Hustler, Paris Hilton Sex Site See .xxx Porn Ghetto

Stuart Lawley has Hustler magazine and the distributor of Paris Hilton’s sex tape up in arms.

The 47-year-old British Internet entrepreneur’s ICM Registry is roiling the $13 billion pornography industry after last week winning a preliminary nod for the .xxx domain from The Internet Corporation for Assigned Names and Numbers, ICANN, which approves Web addresses.

If his bid passes later this year, Lawley could sell Web addresses to adult sites for $60 each. Although not mandated, many Internet sex sites said they’d register with .xxx to prevent their brand from being stolen. Hustler and Vivid Entertainment LLC, the porn company that released sex tapes from Paris Hilton and reality TV stars Kendra Wilkinson and Kim Kardashian, say .xxx would corral the industry into an “online ghetto,” making it easier to censor.

“.xxx would basically be an avenue for authorities to try and push all adult websites into a certain segment and then get rid of .com,” Michael Klein, the president of Hustler, the brand behind websites like Barelylegal.com, said from his Los Angeles office.

An unlikely alliance has formed in opposition to Lawley. Adult content providers see lost revenue from software blocks, increased stigmatization and possible censorship, while conservative groups such as the Family Research Council argue .xxx legitimizes porn.

More Control

Lawley, who reckons his Jupiter, Florida-based ICM stands to earn $200 million a year from .xxx, says the domain gives parents more control and allows Internet users to filter out unwanted pornographic material.

“There’s a noisy little section of the adult industry that’s not happy about this, but the majority is,” he said.

With already more than 153,000 registration requests for the domain, Lawley said he’s planning a “PayPal for porn,” an online system across .xxx that could process $1 billion a year in transactions.

Kink.com, which shoots bondage films in a San Francisco armory, has begun registering .xxx versions of thousands of its Web addresses with ICM, said John Sander, the company’s vice president for marketing and business development.

Half of all online-video consumption is related to porn, said Ian Maude, a media analyst at Enders Analysis in London, citing figures from market researcher ComScore.

“It’s obviously incredibly popular on the Internet,” he said. “The question would be how to drive traffic to .xxx, as the porn sites don’t want to be in .xxx unless it’s comprehensive.”

Who Decides?

Should Lawley’s bid pass at an ICANN board meeting in December, the new domain would go into use from 2011. He expects to eventually log between 3 million and 5 million registrations and become the preferred domain for the industry.

Not everyone wants it to be.

“We need to be concerned with what will follow the implementation of this domain,” said Steven Hirsch, founder of Los Angeles-based Vivid Entertainment. “Will all adult .coms be mandated into the .xxx corral and if not, what makes some exempt but not all?”

The Free Speech Coalition, the adult industry’s trade association with more than 1,000 members, says .xxx could make the porn industry a target for “anti-adult industry extremists.”

“At a time when the adult entertainment industry is hard- hit by the recession and copyright infringement, there is no expendable income to invest in defensive registrations,” said Diane Duke, the group’s executive director.

‘Hoopla’

Marc Bell, the owner of Penthouse magazine and AdultFriendFinder.com, which claims to be the largest online sex community, isn’t convinced .xxx would translate into a loss of business.

“There’s a lot of hoopla right now, but at the end of the day it’s a matter of delivering content that people want,” he said. “Ebay.com or Amazon.com has something you want so you’d go to them no matter where they went.”

Lawley has spent $6 million over six years on .xxx legal fees and $3.5 million on other costs.

He first tried to get ICANN to recognize .xxx as a domain in 2004. His application was denied because he didn’t have enough support in the adult-entertainment industry, according to ICANN Chairman Peter Dengate Thrush.

Lawley said the proposal moved forward last week after an independent arbitrator ruled ICANN acted improperly in rejecting the proposal.

Otherwise uninvolved in the porn industry, Lawley is a mechanical engineer by training and was former chairman of Oneview.net Plc. The company, which he helped take public on London’s AIM market in 1999, was sold for $200 million in March 2000, he said. He’s now looking for his next big Internet win.

“This is bespoke for the adult entertainment business,” he said. “It’s a must-have.”

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.

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