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IT'S A $12 BILLION INDUSTRY, BUT THE PROFITS GO ELSEWHERE.

Byline: BETH BARRETT

Staff Writer

The San Fernando Valley's adult-entertainment industry -- long considered the epicenter of the business -- rakes in about $1 billion annually, with more than 200 local companies jump-starting a national market worth about $12 billion a year.

In the past 15 years, the industry's local growth has nearly quadrupled, with annual revenues now equal to the Valley's restaurant, fast-food and bar businesses combined.

But while local pornography firms employ about 6,000 people, only a fraction of the industry's massive profits actually trickle back to the Valley. And loopholes in city business taxes minimize the amount firms have to pay into Los Angeles' coffers, raising questions about the industry's contributions -- economic and otherwise -- to the region.

"Don't turn up your nose," said Jack Kyser, chief economist of the Los Angeles Economic Development Corp.

"This is creating jobs for people, a revenue stream, and though you may not personally approve, there's a huge market out there."

Housed in an inscrutable constellation of warehouses in Chatsworth and Van Nuys, most adult-entertainment studios, distributors and manufacturing companies operate out of the sight and consciousness of Valley residents.

The industry is dominated by small studios, each with several dozen employees, that crank out scores of movies and videos a year. And in contrast to the multimillion-dollar budgets needed for Hollywood blockbusters, most of the X-rated movies cost just $20,000 or less to make.

"Very few people make over $150,000 in this industry," said David James, one of three partners at Vivid Entertainment Group, the Valley's largest pornography studio, with about $100 million in sales in 2005.

In fact, the average production worker in the porn industry makes about $61,000 a year, state records show. Top female stars can earn upward of $200,000 annually for their performances, appearances and endorsements.

Porn capital

The lore of the Valley's porn industry has long commanded national attention. Media outlets from CBS News to Forbes have put the nation's porn capital in the Valley.

Last year, "The Colbert Report" even did a spoofing interview with Rep. Brad Sherman, D-Sherman Oaks, about the Valley's lurid reputation.

But a review of industry and state financial records show Valley porn production companies brought in just $750 million last year. While that's more than the $600 million total generated by the industry's biggest players -- Playboy, Hustler, Frontier and Private -- it's far less than most people have believed.

That's because local firms realized just 40 percent of the nation's $2.4 billion in annual X-rated video sales and rentals.

In addition, Valley manufacturers of sex novelties and toys -- also an export business -- earned about $250 million last year.

But while research group TopTenREVIEWS puts U.S. revenues from Internet porn at $2.84 billion last year, little of that is earned by Valley companies.

The pay-per-view and subscription porn business last year brought in $1.7 billion -- but most of that was realized by cable and satellite companies, adult channels and hotels.

The Valley also gets just a small slice of the $2 billion adult nightclub business, with about 42 of the nation's estimated 3,000 clubs in the city of Los Angeles.

And while Chatsworth-based industry trade publication AVN estimates it had $17 million in revenues, most of the $1 billion retail adult-magazine business also is outside the Valley.

Ultimately, the Valley's biggest financial porn winners appear to be a handful of owners, including James, who also owns Peach DVD. He said he personally made about $4.5 million last year.

David Feldman, owner of Pipedream Products, employs 110 workers in a 125,000-square-foot warehouse in Chatsworth. The company has annual sales of $25 million to $50 million, but Feldman said more than 90 percent of his 4,000-item product line is shipped outside California and most of the manufacturing is done in Asia.

Still, Feldman -- who has been in the porn business since 1989 -- has seen his company repeatedly named by the Los Angeles Business Journal as one of L.A.'s fastest-growing private businesses. And it's also one that has survived periodic economic downturns, unlike the aerospace and housing industries.

"Sex has been around from Day One," he said. "Airplanes haven't been."

Sales, rentals down

Much of the Valley's adult-entertainment industry is part of an assembly line-like operation that released 7,000 X-rated movies and videos last year, up from about 1,200 in the early '90s.

And it is that workman-like aspect of the industry that has some concerned about its future.

Sales and rentals of X-rated DVDs dipped about 15 percent last year, and the Internet also is chipping away at the market.

"The industry is in transition," said Steven Hirsch, a co-chairman of Vivid, which is shifting its focus to higher-budget films and platforms like the Web and adult channels.

Joone, founder and director of Digital Playground in Van Nuys, compared the industry's growing pains to those of Hollywood in the 1950s as TV's popularity cut into theater revenues.

"The Internet, like TV, is free, and in order for you to create something to get customers to buy your product you have to have really good product, coupled with marketing," Joone said.

