This is all due to the simple fact that sex sells, right? Get naked and the world will beat a path to your Webcam? Maybe not. Progressive technologies and trade practices at least partially account for sites staying competitive and profitable.

Peeking behind the curtain of the adult business is a very peculiar experience. Lorded over by silicone-enhanced former porn stars, mom-and-pop swingers who sell memberships to their sex lives and oodles of old-fashioned sleazeballs, its virtual storefronts sport names like Bad Girls of Detention Hall, Greek Freak, Hoochie Hut and Digipimp. Trying to figure out who owns what and who's partnered with whom (in the business sense) is tricky.

Twisterlike entanglements and colorful characters aside, you would think an online enterprise that pulls in this kind of traffic would be on everyone's radar. After all, successful e-commerce isn't easy. But few in the "legitimate" business community want anything to do with e-porn, at least when they're not quietly servicing it with hardware, bandwidth, programming and so forth. Hosting services like Digex and Exodus do a stellar business trafficking in e-porn, Sun and Silicon Graphics can't sell enough of their servers to porn purveyors and countless Web-development firms play on both shirts and skins teams.

But don't expect to see any of this on corporate reports or in industry briefs. Some analysts even stammer when asked about their tracking of e-porn. When we asked for the analyst who handles online adult content at Jupiter Communications, we were met with nervously cleared throats and the line, "We don't have anything to do with that."

How can they simply ignore such a huge chunk of the online marketplace? They'll get back to us. A few days later, e-mail arrives with a statement from Jupiter's Marc Johnson: "While historically, adult-entertainment offerings have pushed technology applications forward a la the VCR and BBSes, it's a bit of a risk to project more than the technological possibilities onto e-commerce as a whole. For mainstream players, consumer behavior and motivations around adult entertainment are likely to be quite different from what they display toward traditional products." In plain English: Porn buyers are different from other consumers.

At least one analyst, Mark Hardie of Forrester Research, disagrees. Hardie appears to be one of the few who is not timid about studying e-porn and teasing out the technologies and business practices that can be applied elsewhere. He sells his findings to corporations like Disney and Warner Brothers, insisting that they keep an eye on the adult business to anticipate market and consumer trends. And do they actually listen to such a suggestion? "Absolutely," replies Hardie, although he refuses to give more details.

To arrive at the figures in its adult-content report, Forrester interviewed adult-site operators, banner exchanges, credit-card fulfillment houses and traffic-measurement firms. From this analysis, it came up with a staggering $750 million to $1 billion for e-porn revenue in 1998, with rapid growth predicted for 1999. "Before we did the study, we were throwing around figures that were almost an order of magnitude lower," says Hardie. "I suspect that the figure could be closer to the $1 billion end, maybe even higher."

Hardie paints a rosy picture of the e-porn business. He downplays the widely reported dirty Net tricks whereby sites steal from each other using image tags that point to content on other sites (called "hot-linking"), trap visitors with pages that loop back on themselves ("circle-jerking") and falsely report traffic by creating bots that generate phony hits. He sees many of these practices as things of the past, or at least activities ignored by a growing association of more ethically minded adult sites.

Several industry organizations, such as United Adult Sites and YNOT, are aggressive about policing the industry, developing ethical trade practices and building professional friendships. These organizations self-police by posting lists of sites that rip off other adult hosts, steal content or don't pay their bills. The organizations also host discussion boards and workshops for Webmasters.

"What I see when I look at this industry – putting aside any moral judgments about reprehensible content – is an amazing example of an industry that has banded together to protect its business, push revenue across the industry and innovate cutting-edge technologies," says Hardie. "I think there's a lot here that can be applied elsewhere."

So what are some of the e-porn practices others might want to pay attention to? We identified four: Informal and formal partnering, understanding your market, outsourcing and hitting 'em one more time.

Informal and Formal Partnering
Even those who see little in e-porn that's applicable elsewhere marvel at how the industry has built impressive and dizzyingly complex business associations. "It's truly amazing," says Barry Parr, director of Internet and e-commerce strategies at International Data Corp. [IDC is owned by The Standard's parent company, International Data Group.] "There are the 'top sites' lists (Top 50, Top 100), Web rings, indexes, banner-exchange programs, adult-verification systems, trade organizations, all sorts of partnerships and associations." Mark Tiarra, president of United Adult Sites and an adult-content provider, agrees: "It's actually a very cooperative business. If you get into it, it doesn't take long before you realize that the people who are making money are the ones who are working together."

