European Net Firms Aim to Profit from PornAdam Eisner, theWHIR.com
August 15, 2001 – Things are getting a little hot and heavy in Europe.
A number of ISPs and portals have recently unveiled plans to enter the online adult market, intrigued by the allure of a large user base willing to dish out cash for content.
Faced with sagging profits and wishy-washy customers, many portals and ISPs are in need of a way to make some consistent revenue. And judging by announcements made in recent weeks, most companies seem to believe their financial savior is in porn.
“What’s triggering the move towards [adult content] is the steady revenue streams it generates,” said Scott Smith, director of Internet strategies in Europe for The Yankee Group, last week. “Sex sells.”
The latest company of note enter the market is Freenet.de, Germany’s second-largest ISP. The firm recently said it will launch Fundorado.de, a subscriber-based Web site pushing hardcore content and adult chat features, in mid-August. Users will be able to sign up for a monthly fee of 9.95 Euros (about $9 US).
Freenet.de’s venture in to the adult market is not one to be taken lightly. The site, which has been in planning for over a year, will operate as its own company. What’s more, it’s backed by a number of companies including Orion Holding International, one of Germany’s largest producers of erotic books and movies.
Not to be outdone, T-Online, one of Freenet’s biggest competitors, has also unveiled plans for a site of its own. Last week, the company said it would team up with Barcelona-based Private Media Group, a publisher of adult magazines, to create an Internet offering. And last month GMX.de, a provider of free e-mail services, said it would also launch a an adult-related site.
So, why does most of the action seem to be taking place in Germany? The answer may reside in a recent study conducted by European research firm NetValue, which suggests German consumers are Europe’s biggest viewers of online porn. According to the survey, more than 5.3 million Germans visited a pornographic site in June, and spent an average of almost an hour per person on each site.
This is good news for Freenet.de Chief Executive Eckhard Spoerr, who believes there is revenue potential in those statistics. Spoerr recently told Reuters that Freenet has roughly 2.1 million male customers, and that he is confident as many as 10 percent of those will pay the monthly fee to become a Fundorado.de subscriber.
German firms, however, aren’t the only European companies entering the business. Foundering UK e-commerce site Lastminute.com, for example, introduced an auction site for adult toys last week as well.
But don’t expect everyone, particularly portals, to follow suit. European portal Lycos Europe, for example, said it has no plans to enter the adult sector despite its lousy revenues. And let’s not forget Yahoo!’s recent porn flap; angry users forced the company to remove a significant portion of its adult-related content and services not long ago.
If European ISPs and other sites are serious about testing the waters of the adult market, they should seriously consider ramping up their hosting offerings to adult sites. In North America, adult Web hosting services have been a key source of revenue for most major Web hosting firms for a number of years. Adult sites provide significant revenue on a consistent basis because of they require high-end, high-capacity services.
But as confident as Spoerr is about Freenet’s new porn venture (he believes it can break even within a year), he also told Reuters that others will fail if portals and ISPs suddenly saturate the market with adult offerings.
“For me, this is like everybody saying I want to drive a Ferrari,” he said.
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