To compete, Digital Playground released big-budget "Pirates" on DVD in 2005. The company said the DVD cost more than $1 million to make and in addition to sex scenes includes computer-generated graphics and special effects.

Digital Playground said it has sold more than 500,000 copies for a minimum $25 wholesale.

Hirsch said the growing market pressure is making it harder for small production companies to compete.

"You take all of those things into account and that's why you see these little guys getting squeezed," he said. "And it's going to get worse. ... I think there's a real struggle going on out there (in the Valley). There's less pieces being sold at a lower price, and I think you're going to see that continue."

Scrambling to reinvent itself, the industry is exploring various platforms to try to tap new markets: from cable and pay-per-view in hotels to high-definition and the overseas cell- phone market.

"As the DVD business goes down, it's going to evolve into the VOD (video on demand) business," Hirsch said.

Joone said investors are taking note, and that for the first time during the recent Las Vegas adult-entertainment show he was approached by financiers quietly talking lucrative deals.

"I look at the porn business where Vegas and gambling was in the '70s," Joone said. "Vegas was still mob-owned and they were making the transition between these small groups of people to being corporate-owned. I feel the same exact thing is going to happen with adult."

Paul Fishbein, AVN's president, said the trends illustrate the transformation of adult entertainment.

"Porno was a destination. ... Now with DVDs, cable, satellite, it's at your fingertips," he said. "You don't have to go to a sleazy (adult) bookstore."

Fishbein said the changes also are affecting the tone of the Valley's industry.

"Competitors were friendlier in 1991," he said. "All the owners could attend a meeting and agree to try to agree. (Today) there's trepidation."

Daniel Blake, director of the San Fernando Valley Economic Research Center, said the biggest vulnerability with porn is that -- like the Valley's aerospace and auto manufacturing industries -- it's fundamentally an export business that's taken root -- for now -- in the Valley.

"Is it a solid industry? Well, aerospace turned out not to be a solid industry," Blake said. "Porn is largely export. If some other countries start to specialize in it, it's possible they could leave the area. The anchor is the entertainment industry."

beth.barrett(at)dailynews.com

(818) 713-3731

The following are listed by the 2007 Adult Video News directory as companies with a connection to the adult entertainment business:

