Babenet, of Chatsworth, Calif., promised a site so compelling that Internet users would pay to see it, and it even offered to do the job free of charge if Ice-T would agree to split the earnings. The secret ingredient: X-rated pictures on-line. And so Ice-T's "Forbidden Zone" recently opened its virtual doors, zapping images of bare, undulating bodies onto the computer screen of anyone with a credit card. "This site could make $4,000 to $6,000 a day," says Ice-T's manager, Jorge Hinojosa. "The whole adult thing," he adds, "is pretty cool."

Pretty profitable, too. Cyberporn is fast becoming the envy of the Internet. While many other Web outposts are flailing, adult sites are taking in millions of dollars a month. Find a Web site that is in the black and, chances are, its business and content are distinctly blue.

That has legions of entrepreneurs rushing to cash in, from former phone-sex marketers gone digital to new-media mavens to a onetime stripper whose thriving Web site brings in so much revenue that she has given up the stage and nude photo shoots. "I'm out of the modeling business for good," says the former exotic dancer, Danni Ashe, creator of Danni's Hard Drive. "The site is all I do now."

How can X-rated fare rack up profits on-line when so many mainstream Web sites continue to struggle? The obvious reason: Sex sells. And on the Internet, customers can view racy fare without having to slink into a sleazy bookstore or even visit the back room of the neighborhood video shop. Customers can peruse raunchy fare in the privacy of the home -- or office.

But beyond sex, Internet pornographers deploy savvy tactics that mainstream sites would do well to imitate. Adult sites sharply target their marketing, placing notices in electronic discussion groups devoted to sexual topics and tastes, and running ads that pop up on the Yahoo! Internet directory whenever a user types in a search that includes the word "sex."

They also are masters of "upselling," charging for admission when most Web sites are free, then racking up extra revenue by selling accessory services. And the X-rated sites eagerly take up innovative technology that others are too timid to embrace, zapping encrypted credit-card numbers despite widespread fears of hackers and swiftly turning live video transmissions into digital peep shows.

The Internet had always trafficked in dirty pictures, but in the past year amateur swapping has given way to commercial ventures. Nearly 900 adult-related pay and free sites on the Web are indexed at Persian Kitty, an on-line guide to cyberporn. The commercial sites vary in size from small outposts with just a few hundred paying members to major networks with thousands of subscribers.

One site, Amateur Hardcore, produced by WebPower Inc., Lake Worth, Fla., ranked 16th among the Web's most frequently visited sites in a recent survey by PC Meter, a Port Washington, N.Y., company that tracks Web usage. Amateur Hardcore's ranking puts it well ahead of Web offerings from big mainstream brands like Disney and CNN. Industry revenue, pegged conservatively at $50 million last year by Forrester Research Inc., Cambridge, Mass., could grow fivefold by 2000, and even those numbers may understate the market.

All of this commerce comes despite some technological drawbacks. Internet pictures don't yet approach the clarity of magazines, film or television. Photos take awhile to appear on-screen, and video images, confined to the size of a baseball card, can be blurry. Yet customers don't seem to mind.

Any government crackdown may be unlikely, given recent federal-court rulings granting the Internet the broadest possible First Amendment protection. And for now, this market is being shaped by newcomers. Some of the biggest names in traditional pornography have only a limited presence in cyberspace.

"There are a lot of computer nerds emerging as porno kings," says Bob Guccione, publisher of Penthouse magazine.

When Mr. Guccione's General Media Inc. established the premium "Penthouse Live" service on-line, it turned to a more seasoned Web publisher -- 23-year-old Seth Warshavsky. His company, Internet Entertainment Group, which he formed two years ago on the bankroll he earned from running a phone-sex business, is the real operator of the Penthouse "page."

Mr. Warshavsky claims IEG will hit the $20 million mark in revenue this year from about 200,000 customer accounts splayed across nearly two dozen Web sites; of that amount, about 20% goes to partners like Penthouse. Short, scrubbed and apple-cheeked, Mr. Warshavsky looks hardly old enough to shave, let alone direct a sprawling adult-entertainment operation.

A Queens, N.Y., native whose family moved to the Seattle area when he was six years old, he jumped into the phone-sex business after graduating from Bellevue High School in Bellevue, Wash., Class of '91. Soon he was processing hundreds of calls each day. In 1995, he started cruising the Internet, spotted one of the early adult sites and figured he could do better.

"People on the Internet didn't have the aggressive posture you need to market," he says.

IEG employs a staff of two dozen and leases offices in a tony downtown Seattle tower. But Mr. Warshavsky's biggest single revenue generator -- an offering that has the entire adult-Web industry abuzz -- springs from an operation several minutes away. There, behind a locked door at a converted warehouse a few blocks from the Kingdome, women hired by IEG cavort nude before video cameras beaming their images out onto the Web.

"This is it. This is huge," Mr. Warshavsky says. "This combines the interactivity of phone sex with the visuals of television." Known simply as "live video," it features exotic dancers in full-color on the computer screens of users, who can even call on the telephone to chat with the performers in mid-gyration. Customers of IEG's live service can click their way to different "rooms." In the "health club," the performer works out on a step exerciser, sans workout togs. The images may be grainy and a little jerky, but the experience is completely private.

On a recent afternoon at IEG's "studio," a performer wearing only her underwear waits to begin her shift and watches a wall of video monitors as another woman, the camera operator, works a joystick on a control panel, zooming and panning cameras on the various sets. Nearby, doorways lead to two of the rooms: the health club and the "bedroom," where another dancer, tall, thin and naked, rolls around energetically on an expansive mattress.

