From The Kink Machine: The Hidden Business of Pleasure

Narrator

This is an iHeart podcast. Guaranteed Human.

Stacey Vanek Smith

Hi, I'm Stacey Vanek Smith. You might know me from public radio's Planet Money and Marketplace, and I'm here to tell you about a new show I'm working on at Bloomberg Businessweek.

Max Chavkin

Yeah, it's called Everybody's Business. I'm Max Chavkin, a longtime reporter with Bloomberg Businessweek and more importantly, Stacey's co host.

Stacey Vanek Smith

Each week we will talk to some of the smartest people we know to try and understand what is happening in the world of business and and what it means for you.

Max Chavkin

We'll explain Trump's trade war, the AI bubble, Elon Musk's whole thing, and lots of other stuff.

Stacey Vanek Smith

Listen every week wherever you get your podcasts.

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Max Chavkin

Pushkin.

Alex Barker

Hey, listeners. I'm Alex Barker, a journalist with the Financial Times. A few years ago, my fellow reporter Patricia Nielsen and I spent six months looking at how money flows in the porn industry. We gathered our findings in a new audiobook, the Kink the Hidden Business of Adult Entertainment. And today I'm dropping into your feed to share a preview. Patricia and I quickly learned that while performers are required to literally bear it all, even information about the people and businesses who run this industry are kept undercover like a state secret. We started to find a power structure that includes billionaires, tech geniuses, and the most powerful finance companies in the world. It's a story about control, influence, and an industry with staggering cultural reach. If you want to hear more, find the Kink Machine, the Hidden Business of Adult Entertainment at Pushkin fm or wherever you get your audiobooks. Introduction.

Narrator

How did it feel to you to be taken over by a company that no one knew anything about?

Kelly Holland

Well, the deeper I got into it, the more concerned I became about just the general level of secrecy around the company. The money has to move, sometimes from a personal account, sometimes from a business account. That sounded a bit sketchy to me. If you play that fast and loose in that environment, I have to assume that you're playing that fast and loose in every environment.

Narrator

That environment she's talking about, it's Pornography. Kelly Holland would know. She's been a fixture of the porn industry since the 90s. She even ran one of its most famous brands, Penthouse. That is, until she lost it to a mystery investor. And for the industry at large, does it matter that you have these conglomerates that are buying loads of the industry and we don't really know who owns these companies?

Kelly Holland

I don't think it's healthy. I think it's very problematic. It's healthy for somebody's bottom line and it's healthy for shareholders, but I don't think it's healthy for clients, consumers and the general climate. You know, you can make a choice in business to be friendly competitors, which is the healthiest way to go and the most profitable way to go. Or you can be enemies.

Narrator

I'm Patricia Nelson and I'm a reporter for the Financial Times. I write about business. Some days it's a fashion chain, on others it's tobacco or cannabis startup. But recently my job has mainly involved porn. I started writing about the industry about three years ago, but I have to admit, this last year, it's become an obsession. Business papers don't usually write about the porn industry, even though it basically owns a big corner of the Internet. That in itself made me curious. Why wouldn't we write about porn just like we do with any other legal industry? And I think it's because no one really likes to talk about porn. We're embarrassed to, Even though most of us watched it at some point, it's taboo. And so I started where any business reporter would. This is just an industry with companies, right? I can normally figure out who the earnest are, how much money they make, how they're regulated. But porn, it turned out that porn was world apart. The whole industry depends on performers to literally bear it all. But basic information about the businesses who run the industry are kept like a state secret. I kept finding names that weren't names and companies that weren't companies. It often felt like I was wandering around a maze. You know, that strange sense of never knowing where you're heading or how anything's connected. Turns that lead to unexpected places. Like those murky transactions that Kelly Holland talked about. What were they for? What were they hiding? Who or what is behind the business of porn? And you know what? The Financial Times, we call it the ft. They encouraged me to keep going, to report this out. And my boss, he got sucked in too.

Alex Barker

That's me, Alex Barker. I manage Patricia's team of business reporters. But my main job is writing about the media industry. The Murdochs Netflix, that kind of thing. When Patricia asked to look into porn, I knew it wasn't exactly the FT's cup of tea, but it was different and intriguing and only career threatening if we really botched it up. So I said, sure, see what you can find. And bit by bit, this story of the power behind porn drew me in too. It started with a routine email from Patricia, a little update on her reporting with a bombshell buried halfway down. She said, I think I found the secret owner of the world's biggest porn company. And she had. But it was just the first turn in that maze. Once we started following the leads, we soon realized we weren't just tracking one man or one company, but power. And that's when I really got hooked. Because this industry has outsized influence, truly enormous over our culture, over the way my kids learn about sex, over almost 8% of all Internet traffic.

