They're everywhere and once a person knows the site, they will surely keep coming back. There are so many smaller sites and they're making money too. What are the legal issues pertain running such a site? If nothing, why aren't everyone making one?
Nothing is stopping you , other than finding a host that accepts pron sites, and it's not as easy as you think it is...people search hi and lo to get porn and music for free online. You still have to niche market, just like mainstream, and you have fewer places to do that with porn. To answer your other question, everyone doesn't do it because everyone doesn't want a porn site.
This kind of sites is surely interesting lucratively speaking if you find a good niche. Producing the material (like finding the models) can be an obstacle, but many people are really good at copying other's stuff. For the advertising, it is very limited since most of the ad networks forbid displaying their ads on adult sites. It is also hard to do link building. There is still a discomfort speaking of the adult domain in many countries or culture, so this is a relatively isolated business. Making one is easy, but promoting it is harder. May be the lack of interest of that business is a factor. There are tons of these websites and they are mostly similar. Almost everything has been done in that domain.
Most porn sites are affiliates, just like any other web site, with content producers running the affiliate schemes. Copying content in porn is the same penalties as copying content in mainstream...but the big difference is, porn people don't play. It's a very cut throat business, and content thieves are not dealt with in a friendly manner. Very few porn webmasters produce content. That would cost you thousands of dollars , not to mention all your legal would have to be 100%.