For Mr. Warshavsky, the best part of the show plays in glowing text on a lone computer monitor: a list of the nine customers currently paying $49.95 to watch the 30-minute show. That translates into almost $450 in revenue. The dancer's pay for the segment: $10, or $160 for an eight-hour shift. For an entire day's worth of live-video programming, IEG usually sells to about 500 customers -- nearly $25,000 in daily revenue.

Domination Theme

The live-video feature is available at all the sites IEG runs. Club Love is Mr. Warshavsky's flagship site, and E-Zine mimics the format of print magazines like Penthouse or Hustler. AlleyKatz emphasizes hard-core sex images, while another site features gay porn. Coming soon: Mistress X, with a domination theme.

Despite their different names, nearly all IEG sites follow a common formula. First-time visitors see a splashy front page beckoning them to click their way into the site (but only if they are 18 or older, the pitch warns). Visitors who wander into a free "guests" area see a few freebie photos and a description of the offerings.

Then comes a pitch to sign up for a "membership." Monthly dues for Club Love are $9.95. "Hardcore photo archives ... the world's most extensive photo search engine ... exotic shows," the site promises. Joining takes a minute. Would-be members simply type in their name, address, telephone number, electronic-mail address and birth date, then punch in a credit-card number. IEG receives the credit-card information in a scrambled format, then instantly verifies it. Once signed up, users are automatically billed each month unless they cancel their membership. What the new member has really purchased is the opportunity to spend more money. This is the art of the upsell. A Club Love customer quickly encounters pitches for merchandise (massage lotion, $6.95); taped "bedtime stories" played back through computer speakers (99 cents a minute); pay-per-view movies (now showing for $4.95: "The Cable Girl"); personal ads ($4.95 for each day of access); and on-line games ("Strip Blackjack" for $7.95 a day -- win a hand and an article of clothing disappears from the photo of your "opponent").

The typical member spends nearly double the minimum $9.95-a-month fee. These extras generate about 30% of IEG's revenue, and live video provides another 40%; membership fees account for the remainder.

Lifted Prints

To build all of IEG's Web offerings, Mr. Warshavsky and a partner have invested a small fortune: $3 million for computers, phone equipment, software, the video studios and hundreds of X-rated photos for use and reuse at the various sites. (Though big players like IEG commission their own photo shoots, some smaller sites flagrantly violate copyright laws, ripping off content from printed porno magazines and scanning the pictures into their Web pages.)

But Mr. Warshavsky and other operators say the budding entrepreneur can get started for as little as $20 a month. Put up a simple Web page through a consumer on-line account and create an electronic "link" to an existing IEG site. When a customer visits via that personal page, its owner will get a third of the revenue.

"Virtually anyone can put up a Web page, and virtually anyone can promote one," says Steve Becker, a consultant to phone-sex firms and other 900-number ventures.

At Albamar Inc., in New York, partners Madeleine Altmann and Steffani Martin launched their live-video site, Babes4U.com, for $200,000, double what they had initially hoped to spend. Yet after eight months, Albamar already is showing a profit, the two owners say. Break-even "is about a hundred guys a night. And that ain't much," says Ms. Martin, a former adult-film distributor.

Yet as compelling as the live video seems, most mainstream Web sites haven't yet chosen to offer it, in part because the moving images remain fuzzy and choppy. Adult sites are almost the only ones jumping on the new technology. So while IEG and Albamar lure Web surfers with the promise of full-color, moving pictures, America Online Inc. and other big mainstream nonporn services continue to offer live celebrity appearances that confine stars to tediously typing out messages that appear as text on users' screens. No pictures, no sound, no video.

"The adult firms are simply more willing to try new technologies," says Marc H. Bell of Bell Technology Group Ltd., a New York firm that provides Internet services to businesses. His mainstream clients include MSNBC, the Web site jointly run by Microsoft Corp. and General Electric Co.'s NBC network, but when he wants to recommend something new, "we go to the 'adult' people first." His latest project: a Web video site for Penthouse that will mimic cable television, piping different channels of adult and mainstream video over the Internet.

Without live video and other bells and whistles, the fledgling pornographer can launch a basic membership site for less than $10,000, including computers, software, phone gear and photos.

Do-It-Yourself Approach

Danni Ashe, the former stripper and soft-core video actress, started Danni's Hard Drive with a do-it-yourself approach. She spent $8,000 for two computers, a scanner and some networking equipment, plus $1,400 for freelance programmers. But before long, Ms. Ashe scrapped the programmers, bought a few books on Hypertext Markup Language, the computer language used to build Web pages, and started doing the work herself.

Ms. Ashe, 27, originally perceived Danni's Hard Drive as an extension of her "fan club," the marketing apparatus by which many prominent dancers promote their videos, autographed photos and other merchandise. She didn't charge for access, instead posting messages to various discussion groups and waiting for users to click in and buy something. It worked.

"For years I just ran my fan club part time out of the house, and I made $1,500 a month," Ms. Ashe says. "I went on the Web, and it went immediately to $10,000 to $15,000." That prompted her to add Danni's HotBox, a premium "membership" service giving users access to a library of nude photos and interviews with nude models for $9.95 a month.

Now the pay site boasts 17,000 members, putting Ms. Ashe on pace for more than $2 million in revenue this year, she says. Of that, 30% comes from outside the U.S. Ms. Ashe says the site is profitable but won't reveal specifics. Judging from the customer e-mail she receives, she believes she is tapping a new market. "I think a lot of these guys," she says, "have never even bought an adult magazine."