Narrator

So as journalists, we decided to give the subject the time it deserves. We'd report on the business of porn in the kind of way the FT would report on any other industry. We wanted to work out who made online porn what it is today, understand who the real decision makers are, what's driving their choices. Basically, to work out who rules porn.

Alex Barker

We spent months roving around. We interviewed bankers, porn stars, bankers who became porn stars, even a New York billionaire who helped change the industry with one text message.

Narrator

And after all that, we found some answers. A way out of the great maze of Hornland to a place we definitely didn't expect to end up.

Alex Barker

This is the Kink Machine, the Hidden Business of Adult Entertainment, an audiobook about power and finance from Pushkin Industries and the Financial Times. Chapter one, Porn meets the Internet. Act One story. A story.

Narrator

We started by setting up a chat with one of the smartest people in porn.

Stoya

I'm a career pornographer. I'm an artist. What's completely normal and an average Tuesday to me is completely fascinating to like the whole rest of the world. Rest of the world.

Alex Barker

This is Jessica. You might know her from her stage name, Steuer. We wanted to talk to Steuer because she's been there for all the big changes that we're interested in. Steuer's won the equivalent of an adult Oscar. She's been a headline star and a bit of an alternative porn icon. She's written a book, run literary book clubs, and her columns have appeared in the New York Times and Slate. Her fans all over the world had bought thousands of sex toys molded on her vagina. This was my first proper interview with a porn star. I wasn't exactly in my comfort zone, so I started with a softball question just to warm things up. Can you tell me a bit about, you know, where you grew up and school, family?

Stoya

No. I am here as a porn star, so we don't talk about my life before I turned 18. I think it's inappropriate.

Alex Barker

That's absolutely fine. I didn't realize that, so I wouldn't have asked if I had no worries.

Stoya

But there are some strange people in the world who will fetishize those details and then message me about it. And it makes me feel gross. So I just have a black eye before I turned 18.

Alex Barker

Absolutely.

Narrator

Stoya's not afraid to speak her mind or step on toes, whether they belong to porn kingpin or a news reporter. At this stage, what we really wanted to speak to Stoya about were her early years in the industry, a time when online video streaming changed the porn industry forever.

Stoya

I started out. First I was go go dancing. Then I was posing for alternative nude sites. And then I signed a contract to be a performer in hardcore video with a studio called Digital Playgr. Hi, I'm Stoya. So now we're gonna very quietly go to a hotel and have sex on camera, which sounds like shooting a porn, which is not anything I would ever, ever do.

Max Chavkin

This is vacation video travel.

Alex Barker

Now, back then, in 2007, this was a big thing. Hardcore studios like Digital Playground shoot graphic sex. But much like the old Hollywood studio system, they had contract stars. The performers were literally paid not to work for anybody else. The fact this happened at all was a sign of the times. The Internet was bringing porn into millions of homes, but it was mainly images or grainy video, so consumers still wanted the studio stuff. The online business coexisted with the old industry. Porn DVDs were selling by the truckload. Studios were producing lots of features and still largely calling the shots. Everyone was busy and working hard, but Steuer's work that took place in her physical body.

Stoya

I did a lot of acting where the pages were being pushed under the door hot off the printer as I was going through the enema process to be prepared to do my actual sex scene. When you consider the working conditions for the cast and crew, I'm actually quite impressed by what we managed to do.

Narrator

Stoya even starred in one of the most expensive studio porn movies ever made. Pirates 2 Stagnetti's Revenge. It took weeks to shoot on a specially made pirate ship decked out with cannons, a crow's nest, and some suspiciously comfy furniture in the galley. There were dozens of cast and crew, and it reportedly cost millions of dollars.

Max Chavkin

It's not the name that brings a man infamy. It's his infamous deeds that bring infamy to his name.

Kelly Holland

Yes.

Alex Barker

Action.

Narrator

Much wisdom. Now, let's have some woman then, right? Mistoia hit the height of her career. All of a sudden, everything changed. It was around 2009, and the Internet finally took the business model for porn studios and smashed it to bits. There would be no more pirate ship blockbusters for a simple reason. People were no longer buying DVDs. They'd moved to watching porn online for free on what were called tube sites, Basically hardcore versions of streaming sites like YouTube. What's so interesting about Stoja's early career is that the tube sites actually helped make her a star.

