July 5, 2022 • 41 mins
One of the biggest porn companies in the world was forced to radically change its practices. But another porn giant changed almost nothing.
Patricia travels to the company's Prague headquarters to understand why.
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Episode Transcript
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Speaker 1 (00:15):
Pushkin, Welcome back. Here's your reminder. This is a series
about power and money and the porn industry. Some parts
of this series are very much for adults. We should
warn you that this episode contains very graphic depictions of
(00:36):
a type of pornography that some people might find upsetting.
In our last episode, we told you all about the
way mine gee came up against a wall of reckoning.
The giant of online porn, the company that has dominated
this industry more than any other, was finally cut down
(00:58):
to size. It was cut down by two of the
most everyday businesses you could imagine, Visa and MasterCard, huge
payments companies that seem to moon as the regulators of
world porn. But here's the puzzle for this episode. While
mine geek took down millions of videos, its biggest rival
(01:19):
seemed untouched by the whole affair. This other company serves
more pawn to more people in the world today than
mine Geek, ever did. Not only that, it makes mine
geek look like a beacon of transparency, just listen to
its extraordinarily forgettable name. Wgc Z. It stands for Web
(01:43):
Group Czech Republic. You know, because it's a web group
in the Czech Republic. Wgcz's tube sites x videos and
xn xx host about six million visits a month. That's
roughly the same as Twitter, and much more than mine
geek's flagship site, Pornhub. But you're probably hearing about WGCZ,
(02:07):
the owner of all those popular sites. For the first time,
we've discovered that in the pornography world, the competition between
the two companies, mine Geek and WGCZ speers. They're like
rival clans, the Montagues and Capellets of porn. Day by
(02:27):
day they fight to dominate the industry, mostly for money,
sometimes just out of spite. And despite having similar origins,
these two powerful porn empires have taken very different paths.
They both started out as pirates. But there is a
time when the pirate ship comes into port and starts
(02:51):
to improve the island that it's ported at, and it
ceases to be the pirate. Mine Geek seased to be
the pirate a long time ago. They're a very different
kind of company. This is Kelly Holland she knows this
story well. She was there when the tube sites first
took a swing at the foundations of the porn industry.
If you go to Montreal. They've got a seven or
(03:13):
eight story building right on the freeway with their name
plastered on the side, and they've got huge departments. I
mean they're running like any large corporation. WGCZ is running
out of a throwback Soviet block apartment building in Prague
(03:34):
and the neighbors complained because they were shooting porno in
an apartment on the second floor and the neighbors could
hear it. I mean, they're still operating as if they
were a shadow company. While Visa MasterCard came down hard
(03:55):
on mine Geek for failing to police content, WTCZ somehow
dodgedad bullet. If anything, this little known check company has
been the winner and the war on mine Geek. This
is the story of wide paced to stay hidden. If
you're in the business reporn. I'm Patricia Neilson. He's Alex
(04:19):
Barker from Pushkin Industries in the Financial Times. This is
Hot Money, Act one wg WHO. We're in the dusty
(05:04):
hills of the San Fernando Valley in the northwest, outskirts
of La Kelly Holland is an old school feminist and
that's actually withdrew her to make porn in the first place.
For her, back in the nineties, porn was a way
to stick it to traditional American values that she found stifling.
(05:27):
What became apparent to me fairly early on was a
it was a renegade culture. It was a radical culture.
It was very disruptive. Long story short, Kelly wanted in. First,
she made a documentary about porn. Bruce Springsteen had just
(05:47):
come out with Born in the USA, I think, so
we decided we would call it Porn in the USA,
and that's how it started. She then went on to
shoot the real thing. Eventually she became one of the
industry's first big female directors. Well things don't always work
out like they should. Well here's Michael. Now I got
(06:11):
the same working upstairs in the hall closet final clothes. Well,
that's great. She made such a strong name for herself
that in two thousand and six she was headhunted by
one of the most iconic brands in porn, Penthouse. At
that point, tube sites were just getting started, and as
they ripped through the adult industry, Kelly kept rising through
(06:34):
the ranks of Penthouse. When a boss decided to leave,
he asked Kelly to fill his shoes he said, well,
I'll put it to you this way, Holland, You're not
an easy person to get along with. So if I
have to hire somebody to be president of Penthouse, they're
probably not going to like you. And if they want
to fire you, I'm not going to get in their
way because I respect verticals. So what's your answer? And
(06:56):
I went, gosh, I guess put like that. That's how
I actually became president. But as a business leader, Kelly
faced new challenges. As her old boss had predicted did.
She soon started clashing with the CEO of Penthouse. To
get rid of him, Kelly saw only one solution. She
(07:19):
had to take over the whole thing. Kelly succeeded, sort of.
She took over Penthouse in twenty sixteen, but only with
the help of what she jokingly called street corner gangster
debt at a twenty three percent interest rate. The thing is,
Kelly didn't get on with the lenders either. The business struggled,
and by twenty eighteen, just two years after she took over,
(07:43):
she filed for bankruptcy. Penthouse was once again for sale.
So a bankruptcy auction is not like a Christie's auction
where you get that very subtle nod where you get
the finger up or the placard comes up. The courtroom
was packed, It was already hot in Los Angeles, and
(08:03):
I think people were sweating a little bit. Kelly remember
standing at the back, too nervous to sit down. The
clown section had to be shaken out first, and then
it came down to the serious bidders, and that was
very clearly mine geek and WGCZ mine geek. Of course
I knew, and I knew them all the way back
into the man one times because they were so relevant
(08:25):
in driving the changes in business, and they were very
relevant in affecting my broadcast. I didn't know anything about WGCZ.
It took me a day just to remember the four letters. Wait,
w what WGCZ or w GCZ A corporate brand so
(08:48):
anonymous that it hides in plain sight. Remember it owns
x videos, the world's most highly traffic pawn site by
some distance. It has about one billion more visits a
month than pawn Hub today. At the auction that day,
wgcz's representative was Robert Seafort. Kelly remembers that Robert wore
(09:11):
baggy jeans and a T shirt with holes. He stood
out among all the suits, and he was trying to
become her new boss. Kelly asked a colleague about him.
I said, who is that? And they said X videos.
I said what he said, Well, you know, we went
over the numbers with him. He doesn't know anything about
(09:31):
the company, doesn't know anything about the numbers. The courtroom
was tense and quiet. This battle was about more than
the fate of Penthouse. It was a bare knuckle fight
for pride between the two heavyweights of the porn industry.
It was very obvious that mine Geek and wgc were
(09:51):
going to bid against each other. It was who's got
the largest penis here kind of thing, and they hate
each other, so it was all about that. So they
were bidding against each other. And I don't know why
I felt that WGCZ in that moment, was a better
choice than mine Geek. In retrospect, I was dead wrong,
(10:14):
but I was on a dead wrong running streak at
that point, because you know, every choice I'd made that
year had been wrong. The bidding continued, Robert Seafort for
WGCZ and a guy named Scott Justice for mine Geek.
