For .xxx domain, business is booming

ICM Registry has hauled in 'eight- or nine-digit sums'

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PALM BEACH GARDENS, Fla. -- Stuart Lawley has made millions in his short stint as an Internet porn impresario, but the mild-mannered Brit seems more buttoned-down businessman than Hugh Hefner-style high-roller.

Mr. Lawley runs ICM Registry, the Palm Beach Gardens-based owner of the newly launched dot-xxx domain. The content on dot-xxx is risque, but company headquarters is just plain boring. It's a 3,000-square-foot cubicle farm in an office building. The space is decorated in bland colors, with nary a stripper pole in sight.

"No naked women running around," said Mr. Lawley, 49. "I've never been arrested for anything, never been in trouble in my life. We're very sober people."

For Mr. Lawley, Internet porn is all business. And business is pretty good. Mr. Lawley said he brought in $25 million in revenue during the final three months of 2011, when dot-xxx went live.

ICM Registry has sold some 230,000 domain names. Mr. Lawley acknowledges that fully 80,000 were so-called defensive registrations bought by organizations such as retailer Target, the University of Kansas and Northwestern University. They purchased dot-xxx addresses to keep someone else from snapping up their names and posting dirty content.

Even after accounting for the brands that paid to protect their names from being sullied, that leaves a whole lot of porn providers.

"I was amazed by the number of fetishes or predilections people have," he said.

Mr. Lawley launched .xxx after a long battle with the federal government, and he faces opposition from anti-porn activists and from pornographers alike.

Mr. Lawley in 2003 began working to create the .xxx domain. He spent seven years and ran up a hefty legal bill fighting the Internet Corporation for Assigned Names and Numbers, or ICANN, which the U.S. government established in 1998 to run the Internet's address system.

"It took years and millions of dollars, and we won," he said.

Now that .xxx is open for business, Mr. Lawley faces detractors from two sides. Porn critics take issue with the very existence of the .xxx domain. Pat Trueman, a former federal prosecutor and president of the organization Morality in Media, said Mr. Lawley's business is illegal.

"Under federal law, distribution of hard-core pornography on the Internet is a criminal act," Mr. Trueman said. "You've got a business built on the premise that they can violate federal law. How long is that business model good for?"

Mr. Lawley countered that porn is protected by the First Amendment. While federal prosecutors aggressively pursue child pornography violations, they're not concerned about explicit material involving adults, he said.

In addition to the obvious opposition from anti-porn activists, Mr. Lawley has taken heat from some leading pornographers. Last year, the California-based owner of YouPorn.com sued ICM Registry, claiming "monopolistic conduct, price gouging and anti-competitive and unfair practices."

Mr. Lawley, who moved to Jupiter, Fla., a decade ago, had no particular interest in porn until a Halloween event at his son's preschool. Another father mentioned that ICANN was seeking bids for new domains. Porn seemed an obvious money-maker, Mr. Lawley said.

ICM Registry doesn't sell directly to purveyors of porn. Instead, it sells domain names through providers such as GoDaddy.com. The typical price for a .xxx domain name is $75, with ICM getting $62 and GoDaddy keeping the markup, Mr. Lawley says. More desirable addresses equal bigger paydays. Mr. Lawley sold gay.xxx for $500,000, while fetish.xxx fetched $300,000 and shemales.xxx $200,000.

Mr. Lawley calls .xxx "a clean space for dirty content." For instance, ICM verifies the identity of those who buy sites. Once the site is up and running, ICM runs regular security checks to make sure the sites aren't spewing out viruses and malware And ICM promises that .xxx sites show no images of children being abused.

Now that Mr. Lawley has the .xxx domain up and running, he has bigger plans. This week marks the launch of a dot-xxx search engine as part of a partnership with Google. The next step, he said, is an iTunes-like payment plan that will let porn viewers pay for content.

"I wouldn't like to throw out numbers, but we're talking about eight- or nine-digit sums," he said.

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