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Erotica vendors were probably also the first to make marketable products out of on-line animation delivery, downloadable video clips, virtual-reality environments, interactive videos, real-time video feeds, and streaming video (video that runs while it's being downloaded). According to Paul Feith, technical manager of the new media department at Playboy Enterprises, the paid Playboy site that is expected to open this fall is a technological extravaganza, with virtual-reality tours of the Playboy mansion and live chats with Playmates. Film promoters, video artists, and animators are already using similar technologies, and other mainstream businesses (travel agencies, for example) are likely to follow close behind.

The downside of technological development is that the headlong pace of change combined with breakneck competition makes for a highly volatile business climate. George Izumi of A6, a CD-ROM publisher of interactive Asian erotica, observes that erotica sites tend to be short-lived; as the competition increases, revenues fall and the pressures intensify, leading many businesses--particularly small-scale, one- or two-person outfits--to burn out rapidly. And even among the survivors, the longevity of a sector's pricing structures is an ongoing concern. Francis Sharrak of Live Centerfold Girls and More estimates that a properly run erotic videoconferencing business (which usually bills at a rate of $5.99 a minute) should be able to gross $25,000 a week or more. However, he concedes that with the addition of several new listings for competing services every week, that lucrative return probably won't last the year.

In the near term many site developers are going to try to entrench themselves by using the micropayment plans (developed by companies like DigiCash and CyberCash) that are beginning to appear in the market. Unlike on-line credit-payment systems, micropayment plans use the digital equivalent of cash. It's like getting money from an ATM: buyers withdraw "E-cash" from their checking or savings accounts for per-item purchases. Converting to this kind of payment scheme may prompt extensive design changes for existing businesses. Whereas most current erotica sites attract subscribers through services like mass downloading, a site built around micropayment technology, which could allow not only per-image but even per-second pricing, would encourage impulse purchasing and could open up the market to people who don't want to use credit systems on the Net or who aren't interested in buying subscriptions.

Other challenges are in store as well: possible changes in copyright law; the introduction of digital watermarking and other copyright-protection technology; significant increases in bandwidth; the development of high-end applications like 3-D video, touch feedback, and large-scale interactive simulations; and the prospect of stiffer government regulation.

Today's on-line erotica industry may not foretell the age of fully developed on-line commerce in every respect. For example, not every market sector will be as beholden to technological innovation or subject to so volatile a competitive climate. Still, the very scale of the industry's on-line presence offers a preview of what businesses might expect on the new playing field. It seems safe to predict that when the world's banking and investment sectors, say, reach a comparable threshold of Internet representation, they will have to contend with many of the pressures and contingencies that currently affect the erotica market. There's a lot more to those racy pictures than meets the eye.

Fred Hapgood is a freelance writer based in Boston.

Adult Education

Seven Lessons from On-Line Erotica

• Redesign your site regularly. If you don't, people assume you have nothing new to offer.
• Continually upgrade to ever-friendlier user interfaces and the latest generation of multimedia technology.
• Be your own access provider so that you can provide faster service. Speed is crucial.
• Promote yourself in news groups that cater to your industry.
• Distribute come-ons and giveaways to demonstrate the range of your retail services.
• Be innovative. Unique content matters less than innovative site organization and good information management. Consider, for example, periodic E-mail delivery to advertise search-engine updates.
• Design your site for the international market. Sites around the world are targeting your customers; you should be targeting theirs.

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