I don't know anything about Steve Holmes, so "no comment" on that. But I just stumbled upon this article, which doesn't help to make Germans look better. It's about the "Second Life" Online Videogame:

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‘Age Play’, in which players request sex with others who dress up as child avatars, has encouraged a growth in players posing as children in order to make money.

While in the United States "virtual" child pornography is not a crime, in Germany it is punishable by three months to five years in prison.

Some players choose to dress up as child figures, but with no sexual motivation, purchasing "skins" to make them look like minors, but that do not as a rule depict the private parts of the body. There are even adoption agencies that offer lonely "children" the chance to have a virtual family.

But the established Second Life practice of so-called "Age Play", in which players request sex with other players who dress up as child avatars, has encouraged a growth in players posing as children in order to make money.

Bestiality, or sex with animals, is becoming increasingly popular on the site, which now has over six million players and is growing by an average of 800,000 a month. Germans make up the largest single representation of any country, with 209,000 members.

Full Article
http://technology.guardian.co.uk/news/story/0,,2074962,00.html