I’ve blogged before about wanting to start or be involved in an Anti-Pornography Campaign.

I saw a funny commercial on TV the other day and wasn’t surprised at the end to see, when the product was revealed, that it was a beer ad. Beer companies almost always have entertaining commercials. Not surprising — they have huge war chests of cash to afford expensive ad agencies that can make creative commercials. Budweiser reported having $228M at the end of 2004. Why so much cash? Huge profit margins. Above-average profit margins. For 2004, Budweiser reported a 15% net profit margin on $14.9B in revenue. Compare that with the 2004 net profit margins of other profitable companies: GE (10.9%), IBM (8.8%), Dell (6.2%), JetBlue Airways (3.7%), Apple Computer (3.3%). I’m not sure if it would be fair to include Microsoft among the companies I compare (22.2% net profit margin for 2004) since it is a convicted monopolist.

But that’s exactly my point about the beer companies. You learn in economics classes that the only way to consistently earn above-average returns is to have an economic rent — e.g., a patent for a lucrative invention, ownership of natural resources, a monopoly position in the market, etc. Without the economic “rent”, no one can maintain above-average returns because competitors enter the market place and drive profit margins toward zero. It’s hard for the every-day corporation to be profitable. Budweiser, on the other hand, had similar net profit margins (14-15%) for 2003 and 2002 as well.

My guess is that if we had financial statements for pornography companies we’d see similarly high profit margins — probably even higher than beer. Alcohol is widely known to be an addictive substance, and the same understanding about the addictive properties of pornography is growing too. Therein lies the economic “rent” — alcohol and porn companies bank on selling addictive substances, thus “monopolizing” your morality. I wonder if antitrust law has any place in the legal fight against pornography on the grounds of pornography being a monopoly on morality.

richard miller