1. 1st Strike, 6752 Eton Ave., manufacturer

2. 3 Vision Entertainment, 3166 E. Palmdale Blvd., manufacturer

3. 3rd Degree Films, 9035 Independence Ave., manufacturer

4. 818 Associates Entertainment Group, 5154 Sepulveda Blvd., retail

5. Access Instructional Media, 16311 Ventura Blvd., manufacturer

6. Acid Rain, 8735 Shirley Ave., distributor

7. Adam & Eve Pictures, 9445 DeSoto Ave., manufacturer

8. Addictive Entertainment, 18034 Ventura Blvd., manufacturer

9. Adonis Pictures, 14141 Covello St., manufacturer

10. Adult Source Media, 9909 Topanga Canyon Blvd., distributor

11. Al Borda Video, 7731 Hayvenhurst Ave., manufacturer

12. Alante International Sales, 9145 Owensmouth Ave., distributor

13. Alexander Institute, 15030 Ventura Blvd., manufacturer

14. All U Can Eat Inc., 9531 Cozycroft Ave., distributor

15. Amateur District, 20339 Nordhoff St., manufacturer

16. American Xcess, 9537 Cozycroft Ave., manufacturer

17. Anabolic Adult Toys, 9223 Owensmouth Ave., manufacturer

18. Anabolic Video Productions, 9223 Owensmouth Ave., manufacturer

19. Anarchy Films, 20850 Dearborn St., distributor

20. Anastasia Pierce Productions Inc., P.O. Box 57933, manufacturer

21. Angel Pictures International, 9909 Topanga Canyon Road, distributor

22. Antigua Pictures, 21110 Nordhoff St., distributor

23. Anton Productions, P.O. Box 7140, manufacturer

24. APD, 9539 Cozycroft Ave., distributor

25. Aquarius Broadcasting, 10500 Northridge Hill Drive, distributor

26. Arena Entertainment, 6649 Odessa Ave., distributor

27. Astral Ocean Cinema, 12416 San Fernando Road, distributor

28. Astrux Entertainment, 23679 Calabasas Road, manufacturer

29. Avalon Entertainment, 9033 Owensmouth Ave., manufacturer

30. Avica Entertainment, 7044 Sophia Ave., manufacturer

31. AVN, 9414 Eton Ave., manufacturer

32. Aware Distributors, 707 Arroyo Ave., distributor

33. B. Cumming Co., 9990 Glenoaks Blvd., manufacturer

34. Bacchus Releasing, 9718 Glenoaks Blvd., manufacturer

35. Bad Seed, 9445 DeSoto Ave., manufacturer

36. BBL, 23679 Calabasas Road, manufacturer

37. Best DVD Store, 9800 Topanga Canyon Blvd., distributor

38. Bizarre Video, 8975 Fullbright Ave., distributor

39. Black Ice, 9035 Independence Ave., manufacturer

40. Black Widow Productions, 7071 1/2 Vineland Ave., manufacturer

41. Blue Pictures, 7230 Coldwater Canyon Ave., manufacturer

42. Caballero Video, 7230 Coldwater Canyon Ave., manufacturer

43. Cal Vista International, 6649 Odessa Ave., distributor

44. Celestial Productions-Lethal Hardcore, 21612 Marilla St., manufacturer

45. Centaur Films, 20652 Bahama St., manufacturer

46. Channel 60 Video, 19354 Londelius St., manufacturer

47. Cherry Boxxx Pictures, 9400 Eton Ave., manufacturer

48. Cinderella Distributors, 8021 Remmet Ave., manufacturer

49. Classic Erotica, 20950 Lassen St., manufacturer

50. Climax 9 Productions, P.O. Box 5673, manufacturer

51. Coastline Licensing, 7345 Topanga Canyon Blvd., distributor

52. Colossal Entertainment, 5362 Cahuenga Blvd., manufacturer

53. Content Junky, 9009 Independence Ave., distributor

54. Corruption Video, 10535 Pine Hill Drive, manufacturer

55. Critical X, 7745 Alabama Ave., manufacturer

56. Crush Entertainment Inc., 21363 Lassen St., distributor

57. Damaged Pictures, 20652 Bahama St., manufacturer

58. Dane Productions, 9547 Cozycroft Ave., distributor

59. Darkside Entertainment, 14141 Covello St., manufacturer

60. Defiance Films Inc., 5146 Douglas Fir Road, manufacturer

61. Devil's Film, 21541 Blythe St., manufacturer

62. Diabolic Video Production, 9223 Owensmouth Ave., manufacturer

63. Diamante Films, 13095 San Fernando Road, distributor

64. Digital Media Fantasy Corp., 1889 Alpha Road, manufacturer

65. Digital Sin, 21345 Lassen St., manufacturer

66. DNA Pictures Inc., 8967 Fullbright Ave., manufacturer

67. Doc Johnson, 11933 Vose St., manufacturer

68. Ducati Productions, P.O. Box 95, manufacturer

69. Earthly Body, 9420 Lurline Ave., manufacturer

70. East Coast News West, 7731 Hayvenhurst Ave., distributor

71. Elegant Angel, 8015 Deering Ave., manufacturer

72. Empire Video Distributors, 20740 Marilla St., distributor

73. Evasive Angles Entertainment, 21212 Vanowen St., distributor

74. Evil Angel Productions, 14141 Covello St., distributor

75. EVN Erotic Video Network, 20436 Corisco St., manufacturer

76. Evolution Erotica, 8967 Fullbright Ave., manufacturer