He would say here, representing mine Geek, Mine geek bids
(10:35):
nine million, Sit back down, Seafort slouching in the corner,
wgc Z nine point two. The judge would say what
at nine point two? WGCZ I'm sorry, could you say
what is the company again? I just remember he had
to past twelve time and Robert was very quiet. It's like,
w GCC bids nine point eight, I'm sorry, what was
(10:57):
that bid? The scott Scots, some big guy booming boys.
Geek bids nine point nine. WGCZ bids ten million. You know,
it was just back and forth and back and forth.
So it was a bit theatrical, you know. So then
the bidding continues, bid it up to eleven. Then Seyffert
(11:19):
piped up eleven point two and they asked for other
bids and that was it. Eleven point two BAM Penthouse
was sold to a company that Kelly knew nothing about.
Kelly assumed that she and Robert would spend loads of
time together, at least over the next few days, but
(11:41):
he had other plans. The next thing I remember him
saying was that he had to get back on a
plane because he had a dentist's appointment in Prague. And
I said, you just bought Penthouse. You bought one of
the most iconic adult brands in the world, and you're
going to go to a dental appointment. I think you
need to reset that, don't you. Kelly later discovered that
(12:02):
Robert had bid for her company on a win. The
story goes that Robert heard that Penthouse was up for
at a Friday night dinner party. He jumped on a
plane to la and by Monday, Robert had bought Penthouse.
The whole thing took less than seventy two hours. Kelly
says he barely knew anything about the company's finances. It
(12:24):
seemed he just wanted to own it. We had a
lunch the next day to introduce him to everybody, to
introduce him to the staff. I actually at that point
felt comfortable with him for two reasons. I understood that
he didn't know anything about the company, and I had
(12:45):
a wrong presumption that he would be wise enough to
allow the people who did understand what was happening to
do their job. It didn't work out that way. Penthouse
was broke. It had bills some way just to pay,
but getting funds from Robert proved tricky, and the first
(13:07):
oh my god moment was when Robert Seyffert said, I
don't understand this. Why do I have to pay any money?
I already paid eleven point two million, But that point
had to be explained over and over and over again. Now, look,
Kelly had run Penthouse into bankruptcy, and we're not making
(13:30):
a judgment here on who was right or wrong. But
while Kelly was trying to get on the same page
with Robert, she was hearing things about WGCZ that really
made her nervous. She started to suspect that Robert wasn't
actually in charge. It's not like he has access to
the money of the company. He's a very small part
(13:53):
of this. Kelly learned there was somebody else behind Robert
who was in control. The deber I got into it,
the more concerned I became about just the general level
of secrecy around the company. That lying about, you know,
the money house to move sometimes from a personal account,
(14:14):
sometimes from a business account, sometimes through multiple accounts. That
sounded a bit sketchy to me. And here we are
right back where we started. You might remember to take
from Kelly. It was the very first thing you heard
at the beginning of our theories. If you play that
fast and loose in that environment. I have to assume
(14:37):
that you're playing that fast and loose in every environment,
and that you're not concerned about all the regulations that
underpin our world and his world in Europe, and the
integration of those two worlds. It was a volatile situation
that turned worse. Kelly was fired in twenty eighteen. Her
(14:57):
run at Penthouse was over, and the people she thinks
made the decisions about her future and the future of Penthouse.
She never met them. All she knew was their names.
The pack Hos. That's Stephan Paco and his twin sister
Mallory to be exact, the twins behind the world's most
popular porn sites. More about them when we return Act
(15:26):
two the Prague HQ. We've met some mysterious characters in
the world of porn, but the Paco's they really topped
the bill. They are the owners of w GCZ and
Stefan runs the business day to day. Now, one thing
(15:48):
they do have in common with the owner of their
biggest rival is you might easily believe they don't exist.
They are registered as the owners of w GCZ, but
there is hardly any trace of them on social media.
No pictures. They send out guys like Robert Seafort to
do their business in public. There is even some speculation
(16:12):
online as to whether the twins are actually made up
affront for someone else. Well, they're not. Mallory handled the
corporate side. Stepan is the computer whiz. He loves gaming.
They come from a small town in a region of
eastern France known for its coal mines and its Burgundy wine.
(16:35):
They still rely on friends and family from there to
run their business. Stefan is the one who really blazed
their path into porn and who is ultimately, we learned,
in control of the company. He was running online porn
picture galleries back in two thousand and two. He was
in his early twenties at the time, a skinny redhead.
(16:57):
But twenty years on he is the master of more
internet porn traffic than any other man on earth, and
no one really knows any about him, not even people
in the industry. Again, a question I've asked so many
times over the past year, how is this possible? I
(17:22):
remember looking up the address of their headquarters some Google Maps,
and it wasn't quite a Soviet department block that Kelly
hall In described, but it did look a lot like
the entrance was down a back alley. I couldn't believe
one of the world's top ten websites was being run
out of this building. It just didn't make sense. And
(17:44):
so I hopped on a plane with our producer, Pete Sail. Okay,
we're recording, so yeah, just have every bit about where
we are. And so we arrived in Prague yesterday and
we're sat down this morning to have a coffee and
we know that WDCZ is based here in Prague, and
(18:04):
we just wanted to go and look at their headquarters
and looked it up on Google Maps, and it turns
out that it's just next door to our hotel, and
we actually passed it yesterday when we were going for
dinner and missed it. We walked by the headquarters of
what's possibly the world's biggest porn company and we didn't
even notice. It was a shared building with an open entrance.
(18:28):
There were company signs plastered on the wall, like for
a creation tourist bureau, but most of them more names
of w DCZ subsidiaries. So this was the right spot.
I did try calling them. I didn't try finding a
(18:49):
press office, but I didn't have any luck. And so
I decided to walk in and see if I could
find anyone to speak to. There was no security, no reception,
nothing stopping me from walking in. Just the property manager
who to go out to realize I may not be
(19:11):
their usual type of visitor. So what happened? So this
very lovely man, who was getting very nervous about us
standing around and recording here, he chased me up the stairs.
But because he's quite much older than me, I did
manage to find one floor that had a WDCZ sign
(19:32):
on it, and I knocked on the door and a
man came out and looked quite confused as to why
I was there, and I told him I'm a journalist
and you know, I'm trying to reach out to their
press office, and he said, I don't think we have one.
I asked, can I speak to you? He said no?
And you know, I said, is there? Do you have
(19:52):
any advice for me? What should I do? And he
said I don't know. And I walked upstairs as well,
and to the great dismay of the property manager, who
had by that time caught up with me, I went
to knock on some of the doors on the other side,
and these two young women opened the door. It was
kind of strange because the door was already open, so
you know, it wasn't locked. I knocked on the door
(20:15):
and they said, you know, we have nothing to do
with the business. Looking back, it was the women that
stuck in my mind. They were young, blonde, thin, and
seemed nervous to see me there. I'm not sure who
they were exactly. Several people. Housins told me that one
(20:38):
of wgcz's production studios is based in that building. They
actually shoot porn in their headquarters, and this studio, it
produces the kind of stuff that anti porn campaigners want banned.
A lot of it is rough and degrading, and that's
not just my take, it's the whole point of it.