Hardie harps on collaboration to his big media clients. "I tell them straight out, 'Look, you have 50 sites and they're not even networked together! Gather up your and your partners' sites into your own entertainment-commerce network and move visitors around within that.'"

Sean Carton, a managing partner at Baltimore's Carton Donofrio Interactive and a regular market columnist for Clickz, a marketing Web site, agrees: "The rest of the e-commerce community should wake up and realize they can benefit by forming network relationships similar to what we see in the adult community. In the adult world, they try all sorts of wild schemes at once to see which ones shake out."

One of those schemes is Adult Verification Systems. IDC's Parr thinks AVS offers an interesting partnering model. "That's a very fascinating way of getting people to buy one subscription to gain access to a bunch of content on associated sites. I could see this working in other areas online – say you subscribe to the Wall Street Journal and you get [the San Jose] Mercury News and other top publications with it. I think something like this makes a lot more sense than the whole micropayments thing."

Andy Edmond is president of SexTracker, a firm that follows adult content online, offers a suite of other services and hosts a number of adult sites. He is not quite as sanguine about AVS, but does agree it could work with modifications. "Let's say you're Salon and you're getting 50 subscriptions a day," he says. "Not bad – but what if you were partnered with 10 other complementary sites that were bringing in a total of 1,000 sign-ups a day, and you were sharing the revenue? This is the kind of thinking we do in the adult world."

Understand Your Market
At 30, well-known nude model and dancer Danni Ashe is already an Internet old-timer. She traces her online history back before the Web gold rush when she used to show up on Usenet alt.sex newsgroups and no one would believe it was really her. Her Web site, the woman-owned, all-woman-operated Danni's Hard Drive, which she coded up herself in 1995, has become one of the most successful sites of its kind, with 25,000 paying members and 5 million hits a day. For $14.95 a month, the site offers sex in bulk, with 1,000 nude photos a month, more than 1,000 video sex channels, several sex e-zines and a cooking column featuring a huge transvestite named Miss Peg.

"We're much more profitable than most because we don't rely so heavily on advertising to get traffic," says Ashe. Instead, she works to create a community atmosphere that makes members want to stay on month after month. Where other e-porn pay sites are lucky to hold members for a month or two, many of Ashe's members stay on for several years. Insiders attribute her success to her strong brand identity (she makes numerous TV and print media appearances) and her obsessive … ahem … hands-on approach to the site.

She says with exasperation: "We give people what they want! That may sound obvious, but so many sites, both adult and non[adult], don't seem to ask themselves the simple question: 'What do our users really want?' I spend an inordinate amount of time trying to get inside our members' heads."

"We understand our market more than most," claims Edmond of SexTracker. He thinks his company spends more time trying to figure out who its users are, what they want and how to sell it to them than other e-commerce companies do.

Doesn't every e-commerce site think they're doing this? "But they're just not focused enough on getting people from the content to the shopping cart," says Edmond. "Take a site like Internet Movie Database. Great site, with an ever-expanding body of content – if that was an adult site, we'd spend much more time figuring out how to move the audience into buying stuff, rather than just adding more content.

"We try to learn as much about our users as we can from the data we collect, and then create services and products that respond directly to their online behavior – not what they say they want on feedback forms, but what we know they want from how they behave online."

Outsource
Almost everybody outsources their video content," says Jane Durall, who runs Jane's Guide, a site that reviews other adult sites and features a weekly adult Web zine. "The bandwidth you need, the hardware, the models – it's just too cost-prohibitive." While you might not need a video feed from BabeNet on your Web site (oh, but think of the traffic!), the outsourcing of content, a popular move in the e-porn world, is showing up elsewhere.

In the adult world, one trick that's used is upselling. Paying customers get the video feeds as part of their membership, but if they want to talk with others watching the same feed or to direct the actions of the models, they have to pay extra – directly to the content provider, not the pay site.

