FASTRACK/29inches/1st jc/mark2nd

BEN SULLIVAN Staff Reporter

At a time when other Internet start-ups are struggling to stay online, a Culver City firm founded by 28-year-old Danni Ashe is struggling just to meet customer demand.

As founder and president of Danni’s Hard Drive, Ashe regularly spends Sunday afternoons in the office going over the books, catching up on correspondence and helping scan photographs and posting them on the Internet.

These aren’t just any photographs.

Danni’s Hard Drive is a subscription-based adult entertainment service. Besides Ashe, the company’s four department heads are all women, as are the models they cash in on.

The pornography industry traditionally has been quick to pick up on new technology, initially leading the markets in commercial phone services such as 976 numbers, in videocasettes, and more recently, in CD ROMs.

“A huge part of the sales for newly developed media comes from adult material,” said Scott Smith, an analyst with Jupiter Communications. “The first question when a new technology is developed seems to be ‘How can we put something sleazy on this?'”

Danni’s Hard Drive is growing at about 16 percent a month, according to Ashe, with gross monthly revenue up from around $10,000 a month in 1995 to the current $140,000.

The company closed 1996 with just over $1 million in sales and subscriptions, Ashe reports.

“A lot of investments are being made (in Internet businesses),” observed Ivan Nikkhoo, a partner at Internet consulting firm Vertex Systems, “but few companies are doing this well.”

Adult entertainment on the Internet is a popular but limited commercial niche, with about a quarter of all people who use the Internet in a given month visiting an adult site, according to Smith. Internet surfers consistently hit news, sports and travel pages at a far higher rate, he said.

Where online porn stands out is in income.

“It’s kind of ironic, but people are afraid to buy a pair of socks over the Internet, but have no problem giving their credit card numbers to adult sites,” Smith said.

Though no formal numbers have been compiled, Smith estimates that online adult entertainment generates at least $1 billion in revenue annually, or as much as all other online commerce combined. “I think there are some brilliant case studies there in how to make money. They’re the pioneers of online business.”

Danni’s Hard Drive makes its money primarily through subscriptions and sales. The site features a collection of about 500 high-resolution photographs of a dozen erotic models, mostly friends of Ashe’s from her previous career as a dancer and centerfold. The pictures are divided into “fan clubs” dedicated to different models, and appear with biographies of the women on separate Web pages.

In addition to the photos, which more than 15,000 subscribers pay $9.95 a month to access, Danni’s sells related other products, including boxed sets of glossy prints and videotapes. The company takes a 50 percent cut on any items the models sell through their fan club pages, and keeps all profits from the firm’s own merchandise.

“The original plan was that it was going to be a big video catalogue,” Ashe said.

The 1-and-a-half-year-old company’s management is determined to keep up with the technology available on the Internet.

Though the firm’s bread and butter remains membership fees and sales revenue, it began working recently with San Diego-based Virtual Dreams to provide subscribers live video chat sessions with Danni’s models.

Charging $6-7 per-minute, the women will strip, dance and talk with customers from a Virtual Dreams studio via an Internet camera.

The idea of Danni’s came to Ashe two years ago after a brush with the law convinced her to get out of live entertainment. After being arrested in Florida for a table dance that crossed local decency regulations, Ashe said that her husband, a film buyer for Landmark Theatre Corp., one day showed her the company’s home page when something clicked.

“I decided that was it,” she said. “I just knew that was what I had to do.”

Ashe bought a book on hypertext markup language (HTML) programming and on a week-long holiday in the Caribbean taught herself the basics of the Internet.

Starting as a one-woman show, Ashe hired on a crew of four women some from adult entertainment, some not to help manage the site.

Jannine Thomas, who heads the company’s subscription department, was working as an assistant to a rabbi when a friend introduced her to Ashe last March.

“At the other job I was sitting in an office doing secretarial stuff all day,” Thomas said. “This job lets me use my education, my managerial skills, whereas the other job really wasn’t going to lead to anything.”

While the work is often criticized as exploitive of women, Ashe dismisses such opinions, arguing that women should have a chance to make money in a field long dominated by men.

“Women have to look out for themselves,” Ashe said.

Unfortunately for Danni’s Hard Drive, analysts expect the percentage of total use commanded by adult entertainment sites to fall off.

“As the novelty wears off, the popularity of these sites will decrease,” believes Lilly Canter, Microsoft Corp.’s director of business development for the Western United States. “A lot of people are rushing to these sites because it’s something new.”

Still, Ashe said, with an 81 percent re-subscription rate and 700-1,000 new members each month, she is more worried about finding good employees for her service than about being edged out of existence.

Lonely men “are always going to be looking for some sort of connection,” Ashe said. With women calling the shots on adult sites, at least the customers “are getting to know more about who we really are.”