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ME talked to adult specialists Julia Dimambro and Mike Falco about the sector's challenges.

The app store revolution, regulation, North America… the mobile adult business has a lot to grapple with. We canvassed myiPlayground.com's Mike Falco and Cherry Media's Julia Dimambro for the inside 'skinny'.

The US porn industry is worth $12bn, but the US and Canadian operators still don’t permit adult content on their networks. Will this change?

Mike Falco: Eventually, as long as content is monitored and age-verified. My guess is that we’ll have to wait till 2011. It’ll be like pay-per view porn on cable and satellite TV. As competition grew, those companies were forced to meet the high demand for porn, and eventually it became a “normal” aspect of TV.

Also, the operators have no choice. They are helpless to control the consumer’s urge to access the mobile web and therefore mobile porn. Our site, myiPlayground.com, is formatted for the mobile web with a directory of hundreds of quality mobile porn sites that work on various devices.

Julia Dimambro: At a personal guess, I get the impression they probably won’t ever allow hardcore content on their networks. American culture is just too expansive and varied. It would be like all European countries allowing it, which hasn’t happened in over eight years, despite many advances in attitude and technology. US carriers’ brand values have to stretch across a range of cultures and public opinion, they prefer to keep the brand safe. Remember Janet Jackson? A total scandal there because one nipple popped out!

That said, I firmly believe that sexy glamour will eventually permeate the decks. Popular culture is full of the stuff. Nothing that we currently distribute at ‘bikini level’ comes anywhere near many of today’s pop-videos in terms of sexual content.

It all comes down to positioning. Compare Vodafone UK and Telus. Vodafone built a world-class age verification system and started with softcore content. They created a public image of a responsible, pro-active operator. Telus also built a good system, but they kept it as quiet as possible, as if they were hoping that no-one would notice. When they did, there was a huge public outcry.

Apple still doesn’t allow adult apps. Can you see a change of policy?

Mike Falco: I believe that open source apps are the future. Since Apple will not accept adult apps, many will create and sell them for Android open source phones. If so, I believe Apple will adjust its strategy and the floodgates will open.  I think that Apple should have a specific section that requires proof of age and sub-contract it to another organisation so Apple brand is not directly associated with porn apps.

Julia Dimambro: There’s not much doing with apps as yet. Not much point as we are focused on immediate ROI.

How can adult providers circumvent restrictions by building mobile web sites?

Mike Falco: A user can already find mobile porn with great ease. That said, I do not believe that all adult providers want to circumvent restrictions. At this point, the mobile web has the same restrictions as the “regular” web. Our duty as porn webmasters is to stay away from illegal content, and keep porn away from minors. It doesn’t benefit anyone in our industry to have minors access this content

What’s the best way to charge for adult?

Mike Falco: Micro payments, credit card and on-bill are all available depending on the geographical location. In North America, credit cards are widely used, but on-bill payment is generally not accepted. The European operators are more lenient towards on-bill and micro payments. One such European market is Spain.

Julia Dimambro: What I find interesting is how billing affects consumption. About 80 per cent of mobile adult sales in the UK are on-bill or via PSMS, but barely 20 per cent of them are on subscription, because of the old ringtone backlash. In the US, it’s all subscription, because it doesn’t make sense to keep entering your credit card details for single downloads.

Surely micro-payments are tailor made for mobile porn…

Julia Dimambro: They are a perfect match because they are non-committal and allow for impulse purchasing. Signing up to a monthly subscription can make customers feel like they are officially ‘porn consumers’, which is something many shy away from. Micro-payments let them ‘dip their toe in’ and purchase on impulse. As arousal is normally impulsive, it’s perfect for mobile.

How are major adult brands performing on mobile? Is it easier and more profitable to sell niche content?

Julia Dimambro: I’ve been saying it for years: consumers simply DO NOT BUY BRANDS. They buy what turns them on. This is where the money is! Nearly every operator is asking for categories and themes. After six years, not one has seen the commercial return they were promised from brands. Fortunately, some have recognised this.

Mike Falco: We promote hundreds of sites from a variety of sites. 2009 has been a record year and a lot of major adult brands regard mobile as the new star in their portfolios. But demand for niche product will grow. Nothing sells like original, high quality content geared towards a consumer’s specific tastes or fetish.

Downloadable web porn is under threat from free UGC sites, which means that live chat/webcam stuff is the best hope for making money. Is this coming to mobile too?

Mike Falco: This is a great point. UGC has definitely changed the game, and will force many porn companies to innovate or die. This is not the web of 1996. My belief is that the future of mobile porn is in sites with original niche content, UGC, live chat/webcam and dating.    

Julia Dimambro: It’s true that free porn has come to the web. Will the same happen on mobile? I think compelling ‘erotic environments’ will maintain a paid-for commercial model with a base of loyal customers. These non-immersive ‘shop-front’ download stores won’t because there will be so much content out there for free.

So what kind of content should mobile adult companies focus on?

Julia Dimambro: Mobile erotic entertainment should ...