(21:00):
It's humiliation porn. The videos shot here are at the
hardest edge of the industry, the physical extreme. The kind
of stuff performers told me, crosses the line for them.
Paco's studio isn't the only one making this kind of porn,
but it is the biggest name in the genre. His
subscription site, called anal VIDs, is the go to destination
(21:25):
for people looking for these kinds of videos. Analvid members
pay roughly thirty dollars a month for the basic plan
and they pay with MasterCard and Visa credit cards. How well, technically,
humiliation pawn isn't banned under Visa and MasterCards core rules,
(21:47):
you know, all those commandments we told you about in
the last episode. But the banks and billers they work with,
the ones who actually process payments for Visa and MasterCard,
they often take a more conservative view. They say no
to some of the acts you'll find on Paco's site.
They don't allow it because they think you will harm
(22:07):
their reputation, or rather that of Visa and MasterCard. But Paco,
he has found some way to make the business work.
And it's not just the paywall sites. Paco's tube sites
also host content with the least amount of restrictions in
the industry. That's according to what we've seen, what sources
(22:29):
have told us. And a spreadsheet, a pawn spreadsheet to
be exact, made by a performer called Sophie Ladder. She
meticulously charts the acts and words that might get you
kicked off adult platforms. Many top sites are covered with
boxes highlighted in red. No menstrual, blood, no kidnapping, role play,
(22:52):
no hypnosis. The platforms that stand out as mostly green.
They are owned by Stefan Paco vomit that's okay, swallowing urine,
fine blood, no problems, the whole thing confused. US Performers
like Stoya have told us how tricky it can be
(23:14):
to navigate complicated rules on porn set by financial institutions.
The Paco's empire seems to stay on the right side
of Visan MasterCard while hosting and making some of the
most extreme content. This industry in general seems to have
a lot of backstories that if you are not aware
you're in deep shit, you just don't get some bookings.
(23:38):
This is Sabian Pneumonia. She is a porn performer who
has worked for Paco studios, including the one at his headquarters.
Many people in the industry shy away from speaking publicly
about their experiences. There's a lot of stake for them.
If you get on the wrong side of the people
in charge, it can be hard to get work with Sabian,
(24:01):
she agreed to talk with me on the record. Sabian
is covered in tattoos all the way up to her neck,
and even though her the art brands are as so
called alternative, meaning it's not always easy to get cast.
She's quickly become quite a big name. Don't let me
ask twice, I've been good girl. Oh yeah, come on,
(24:24):
So how did she become so big, because that's what
everyone's saying. Everyone's like, she just kind of suddenly came
in and now you're everywhere, You're involved in everything. So like,
I mean, I don't I don't really know. I guess
we're working our asses off. Sabian was a glamor model
for years, mainly as a hobby, but then she realized
(24:44):
that the fantasy woman she was cosplaying could actually make
her quite a bit of money. So for the past
three years, Sabian's been a full time porn star. In
that time, she's worked with loads of studios, including Pacos.
If you talk to people in the industry about his studios,
they tend to refer to them by an old umbrella
(25:05):
name Legal Porno, and that work brought her lots of attention.
I did my two first scenes and my following one's
crazy just because I was on legal Partner, Sabian says,
to the studio operating in Paco's headquarters pays well because
of the physical and mental strain that performers are put under.
(25:27):
She described what it was like to shoot for the studio.
We have chosen to include it because we don't want
to gloss over the fact that the porn industry asks
a lot of performers. When I speak to people inside
the industry, everyone's saying like, no one wants to do
that stuff, Like it's like the perverts outside of the
industry who want this and we need to supply it.
(25:50):
I've spoken to people who just like say, like, you
know what, keep your money, like I'm gonna I'm not
gonna finish, you know, the shoot here people unfortunately facing
the situation they have to work on them. One's supply situation.
Let's be honest. Porn as a thing supposed to supply
you with the best way of expressing your sexual desires,
(26:13):
and human beings are known for having weird, skinky sometimes
super they pray fantasies. I did this and for me,
it's just gape on with backup dancer period Sabian says
she thinks there's a demand for this kind of porn
from viewers who just want to see women degraded. That's it.
(26:36):
The girl never had it. Let's see how quickly will
make her cry. I should point out Sabian is one
of many performers who have chosen to perform this kind
of porn. She knew exactly what she was getting into.
She actually did some in depth research watching hours of
content on Paco's side. But the industry is full of
(26:58):
very young people, especially in Prague, which is one of
Europe's porn production hubs. Many performers come from countries like
Ukraine and Russia and don't speak Czech or English, and
more importantly, they don't have rights to work in EU countries,
which makes them more dependent on whoever helped them get
(27:18):
the gig in the first place. The point is it's
hard to imagine that everybody can do or does as
much research as Sabian did going into it. Another quick
warning here, Sabian is about to describe in explicit terms
some of the things she experienced shooting for Paco Studios.
(27:40):
We can blame them for many things, but I don't
think any of people who broke on the scene stand
on front of the mirror and be like tomorrow, they
will piss on me, they will fuck me hard, My
ass will be sure. You know, how can I avoid
breaking internally, how I will feel about myself after that
(28:01):
all happened. Even though Sabian says shooting for Paco Studio
put her body in danger, she doesn't think the making
of this kind of porn should be illegal. She sees
it as a matter of choice. In this series, we
haven't sought to expose illegal practices on porn sets. We've
looked at the porn business within the rules. But even
(28:24):
if Paco Studios follow the rules set by the financial
institutions that oil the wheels of the porn industry, it's
clear that the kind of porn he makes and selves
is high risk, a level of risk that is simply
too much from many banks, payment processors, and other pornographers.
As we heard in the last episode, this content carries
(28:47):
exactly the sort of reputational risk that payment companies want
to avoid. I did ask Sabian about Paco. She had
never met him, but she did have something to say
about him. Obviously, it's not a fair that the person
who get the least shame get the most money. But
(29:09):
you know, life is life. It's it is I mean,
it's I mean, come on, it's politics, per No, there
are so many other industries where the top guys you
will never know their names. I mean, I agree with
you that it is true that like in any industry,
their private companies. You don't have owned companies one. But
I feel like with porn it's there's the slight difference.
(29:29):
You know, performers, you don't have a right to take
down content. Once you're out there, you're out there right
and as a performer you face a lot of stigma.
Back in the days, you'd have like Larry Flynt and
you Heffner and people are making shitloads of money, but
they went out there and defended the industry. I think
Stefano's just a businessman, and businessmen's like to keep quiet
(29:50):
about their money, where other people who do it for
their ego they will flash everywhere what they do. So
let's not make James Bond out of Stefano. He's just
very good in business making. I guess that's why he
keeps his privacy as a priority. Maybe Stefan Paco is
(30:13):
not quite your secret agent, but he seems to have
a special license in this business. He can make and
distribute some of the most fringe porn on the Internet
and still get paid for it. Could staying below the
radar be the key to how he does this. Before
I left Prague, I found someone who helped us understand
(30:35):
what really makes Paco stand out from his rivals. That's
after the break Act three, White pace to stay low.