77. Exquisite Multimedia, 20821 Dearborn Ave., manufacturer

78. Extreme 2.0 Inc., 8967 Fullbright Ave., manufacturer

79. Falcon Foto, 14300 Little Tujunga Canyon Road, manufacturer

80. Fallen Angel, 9424 Eton Ave., manufacturer

81. Fantasy Lingerie, 10260 Norris Ave., manufacturer

82. Fever Films, 7230 Coldwater Canyon Ave., manufacturer

83. Fifth Element, 20850 Dearborn St., distributor

84. Filmco Productions, 9718 Glenoaks Blvd., manufacturer

85. Flashpoint Productions, 15825 Devonshire St., manufacturer

86. Forbidden Novelties, 9960 Glenoaks Blvd., manufacturer

87. FunFactory USA, 3607 W. Pacific Ave., manufacturer

88. FYA Independent, 9045 Eton Ave., manufacturer

89. Gentlemen's Video, 21638 Lassen St., manufacturer

90. Ghetto Life Productions, 7800 Airport Business Parkway, manufacturer

91. Girlfriends Distribution Inc., 21208 Vanowen St., distributor

92. Harmony Concepts, 5432 Cahuenga Blvd., manufacturer

93. Heatwave Entertainment, 6031 Kester Ave., manufacturer

94. Hi Profile Productions, 14667 Titus St., distributor

95. Holiday Products, 20950 Lassen St., distributor

96. Hollywood Chrome, 20540 Superior St., manufacturer

97. Honey's Place, 675 S. Glenwood Pl., distributor

98. Hott Products Unlimited, 20700 Dearborn St., manufacturer

99. Hush Hush Entertainment, 14560 Calvert St., manufacturer

100. Hustler Content, 26500 W. Agoura Road, manufacturer

101. I Everyday Products, 21040 Nordhoff St., manufacturer

102. Ignite Video Productions, 9045 Eton Ave., manufacturer

103. Insanity Pictures, 7246 Eton Ave., manufacturer

104. Instinctively Yours, P.O. Box 8299, distributor

105. JB Video, 9140 Owensmouth Ave., manufacturer

106. Jet Set Productions, 7073 Vineland Ave., manufacturer

107. JM Productions, 9140 Owensmouth Ave., manufacturer

108. Juicy Entertainment, 20821 Dearborn Ave., manufacturer

109. Juicy Video Distributors, 20821 Dearborn Ave., distributor

110. Jules Jordan Video, 14141 Covello St., manufacturer

111. K-Beech Video, 9400 Eton Ave., distributor

112. Latin Media, 21040 Nordhoff Ave., distributor

113. LBO Entertainment, 21601 Devonshire St., manufacturer

114. Le'WOOD Productions, 4924 Balboa Blvd., manufacturer

115. Legend Video, 9145 Owensmouth Ave., manufacturer

116. Leisure Time Entertainment, 7050 Valjean Ave., manufacturer

117. Lennox Films, 21032 Devonshire St., manufacturer

118. Leoram, 9161 Deering Ave., distributor

119. Line One Laboratories Inc., 21230 Lassen St., manufacturer

120. Lurid Entertainment, 4004 W. Burbank Blvd., manufacturer

121. M&M Sales, 9640 Owensmouth Ave., distributor

122. Mach 2 Entertainment, 6649 Odessa Ave., distributor

123. Madness Pictures, 14141Covello St., manufacturer

124. Marina Pacific Distributors, 7077 Vineland Ave., distributor

125. Matrix Content, 5146 Douglas Fir Road, manufacturer

126. Maverick Entertainment, 7230 Coldwater Canyon Road, manufacturer

127. Mayhem, 9155 Deering Ave., manufacturer

128. Mercenary Pictures, 21018 Osborn St., manufacturer

129. Metro Interactive, 9327 Deering Ave., distributor

130. Misty Rain Entertainment/Pure Filth Productions, 3940 Laurel Canyon Blvd., manufacturer

131. Moonlight Entertainment, 8747 Shirley Ave., manufacturer

132. My Adult Marketplace, 21817 Plummer St., distributor

133. National Video Supply, 21345 Lassen St., distributor

134. Nectar Entertainment, 6752 Eton Ave., manufacturer

135. New Beginnings, 12445 Gladstone Ave., distributor

136. New Sensations, 21345 Lassen St., manufacturer

137. Next Phase Distribution, 9320 Mason Ave., distributor

138. Nicholas-Steele Productions, 4339 Vantage Ave., manufacturer

139. NJ Films, 9728 Variel Ave., manufacturer

140. OceanFire, 335 N. Brand Blvd., manufacturer

141. P.J.D. Distributors, 9020 Eton Ave., distributor

142. Pacific Marketing, 21135 Erwin St., manufacturer

143. Pacific Sun Entertainment, 19425 Londelius St., manufacturer

144. Pamela Peaks Production, 11054 Ventura Blvd., manufacturer

145. Party-Time Video, 10140 Lubao Ave., manufacturer

146. Passion Pictures Studios, 6860 Canby Ave., manufacturer

147. Peach DVD, 15115 Califa St., manufacturer

148. Phallix, 7900 Clybourn Ave., distributor

149. Phase One Graphics, 9045 Eton Ave., manufacturer

150. Phase Ten, 20436 Corisco St., manufacturer

151. Pink Kitty Video, 7334 Topanga Canyon Blvd., manufacturer

152. Pipedream Products, 21350 Lassen St., manufacturer

