Pornographers and the religious right usually don't agree on much, but not surprisingly they are both expecting the Bush Administration to crackdown on the American porn industry. Surprisingly, if that comes to pass, it will could make the current tech sector slump even worse.

Getting solid data is tough since pornographers are paranoid and avoid the mainstream media while the few industry research firms like Forrester and DataMonitor who once monitored the adult online sector have stopped. "Adult operations don’t buy our reports and the rest of the tech sector would prefer to remain in denial," said a Forrester analyst.

Certainly there are some solid user statistics: Both Netratings and MediaMetrix show that about 25% of surfers in the U.S. visit adult sites. Wordtracker says that sex is consistently the most-frequently searched word on mainstream search engines. Datamonitor’s last research report in 1999 indicated that adult sites took in 69% of all premium-content revenues on the Web in 2001. And while analysts a year or two ago predicted that porn’s importance would diminish as non-adult premium content sites grew, the opposite has happened as premium content sites have left some of the deepest craters across the Nasdaq landscape.

Anecdotally, these facts support contentions of sex’s importance to technology companies but assigning a monetary value to that sector is more challenging. One way to approach the problem is from a bandwidth and server hosting perspective since it’s relatively easy to determine where a server is being hosted. In addition, server farms are full of Cisco routers, Sun servers, switches, massive disk storage arrays such as those sold by EMC. Hosting facilities are also where you find connections to the web infrastructure including bandwidth connections to the Web itself via MCI, Qwest, UUNet and other providers of fiber optic cable and all the technology to make them communicate.

Forrester Research puts 2000 revenues for hosting companies at $3.5 billion, 2001 at $6 billion and 2003 revenues at $14.7 billion. The undisputed leader in the market is Exodus which has almost $900 million in revenues and a 15% share of the market. Other big players include AboveNet, UUNet, Level 3, and Verio (now a part of Japanese telecom giant, NTT).

Like great nerve ganglia, these 50,000 square-foot data centers are the core of the Internet. They are also the epicenter of the Web’s sex industry. Indeed, data provided by PCData Online (http://www.pcdataonline.com) and derived from the Web-based services of NetCraft (http://www.netcraft.com) show that 13 of the top 20 adult web sites are hosted by a handful of large, well-known public companies whose SEC filings never mention their adult clients: AboveNet, Digex (part of MCI), Exodus, Level3, UUNet (part of MCI), and Verio (owned by Japanese telecom giant, NTT).

Click here for the entire Top 20 List along with hosts, operating system and webserver data.

Level3, which owns and runs one of the largest networks of fiber optic cables and owns a 33% stake in telecom powerhouse RCN, hosts Top 20 sites sleazydream.com and lightningfree.com.

Finally, NTT subsidiary Verio, provides hosting for pink4free.com and join4free.com. A look at other sites hosted by Verio shows one of the reasons that hosting companies in general would rather not talk about their adult customers. At Verio, the longest running server in late February 2001, was adult site freegallery.com followed by valleyvehicles.com. Longest running sites 3-5 were, in order: free-xxx-pics-4u.com, f__k1.com and topf__ksites.com. A look farther down the list shows the irony of Web hosting. Number 18 on Verio’s list of longest running servers is strongfaithbiblechurch.com and number 33 is the site for the Catholic Archdiocese of Atlanta, mostblessedsacrament.com. Not far away on the list are bestiality sites, horsesexpics.nu, beastfever.com and sexanimals.nu

"For most of us, our adult hosting division is something we try to leverage as much as possible, while drawing as little attention to it as possible," said Nash Hall, a pseudonym used by an executive with one of the country’s major web hosting firms. "To stay alive in our business [web hosting] we have to do business in that industry."

I contacted all the non-adult hosting companies that provide data center services to the Top 20 adult sites as well as companies in the backbone business such as MCI and Qwest. Not surprisingly, none was willing to speak on the record; only a few were willing to speak off the record and most did not return my phone calls and e-mail requests for comment and information.

"Two years ago, our money came from e-commerce companies, ASPs [Application Service Providers], ISPs, and portals", said Hall. "Today companies in those sectors are struggling and mostly unable to pay their bills. Probably 20% of our mainstream customers have gone out of business over the last six months, while only 2-3% of our adult customers have gone out of business." Other hosting and backbone sources confirmed Nash’s statistics with some saying that non-adult customer loss was between 10 and 25% including those officially still on the books, but not paying their bills.

What's more adult sites are also the most profitable. "An average mainstream customer at our company spends $5,000 per month," said Hall. "An average adult customer spends around $20,000 per month."

"Remember, if we’re not doing well," said the Exodus source, "then we’re not buying switches and routers, racks, Cat-5 [referring to Category 5 cable, miles upon miles of which are used in server farms), load balancers not to mention all of the real estate and construction costs that go into building a bomb-proof hosting facility."

But just how important are adult operations? The financial value of adult businesses to non-adult hosting companies is most credibly derived by calculating the amount paid for bandwidth. While hosting companies turn around and have to pay their own wholesale bandwidth costs to an MCI, Qwest or MFN, bandwidth is an important source of gross revenues.

Bandwidth revenues are significant because, while there are trillions of HTML web pages in the Web universe, most are non-adult text pages with small graphics. On the other hand, even relatively small porn images are rarely less than 100K and most are substantially larger.

"I’d say that about 65% of the data transferred through the data center I work in is porn," said a network engineer with Exodus. Other estimates of how much of the Web’s total bandwidth that porn consumes ranges as high as 80% but none put it lower than 40%.

"I do not know what the exact number is, [for adult content’s bandwidth percentage] but it is very high," said Muayyad Al-Chalabi, an analyst with telecom consulting firm RHK (http://www.rhk.com).

Using those estimates along with the total amount of Internet traffic and its cost can yield one financial measure of porn's importance to Exodus, Cisco, Qwest and others.

Consider:

• According to RHK, Internet bandwidth is about 42,000 Terabytes per month. (A Terabyte is 1,000 Gigabytes).
• Andrew Odlyzko, Head of the Mathematics and Cryptography Research Department at AT&T Labs says that Web traffic comprises about 80% of the bytes that are transmitted.
• According to Richard Elliott, founder and Executive Vice President of Band-X, (http://www.band-x.com) a major bandwidth trading exchange, the wholesale cost of "transit" -- the transfer of files, ranges from $4 to $14 per Gigabyte but that is a wholesale price which means that retail charegs will be much higher.