Here is a subject not many people talk about. Also looking at Internet, people do not believe there is any kind of regulation in Japan for making and distributing pornography in Japan.
What you see on Internet is quite different from what is legal in Japan. Any uncensored pornography you see on Internet (whether it is made in Japan or not) is illegal in Japan. Payboy magazines are illegal in Japan.
But there is no Internet censoring in Japan. You are not allowed to sell uncensored pornography in Japan, but you can see as much as you want on Internet.
There are many regulations like that in Japan. For instance, gambling is illegal in Japan, but look at all the Pachinko Parlors. Prostitution is illegal in Japan, but when you walk Shinjyuku Kabukicho at night, you will never guess that.
Back to talk about Internet. One of the biggest reason why high speed Internet became popular in Japan is the fact that you watch uncensored pornography. I guess SEX SELLS is true here as well.