"I don't think of myself as the king of sleaze," the Net entrepreneur asserted. "I'm a businessman. It's true that one of IEG's main products is adult material, but we're all a product of sexuality. There's nothing wrong with it."
Warshavsky claims that IEG grossed US$50 million in 1997, not bad for a 3-year-old business owned by a 25-year-old high-school dropout. It's not news that sex sells or that it sells well on the anonymous medium of the Net. But Warshavsky is one of the first to combine perennially popular T&A with business sense and an eye for controversy.
Notorious IEG capers like the Dr. Laura Schlessinger boudoir shots, the Pamela and Tommy Lee video, and the scandalous scam, Our First Time, have attracted millions of curious and horny surfers, and it seems they all have cash to spend.
"We kind of pride ourselves on our unique and controversial material," Warshavsky said. "Not just because it gets press, but it keeps our member base coming back for more and gets new people in the door."
The Doogie Howser of the adult industry got an early start building his reputation. Like many of the Net's adult content providers, Warshavsky got his start in phone sex. At 17, he girded his cojones, borrowed $7,000 against his credit card and founded J&S Communications, live and lascivious at 1-800-GET-SOME.
"I've always been unafraid to take risks," Warshavsky said. "The higher the risk, [the] higher the reward."
And the rewards rolled in. By 1995 his phone-sex business was earning
almost $60 million a year and employed thousands of phone actors. Warshavsky
was riding the phone-sex gravy train until the FCC put a Denver boot on the
wheels, restricting phone-sex payment methods.
The first phone-sex companies collected money by using phone numbers with
special prefixes (900 or 976) and charging through phone companies. When the
FCC outlawed that payment method, customers had to pay by credit card. Most
exposure-shy callers were loath to reveal their numbers. Determined not rest
on his laurels -- and his vastly enriched bank account -- Warshavsky decided
to take his business savvy online.
"It's a natural fit," Warshavsky said. "There is a huge demand for adult content online. The Internet is totally anonymous, it's totally interactive, totally impulse-oriented."
Warshavsky launched Candyland.com in January 1996, parlaying his phone-sex experience into fulfilling customers' fantasies online for a price.
Certain that sex would move online, he sank millions into high-end servers, T3 connections, streaming videos, live chats, and other innovations. Unlike most non-adult start-ups, Warshavsky and his competitors had enough capital to invest in the technology that would assure a steady stream of future spenders.
"The adult business has always driven technology," Warshavsky said. "Not only on the Web, but look at what the adult business did to, say, VCRs and videocassettes. Last year, I went to buy a DVD player, and I asked the sales guy how many movie titles were available for the player. He said 13. Then I called up my friend at [adult-video distributor] Vivid Video, and he had 40 adult titles!"
IEG's tech-savvy, video-on-demand sites like ClubLove are the company's bread and butter.
Customers who want to watch models soaping up in the Two-Girl Shower or
writhing in the Dungeon pay $49.95 for a 30-minute peek, which adds up to a
heck of a lot of long green, particularly when you add in the sales of
pay-per-view adult movies, membership fees, and sex-toy revenues.
IEG's much-publicized Web firsts like the Schlessinger pictures and the Lee
video certainly haven't hurt the company's revenue stream, nor have
not-for-the-squeamish sites like
OnLine Surgery and
Genderchange.com, which will soon show its Web audience a male-to-female
medical procedure for a $10 fee.
"We should all hope to be so successful," sighed Brad Newman, webmaster of adult site GirlCrazy. "Ethics, schmethics, the guy's sitting on a mountain of cash."
Steve Allen, webmaster of adult search engine Etopia, is more blunt about the well-known sex industry CEO.
"Seth is crazy," Allen said. "Warshavsky's sites get so much press, but it's dangerous. You could argue that it's a great way to get publicity, but who wants publicity which lands you in a jail cell? The obscenity laws are so vague that if you start doing things which skirt the law, you're the Bismarck waiting for a missile. Sooner or later there'll be a DA who wants to play dragon slayer and take Warshavsky on."
That scenario seems more and more likely with each passing Warshavsky venture, particularly the barely legal online dispensing of Viagra through IEG Medical.
Warshavsky pooh-poohs such concerns. "Our content is definitely compliant with any legislation. People come to us because we offer unique, quality material and the controversy we generate helps bring more members to our sites."
"In the end," Warshavsky said, "I'm just a businessman. A successful businessman."