Existing copyright policy is based largely on the utilitarian theory of incentivizing creative works. This Article looks at content production incentives in the online adult entertainment industry. A recent trend of industry-specific studies tries to better understand the relationship between intellectual property (IP) and creation incentives in practice. This Article makes a contribution to the literature by analyzing a major entertainment content industry where copyright protection has been considerably weakened in recent years. Because copyright infringement is widespread and prohibitively difficult to prevent, producers have been effectively unable to rely on the economic benefits that copyright is intended to provide.

Qualitative interviews with industry specialists and content producers support the hypothesis that copyright enforcement is not cost effective. As a result, many producers have developed alternative strategies to recoup their investment costs. Similar to the findings of other scholarly work on low-IP industries, this research finds a shift toward the production of experience goods. It also finds that some incentives to produce traditional content remain. The sustainability of providing convenience and experience goods while continuing content production relies partially on general, but also on industry-specific factors, such as consumer privacy preferences, consumption habits, low production costs, and high demand. While not all of these attributes translate to other industries, determining such factors and their limits brings us toward a better understanding of innovation mechanisms.