Stoya

One of the employees of Digital Playground had maybe one too many drinks at an award show, and they came to me and expressed confusion as to why my first film with them was selling so well. They were like, how do people know who you are? And I'm like, well, you know, I've got my little MySpace page with like a couple thousand people, and there's this video of me with my tampon string hanging out, destroying an enormous teddy bear while naked.

Alex Barker

It was called Steuer Kills the Bear, an early piece of viral porn that some random person had ripped from a DVD and posted on a tube site. That film was pirated. But Steuer says at that point, the publicity was kind of welcome.

Stoya

And people on these tube site things just like, really like that video. That was the first effect that the tube sites had on my career. And it was positive. This may be the only time that it was positive.

Narrator

The negative side had a name, a company called Manwin. In January 2012, around five years into Storya's career, her studio boss decided to sell Digital Playground.

Stoya

He told me that we had been purchased by Manwin, and I was like, oh, I am now tied to a company that is literally named Man Win. This is awful. I have a reputation for being pedantic and difficult in interviews. Every interview, I'm like, yeah, Manwin bought us. Yeah, the people who own pornhub and browsers. Yeah, think about that. What's happening? They're buying up all these properties. It's weird.

Alex Barker

Tube sites had broken the old studio model for porn. And now the main owner of tube sites, Manwin, was buying up everything that was left, like the conqueror of a vanquished land.

Stoya

Did I mention they're called Man Win? Can someone explain this to me? Is it like a German thing where the word is like completely different. And it just sounds, sounds ominous to me. And it's been a long and complicated.

Alex Barker

Relationship since Manu owned free tube sites like pornhub. It had bought Digital Playground, a deal compared to Disney buying Pixar. It even snapped up digital rights to Playboy. And everyone knows that brand. Steuer, the independently minded artist, was now working for a porn conglomerate. What she'd witnessed was the birth of, of the modern porn industry. Act two, the tubes that made porn free.

Narrator

In the words of the musical Avenue Q, the Internet was made for porn.

Stoya

The Internet is really, really great for porn.

Narrator

I've got a fast connection so I don't have to wait for porn.

Stoya

There's always some new site for porn. Eyebrows all day and night or porn. It's like I'm surfing at the speed of light.

Narrator

The Internet brought more images of sex to more people than ever before. Anyone with an Internet connection could watch porn in the privacy of their own home with no need for any awkward visits to the local sex shop. And it was free. The old world of porn had been a close knit community where everybody knew each other. But there was no sense, even in the industry of who was behind the tube sites, or for that matter, how they were getting away with becoming overnight millionaires with pirated content. To find out who rules the porn industry today, we need to dig in here at the moment when Power of a Porn first changed hands.

Alex Barker

And that led us to Curtis Potek. He was there running one of the first big porn tube sites pretty much by accident. Back in 2006 when Steuer started her career, Curtis was working as a strip club dj. He needed a day job, so he answered an ad to work on a support desk.

Max Chavkin

That was probably one of the most unique interviews of my life. He threw down some terms in front of me, some pretty vulgar sexual related terms, some racy terms because you can't control what people say. So you know, they just wanted to prepare me, I guess, for the worse.

Narrator

The website turned out to be called XTube. It was part of the boom in these cool online platforms that allowed people to upload stuff online and watch it go viral. But the tube sites, well, they were different from the likes of YouTube because they allowed porn.

Max Chavkin

It was user generated content, all provided by webmasters or just normal people like you or myself.

Alex Barker

Curtis was one of many who were swept up in the wild rise of the tube sites. It was online anarchy. Nobody in the old porn industry knew who was in charge. All Curtis knew was that the shoestring operation at XTube was mainly funded by a mysterious Chinese businessman. They called him Mr. X. The early days of XTube were chaotic, but there was a basic goal. Get as many people visiting the site as possible and hope the advertising money followed. Curtis says it started off slow, but eventually XTube found its niche in gay porn. And as clips went viral and worked their magic, things took off.

Max Chavkin

Once the word of mouth got out there, we went from 200,000 users to over half a million users in about a week. XTube took off at a crazy rate.

Narrator

But it wasn't problem free. One of the founders left, leaving Curtis in charge of the site, and he started to hear from people who were less than happy. Producers were seeing their videos uploaded to the site and XTube hadn't paid a penny for them.

Max Chavkin

I got very used to hearing the words, I'm going to sue you. I was like the subpoena king of the universe. I had a fax machine right beside me at my desk and it was just pumping out subpoenas at one point.

