Last Updated Oct 22, 2010 1:43 PM EDT
As a start, the new owners have to accept that Internet pornography is leaving the desktop and coming through the mobile. A large percentage of Google (GOOG) Android apps are porn or sex-related. And, despite Steve Jobs admonishing the Android for adult apps and pushing nude-free iPad editions of Playboy, the Apple (APPL) iPhone, iPod and iPad still carry adult-oriented software after the whitewash last winter. (Indeed, the next Mac OS, "Lion", will bring apps to the Apple home computers and laptops.) The unregulated Apple FaceTime software has also taken video sex from webcams to smartphones.
The ultimate mobile pornographic experience, of course, is still through the web browser, which is something Google, Apple, or any other mobile device creator wouldn't dare regulate. Even here, however, adjustments must be made: Twitter and other websites have revamped their main site to look like an app, essentially turning the cart into the horse. To make any type of impact in a post-iPad world, Sex.com will have to be formatted for mobile platforms.
Also, consumers are used to search engines giving them exactly what they need, which is the antithesis of a generic website header like Sex.com. While some websites like Vegas.com will always hold value with people interested in the specific topic, most broad domain names have lost relevance in the age of Google and Microsoft (MSFT) Bing. The problem with Sex.com is that Internet pornography has become very specific: Type in "one-legged blondes" or another narrow erotic interest and chances are extremely high that there is a website geared towards it. The party most likely to type in "sex.com" off the bat would be someone looking for pornography or sex-related information for the first time, and it will likely be the last once he or she discovers Google.
The previous Sex.com served as a generic repository of links to pornographic websites, about as descriptive as the color-by-numbers placeholder that appears when you accidentally type Google with three o's. The new owner will have to do much better to get a serious return on its multimillion dollar investment.
The first option is exclusive content. As YouTube-style sites stream copyrighted porn for free, customers are buying less multimedia from the manufacturers themselves. Porn creators are more desperate than ever to prevent theft. Last week Hustler's Larry Flynt sued 3,120 BitTorrent users who allegedly bootlegged the parody This Ain't Avatar XXX 3D. (It wasn't appreciated, as the Hustler.com website was repeatedly down most of the week after a series of devastating hacker attacks reportedly linked to the lawsuit.)
A smarter move for both Sex.com and content creators is to turn the website into a video hub, not unlike Hulu, where these new videos can be exclusively screened. The movies can be high HD quality, have crisp 3D visuals, or other special, higher-end features that cannot be easily replicated on the other streaming websites. Sex.com could be the ultimate adult screening room.
The second option is education. From informative videos to documentaries, Sex.com could become a repository of information. It may not be as potentially lucrative as a traditional porn site, but the website also wouldn't be fighting for the same type of adult entertainment audience as, say, 85 percent of the Internet. It also would serve a higher purpose as now more teenagers and adults worldwide depend on the Internet for sex education compared to traditional channels.
Regardless of what Clover Holdings decides, one thing is clear: Paying a reported $13 million is only a bargain if it actually does something innovative with the Sex.com domain. With most internet pornography revenue slumping, Sex.com is going to need a really interesting hook to bring a payoff.
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