This article is from a recent New York Magazine. I didn't realize how much of the online porn business was concentrated in the Montreal area, at least for a while.
I've only copied the parts of the article relating to the history of online porn and the Montreal connection, but it's still really long.
This is part 1
The Geek-Kings of Smut
After once being the best thing that ever happened to porn, the Internet is now wreaking havoc: destroying some fortunes, making bigger ones, and serving as a stimulus plan, in more ways than one.
By Benjamin Wallace Published Jan 30, 2011
...For a decade or so, to the porn industry, the Internet looked like the best thing ever invented—a distribution chute liberating it from the trench-coat ghetto of brown paper wrappers and seedy adult bookstores, an E-Z Pass to a vast untapped bedroom audience. If it was equally apparent that the web would prove as destabilizing as it has for other media, the money was so good that the industry could ignore the warning signs. Now the reckoning has arrived.
The chief culprits in the eyes of the porn Establishment are the “tube sites,” YouTube-like repositories of content that is often free, and often pirated. “Tubes are going to destroy our industry,” says Sunny Leone, 29, an Indian-American knockout who is celebrating eight nominations this evening. “Fans don’t understand that if they don’t pay for porn, we can’t make a living. They’ll have to watch crazy European porn.”...
There you are, Porn Surfer, Googling your way to a little adult material—you know, a little plain-vanilla, middle-of-the-road grown-up content—when, wham, you’ve dropped acid and been astrally projected into a triple-X pachinko parlor. One minute you’re trawling for a simple NSFW divertissement, and the next you’re in free fall through this insane, cross-linking wilderness-of-mirrors chaos of pop-ups and pop-unders and portals and paysites. And, wait, why is someone named Jasmin talking to you in that browser window that just opened, as if you’d accidentally paid for a live cam show? Even after you figure out that she’s a canned come-on for a streaming site, you’re still befuddled. You click on an image, only to find yourself being shuttled from one site to another, unsure of what’s free and what’s not, what’s a destination and what’s merely a billboard for one, who’s an amateur and who’s a pro, who owns what and how it’s all connected. You start to nurse a deep suspicion that there’s more going on here than you can see—that there is some intricate, invisible web of revenue-sharing and traffic-trading and content-licensing at work. Which, of course, there is.
Until the invention of the tubes, online porn was relatively simple to watch and lucrative to sell. With very little money and a For Dummies–level understanding of HTML code, anyone could put up a web page featuring a list of text links to other porn websites. If a surfer clicked on one of the links, he would be directed to a paysite; the paysite would pay the referring site a tiny amount for the traffic, and kick back a more substantial amount if the surfer ended up subscribing to the site. Over time, link collections evolved to the more visual formats of “thumbnail-gallery pages” and “movie-gallery pages,” where instead of a list of text links, you’d see a mosaic of snapshot links or, say, eight-second movie-clip links. TGPs, as they were called, drew more traffic than link collections and “converted” better—that is, a higher percentage of surfers signed up for billed memberships. MGPs were more effective still. The paysites would supply these “affiliates” with the snapshots and clips for free, and the online porn universe came to consist of a relatively small number of paysites surrounded by many thousands of affiliates.
It was inevitable, once YouTube launched in 2005, that someone would start a porn equivalent. Sure enough, over two months in the summer of 2006, three different sites launched that would become major adult-only tubes: PornoTube, RedTube, and YouPorn. Like YouTube, the porn tubes were flooded with free content—some of it licensed for pennies from older companies that didn’t understand the web, much of it pirated from paid sites. The tubes had a new business model: They made most of their money by keeping surfers on their sites and selling banner ads, though they also put some content behind a paywall.
Porn surfers migrated en masse from the old TGPs and eight-second MGPs to free movies on tube sites that could run upwards of 30 minutes. Traffic to the affiliates and conversions to paysites both plummeted. The proliferation of cam sites (where you can video-chat with a live model), together with the waning popularity of DVDs, compounded the industry’s problems. Steven Hirsch, president of Vivid Entertainment—who five years ago was called “The Porn King” by Forbes—says his company’s online revenue projections are off 50 percent. Other companies report declines closer to 80 percent.
When the old porn companies complained that the tube sites were stealing their content, the tubes claimed, as YouTube did, that the “safe harbor” provision of the Digital Millennium Copyright Act absolved them of responsibility for “user-uploaded” content. Never mind that industry consensus was that the sites were doing the uploading themselves. (How else to explain tube sites full of content from day one?) The sites could simply deny it—or point to YouTube, which had launched using a similarly shady business model and was now owned by Google.
The furor over the tubes began to dominate discussions on GoFuckYourself.com (GFY), the main online industry forum, and finally someone took action. In December 2007, nine months after Viacom sued YouTube for copyright infringement, Vivid sued PornoTube. Around the same time, an anti-tubes diatribe was posted on GFY by Ouissam Youssef, a co-founder of Brazzers, one of the most successful new companies producing and branding online content. In a thread on piracy earlier that year, “Brazzer,” as Youssef called himself on GFY, declared that content thieves “will not steal it and get away with it, their days are counted!”