Sex on the stock exchange

Eroticism is big business worldwide and only the prudish are missing out, writes DITA DE BONI.

Multi-coloured vibrators, sex on matching linen sets, stock market listings - the future of carnality is finance sector-oriented and feminine. So says Fiona Patten, chief operating officer of one of just two Australian sex businesses listed on that country's stock exchange.

Ms Patten helps to steer Sharon Austen Ltd and its main operation, which is sharonausten.com, an e-commerce-focused sex products and services portal. She was in New Zealand last week to share e-marketing tips with a curious and nervously titillated audience at the Direct Marketing Association's Marketing Today conference.

The conference reception for Ms Patten's speech, Selling Sex under the Covers, typified the mixed reception the immensely popular yet highly regulated sex industry generates in general.

Record numbers attended Ms Patten's slot, but visibly blanched at some of her bald statements, including "I think a partnership between Kleenex and sharonausten.com should be encouraged" and "we're moving into personalised services ... pick your actress, pick your couple, pick your implement."

It's no joke to Ms Patten, who says prudishness is keeping large companies - to their detriment - from forming partnerships with heavily patronised websites. Worldwide, sex is estimated to be a $US56 billion-dollar ($137 billion) industry, one of the few in which sites have survived the dotcom crash.

These technologies, including sophisticated pay-per-minute telephone and internet billing systems, have allowed the industry to reach an increasingly broad consumer base against a backdrop of bitter debate among conservatives, feminists and sex industry advocates.

It is the underground nature of the business which allows its more extreme and, as some might see it, distasteful elements to continue operating, advocates believe. Ms Patten says sex is a business just like any other, except, perhaps, that it is "interesting to everyone."

She says the reputable operators have pushed for the industry to be regulated like others in the hope of keeping "rogue" operators out and raising the sector's acceptance and profile.

It is the increased participation of women consumers of sex products that has aided the industry's quest for "respectability." Marketers of sex products such as Sharon Austen have been quick to seize on that market, rebilling the products as sex or marital aids and inserting tasteful advertising in mainstream women's magazines via beautifully produced catalogues.

"Our customers are not men in trenchcoats," says Ms Patten. A survey has shown, for example, that 75 per cent of buyers of adult videos say they will be watching them with their lovers.

Despite this, however, the adult industry in Australia is subject to regular floggings from authorities, and the sector incurs huge costs to sidestep regulations and service the local market which is, according to research, the most fervent group of adult website fans in the world.

The Sharon Austen business is no exception. It hosts its website out of the United States (it is illegal to host an adult site on Australian territory) and must send its mail-order videos from the ACT (Canberra) or the Northern Territory, the only two states allowed legally to deal in adult film.

Ms Patten, who lobbied Parliament to legalise prostitution in the ACT and to regulate the adult industry for 10 years before her present job, says the sector is constantly under threat.

"We are seeing greater and greater censorship on adult material which isn't in line with community standards. It's also forcing our customers onto the net in greater numbers."

Enter founder Austen, a former bordello-owner turned net enthusiast who realised early on that sophisticated selling of sex products, including videos and vibrators, over the web would reel in high-spending female consumers - a growing proportion of the market.

The company, which offers sex toys, videos, live video streaming (of sex acts), lingerie, voyeur cams and other paraphernalia, listed on the Australian Stock Exchange in the middle of last year, the float fully subscribed at $A7 million. It is also listed on the German exchange, the DAX.

Institutional investors who "eagerly read the prospectus from cover to cover" still shy away from the company, says Ms Patten. "It's what they perceive to be a morality issue." It also might be because of its historically low market capitalisation, at just under $A20 million.

The company has stalled recently, despite being majority-owned by German adult entertainment behemoth Beate Uhse, which provides its Australian partner with European videos and lingerie. The might of its German partnership has not stopped the company's share price flopping from A50c at listing to about 15c, and the company burning through cash at the rate of $500,000 a quarter.

But Sharon Austen's second wind is set to blow with a newly signed agreement with off-line adult video and telephone services provider Divolution Group, which turns the former loss-making business into one with a combined turnover of $A10 million.

Like other businesses, technology is the future. "Our next move will be different media platforms including cable and interactive television," says Ms Patten. "Obviously you can make more money selling the same video a thousand times ... than you can selling a vibrator." The company has started producing its own "erotic theatre."

Other side ventures have also proved popular, including tours of the adult industry. "The tours ended up being too popular. We'd take women on a tour of the local adult industry - to brothels, table-top dancing venues, warehouses full of adult videos and the like - and they just loved it because previously they'd only watch what their male partners chose."

"Ten years ago less than 20 per cent of [product] customers were females, now the figure is more like 40 per cent," she says. "They also account for around 50 per cent of all products brought online. The industry has had to change to accommodate women, so the product has become better because women are more demanding."

"Women still want explicitness but we want the sex in context. I've seen thousands of X-rated videos but I can tell you that I want to see the pillow cases match, and I'll get turned off if I'm getting annoyed by the lampshade - that kind of thing."

She says the products themselves have also changed. "Ten years ago vibrators were large and realistic, and mostly brought by men ... Now they're multicoloured, with pearls and whistles and that kind of thing because women are buying them.

"And as the product has changed, companies such as Sharon Austen have the ability to legitimise the sex industry as well. We're out there, we're a public company, and we're saying there's nothing wrong with sex, [or] watching it [or] buying it."

"You don't have to do it with the lights off."

* Next week: Selling to the rural community.