Adult sites are extremely cunning about upselling (when a customer shows up for one thing, but buys something more expensive) and cross-selling (a customer shows up for one item, and buys an adjoining item, as well). "I think you're going to see a lot more attention paid to upselling and cross-selling as more sites start mixing commerce and content," says Carton. "People are getting a little desperate at this point and will probably be trying all sorts of crazy things in the coming year."

Outsourcing is showing up in the nonporn world, too. San Francisco-based iSyndicate offers free news and information content from partners like AP, Reuters and ZDNet. The participating sites display the partner's brand identity and the hyperlinked news and article headlines. When users click on a story, they're taken to the originator's site. ISyndicate gets traffic, and their customers get regularly updated content from reputable brands.

As the market has expanded and competition has grown fiercer, pay sites have increased the bounties they pay to free sites that can deliver them greater numbers of visitors "fresh from the farm," as Edmond puts it. In the nonadult world, the closest thing to this kind of relationship would be Amazon.com's Associates Program, in which Web sites sell books through an Amazon.com link for a small commission.

Accelerated competition has led free-site operators to take more extreme measures to get traffic to the pay-sites' doors. The result for the consumer is an annoying Whack-a-Mole world of pop-up browser windows and Java consoles that don't let you leave until they suggest a half-dozen other sites you should visit. Among these are phony top-site lists generated through false reporting of traffic and faked links (called "blind linking") that make you think you're going to another freebie site but take you to a pay site instead.

On the face of it, this technique might seem unlikely to work elsewhere. In the porn world, people supposedly put up with this nonsense only because of their intense desire for the final payoff. But if you look beyond the blatant avarice, there are techniques here that just may be ahead of their time. People grumbled about consoles and daughter windows (the smaller browser windows that pop up on top of the main window when you hit a Web page) when they first appeared in the porn world, but now everyone uses them, from Netscape to countless homepages.

Andy Edmond offers an example of the next-generation console: "Let's say I go to Amazon all the time and buy books on motorcycles and fantasy. I click through five pages within Amazon and then decide to leave – why does Amazon just let me go away unchallenged? Why not pop up a console that suggests a list of relevant partner sites based on my purchasing behaviors? I think you're going to see a lot more of this type of thing soon." Edmond hints that his company may be working on such technology.

Another practice that's gaining popularity in the adult business is the selling of exit traffic (for example, those leaving a site who haven't bought anything). An exit-traffic buyer will pay a site to hand these surfers over to them, popping up a console linking to their own sites or sites to which they've brokered traffic.

SexTracker recently released SuperBrowser, an adult- targeted browser that works off the Internet Explorer engine (that is, you need IE to use it). The browser is password-protected and comes preloaded with pull-down lists of SexTracker partner sites along the top menu bar; wherever you go, SexTracker-sponsored sites are always a click away.

NeoPlanet is another company that's creating browsers tailored to specific markets. With such a browser, a site (or commerce network) can constantly advertise its brand and promote its partners right on the browser. To entice people away from IE and Navigator, NeoPlanet offers special features like a library of custom interfaces and the ability to create custom menus and channels. SexTracker plans to develop its browser to tailor content to the user's behavior, encapsulating the user's preferences and credit-card information so such data can be sent to sites more easily.

Interstitial ads are also likely to increase. "It's just a question of balance between the annoyance level and the bandwidth issues," says Hardie. As Internet access speeds up, loading an ad window or an animation pop-up between page loads will become less of a nuisance. And the rich-media ad, with input forms and Java, Flash and Shockwave interactivity, was introduced on adult sites first and is now gaining wider popularity.

E-porn excites extreme reactions, from blanket condemnation to extravagant claims of marketing genius. But is it really that hard to imagine that out of this ethically and technically promiscuous commercial environment real innovations bloom?

When you compare the typical e-commerce returns with the profit margins and success of the e-porn business – where even home businesses can make a killing – "Cam's Perfect Breast Bonanza" starts to look like as good a place as any to hunt for advice.

A field guide to the porn players.

It takes awhile – crouched in the bushes with binoculars, a notepad and a well-tuned bullshit detector – to figure out exactly what's going on in the red-light districts of cyberspace. Andy Edmond of SexTracker (a botanist by training) likes to think of it as an "ecology of manipulation." To help you find your way around, we offer a few notes from the field.

