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Phil Harvey Delivers Keynote Address at FSC Meeting

Adam & Eve founder optimistic about Obama administration

Phil Harvey Delivers Keynote Address at FSC Meeting

WOODLAND HILLS, Calif. — The Free Speech Coalition held its annual membership meeting at the Woodland Hills Marriott this afternoon, in conjunction with the Xbiz Conference 2009, with Adam & Eve founder Phil Harvey as its keynote speaker.

Harvey spoke on a wide range of subjects - the health of the industry, the Obama administration's Justice Department, the future of DVD sales - with some thoughts on sex in general thrown in for good measure.

Below are some of Harvey's statements from this afternoon's talk:

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On the health of the industry: "As far as I can tell, over a period of some 35 years, we're recession-proof. There may be other reasons our businesses are facing difficulties, but the economy does not seem to be among them.... Last year and the first few weeks of this year, our sales, while they're not booming and they're not growing, don't appear to have been impacted by the downturn in the economy at all, so that I think we should all be very grateful to be in a recession-proof business and probably to the extent our businesses are in trouble or facing trouble or seem to be facing trouble, we should be looking to other causes than the economy because I think home entertainment with sexual materials, home entertainment with toys, etc. appear to be one of those below-cost pleasures - that is, pleasures and satisfactions that people can afford during difficult times and pleasures that people may particularly want and need during difficult times. Whatever the reason, it looks to me like we're recession-proof."

On the future of DVDs: "Our experience with DVD sales is probably much like everyone else's, but I would point out that the sales of DVDs are not going down as fast as you would assume from the scuttlebutt. Especially in the mainstream media there's been discussion of DVD sales and X-rated DVD sales as falling off a cliff and that has not been our experience. From '06 to '08, a two-year period, our DVD sales in units went down by 7 percent, and in dollars, by 10 percent. That's not good, and we'd like to see growing sales in that category as well as all others, but a drop of 5 percent per year is not so precipitous that we need to talk about being entirely out of the DVD business anytime soon. In addition, there's an interesting survey that has recently been reported on, home entertainment generally, not just our targeted market, which suggests that as far as home entertainment is concerned, where DVDs are still 97 percent of movies and related home entertainment, we can expect Blu-ray to overtake DVDs in 2014 and VOD to overtake them both in 2017. That feels about right to me. Every time there is a new technology - look what happened when the DVD came along to replace videocassettes: There's a boost, and we have Blu-ray coming along now; we're going to get another boost from that, and I have no doubt our industry will take full advantage of the Blu-ray technology and promote additional advances in that technology. So the prediction here, and my sense is that this is about right, is, we've got five, six, seven, eight years of both DVD and Blu-ray sales; these folks think Blu-Ray will be very vulnerable, and that, I don't have a sense of. But it certainly will be important, but the hard disks that have to be shipped through the mail will be slipping out of business in eight or nine years, and that may be so, but that gives us time to respond and react and we will."

On the Obama Justice Department: "Obviously, all of us are optimistic, and I think correctly so, about the change in administrations. There are a couple of points that I would make as we look forward to a lessening focus by the federal government on the obscenity issue. The first point is that I fully expect to see a few more - perhaps more than a few - federal obscenity prosecutions coming out over the next year or two simply because those cases are already in transit; they're already ongoing, and while Eric Holder's Justice Department under Obama may very well not initiate new adult obscenity prosecutions, and indeed, I don't think they will, stopping something that's already in train and in which DOJ lawyers have a stake may be politically awkward for them, so I think we should not get discouraged if we see a few more federal indictments over the coming months. The second point is that the content still matters. All of the federal obscenity indictments, at least in the Bush years, have been for pretty rough material."

On the question of "obscenity" in general: "The fact is that the Max Hardcore material, the Extreme Associates material, is rough stuff, and the feds will continue to go after that kind of material partly because of the definition of prurience, which involves unnatural sexual interests and activities, and that's part of the law, and partly because it's simply easier for them to win in front of juries with material that juries find just horrendously distasteful. The Stagliano indictments have me worried more than the others ... because they're not that type. The Stagliano material is not as vanilla as most of Adam & Eve's but there's a lot of squirting and gargling and other unique activities but it's all upbeat; there's no coercion and no violence, so that's worrisome. I think they may have made a mistake to charge that kind of material in Washington D.C. and it's important for all of us for many years to come to hope that he wins, because if he does, that will draw the line between the rough stuff that the feds have succeeded on and the consensual stuff on which we hope they will not."

On David Ogden and other DOJ appointees
: "Mark Kernes and others have written about the sort of ambivalence surrounding Eric Holder himself, but I am particularly heartened by the appointment of David Ogden and two other attorneys, both of them from Jenner & Block, Tom Perrelli and Don Verrilli. These are people who would not have been appointed to very high levels in the Justice Department by a president or an attorney general who really wanted to go after adult material... I can tell you on good authority that David and these two attorneys from Jenner & Block are solid supporters of free speech and the First Amendment. They are good soldiers and if they are told make an obscenity prosecution, they will, but they will not do it with any enthusiasm, in my opinion. So I think those appointments by themselves are a very good sign."

In answer to a question on the effects of tube sites and piracy on DVD sales: "Certainly, the reason for the gradual erosion of our DVD sales is the same as everybody else's. Yes, it's free content and pirated content and that's tough to compete with. As for the demographics, i don't know. I can tell you that our online customers buy fewer DVDs than our mail-order customers, and also a much higher percentage of our online customers are women; about 20% of our mail-order customers are women; about 35 percent of our online customers are women, which surprised me the first time I saw it."






Related Content:

Adam & Eve Pictures
Phil Harvey
Mark Kernes

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