Alex Barker

So Curtis, the strip club DJ turned tech bro, ended up becoming the subpoena king. And XTube wasn't the only company winding up producers. Things were getting nasty, almost Godfather nasty. Another popular tube site called upon got sent a bullet in the post. An actual bullet with the word upon etched into the side. XTube almost folded when it had to pay a half a million dollars to a porn producer who sued them for hosting pirated videos. But it survived. By 2008, they charged a million dollars just for the ad slot across the top of the site. Throughout all of this, Curtis was the one in the firing line. Mr. X and the other owners, they preferred a different approach. Hiding.

Narrator

Why didn't they want to be the face of XTube?

Max Chavkin

Because they were older and smarter than I was. Some people put their face to a business like an adult business, like that, but they won't put their name, their real name. And I did both of those. I used my real name and I used my face. I was the main profile that if you had any issues on the site, there was my ugly mug plastered up in the corner. I mean, I was starting to get depressed. I was having a bit of issues with drugs just to kind of like cope with what was happening in my life.

Narrator

Curtis was used to calls from people who hated him and what he did, but every now and then he would also hear from people who realized how much money there was to make on free porn, people who realized there was value in all that. Traffic. He remembers the last of those calls he ever got. The guy on the phone was adamant. Just give me a number, he said. So Curtis walked over to the desk of one of the owners and asked him.

Max Chavkin

If you're gonna sell Lex Tube for whatever you wanted to, just give me that number right now. And he goes, 35 million. Said, all right. And I walked back and I picked up the phone and I said, you're not gonna like this. So I told him, 35 million. He goes, sure, I'll be there next week.

Alex Barker

If there was a year zero for the industry, this was probably it. Not 2006 when a bunch of renegade tech guys like Curtis started platforms where you could share stolen videos. They were just the folks storming the Bastille. What really mattered was what came a few years later when someone emerged from all the chaos to seize control. When Curtis took that call, he had no clue he'd witnessed the moment that started to happen. Before long, the new owner of X Tube showed up in his office. A German software engineer called Fabian Tillman.

Max Chavkin

Fabian used to like lie on the floor in front of my desk after his very long flight.

Narrator

And what was Fabian's role?

Max Chavkin

I believe they were just setting up the basically the takeover of the adult industry.

Narrator

XTube was just an appetizer for Fabian. Remember that name, Fabian Tillman. Because there aren't many that are more important in the history of online porn.

Alex Barker

Act 3 Stoia in a changed landscape.

Narrator

There was a merciless side to tube sites like XTube, Uporn and Pornhub. Consumers loved them for the obvious reasons. But all the free porn was tearing apart the business model of the old porn studios that were making all the videos in the first place. Hollywood and the music industry were also under attack from piracy. But they were well funded and powerful and could hit back with lawsuits and lobbying with porn. Well, who's going to stick up for porn producers and performers like Stoja? They were even more vulnerable.

Alex Barker

How would you break down the negative consequences that the arrival of tube sites like pornhub and Uporn had?

Stoya

They gave the general porn watching public an immense sense of entitlement. And when there are more hours of free pornography available than one porn person could ever watch in their lifetime, it becomes much more difficult to get them to pay for pornographic work. The next thing was that when you have people who have stolen your content and illegally uploaded it to a Tube site, you can imagine what the descriptions sound like. They're not very nice creepy things. I am simultaneously too fat and concerningly anorexic and I don't like having that kind of body shaming posted on my work.

Alex Barker

So there was a personal toll from giving away stolen porn too. How could tube sites get away with not policing what was uploaded? The answer is pretty ugly. We'll get into how in a later chapter. All you need to know for now is that tube sites prospered using the same legal loophole as social media platforms. For the most part, they're not responsible for what gets uploaded to their sites. They just have to deal with the complaints.

Stoya

Work was just being stolen and put on the tube sites, and the tube sites were putting their hands in the air saying, we just let users upload things and if you want something taken down, you can contact us. Around the same time, pornhub was going to production companies and saying, hey, if you just like work with us and send us trailers and then we'll help you take down your content and we'll send you traffic, which other people in the adult industry have described as a gun to the head situation.

