Senior analyst Mark Hardie cited conversations he's had with credit card processing companies. Hardie estimated the number of sex sites on the Internet at between 20,000 and 30,000.
Sex on the Web is "easily worth $700 million, and could be closing in on a billion dollars," Hardie told a workshop on investment opportunities in X-rated Web sites. "It's a huge market to support these entrepreneurs coming online. If the market wasn't large, they wouldn't stay."
The chief executive of one sexually-explicit Web site Thursday credited President Clinton's problems with helping to boost Web traffic.
"I love Bill." Caity McPherson of Samantha's Online Galleries told the workshop. "Bill Clinton has brought the vocabulary of sex to mainstream media," she said. "At parties now, people don't talk about sex in literary terms. They mention cigars and brunettes. Then they go on the Web looking for brunettes using sex toys. And I make money!"
The several hundred people attending the workshop also heard market researcher Robert Hawthorne of RelevantKnowledge attest to sex sites' popularity.
He said August traffic reports, based on Web usage by the firm's panel of 30,000 users, shows eight such sites gather at least one million unique users a month. "In the second quarter of this year, 43 percent of the entire domestic Web universe visited a sex site at least once," he explained, saying that's comparable to sports or weather sites, "and only slightly lower than business and travel. It's very significant."
Other sex site operators scheduled to appear on the panel were no shows. One of them, Seth Warshavsky, of Internet Entertainment Group, has reported having difficulty finding an underwriter to handle an initial public offering for his company. Forester's Hardie said he's familiar with IEG, saying it grossed $40 million last year, and claimed profits of $15 million.
Another possible concern for the business is a rumor Hardie said he'd heard that American Express (AXP) is considering not accepting charges from adult sites.
Samantha chief executive officer McPherson said few people should be surprised at how popular sex sites are. "It's a very exciting, titillating and lucrative business. Sex sells to a lot of people in a fast way. They log on, get off, and log off."
Written By Frank Barnako