So you found a whistleblower. I mean, people are so
(30:57):
reluctant to talk about Paco's empire that when we finally
found someone from the inside who would talk, it certainly
felt like a whistleblower. We recorded an interview, but I
can't use his name. I can't play his voice. He's
too worried about recriminations for that. I can tell you, though,
about his experiences working for the Paco Twins and WGCs
(31:21):
and Douz. He know the place well, yeah, definitely, I
mean well enough to understand the relationship between twins. Apparently
they're not always on great terms. Mallory used to handle
the books and some stuff feared her, but she has
stepped back from the company in recent years. Stefan is
the one who really calls the shots. Apparently he micromanages things.
(31:43):
Our insider called him megalomaniac and the master of puppets.
He has a company for everything. It's a really complex empire,
split into small cells for each business, and he sits
in the middle of it. All. Sounds like he's pretty headstrong,
self reliant kind of guy, And that's the key word,
(32:04):
self reliant. This guy I spoke to mentions something crucial
about Paco's business that I missed at first. It wasn't
until months after our conversation that the lightbulb moment finally came.
He told me that Paco had built his own payment processor.
(32:26):
You know those companies at the bottom of the visa
and MasterCard ecosystem that write detailed rules on what type
of porn is allowed. Well, that's one way to gain
real independence. You still need a bank, but it just
gives you much more operating freedom, especially on content that
(32:46):
might be banned by other sites. Exactly. This is how
he can run some of the most permissive porn sites
on the Internet and still make money. The payment processor.
Some other porn companies have their own payment processor, but
few rely so heavily on them. It allows Paco to
make a direct link between subscribers who pay for his
(33:08):
porn and his bank. Because he owns the payment processor,
he needs to rely on fewer financial companies. He essentially
cut them and their regulations out to differentiate yourself. Now
you've got to do something different, Edgy. I mean, you know,
keep it legal, but it's got to be some different.
(33:30):
This is Kevin Smith. He's a payment's consultant and has
been in the industry for close to three decades, specializing
in risk management. My question was, how big a deal
is it that Paco has his own payment processor. It
gives some extra flexibility on that particular content. It means
that if they have to make some dramatic decisions to
(33:52):
pull or change, it doesn't affect other parts of the business.
It primarily just gives them more control, control, independence, the
very things that appeal to man like Stefan Paco. Kevin said,
setting up a payment processor is not easy. It's a
(34:16):
tech challenge. There is lots of data regulation. Most companies
think it's better to just pay someone to handle that.
But being independent does have benefits, especially if you want
to set your own rules, if you want to decide
what porn is acceptable to make and what is acceptable
to sell. At the end of the day, you look
(34:37):
at it and go the Visa MasterCard rules at the
highest level basically say keep it legal. In the jurisdiction
of the seller, and the buyer for adult has the
extra flavor said keep it legal and none of the following,
and then you're right. The rest of it is open
to interpretation. If it isn't any of the above, you
have absolute flexibility. Those words are still ringing in my head.
(35:03):
Absolute flexibility, and Stefan had found a way to minimize
the constraints escape through many restrictions faced by other porn sites.
We had spent six months trying to contact Stephan phone email,
Patricia visited his office, and then, in a late breaking surprise,
(35:26):
WGCZ actually confirmed what we had suspected in writing it
was incredible. Right when we were about to lock this
episode for a release, we got a response from Paco's
tube site x Videos, an email that explained the company's
strategy and overall outlook on porn. And what's so weird
(35:49):
about that message is that it's unsigned, but written in
the first person, and it references a meeting that only
Paco could have attended, so it sounded to us like
Paco wrote it himself. It said, hello, ft, here are
some comments from us. We're a little late. Sorry, And
(36:09):
the most important point the email makes is this. It
basically says that Visa and MasterCard care most about stopping
illegal sexual content, which is absolutely true. The company or Paco,
has realized that what prompts Visa and master Card to
take action are videos made or distributed without the consent
(36:33):
of the people in them, and that's what they say.
Their priority is meeting the core MasterCard and Visa rules,
not all the extras and detailed additional restrictions that banks
and processes in the Visa and MasterCard networks might require.
The email said that as far as Paco's company is concerned,
(36:56):
all porn made with concent is fine, including the type
of humiliation porn that Sabian told us about, and that
quote efforts should be spent on fighting actual non consensual
content rather than consensual kinks and role plays. They'd love
for all the payment intermediaries that ban certain types of
(37:19):
porn to just back off. The email argues that lots
of sites and social media platforms carry similar content to Paco,
but that press and politicians keep in their words, hammering
away at the same two or three tube sites. Their
point is that wild user generated content has been transformative
(37:41):
from mainstream media. It's been a disaster for pawn. To
quote his email today, the adult industry is a giant mess.
People fight each other a lot. You've got systematic industry,
scale piracy, revenge, pawn, stolen content everywhere. And Paco controls
about a third of all pawn traffic, a third mainly
(38:05):
through his free tube sites. And yet here he is
saying he's not happy with how the industry is developed.
And this is a surprising part. He went on to
say that the industry could be fixed again by politicians,
but only as long as they dropped the bias against
(38:26):
porn and quote talk to people who actually understand the
industry and the Internet. Could one of the most secretive
men in porn be calling for government intervention? Stephan Paco
has shown us that if you understand the payment's world,
if you do just enough to never upset master Card
(38:46):
or Visa, you can glide on. So there he is
with this enormous growing empire and an anonymous entity at
the top of it that hasn't been cracked down on
by Visa or MasterCard. Well they haven't cracked down on
it yet. Next time on Hot Money. If the company
(39:14):
behind x videos taught us one thing, It's that if
you want to revolutionize pawn, it's payments that you have
to figure out, and it just so happens that a
fresh wind of change is blowing through the world of pawn.
Will tell you how it finance Fetish helped make a
(39:34):
groundbreaking side called Only Fans, and how uptide bankers almost
chased it out of the porn industry. I mean for
a lot of people it was It's like being cut
down at the knees. Do you have regrets on how
you handled it? Looking back? Not on how it was handled.
I don't think we had much of a choice, but
(39:54):
I deeply regret the amount of concern an anxiety it caused.
Hot Money is a production of The Financial Times and
(40:15):
Pushkin Industries. It was written and reported by Me, Patricia
Neilson and me Alex Barker. Peter Sale is our lead
producer and sound designer. Edith Russolo is our associate producer.
Our editor is Karen Shakerjie Amanda Kwong is our engineer.
Music composition by Pascal Wise, fact checking by Andrea Lopez Kusado.
(40:40):
Our executive producers are Cheryl Brumley and Jacob Goldstein. Special
thanks to Renee Kaplan and Ruler Kalov for The Financial Times,
and Mia Lobel, Lital Molad, Justine Lang, Julia Barton, and
Jacob Weisberg at Pushkin Industries. We had a lot of
help for this episode from our external researcher, Voiche Mihauak.
