Suffocating the UK Adult Internet Video Industry?Open Letter to the ...

Dear Sirs,

I?m writing both as Managing Director of Strictly Broadband Ltd., a notified ATVOD ODPS provider, and Chairman of AITA, the UK?s Adult Industry Trade Association.

It has recently become apparent that despite some efforts, the voice of our industry hasn?t, until recently, been heard by the ATVOD board. This has recently changed with the appointment of Chris Ratcliff of Portland TV to the board, which we welcome. This letter is intended to explain why our industry has apparently been reticent to implement ATVOD rules.

My own business has been operating since 2004, selling rentals of online streaming adult videos. I established the business in the UK, which at the time was quite unusual for an online adult business; in 2004, the online adult industry had little idea where we stood legally, and most companies were established offshore. My aim was to track and implement UK regulation as it evolved. Initially, we worried that we may be in breach of the Video Recordings Act (VRA) ? however, the BBFC and police came to the conclusion that the VRA didn?t apply to online adult businesses, and we found ourselves in a legal grey area.

The first attempt at regulation was by the BBFC Online scheme; Strictly Broadband joined and implemented the scheme at a cost to ourselves of around ?10,000. The scheme ultimately failed to gain official recognition. So the first real regulation we faced came when ATVOD was formed. As with the BBFC scheme, Strictly Broadband made early contact with ATVOD, and became an early service to notify.

During this same period, the global online adult industry has been through a huge recession and shake-out as a result of the sudden availability, from late-2007, of free streaming content via the so-called tube sites. It is estimated within the industry that a revenue decline of 80% to 90% has been experienced during the past four years. Rather than being a grass-roots movement, the tube sites are largely operated by a few big industry players, in particular Manwin, which is a Canadian company (but owns UK businesses). The end result is that, as the ATVOD regulations are being introduced, many of the original players have gone out of business and those that remain are relatively small businesses compared to a few years ago. Strictly Broadband has seen its revenue and staff levels fall by over 50% during this time.

As a business and an industry, we have consistently strived to operate within laws and regulations; however, the regulations now being imposed by ATVOD are so onerous that they are effectively impossible to implement. We have always age-verified (via payment systems) before people can view our video product. However, the requirement that we age-verify before even photographic sales imagery can be seen will simply drive most of our customers to sites outside ATVOD?s scope. The one company to fully implement these rules to date, Portland TV, has seen an 80% fall in new business, and a 28% fall in overall revenue, since they complied. As I?m sure the board will appreciate, few businesses can survive such a decline, especially in the current economic climate.

The ATVOD regulations seem to ignore a basic fact: the Internet is a global, borderless marketplace, and well over 99% of our competitors operate outside ATVOD?s scope. To my knowledge, none of the top 100 adult services viewed by UK consumers falls within ATVOD?s remit. Even among UK sites, none of the top three has bothered to notify. Furthermore, thousands of non-adult services, including Google and Twitter, freely display hardcore imagery without age verification. Therefore the ATVOD rules, particularly Rule 11, do not protect consumers in any way, but merely serve to punish those services that try to operate legally within the UK.

So far, I?m aware of one UK business that has closed down due to ATVOD?s rules, and a second that has relocated outside the UK. If ATVOD pushes ahead with enforcement of Rule 11, the effect will be to decimate the UK adult industry. My own business would not survive the implementation of Rule 11, and I?m currently in discussion with EU-based partner businesses to outsource the key business functions if necessary. Our aim, since 2004, has been to comply with UK regulation; ATVOD is currently making that aim impossible to achieve.

Even if the entire UK industry closes down, adult content from outside the UK will be as easily accessible as it was before ATVOD. The regulations not only fail to stop adult content being accessible by children, but actually remove the few ethical businesses that want to comply with UK laws and pay UK taxes. From an industry perspective, this seems counter-productive; surely the aim of any regulations should be to tilt the playing field towards compliant businesses, rather than towards those who escape regulation?

AITA is looking at the possibility of creating a campaign, similar to the Drink Aware brand run by the alcohol industry, that would help educate parents on how to filter adult content from their children?s Internet devices. We feel that this would be a better way forward to a regulated industry rather than punitive measures which would simply drive the UK industry offshore.

Sincerely,
Jerry Barnett

Chairman AITA
Managing Director, Strictly Broadband Ltd.

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