To see the guts of how ratings systems work, check out "This Film is Not Yet Rated", which details the inner workings of the MPAA ratings board. Rating a film NC-17 will kill it for the most part (won't be screened, sold in stores), and the decisions are arbitrary. AO is exactly that. And the argument that "The industry has to police itself or the gov't will step in" is bogus, because aside from child pornography, the US Supreme Court has consistently upheld the 1st Amendment protections of free speech for film. The film industry usese the banner of "self-regulation" to squeeze independent film producers from promoting films on a large scale, and protects the watered down cater-to-the-vocal-minority Hollywood fims.
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