Narrator

Tube sites and porn studios did end up in a kind of uneasy truce. Studios would buy ads or post short clips like, you know, teasers. This hypothetically would get people to click through and pay to watch the rest of the video. But the problem was the money was never as good. There is a universal law of online porn. Visits to tube sites last an average of eight minutes, and there aren't that many people who feel the need to buy the whole video after they've finished their business. The other problem was that in the end, these tube sites just didn't have a good enough reason to police the content. That was true for stolen movies, but it was also true for other material. Illegal abuse or what's known as revenge porn. Just think of it this way. If your video was on one of the sites and you didn't want it there, you had a problem. Not the tube sites.

Stoya

The respect and autonomy that I worked for years to establish is now completely out the window. I have no idea who these people are. They look like a large business. They're named Manwin. And none of this makes me happy. But still, I had a job to do.

Alex Barker

Over the course of your career, we've seen a lot of the owners of these sites really recede into the background. They do a lot to hide their identity. How does that make you feel?

Stoya

You really want my feeling? So I can't post a snapshot without a tabloid reporting on it. Even in the COVID era, where I'm wearing a mask, people recognize me by my eyes and eyebrows, I am so exposed. And the people who really own these tube sites get to be reclusive and not publicly held to account. That is so unfair. I don't like it.

Alex Barker

Supporters of the owners might say they're just protecting themselves from the stigma of being involved in the adult industry. Pornography made by consenting adults is legal. So what's our business knowing who the owners are? Steuer was not impressed by that argument.

Stoya

It's not fair at all. It's not fair at all. These people have come into sex work, exploited as much as possible the industry and they don't want to deal with the shame or the stigma like, sorry babe, that comes with the package.

Alex Barker

So what are the questions that you would want answered?

Stoya

So I'm personally very curious why they're using all these like shell corporations in places that shady people do business. And like, maybe that's because it's porn. So that's all they have access to because porn is largely shut out of normal business infrastructure. But I would really like to know why. So they built these tube sites and whether they intended to or not, they devalued the entire. And then they started buying up production studios. And I've thought about this a lot and I can't figure out how giving everything away for free and acclimating people to a porn as something you can have whenever you want without paying for it results in a viable business once the dust has settled.

Narrator

We ask plenty of people this question and it was because we were torn. We met a lot of happy people in porn who loved their jobs. We also came across stories of exploitation. Some of them are heartbreaking stories with real victims and real villains. At the back of our mind was always the shouldn't we be exposing all that the bad guys? Talking to Stoja helped us realize that if you care about porn, how even the most hardcore kind became free to watch at the click of a button, how the biggest platforms are not held accountable if bad things are uploaded to their sites. Things like revenge porn or child pornography. How many sex workers are still denied a voice to speak out if bad things happen to them? Then you need to understand how this business works. Who profits from it? Who calls the shots? Who is really in control?

Stoya

You are the Financial Times. I suggest you stay in your lane. You focus on the business aspect, you focus on the finances. You focus on who got what investment money, who's in how much debt, how much profit is actually happening and what the legal standing of these free tube sites should be.

Alex Barker

So that's what we've done. We stayed in our lane and followed the money. Patricia and I were given six months off our normal day jobs. Time to focus just on the world of porn. Over the course of eight chapters, we're going to tell you what we found. We met pornographers, adult performers and directors.

Kelly Holland

It was who's got the largest penis here? Kind of thing. And they hate each other.

Stoya

We lost half of our followers, which means we also lost half of our income.

Alex Barker

Tech pioneers who almost accidentally shaped today's Internet. The guy doesn't give a shit about anything other than himself. Hedge fund guys and money men. What this put a spotlight on was discriminatory policies within the banking system.

Narrator

I'll even tell you how I uncovered the secret owner of the world's best known porn sites.

Alex Barker

And let me tell you, we were surprised by who is really in charge. If you want to hear more, find the Kink Machine, the hidden business of Adult entertainment at Pushkin fm, Audiobooks or wherever you get your audiobooks.

Stacey Vanek Smith

Hi, I'm Stacey Vanek Smith. You might know me from public radio's Planet Money and Marketplace, and I'm here to tell you about a new show I'm working on at Bloomberg Business Week.

Max Chavkin

Yeah, it's called Everybody's Business. I'm Max Chavkin, a longtime reporter with Bloomberg businessweek and more importantly, Stacey's co host.

Stacey Vanek Smith

Each week we will talk to some of the smartest people we know to try and understand what is happening in the world of business and what it means for you.

Max Chavkin

We'll explain Trump's trade war, the AI bubble, Elon Musk's whole thing, and lots of other stuff.

Stacey Vanek Smith

Listen every week, wherever you get your podcasts.

Narrator

This is an Iheart podcast. Guaranteed human.