San Diego Notebooks and pens in hand, the students file into a nondescript meeting room at a Mission Valley hotel. They include retirees, business managers, college-age youths, middle-age men, and tall, thin blondes who look like models. When the room fills, someone brings in more chairs.
Most people are willing to talk about why they are there. They say they want to make money. Few are willing to identify themselves. "You've got to be kidding," one man says. "My family doesn't know about this. My friends don't know about this. This is taboo." He is among the 45 people attending one of the Learning Annex's most popular classes in San Diego: How to Make Money in the Adult-Entertainment Business on the Net.
"These classes are consistently well attended," said Rick Dilliott, operations manager of the Learning Annex in San Diego, which has offered the business course since 1997. "It draws between 20 and 50 people each session. For a class to run every single month, those numbers are pretty good."
With dreams of supplementing their income, becoming self-employed, or starting their own business, some San Diego residents flock to the class as though it were the next get-rich-quick scheme. But posting pornographic photographs on the Internet requires money, time, attention, and lots of work, according to Jeff and Catherine Miller, the husband-and-wife team who teach the class each month in San Diego.
"A few years ago, it wasn't uncommon to earn $100,000 or $200,000 a month. Now that's rare," Jeff Miller said. "Today, it's not uncommon to earn $5000 or $10,000 a month quickly, but it takes a substantial investment." The reduced numbers perk up students' ears nonetheless -- creating a captive audience for the nuts-and-bolts presentation about domain names, Web hosts, Internet service providers, and data transfer.
As Miller differentiates between free adult websites and membership sites, explains the various sources of advertising income, and answers questions about what is legal, he weaves in some personal testimonial. How Miller, a former Merrill Lynch stockbroker, and his wife, a former management trainee at Wells Fargo Bank, became full-time pornography vendors in Temecula is as entertaining as some of their websites, which display photos of naked women.
Four years ago Jeff Miller, 38, operated a bulletin-board system on his home computer as a hobby. The eight telephone lines into his house enabled eight people to access the board simultaneously, and Miller charged membership fees to cover the phone bill. "A lot of people said they would join if there were adult photos on the bulletin board," and that got Miller into the moonlighting of X-rated photographs. "I bought images from a local photographer and scanned them in."
When the Internet became more affordable and accessible to average people in the spring of 1996 -- making tens of thousands of private bulletin-board systems obsolete -- Miller procured the domain name of "Web virgins" to sell his photos to more people. The bank he lined up to process credit-card purchases sought an estimate on volume. Miller -- thinking he might earn some extra pocket money, albeit temporarily -- gave an optimistic projection of 5000 transactions a month. The "Web virgins" site hit that number the first week.
By April 1997, Miller had quit Merrill Lynch to devote full-time to Internet pornography. Catherine still had doubts. But, being a good sport and playing the dutiful girlfriend, she helped nurture the business, then called KNB Enterprises Inc., now called SunUp Media Group Inc. Employing Catherine as a photographer proved advantageous, Jeff Miller said, because she works well with shy 18-year-olds and women who are weary and wary of male photographers who flirt with models. By hiring amateurs, the company reduces expenses while attempting to make its photographs stand out from those of other websites.
"When Jeff started with this, I said, 'I don't like this idea,'" recalled Catherine, 27. In addition, her training as a loan officer had influenced her to analyze start-up ventures pessimistically. "When the money started rolling in, I changed my mind. But it wasn't just money. As I met the girls, I realized that it wasn't about women being demeaned. The women who did this knew what they were doing. They wanted to do this. They wanted money. This is how they support themselves, their children." An honors graduate in economics from UCLA, Catherine abandoned her management-training program at Wells Fargo in July 1997.
SunUp Media Group now boasts more than $1 million in revenue and employs eight people, including a few photographers in Australia and Canada. Pornography on the Internet constitutes as many as 120,000 websites and may generate as much as $1.8 billion a year in revenue, according to SexTracker, a Seattle-based Internet company specializing in the adult industry. Estimates of the online sex business are likely to be incomplete, though. "The problem is the full-fledged businesses may not identify themselves as adult. It's almost impossible to get accurate statistics," Jeff Miller said. "The majority of adult sites are second incomes, at-home businesses, part-time jobs, and they may not report all their income. A lot of adult websites don't make money, but they don't lose money either."
While the sale of X-rated videos, photographs, sex toys, live video feeds, website memberships, and advertising accounts for a tiny portion of electronic commerce, Miller said, that portion is probably the most profitable. SunUp Media Group's profit margin is about 65 percent, he said, and the company has diversified to accommodate the so-called non-adult industry. SunUp also designs Web pages, hosts websites, and offers consultation to conventional businesses.
To answer basic questions of their San Diego students, the Millers draw on their own experience. "How do you find the talent? The models?" one man asked, almost in desperation. "Come on. San Diego is the stripper capital of the world," Jeff Miller responded. "Just advertise in the newspaper." Keeping overhead low is a common theme in the couple's replies. When another man asked about finding photographers, Jeff Miller advised the student to become his own photographer -- noting that lighting is the most critical factor. When someone else inquired about studios, Catherine explained how their home often serves as the studio. Changing the background is easy, she said, by using different rooms throughout the house and an abundance of sheets and bedspreads.