Some interesting statistics about the adult film industry here. I’d be curious to know what the 90% confidence intervals are around these estimates, because many of them seem surprising. For instance, the claim that the San Fernando Valley produces 90% of all adult films and releases 20,000 adult movies a year seems unrealistically large. It is also claimed that the total worldwide revenues to the industry are $97 billion. So if 90% of that flows to California, where the San Fernando Valley is located, then it contributes $87.3 billion to California’s GDP. This would be 4.7% of California’s $1.8 trillion GDP, which would be twice the direction contribution to the economy of agriculture, and 65% as large as total exports. Does that sound believable? Are there better numbers on this?
H.T. Digg
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Saturday ~ January 9th, 2010 at 4:15 pm
Morten Josefsen
Even believing the numbers, your calculation seems off base. Even if 90% of films are made in SFV, it does not mean 90% of ‘worldwide revenues’ flows there. The actual production is just a (small) part of adult film trade. Marketing and distribution are two obvious activities which contributes a lot to the gross worldwide number. Both are unrelated (geographically) to the production.
Saturday ~ January 9th, 2010 at 7:46 pm
Tom Hickey
Might well that the “revenue” just doesn’t show up when it comes time to taxed, similar to the huge drug trade that contributes to the underground economy.
Sunday ~ January 10th, 2010 at 7:24 pm
Ming Jack Po
I agree with Tom. These numbers could be possible given how large the underground economy is purported to be.
See TED talks about it here:
http://www.ted.com/search?q=underground+economy&x=0&y=0
and here:
http://www.ted.com/talks/lang/eng/loretta_napoleoni_the_intricate_economics_of_terrorism.html
Sunday ~ January 10th, 2010 at 9:20 pm
Adam Ozimek
Morten, divide the number in half then- it is just as remarkable.
Monday ~ January 11th, 2010 at 3:59 pm
Leigh Caldwell
I’d agree that the figures seem a little off in some respects – for example 20,000 films and $97 billion implies that the average film makes revenue of $5 million – highly unlikely. Especially when a production spend of $100,000 per film is unusually high – as this interview with Bill Asher implies.
The interview (linked from one of the sources on the graphic) is quite revealing: http://www.pbs.org/wgbh/pages/frontline/shows/porn/interviews/asher.html
Asher is head of Vivid. In 2001, he estimated an industry size of between $4 and $10 billion, but this was not all in films. The pie chart on the linked graphic indicates that about two-thirds of adult revenues are in China, Japan and Korea and I would imagine that they are not buying primarily American movies. But perhaps someone with more experience can correct me.
Asher does say something revealing: the cable TV networks take 80% of revenue on adult pay-per-view films. Similarly, adult websites probably make much more ad revenue than they pay out to the filmmakers. So your 50% estimate is probably too high. On Asher’s figures, a more accurate number would be (say) $7 billion revenues of which no more than $1 billion is likely to be going to SFV film companies.
Ultimately, the thing to remember is: the 90% confidence intervals are huge, for the simple reason that these are not economic statistics – they are business-magazine statistics.
You can see a huge list of inconsistent stats at the following link (which is from an anti-porn pressure group, and appears to have been cherry-picked to make the graphic that you link to):
http://www.nationalcoalition.org/stat.asp
And on the subject of whether they’re paying taxes:
“It employs in excess of 12,000 people in California. And in California alone, we pay over $36 million in taxes every year. So it’s a very sizeable industry,” says Bill Lyon (from http://www.cbsnews.com/stories/2003/11/21/60minutes/main585049.shtml).
That’s a whopping $3,000 per person. Not entirely sure they’re paying everything they should, then.
Monday ~ January 11th, 2010 at 8:52 pm
Adam Ozimek
Interesting points Leigh, I think your $7 billion estimate sounds fairly reasonable. Interestingly, the Vivid guys claim that they only filmed 80 movies a year, which puts the 20,000 movies out of California into question even more.
I do think Cable networks probably have significantly more market power than internet sites, since the barriers to entry are much lower. So I wouldn’t guess that websites would be able to bargain for a big piece of the pie like networks can.
The Vivid interview and CBS story are both very out of date, I imagine that the increase in broadband internet has dramatically changed the nature of the industry over the last 5-10 years. I’d be curious to read more up to date information.