Search Engines
The quest for flesh starts here. Type in the word sex, and Yahoo, HotBot and the rest load up the ads and rake in the revenue.

Free Sites (aka Click-Through Farms) - From search engines, the big, fat funnel o' porn narrows to the FREE! sites. Click-through farmers get a few cents for each customer they can hook and deliver to a pay site (more if they can sleaze multiple clicks out of them). There are an estimated 60,000 of these sites, some pulling down as much as six figures each month. Think of them as the chum in the e-porn ocean.

Niche Sites
These are mom-and-pop shops that frequently cater to special fetishes and adult Webcam sites. They aren't big players and they don't advertise aggressively, but they do enjoy devoted followings and enviable conversion rates of visitors to members.

Pay Sites
The buck stops here. Actually, the bucks leave your wallet and enter the till here. Pay sites take a small percentage cut, and divvy the rest among the click-through farmers, content providers, telco and others.

There are only a few pay sites – about 300 – at the top of the e-porn food chain. According to Edmond, out of 1,000 visitors to a typical pay site each day, only three or four will open their wallets. For any site to make money within the system, ungodly amounts of traffic need to be thrown at the pay sites each day. This traffic inflation has raised everyone's operating costs and led to revenue erosion for the pay sites and a wider distribution of profits.

Support Services
Sites such as United Adult Sites and the YNOT Network offer industry policing, legal help, workshops, consulting and lobbying. Places like Persian Kitty and Yahooters serve as search engines and indices. SexTracker, Sexhound and others provide site tracking, adult hosting and banner exchanges. There's also the invaluable Jane's Guide (think Consumer Reports with a smutty spin). Meanwhile, WebPosse, a rather militant copyright squad, patrols the X-rated Web in search of copyright infringers.

Content Providers
Many of the free and pay sites outsource their content to places like BabeNet and iBroadcast. Some providers license the content; others provide it for ad exchanges and upselling opportunities (such as live chat with models).

Hosting Services
While many Web hosts traffic in adult content whether they know it or not, many adult sites go to hosting services that can handle the special hardware, bandwidth and security requirements of adult content. The latest wrinkle in e-porn is free hosting, in which a provider offers free server space in exchange for premium ad real estate.

External Support
No one wants to admit it, but the e-porn food chain is supported by the greater ecosystem of the Internet. Network-infrastructure companies enthusiastically provide hardware, software, tech support, telecom and all the rest to adult sites.

Tools of the Trade – Click-through and banner-exchange schemes work the same as in the rest of cyberspace, although relationships can get more convoluted.

Java Abuse
Outside contractors, dubbed "script jockeys," are often hired to create all manner of annoying consoles, phony link tricks, pop-up windows and other in-your-face sales tools. For good or bad, many of these tricks eventually find their way into mainstream e-commerce.

Link Exchanges
Usually simple link-for-link exchanges. The management of links has gotten so complicated that it's sometimes outsourced to a link-management service. Abuse is rampant.

Partnership Programs
Many different arrangements exist, but usually a referring site will get a percentage (50 percent is common) of the initial sign-up. Sometimes it will get the same percentage for renewals, as well. Complicated database programs and scripts are designed to track these partnerships and – guess what – abuse is rampant.

Adult Verification Systems (AVS)
Networks of e-porn partners share the wealth. Consumers pay a single annual membership for an entire network of content. Upselling on AVS sites for "premium" services is common.

Web Rings
The most trafficked Web rings are found in the amateur e-porn and adult Webcam communities.

Pic Posts
Free porn supersite created by participating sites sending image tags each day that point to several images and an ad banner stored on their servers. The pic post gets remotely located content, users get free dirty pictures and sites get free advertising and traffic. Aka "Thumbnail Posts."

Top-Site Lists
These lists became the rage in 1997. Participants get placement depending on how much traffic they drive to the top site. Now, more often than not, the top sites simply circle-jerk visitors through a series of links that never deliver any content (thus raising their position on the top-site list).

Keyword Purchasing
Paying to have your ads pop up on a search engine when a certain word is entered. Words like sex, anal and blowjob can sell for six figures.