153. Pistol Whip Media, 20432 Corisco St., manufacturer

154. Platinum X Pictures, 20339 Nordhoff St., distributor

155. Playtime Productions, 9521 Wilbur Ave., manufacturer

156. Pleasure Productions, 7731 Hayvenhurst Ave., manufacturer

157. Plum, 7731 Hayvenhurst Ave., manufacturer

158. Powerhouse Unlimited, 21418 Parthenia St., manufacturer

159. Powersville Inc., 9730 Variel Ave., manufacturer

160. Private USA, 19800 Nordhoff Pl., manufacturer

161. Pulse Distribution, 9640 Owensmouth Ave., manufacturer

162. Pure Play Media, 19800 Nordhoff Pl., manufacturer

163. Red Devil Entertainment, 13029-A Victory Blvd., manufacturer

164. Red Light District, 20339 Nordhoff St., manufacturer

165. RLD Distribution, 20339 Nordhoff St., manufacturer

166. Robert Hill Releasing, 21598 Marilla St., manufacturer

167. Rockman Entertainment, 10451 Gerald Ave., manufacturer

168. Roman Video, 19360 Rinaldi St., manufacturer

169. Shane's World Studios, 9744 Variel Ave., manufacturer

170. Shooting Star, 9145 Owensmouth Ave., manufacturer

171. Sin City Entertainment, 9155 Deering Ave., manufacturer

172. Smash Pictures, 9619 Canoga Ave., manufacturer

173. Spice Studios, 9321 Eton Ave., manufacturer

174. Standard Digital, 18034 Ventura Blvd., manufacturer

175. Sticky Video, 9145 Owensmouth Ave., manufacturer

176. Sunshine Films, 7800 Airport Business Parkway, manufacturer

177. Super Babe, 21110 Nordhoff St., manufacturer

178. SW Services, 9145 Owensmouth Ave., manufacturer

179. Swank Digital Inc., 26500 W. Agoura Road, manufacturer

180. Taylor Wane Entertainment, P.O. Box 572229, distributor

181. Teravision Inc., 13273 Ventura Blvd., manufacturer

182. The Agency, 7044 Sophia Ave., manufacturer

183. The Buff and Brassy Co., 11054 Ventura Blvd., manufacturer

184. The Candy Shop, 20339 Nordhoff St., manufacturer

185. TightFit Productions, 7641 Burnet St., manufacturer

186. Timmy Crass Production, 17328 Ventura Blvd., manufacturer

187. Top Cat International, 21230 Lassen St., manufacturer

188. Topco Sales, P.O. Box 2488, manufacturer

189. Totally Tasteless Video, 9718 Glenoaks Blvd., manufacturer

190. Trigg Laboratories, 28650 Braxton Ave., manufacturer

191. Union Jaxxx, 9421 Winnetka Ave., distributor

192. Universal Distributor, 11961 Sherman Road, distributor

193. Up in Flames, 21110 Nordhoff St., manufacturer

194. Urban Attractions, 9400 Eton Ave., distributor

195. Valley Pro Video, 19354 Londelius St., distributor

196. Vengeance XXX, 21345 Lassen St., manufacturer

197. Venus Girls Productions, 4872 Topanga Canyon Blvd., manufacturer

198. Vertigo, 7230 Coldwater Canyon Road, manufacturer

199. Vico Distributors, 7044 Sophia Ave., distributor

200. VIP Services, 9741 Canoga Ave., distributor

201. Vivid Entertainment Group, 9640 Owensmouth Ave., manufacturer

202. VivThomas.com Distribution-SMG Video Inc., P.O. Box 57339, distributor

203. Vouyer Media, 9040 Eton Ave., manufacturer

204. WantedList, 14141 Covello St., distributor

205. West Coast Productions, 20830 Dearborn St., distributor

206. Wet International, 28650 Braxton Ave., manufacturer

207. White Tiger Releasing, 21598 Marilla St., distributor

208. Wicked Pictures, 9040 Eton Ave., manufacturer

209. Wildlife Video Productions, 21418 Parthenia St., distributor

210. WorldWideContent.com, 1650 Flower St., distributor

211. Xposed Entertainment, 15280 Arminta St., manufacturer

212. Xtreme Productions, 4063 Radford Ave., manufacturer

213. Zero Tolerance Entertainment, 9035 Independent Ave., manufacturer

CAPTION(S):

2 photos, box, map

Photo:

(1 -- color) Vivid Entertainment, with its headquarters on Cahuenga Boulevard, is probably the most visible porn company in the Valley.

John McCoy/Staff Photographer

(2 -- color) David Feldman is chief executive officer of Pipedream Products, one of the country's largest adult entertainment novelty/sex toys manufacturers. Pipedream operates out of a 125,000- square-foot warehouse in Chatsworth.

John Lazar/Staff Photographer

Box/Map:

San Fernando Valley's pornography industry (see text)

SOURCE: Better Business Bureau, Daily News research

Gregg Miller/Staff Artist
COPYRIGHT 2007 Daily News
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2007, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Daily News (Los Angeles, CA)
Date:Jun 5, 2007
Words:3000
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