redlight District, Spearmint Rhino, Deep Throat, Virtual Sex, Jesse Jane, Jameson and Earl Miller are simply more likely to survive the difficult times ahead than adult-content companies whose profits are dependent upon content sales associated with a lesser-known brand.
This is primarily because strong brands enable the companies that own them to monetize the good will associated with those brands by associating them with goods and services that are not easily pirated. For example, strong adult brands are commonly used to create new profit centers through licensing and other exploitation of their trademarks and service marks in the areas of adult toys, live chat, online dating, gentlemen's clubs, casinos, clothing, energy drinks, etc. Companies with strong protected trademarks have thus, in effect, diversified their risk and made themselves less vulnerable to the negative effects of collapsing content profitability.
For those content companies that have not yet established a strong brand, there are always opportunities for doing so. Consider, for instance, the fact that even in the current environment of a seemingly endless ocean of free adult content, there is always something fresh and new that strikes the public's fancy that, at least temporarily, generates a spike in demand for the new content.
Those who have produced such content are afforded the opportunity, albeit limited, to establish an exploitable brand by careful and purposeful association of a memorable trademark with the successful content. For example, the profitable Bang Bros. brand was established in large part because of the phenomenally successful Bang Bus series. But it is important to note that this strategy will only work if the content is consistently and uniquely associated with a protected trademark brand.
Therefore, the need for effective, if not perfect, copyright and trademark enforcement was an important topic of discussion at the Roundtable.
In the future, the adult entertainment industry can reasonably be expected to continue to be an early adopter, if not a developer, of new technologies and new business models.
The industry's history in this regard, in fact, was the driving force in the establishment of the home video market and Internet e-commerce. The continuation of this trend into the future provides another basis for my confidence that there will always be a place for the production and distribution of interesting new adult content.
Ironically, in fact, I think it is likely that the same kind of early technology adoption that brought us the adult Internet boom will almost certainly create new business models based on new technology adoption that will, in turn, produce more economic opportunities.
For example, the emergence of the first-generation tube sites, which have been rightfully decried by many, will point the way to a sustainable business model. This will usher in an era of legal tube sites, where the availability of free content, properly licensed and lawfully distributed, will create numerous legal traffic magnets. Clever adult entrepreneurs will exploit legal tube sites to convert the traffic they generate to upsells, including live videoconferencing, adult toy sales, adult dating and other products that are not easily pirated. In fact, given the greater social acceptance of adult content, such tube site traffic now offers realistic new opportunities to market a whole host of nonadult goods and services. After all, while it may not be true that every person who buys toothpaste watches porn, just about every person that watches porn buys toothpaste.
There is still a vast unexplored universe of traffic exploitation opportunities generated by providing free or nearly free adult content. And those that understand and effectively exploit this are likely to be among the big winners in the next phase of the adult industry.
There are already signs that the pattern of early technology adoption is repeating again, as seen in the adult exploitation of "virtual worlds" technologies: An example of this is the virtual adult playground Red Light Center, created by my good friend, adult Internet legend Brian Shuster.
I also expect that before too long, online virtual worlds will be populated by very realistic-looking avatars. You may be surprised learn that the functionality provided by such technologies, the creative components of the avatars and even the virtual worlds themselves will all be subject to intellectual property rights protection and enforcement.
Also, later this year, we will likely see the adult industry's introduction of the first true touch-sensation teledildonic devices using haptic technology, where online participants can engage in remote tactile contact with one another. It seems certain that the development of adult virtual worlds and the introduction of haptic devices will once again provide numerous new opportunities for enterprising adult entrepreneurs.
On the content production front, it is probable that more and more video products in the future will be generated as hybrid works that combine digital recordings of live performances captured with hi-def cameras and CGI animation. It is a technological trend that Hollywood is already fast embracing after the success of the cult film "A Scanner Darkly," starring Keanu Reeves, Robert Downey Jr., Woody Harrelson and Wynona Ryder. The adult industry's potential for using this technology is, in my opinion, simply enormous.
In the near future, I predict many additional opportunities for content producers and traffic exploitation experts will develop in the area of the computer gaming. In that arena, avatars, live/CGI hybrids other kinds of animations based on live, digitally captured content, what I call "synthespians," are likely to have an increasingly important role in the spectrum of adult content production. One big benefit of content created with synthespians is that the 2257 regulations simply do not apply to content that does not depict actual persons. One highly successful example of this emerging trend is the VirtuaGirl desktop synthespian.
But although there are many new technologies right around the corner, in order to participate in the adult business of tomorrow, one has to survive the tough times today. And one of the best ways of doing that is to be as proactive as possible in the protection, exploitation and enforcement of copyrights and other intellectual property rights. It was my pleasure to assist the Free Speech Coalition, the Global Anti-Piracy Agency and the Phoenix Forum in their first presentation of the roundtable.
It also will be my pleasure to continue to provide instructive information regarding intellectual property law matters to readers of this column in the months ahead.
Gregory A. Piccionelli is an Internet and adult entertainment attorney. He can be reached at Piccionelli & Sarno at (310) 553-3375 or at greg@piccionellisarno.com.
