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The following profile appeared in the October 9th 2004 issue of The Economist ...

Face Value | Well Endowed

Phil Harvey sells sexual excitement to the rich, then helps the poor

philharveySTROLL down the dusty streets of Awasa, a town in southern Ethiopia, and you might find a billboard advertising condoms with the catchy slogan: “Value your life! Superior protection.” Were you driving along a highway in Toronto, Canada, you might have seen another poster, this one showing a middle-aged woman peering down into her husband's glowing boxer shorts with the cheery message: “Put a party in your pants!” The sexual pleasures of the rich may seem a far cry from the family-planning and AIDS-prevention problems of the African poor. But both the ads and the products they promote are intimately connected through Phil Harvey.

Mr Harvey is both one of the world's leading purveyors of “adult entertainment” and a big supplier of contraceptives to the developing world. His PHE group, which includes Adam & Eve, America's biggest mail-order and online retailer of sexual toys and pornographic films, is a market leader in an industry which some estimate to be worth more than $10 billion a year. Yet as president of DKT International, he also leads a non-profit group that specialises in distributing condoms, pills and other forms of birth control in some of the poorest parts of the world.

With his penchant for a tweed jacket and tortoiseshell glasses, Mr Harvey can look more like an academic than a sex magnate. Perhaps this is not surprising, given his firm's origins. In the late 1960s, he studied at the University of North Carolina with Tim Black, now head of Marie Stopes International, a reproductive-health agency. They both did masters degrees on non-medical ways of promoting family planning: in particular, they sold condoms to students through the post, even though marketing such “obscene” items by mail was illegal at the time. They decided to try similar techniques in the developing world and pioneered Population Services International (PSI), which is now the world's biggest organisation for so-called “social marketing”. This involves using commercial techniques to persuade people to do something that is good for them. Mr Harvey founded DKT in 1989 to work along similar lines—in this case providing contraceptives at knock-down prices, with the help of subsidies from governments and private foundations.

Adam & Eve, which grew out of Mr Harvey's mail-order condom business, sells some $70m-worth of films and goods a year—including such products as the Scorpion Double-Shaft Probe (don't ask) and the Pussy Enhancer. It has its own brand of sex toys and spends around $2.5m annually making some 75 pornographic movies, including notable hits such as “Rawhide” and “Stud Hunters: A Hard Man is Good to Find”. The firm sends its videos and books to licensed sex therapists for review and, says Mr Harvey, anything that smacks of coercion gets “zapped”.

The success of Adam & Eve helps Mr Harvey's philanthropy. He ploughs around $2m of his annual profits from the company into DKT. With a total budget of $31m, DKT distributed 348m condoms and 29m oral contraceptives in Africa, Asia and Latin America last year. DKT does this with a keen eye for branding and advertising, using any available channel, from pharmacies and kiosks to brothels and bars, to get products to people. Mr Harvey says that rather than donating contraceptives it is better to market and sell them—even if only for pennies. This brings lots of shopkeepers and others into the distribution network, and it also means customers are more likely to value—and therefore use properly—something they have paid for.

Few Adam & Eve customers realise that a proportion of their spending goes to promoting contraception in poor countries. The company once made the link in its marketing, but says it did not make any difference to sales. The philanthropic connection does motivate some employees, however. Indeed, for all the sex toys on desks and steamy posters on the wall, there is a strangely un-erotic atmosphere at the firm's headquarters, located beside an old-people's home in suburban North Carolina; even The Economist's offices seem more sexually charged.

Selling sex is becoming a tougher proposition and Adam & Eve has seen its sales flatten in the past three years. The business is also changing, along with buyers. A third of the company's 4m customers are now women, up from about a fifth five years ago. To tempt them, Adam & Eve has introduced home “Temptations Parties”—a bit like Tupperware nights, only with vibrators. It is also exploring the idea of franchising branded stores.

Liberty and the pursuit of happiness

The biggest challenge facing Mr Harvey's adult-entertainment business is, in part, of his own making: the emergence of new competitors. He is famously libertarian and has long fought against censorship. His first big battle came in the 1980s when the Department of Justice raided Adam & Eve and prosecuted the firm in several states for selling obscene material. Mr Harvey spent eight years both defending himself and suing the federal government for harassment and violation of free speech. In this way he helped to win the adult entertainment business more freedom, which has been good not only for him, but also for his competitors, although prosecutions in the industry go on.

Now another sort of battle looms. The public-health side of Mr Harvey's business has become more controversial because of the Bush administration's conservative views on sex and condoms. Last year Mr Harvey resigned from PSI's board after a flap broke out over his presence on a body that was in receipt of substantial government overseas-aid contracts. He laments that newly illiberal policies are “increasing contempt for America abroad”. And he has broadened the scope of his fight for free speech and individual choice. Another of his targets is America's war on drugs, a conflict he says represents a greater threat to civil liberty than the war on terror. Might a mail-order cannabis business be next on his list of ideas?



 
     
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