The SED took a Janus-faced approach towards erotica and various sexual materials. On one hand, SED propagandists and other cultural luminaries portrayed the West's pornography as an example of the larger depravity of capitalism that commodified this essential human experience and appealed to the basest common denominator. This line of attack became more salient as the FRG's economy eclipsed that of the GDR. The SED was desperate for any sort of high ground against its Bonn rival and attacking the West's pornography was a means to argue the GDR was a "better" Germany. Nonetheless, despite the official legislation against the production and sale pornography (§ 125), the GDR's state-run publishers did produce a number of materials that used sex and the nude form, often female, for mass consumption. The long and the short of it was that the SED applied the pornographic label very selectively and often to foreign-produced items.

This apparent hypocrisy was not surprising in hindsight. Western pornographic materials were not just items that sold skin. Magazines like Playboy also sold Western capitalist ideals of consumerism and luxury. One of the innovations Hefner's publication pioneered was that it marketed an upscale lifestyle to blue-collar workers and the nouveau middle class of the postwar generation. Although buying Playboy for the articles was something of a joke in the West, the articles and their advertisements did have some degree of cultural cachet within the Eastern bloc. The SED was acutely aware of the shortfalls within the planned economy with regards to the consumer economy despite its claims to the contrary, as seen in this collection of GDR commercials. Western pornography was a dangerous rival in this sense in that it used sex to underscore the failures of living socialism.

While the SED was reluctant to engage the West in a porn war, it did try to produce sexual materials of its own. One of the more prominent examples of this phenomenon was the publication Das Magazin. The SED was reluctant to release scarce print for this publication but it soon became clear that the public demand for the magazine meant cancelling it would risk further domestic discontent. Das Magazin was largely apolitical, a rarity in GDR magazines, and featured both risque cartoons- such as this 1970 one featuring a classroom of men learning how to unhook a bra- and several nude women like this 1980 example. Das Magazin was of a piece with other GDR sexual materials. The sex was on sale, but these materials often stressed that sex in the GDR was different than that featured in the West's porn. For one thing, the GDR's female nudes often were in natural lighting and seldom hid such unsightly things like body hair. The ideal here was that the socialist bodies were to be celebrated as was the idea of men and women celebrating their sexuality. This matched other discourses that stressed that the state's socialism would allow humans to meet their full potential, including sexual happiness.

GDR sexual materials though verged awfully close to Western examples of the genre despite these claims. Although the GDR's erotica did not have the race to explicitness that characterized Western porn in the 1970s (eg the "Pubic Wars" of Playboy vs Penthouse), its nudes were almost exclusively of women. Das Magazin mirrored the Playboy of the 1950s and 60s in that it mixed cheesecake with humor and cultural pretenses. The editorial staff maintained a sanctioned subscription to Playboy so that it could understand the secrets of its Western rival. The GDR's print houses also realized that erotica was a good seller both at home and abroad. The various state-owned publishing houses needed a steady seller to justify their other publications and risque materials increasingly filled this niche by the 1970s. The state also sold erotic nudes in bulk outside the Eastern bloc to gain much-needed hard currency.

One of the ways the SED dictatorship made an end-run around its pretenses regarding sex was that its media used skin to attack the West. One of the staples of GDR spy fiction featured a Stasi infiltrator playing at being James Bond. This included depicting the West's sexual depravity. This scene of the tv hit Das Unsichtbare Visier exemplified this trend as a scantily-clad debutante dances erotically with her friends to a jaunty tune. This approach was similar to how the SED tackled issues of youth hooliganism and the appeal of the West. Films like Berlin—Ecke Schönhauser acknowledged problems with delinquency, but placed blame for the misdeeds of German youth on the decadence and permissiveness of the capitalist West all the while using Western music and fashions as part of its appeal. Nor was this approach limited to instrumentalized propaganda. The comedy road film Und nächstes Jahr am Balaton featured Kareen Schröter as a Dutch hitchhiker who hooks up with the GDR male protagonist and spends a good deal of the film in the buff and shouting hippie platitudes. The climax of the film features a catfight between Schröter and the female lead after she catches her with her boyfriend.

The full-frontal nude scenes in Und nächstes Jahr am Balaton as well as the implied sexuality shows that there was a degree of convergence between the free market's media and the GDR's. State media could and did use breasts and sometimes genitals as a selling point. Although there was not much of an official hardcore pornography industry in the GDR, the nude female form was increasingly more visible in the media landscape of the GDR. § 125 may have covered lewd materials, but the state turned a blind eye to its own products when applying this law. The nudes the state sold were healthy expressions of socialist sexuality while state prosecutors and cultural gatekeepers attacked Western pornography as degenerate. The SCOTUS principle on obscenity- "I know it when I see it"- was applicable to the GDR. The SED was very selective when it came to applying its own principles to its state-run media.

Sources

Crowley, David, Susan Emily Reid, and Paulina Bren. Pleasures in Socialism: Leisure and Luxury in the Eastern Bloc. Evanston, Ill: Northwestern University Press, 2010.

McLellan, Josie. Love in the Time of Communism: Intimacy and Sexuality in the GDR. Cambridge: Cambridge University Press, 2011.

As a follow up, was there a big clash in how people acted towards taboos between the Germanies?

§ 125. Verbreitung pornografischer Schriften. Wer pornografische Schriften oder andere pornografische Aufzeichnungen, Abbildungen, Filme oder Darstellungen verbreitet oder sonst der Öffentlichkeit zugänglich macht, sie zu diesem Zwecke herstellt, einführt oder sich verschafft, wird mit öffentlichem Tadel, Geldstrafe, Verurteilung auf Bewährung oder mit Freiheitsstrafe bis zu zwei Jahren bestraft.

StGB 12. January 1968

That's a quote from the criminal law of east Germany. Please excuse my rough translation and abstraction. Distribution or making available to the public of pornographic texts, recordings, pictures, movies or depictions, or producing, importing or acquiring those for the motives, is to be punished by a warning, fines, probation or jail up to two years.

The west German criminal law regarding pornography (§ 184 StGB) is quite a lot more complicated and I don't feel confident to translate in full. Even fully understanding it is hard for me because I'm not used to the legalistic language used in the 70s.

My reading at this point of it is that it punishes with up to 1 year in prison and 1000 Deutsche Mark (currency) in fines people who advertise, publicly display, make publicly available, sell to people under the age of 16 any "lewd material" which includes but is not limited to audio and visual records, material that talks about contraceptives and STDs. From my reading ownership and buying pornographic material is only illegal in the context of making it publicly available but like I said, I'm not certain if I read the law correctly. The law in German and full can be found here https://lexetius.com/StGB/184,13

Over time and with multiple revisions laws in both Sates did and could have changed. I chose the 1. April 1970 revision of the West German StGB because it was the closed available to the date of the East German.

I can not comment on how these laws were enforced or what the case law was like.