(41:01):
If you like this show, consider subscribing to Pushkin Plus,
offering bonus content and ad free listening across our network
four dollars nine nine a month. Look for the Pushkin
Plus channel on Apple Podcasts or at pushkin dot Fm.
Pushkin, Welcome back. Here's your reminder. This is a series
about power and money and the porn industry. Some parts
of this series are very much for adults. We should
warn you that this episode contains very graphic depictions of
(00:36):
a type of pornography that some people might find upsetting.
In our last episode, we told you all about the
way mine gee came up against a wall of reckoning.
The giant of online porn, the company that has dominated
this industry more than any other, was finally cut down
(00:58):
to size. It was cut down by two of the
most everyday businesses you could imagine, Visa and MasterCard, huge
payments companies that seem to moon as the regulators of
world porn. But here's the puzzle for this episode. While
mine geek took down millions of videos, its biggest rival
(01:19):
seemed untouched by the whole affair. This other company serves
more pawn to more people in the world today than
mine Geek, ever did. Not only that, it makes mine
geek look like a beacon of transparency, just listen to
its extraordinarily forgettable name. Wgc Z. It stands for Web
(01:43):
Group Czech Republic. You know, because it's a web group
in the Czech Republic. Wgcz's tube sites x videos and
xn xx host about six million visits a month. That's
roughly the same as Twitter, and much more than mine
geek's flagship site, Pornhub. But you're probably hearing about WGCZ,
(02:07):
the owner of all those popular sites. For the first time,
we've discovered that in the pornography world, the competition between
the two companies, mine Geek and WGCZ speers. They're like
rival clans, the Montagues and Capellets of porn. Day by
(02:27):
day they fight to dominate the industry, mostly for money,
sometimes just out of spite. And despite having similar origins,
these two powerful porn empires have taken very different paths.
They both started out as pirates. But there is a
time when the pirate ship comes into port and starts
(02:51):
to improve the island that it's ported at, and it
ceases to be the pirate. Mine Geek seased to be
the pirate a long time ago. They're a very different
kind of company. This is Kelly Holland she knows this
story well. She was there when the tube sites first
took a swing at the foundations of the porn industry.
If you go to Montreal. They've got a seven or
(03:13):
eight story building right on the freeway with their name
plastered on the side, and they've got huge departments. I
mean they're running like any large corporation. WGCZ is running
out of a throwback Soviet block apartment building in Prague
(03:34):
and the neighbors complained because they were shooting porno in
an apartment on the second floor and the neighbors could
hear it. I mean, they're still operating as if they
were a shadow company. While Visa MasterCard came down hard
(03:55):
on mine Geek for failing to police content, WTCZ somehow
dodgedad bullet. If anything, this little known check company has
been the winner and the war on mine Geek. This
is the story of wide paced to stay hidden. If
you're in the business reporn. I'm Patricia Neilson. He's Alex
(04:19):
Barker from Pushkin Industries in the Financial Times. This is
Hot Money, Act one wg WHO. We're in the dusty
(05:04):
hills of the San Fernando Valley in the northwest, outskirts
of La Kelly Holland is an old school feminist and
that's actually withdrew her to make porn in the first place.
For her, back in the nineties, porn was a way
to stick it to traditional American values that she found stifling.
(05:27):
What became apparent to me fairly early on was a
it was a renegade culture. It was a radical culture.
It was very disruptive. Long story short, Kelly wanted in. First,
she made a documentary about porn. Bruce Springsteen had just
(05:47):
come out with Born in the USA, I think, so
we decided we would call it Porn in the USA,
and that's how it started. She then went on to
shoot the real thing. Eventually she became one of the
industry's first big female directors. Well things don't always work
out like they should. Well here's Michael. Now I got
(06:11):
the same working upstairs in the hall closet final clothes. Well,
that's great. She made such a strong name for herself
that in two thousand and six she was headhunted by
one of the most iconic brands in porn, Penthouse. At
that point, tube sites were just getting started, and as
they ripped through the adult industry, Kelly kept rising through
(06:34):
the ranks of Penthouse. When a boss decided to leave,
he asked Kelly to fill his shoes he said, well,
I'll put it to you this way, Holland, You're not
an easy person to get along with. So if I
have to hire somebody to be president of Penthouse, they're
probably not going to like you. And if they want
to fire you, I'm not going to get in their
way because I respect verticals. So what's your answer? And
(06:56):
I went, gosh, I guess put like that. That's how
I actually became president. But as a business leader, Kelly
faced new challenges. As her old boss had predicted did.
She soon started clashing with the CEO of Penthouse. To
get rid of him, Kelly saw only one solution. She
(07:19):
had to take over the whole thing. Kelly succeeded, sort of.
She took over Penthouse in twenty sixteen, but only with
the help of what she jokingly called street corner gangster
debt at a twenty three percent interest rate. The thing is,
Kelly didn't get on with the lenders either. The business struggled,
and by twenty eighteen, just two years after she took over,
(07:43):
she filed for bankruptcy. Penthouse was once again for sale.
So a bankruptcy auction is not like a Christie's auction
where you get that very subtle nod where you get
the finger up or the placard comes up. The courtroom
was packed, It was already hot in Los Angeles, and
(08:03):
I think people were sweating a little bit. Kelly remember
standing at the back, too nervous to sit down. The
clown section had to be shaken out first, and then
it came down to the serious bidders, and that was
very clearly mine geek and WGCZ mine geek. Of course
I knew, and I knew them all the way back
into the man one times because they were so relevant
(08:25):
in driving the changes in business, and they were very
relevant in affecting my broadcast. I didn't know anything about WGCZ.
It took me a day just to remember the four letters. Wait,
w what WGCZ or w GCZ A corporate brand so
(08:48):
anonymous that it hides in plain sight. Remember it owns
x videos, the world's most highly traffic pawn site by
some distance. It has about one billion more visits a
month than pawn Hub today. At the auction that day,
wgcz's representative was Robert Seafort. Kelly remembers that Robert wore
(09:11):
baggy jeans and a T shirt with holes. He stood
out among all the suits, and he was trying to
become her new boss. Kelly asked a colleague about him.
I said, who is that? And they said X videos.
I said what he said, Well, you know, we went
over the numbers with him. He doesn't know anything about
(09:31):
the company, doesn't know anything about the numbers. The courtroom
was tense and quiet. This battle was about more than
the fate of Penthouse. It was a bare knuckle fight
for pride between the two heavyweights of the porn industry.
It was very obvious that mine Geek and wgc were
(09:51):
going to bid against each other. It was who's got
the largest penis here kind of thing, and they hate
each other, so it was all about that. So they
were bidding against each other. And I don't know why
I felt that WGCZ in that moment, was a better
choice than mine Geek. In retrospect, I was dead wrong,
(10:14):
but I was on a dead wrong running streak at
that point, because you know, every choice I'd made that
year had been wrong. The bidding continued, Robert Seafort for
WGCZ and a guy named Scott Justice for mine Geek.
