Yahoo has become the first top-tier Internet company to embrace the porn industry, opening an online store stocked with thousands of hardcore DVDs and video tapes.

The marriage between porn and technology is one of the few profitable online business models but no Internet giant has jumped into bed with the adult entertainment industry.

Because of Yahoo's dominant online presence, the company emerges as a behemoth in the online pornography business, experts say. An estimated 185 million people worldwide access Yahoo each month.

The push into porn is a departure for Yahoo, which has long cultivated a main-street reputation in its bid to become the Web portal for the world. Consumers have always been able to find racy material through the company's Web directory but Yahoo served as only a pointer - not a promoter - of such X-rated products.

Yahoo's decision to become porn's online middleman reflects the desperation of Internet companies to find new sources of revenue amid a slowing economy.

Earlier this week, Yahoo reported a first-quarter net loss of $11.5 million (€13 million), compared with a profit of $67.6 million in the same quarter last year. It said it would cut 12 per cent of its workforce and take a second-quarter restructuring charge of $40-$60 million.

Yahoo officials declined to discuss the erotic-video outlet, or to say why they are expanding its offerings. The "adult and erotica" store, connected to Yahoo's main shopping channel, was quietly expanded and relaunched in recent weeks as part of a company-wide effort to offset a sharp drop in advertising sales.

In a written statement issued late Tuesday, company officials said that "under stringent control, adult products have been available through Yahoo Shopping for more than two years".

Despite the potential cashflow, other leading online companies are squeamish at the thought of embracing porn.