He would say here, representing mine Geek, Mine geek bids
(10:35):
nine million, Sit back down, Seafort slouching in the corner,
wgc Z nine point two. The judge would say what
at nine point two? WGCZ I'm sorry, could you say
what is the company again? I just remember he had
to past twelve time and Robert was very quiet. It's like,
w GCC bids nine point eight, I'm sorry, what was
(10:57):
that bid? The scott Scots, some big guy booming boys.
Geek bids nine point nine. WGCZ bids ten million. You know,
it was just back and forth and back and forth.
So it was a bit theatrical, you know. So then
the bidding continues, bid it up to eleven. Then Seyffert
(11:19):
piped up eleven point two and they asked for other
bids and that was it. Eleven point two BAM Penthouse
was sold to a company that Kelly knew nothing about.
Kelly assumed that she and Robert would spend loads of
time together, at least over the next few days, but
(11:41):
he had other plans. The next thing I remember him
saying was that he had to get back on a
plane because he had a dentist's appointment in Prague. And
I said, you just bought Penthouse. You bought one of
the most iconic adult brands in the world, and you're
going to go to a dental appointment. I think you
need to reset that, don't you. Kelly later discovered that
(12:02):
Robert had bid for her company on a win. The
story goes that Robert heard that Penthouse was up for
at a Friday night dinner party. He jumped on a
plane to la and by Monday, Robert had bought Penthouse.
The whole thing took less than seventy two hours. Kelly
says he barely knew anything about the company's finances. It
(12:24):
seemed he just wanted to own it. We had a
lunch the next day to introduce him to everybody, to
introduce him to the staff. I actually at that point
felt comfortable with him for two reasons. I understood that
he didn't know anything about the company, and I had
(12:45):
a wrong presumption that he would be wise enough to
allow the people who did understand what was happening to
do their job. It didn't work out that way. Penthouse
was broke. It had bills some way just to pay,
but getting funds from Robert proved tricky, and the first
(13:07):
oh my god moment was when Robert Seyffert said, I
don't understand this. Why do I have to pay any money?
I already paid eleven point two million, But that point
had to be explained over and over and over again. Now, look,
Kelly had run Penthouse into bankruptcy, and we're not making
(13:30):
a judgment here on who was right or wrong. But
while Kelly was trying to get on the same page
with Robert, she was hearing things about WGCZ that really
made her nervous. She started to suspect that Robert wasn't
actually in charge. It's not like he has access to
the money of the company. He's a very small part
(13:53):
of this. Kelly learned there was somebody else behind Robert
who was in control. The deber I got into it,
the more concerned I became about just the general level
of secrecy around the company. That lying about, you know,
the money house to move sometimes from a personal account,
(14:14):
sometimes from a business account, sometimes through multiple accounts. That
sounded a bit sketchy to me. And here we are
right back where we started. You might remember to take
from Kelly. It was the very first thing you heard
at the beginning of our theories. If you play that
fast and loose in that environment. I have to assume
(14:37):
that you're playing that fast and loose in every environment,
and that you're not concerned about all the regulations that
underpin our world and his world in Europe, and the
integration of those two worlds. It was a volatile situation
that turned worse. Kelly was fired in twenty eighteen. Her
(14:57):
run at Penthouse was over, and the people she thinks
made the decisions about her future and the future of Penthouse.
She never met them. All she knew was their names.
The pack Hos. That's Stephan Paco and his twin sister
Mallory to be exact, the twins behind the world's most
popular porn sites. More about them when we return Act
(15:26):
two the Prague HQ. We've met some mysterious characters in
the world of porn, but the Paco's they really topped
the bill. They are the owners of w GCZ and
Stefan runs the business day to day. Now, one thing
(15:48):
they do have in common with the owner of their
biggest rival is you might easily believe they don't exist.
They are registered as the owners of w GCZ, but
there is hardly any trace of them on social media.
No pictures. They send out guys like Robert Seafort to
do their business in public. There is even some speculation
(16:12):
online as to whether the twins are actually made up
affront for someone else. Well, they're not. Mallory handled the
corporate side. Stepan is the computer whiz. He loves gaming.
They come from a small town in a region of
eastern France known for its coal mines and its Burgundy wine.
(16:35):
They still rely on friends and family from there to
run their business. Stefan is the one who really blazed
their path into porn and who is ultimately, we learned,
in control of the company. He was running online porn
picture galleries back in two thousand and two. He was
in his early twenties at the time, a skinny redhead.
(16:57):
But twenty years on he is the master of more
internet porn traffic than any other man on earth, and
no one really knows any about him, not even people
in the industry. Again, a question I've asked so many
times over the past year, how is this possible? I
(17:22):
remember looking up the address of their headquarters some Google Maps,
and it wasn't quite a Soviet department block that Kelly
hall In described, but it did look a lot like
the entrance was down a back alley. I couldn't believe
one of the world's top ten websites was being run
out of this building. It just didn't make sense. And
(17:44):
so I hopped on a plane with our producer, Pete Sail. Okay,
we're recording, so yeah, just have every bit about where
we are. And so we arrived in Prague yesterday and
we're sat down this morning to have a coffee and
we know that WDCZ is based here in Prague, and
(18:04):
we just wanted to go and look at their headquarters
and looked it up on Google Maps, and it turns
out that it's just next door to our hotel, and
we actually passed it yesterday when we were going for
dinner and missed it. We walked by the headquarters of
what's possibly the world's biggest porn company and we didn't
even notice. It was a shared building with an open entrance.
(18:28):
There were company signs plastered on the wall, like for
a creation tourist bureau, but most of them more names
of w DCZ subsidiaries. So this was the right spot.
I did try calling them. I didn't try finding a
(18:49):
press office, but I didn't have any luck. And so
I decided to walk in and see if I could
find anyone to speak to. There was no security, no reception,
nothing stopping me from walking in. Just the property manager
who to go out to realize I may not be
(19:11):
their usual type of visitor. So what happened? So this
very lovely man, who was getting very nervous about us
standing around and recording here, he chased me up the stairs.
But because he's quite much older than me, I did
manage to find one floor that had a WDCZ sign
(19:32):
on it, and I knocked on the door and a
man came out and looked quite confused as to why
I was there, and I told him I'm a journalist
and you know, I'm trying to reach out to their
press office, and he said, I don't think we have one.
I asked, can I speak to you? He said no?
And you know, I said, is there? Do you have
(19:52):
any advice for me? What should I do? And he
said I don't know. And I walked upstairs as well,
and to the great dismay of the property manager, who
had by that time caught up with me, I went
to knock on some of the doors on the other side,
and these two young women opened the door. It was
kind of strange because the door was already open, so
you know, it wasn't locked. I knocked on the door
(20:15):
and they said, you know, we have nothing to do
with the business. Looking back, it was the women that
stuck in my mind. They were young, blonde, thin, and
seemed nervous to see me there. I'm not sure who
they were exactly. Several people. Housins told me that one
(20:38):
of wgcz's production studios is based in that building. They
actually shoot porn in their headquarters, and this studio, it
produces the kind of stuff that anti porn campaigners want banned.
A lot of it is rough and degrading, and that's
not just my take, it's the whole point of it.
(21:00):
It's humiliation porn. The videos shot here are at the
hardest edge of the industry, the physical extreme. The kind
of stuff performers told me, crosses the line for them.
Paco's studio isn't the only one making this kind of porn,
but it is the biggest name in the genre. His
subscription site, called anal VIDs, is the go to destination
(21:25):
for people looking for these kinds of videos. Analvid members
pay roughly thirty dollars a month for the basic plan
and they pay with MasterCard and Visa credit cards. How well, technically,
humiliation pawn isn't banned under Visa and MasterCards core rules,
(21:47):
you know, all those commandments we told you about in
the last episode. But the banks and billers they work with,
the ones who actually process payments for Visa and MasterCard,
they often take a more conservative view. They say no
to some of the acts you'll find on Paco's site.
They don't allow it because they think you will harm
(22:07):
their reputation, or rather that of Visa and MasterCard. But Paco,
he has found some way to make the business work.
And it's not just the paywall sites. Paco's tube sites
also host content with the least amount of restrictions in
the industry. That's according to what we've seen, what sources
(22:29):
have told us. And a spreadsheet, a pawn spreadsheet to
be exact, made by a performer called Sophie Ladder. She
meticulously charts the acts and words that might get you
kicked off adult platforms. Many top sites are covered with
boxes highlighted in red. No menstrual, blood, no kidnapping, role play,
(22:52):
no hypnosis. The platforms that stand out as mostly green.
They are owned by Stefan Paco vomit that's okay, swallowing urine,
fine blood, no problems, the whole thing confused. US Performers
like Stoya have told us how tricky it can be
(23:14):
to navigate complicated rules on porn set by financial institutions.
The Paco's empire seems to stay on the right side
of Visan MasterCard while hosting and making some of the
most extreme content. This industry in general seems to have
a lot of backstories that if you are not aware
you're in deep shit, you just don't get some bookings.
(23:38):
This is Sabian Pneumonia. She is a porn performer who
has worked for Paco studios, including the one at his headquarters.
Many people in the industry shy away from speaking publicly
about their experiences. There's a lot of stake for them.
If you get on the wrong side of the people
in charge, it can be hard to get work with Sabian,
(24:01):
she agreed to talk with me on the record. Sabian
is covered in tattoos all the way up to her neck,
and even though her the art brands are as so
called alternative, meaning it's not always easy to get cast.
She's quickly become quite a big name. Don't let me
ask twice, I've been good girl. Oh yeah, come on,
(24:24):
So how did she become so big, because that's what
everyone's saying. Everyone's like, she just kind of suddenly came
in and now you're everywhere, You're involved in everything. So like,
I mean, I don't I don't really know. I guess
we're working our asses off. Sabian was a glamor model
for years, mainly as a hobby, but then she realized
(24:44):
that the fantasy woman she was cosplaying could actually make
her quite a bit of money. So for the past
three years, Sabian's been a full time porn star. In
that time, she's worked with loads of studios, including Pacos.
If you talk to people in the industry about his studios,
they tend to refer to them by an old umbrella
(25:05):
name Legal Porno, and that work brought her lots of attention.
I did my two first scenes and my following one's
crazy just because I was on legal Partner, Sabian says,
to the studio operating in Paco's headquarters pays well because
of the physical and mental strain that performers are put under.
(25:27):
She described what it was like to shoot for the studio.
We have chosen to include it because we don't want
to gloss over the fact that the porn industry asks
a lot of performers. When I speak to people inside
the industry, everyone's saying like, no one wants to do
that stuff, Like it's like the perverts outside of the
industry who want this and we need to supply it.
(25:50):
I've spoken to people who just like say, like, you
know what, keep your money, like I'm gonna I'm not
gonna finish, you know, the shoot here people unfortunately facing
the situation they have to work on them. One's supply situation.
Let's be honest. Porn as a thing supposed to supply
you with the best way of expressing your sexual desires,
(26:13):
and human beings are known for having weird, skinky sometimes
super they pray fantasies. I did this and for me,
it's just gape on with backup dancer period Sabian says
she thinks there's a demand for this kind of porn
from viewers who just want to see women degraded. That's it.
(26:36):
The girl never had it. Let's see how quickly will
make her cry. I should point out Sabian is one
of many performers who have chosen to perform this kind
of porn. She knew exactly what she was getting into.
She actually did some in depth research watching hours of
content on Paco's side. But the industry is full of
(26:58):
very young people, especially in Prague, which is one of
Europe's porn production hubs. Many performers come from countries like
Ukraine and Russia and don't speak Czech or English, and
more importantly, they don't have rights to work in EU countries,
which makes them more dependent on whoever helped them get
(27:18):
the gig in the first place. The point is it's
hard to imagine that everybody can do or does as
much research as Sabian did going into it. Another quick
warning here, Sabian is about to describe in explicit terms
some of the things she experienced shooting for Paco Studios.
(27:40):
We can blame them for many things, but I don't
think any of people who broke on the scene stand
on front of the mirror and be like tomorrow, they
will piss on me, they will fuck me hard, My
ass will be sure. You know, how can I avoid
breaking internally, how I will feel about myself after that
(28:01):
all happened. Even though Sabian says shooting for Paco Studio
put her body in danger, she doesn't think the making
of this kind of porn should be illegal. She sees
it as a matter of choice. In this series, we
haven't sought to expose illegal practices on porn sets. We've
looked at the porn business within the rules. But even
(28:24):
if Paco Studios follow the rules set by the financial
institutions that oil the wheels of the porn industry, it's
clear that the kind of porn he makes and selves
is high risk, a level of risk that is simply
too much from many banks, payment processors, and other pornographers.
As we heard in the last episode, this content carries
(28:47):
exactly the sort of reputational risk that payment companies want
to avoid. I did ask Sabian about Paco. She had
never met him, but she did have something to say
about him. Obviously, it's not a fair that the person
who get the least shame get the most money. But
(29:09):
you know, life is life. It's it is I mean,
it's I mean, come on, it's politics, per No, there
are so many other industries where the top guys you
will never know their names. I mean, I agree with
you that it is true that like in any industry,
their private companies. You don't have owned companies one. But
I feel like with porn it's there's the slight difference.
(29:29):
You know, performers, you don't have a right to take
down content. Once you're out there, you're out there right
and as a performer you face a lot of stigma.
Back in the days, you'd have like Larry Flynt and
you Heffner and people are making shitloads of money, but
they went out there and defended the industry. I think
Stefano's just a businessman, and businessmen's like to keep quiet
(29:50):
about their money, where other people who do it for
their ego they will flash everywhere what they do. So
let's not make James Bond out of Stefano. He's just
very good in business making. I guess that's why he
keeps his privacy as a priority. Maybe Stefan Paco is
(30:13):
not quite your secret agent, but he seems to have
a special license in this business. He can make and
distribute some of the most fringe porn on the Internet
and still get paid for it. Could staying below the
radar be the key to how he does this. Before
I left Prague, I found someone who helped us understand
(30:35):
what really makes Paco stand out from his rivals. That's
after the break Act three, White pace to stay low.
So you found a whistleblower. I mean, people are so
(30:57):
reluctant to talk about Paco's empire that when we finally
found someone from the inside who would talk, it certainly
felt like a whistleblower. We recorded an interview, but I
can't use his name. I can't play his voice. He's
too worried about recriminations for that. I can tell you, though,
about his experiences working for the Paco Twins and WGCs
(31:21):
and Douz. He know the place well, yeah, definitely, I
mean well enough to understand the relationship between twins. Apparently
they're not always on great terms. Mallory used to handle
the books and some stuff feared her, but she has
stepped back from the company in recent years. Stefan is
the one who really calls the shots. Apparently he micromanages things.
(31:43):
Our insider called him megalomaniac and the master of puppets.
He has a company for everything. It's a really complex empire,
split into small cells for each business, and he sits
in the middle of it. All. Sounds like he's pretty headstrong,
self reliant kind of guy, And that's the key word,
(32:04):
self reliant. This guy I spoke to mentions something crucial
about Paco's business that I missed at first. It wasn't
until months after our conversation that the lightbulb moment finally came.
He told me that Paco had built his own payment processor.
(32:26):
You know those companies at the bottom of the visa
and MasterCard ecosystem that write detailed rules on what type
of porn is allowed. Well, that's one way to gain
real independence. You still need a bank, but it just
gives you much more operating freedom, especially on content that
(32:46):
might be banned by other sites. Exactly. This is how
he can run some of the most permissive porn sites
on the Internet and still make money. The payment processor.
Some other porn companies have their own payment processor, but
few rely so heavily on them. It allows Paco to
make a direct link between subscribers who pay for his
(33:08):
porn and his bank. Because he owns the payment processor,
he needs to rely on fewer financial companies. He essentially
cut them and their regulations out to differentiate yourself. Now
you've got to do something different, Edgy. I mean, you know,
keep it legal, but it's got to be some different.
(33:30):
This is Kevin Smith. He's a payment's consultant and has
been in the industry for close to three decades, specializing
in risk management. My question was, how big a deal
is it that Paco has his own payment processor. It
gives some extra flexibility on that particular content. It means
that if they have to make some dramatic decisions to
(33:52):
pull or change, it doesn't affect other parts of the business.
It primarily just gives them more control, control, independence, the
very things that appeal to man like Stefan Paco. Kevin said,
setting up a payment processor is not easy. It's a
(34:16):
tech challenge. There is lots of data regulation. Most companies
think it's better to just pay someone to handle that.
But being independent does have benefits, especially if you want
to set your own rules, if you want to decide
what porn is acceptable to make and what is acceptable
to sell. At the end of the day, you look
(34:37):
at it and go the Visa MasterCard rules at the
highest level basically say keep it legal. In the jurisdiction
of the seller, and the buyer for adult has the
extra flavor said keep it legal and none of the following,
and then you're right. The rest of it is open
to interpretation. If it isn't any of the above, you
have absolute flexibility. Those words are still ringing in my head.
(35:03):
Absolute flexibility, and Stefan had found a way to minimize
the constraints escape through many restrictions faced by other porn sites.
We had spent six months trying to contact Stephan phone email,
Patricia visited his office, and then, in a late breaking surprise,
(35:26):
WGCZ actually confirmed what we had suspected in writing it
was incredible. Right when we were about to lock this
episode for a release, we got a response from Paco's
tube site x Videos, an email that explained the company's
strategy and overall outlook on porn. And what's so weird
(35:49):
about that message is that it's unsigned, but written in
the first person, and it references a meeting that only
Paco could have attended, so it sounded to us like
Paco wrote it himself. It said, hello, ft, here are
some comments from us. We're a little late. Sorry, And
(36:09):
the most important point the email makes is this. It
basically says that Visa and MasterCard care most about stopping
illegal sexual content, which is absolutely true. The company or Paco,
has realized that what prompts Visa and master Card to
take action are videos made or distributed without the consent
(36:33):
of the people in them, and that's what they say.
Their priority is meeting the core MasterCard and Visa rules,
not all the extras and detailed additional restrictions that banks
and processes in the Visa and MasterCard networks might require.
The email said that as far as Paco's company is concerned,
(36:56):
all porn made with concent is fine, including the type
of humiliation porn that Sabian told us about, and that
quote efforts should be spent on fighting actual non consensual
content rather than consensual kinks and role plays. They'd love
for all the payment intermediaries that ban certain types of
(37:19):
porn to just back off. The email argues that lots
of sites and social media platforms carry similar content to Paco,
but that press and politicians keep in their words, hammering
away at the same two or three tube sites. Their
point is that wild user generated content has been transformative
(37:41):
from mainstream media. It's been a disaster for pawn. To
quote his email today, the adult industry is a giant mess.
People fight each other a lot. You've got systematic industry,
scale piracy, revenge, pawn, stolen content everywhere. And Paco controls
about a third of all pawn traffic, a third mainly
(38:05):
through his free tube sites. And yet here he is
saying he's not happy with how the industry is developed.
And this is a surprising part. He went on to
say that the industry could be fixed again by politicians,
but only as long as they dropped the bias against
(38:26):
porn and quote talk to people who actually understand the
industry and the Internet. Could one of the most secretive
men in porn be calling for government intervention? Stephan Paco
has shown us that if you understand the payment's world,
if you do just enough to never upset master Card
(38:46):
or Visa, you can glide on. So there he is
with this enormous growing empire and an anonymous entity at
the top of it that hasn't been cracked down on
by Visa or MasterCard. Well they haven't cracked down on
it yet. Next time on Hot Money. If the company
(39:14):
behind x videos taught us one thing, It's that if
you want to revolutionize pawn, it's payments that you have
to figure out, and it just so happens that a
fresh wind of change is blowing through the world of pawn.
Will tell you how it finance Fetish helped make a
(39:34):
groundbreaking side called Only Fans, and how uptide bankers almost
chased it out of the porn industry. I mean for
a lot of people it was It's like being cut
down at the knees. Do you have regrets on how
you handled it? Looking back? Not on how it was handled.
I don't think we had much of a choice, but
(39:54):
I deeply regret the amount of concern an anxiety it caused.
Hot Money is a production of The Financial Times and
(40:15):
Pushkin Industries. It was written and reported by Me, Patricia
Neilson and me Alex Barker. Peter Sale is our lead
producer and sound designer. Edith Russolo is our associate producer.
Our editor is Karen Shakerjie Amanda Kwong is our engineer.
Music composition by Pascal Wise, fact checking by Andrea Lopez Kusado.
(40:40):
Our executive producers are Cheryl Brumley and Jacob Goldstein. Special
thanks to Renee Kaplan and Ruler Kalov for The Financial Times,
and Mia Lobel, Lital Molad, Justine Lang, Julia Barton, and
Jacob Weisberg at Pushkin Industries. We had a lot of
help for this episode from our external researcher, Voiche Mihauak.
(41:01):
If you like this show, consider subscribing to Pushkin Plus,
offering bonus content and ad free listening across our network
four dollars nine nine a month. Look for the Pushkin
Plus channel on Apple Podcasts or at pushkin dot Fm.
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