Hot Money: Who Rules Porn?

Entering the maze

Business papers don't usually write about the porn industry, even though it owns a large corner of the internet. “That in itself made me curious,” says Nilsson. “Why wouldn't we write about porn just like we do with any other legal industry? I think it's because no one really likes to talk about porn. We're embarrassed to. Even though most of us have watched it at some point, it's taboo.”

So, she started where any business reporter would. “I can normally figure out who the owners are, how much money they make, how they are regulated. But basic information about the businesses who run the [porn] industry are kept like a state secret.”

The more she tried to find out about these companies, the more she felt she was wandering around a maze. “I kept finding names that weren't names and companies that weren't companies.”

The story drew in Nilsson’s editor, Alex Barker. “It started with a routine email from Patricia,” says Alex. “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 realised 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 over our culture, over the way my kids learn about sex – over almost 8% of all internet traffic.”

The journalists decided to give the subject the time it deserves. “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? Who rules porn?”

Stoya’s story

Nilsson and Barker set up a meeting with Jessica, also known by her stage name, Stoya - who is something of an alternative porn icon. She has won the equivalent of an adult Oscar, has written a book, run literary book clubs, and her columns have appeared in the New York Times and Slate. She even starred in one of the most expensive studio porn movies ever made, Pirates 2: Stegnetti's Revenge.

When Stoya hit the height of her career, around 2009, everything in the industry changed as tube sites broke the old studio model for porn and people stopped buying DVDs.

In January 2012, the studio Stoya was working for, Digital Playground, was sold to a company called Manwin. “I was like, oh, I am now tied to a company that is literally named Man-win!” she says. “The people who own Pornhub and Brazzers. They're buying up all these properties, it's weird.”

Manwin, the main owner of tube sites, was buying up everything that was left, like the conqueror of a vanquished land. Stoya, the independently-minded artist, was now working for a porn conglomerate. What she'd witnessed was the birth of the modern porn industry.

Mysterious millionaires

The old world of porn had been a close-knit community where everybody knew each other, but there was no sense of who was behind the tube sites. Or, for that matter, how they were getting away with becoming overnight millionaires with pirated content.

“That led us to Curtis Potech,” says Nilsson. He was there running one of the first big porn tube sites, XTube. Xtube was mainly funded by a mysterious Chinese businessman, who they called Mr. X. The early days of Xtube were chaotic, but there was a basic goal: get as many visitors to the site as possible and hope the advertising money followed.

XTube almost folded when it had to pay 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, while Mr. X and the other owners hid.

“They were older and smarter than I was,” says Potech. “Some people will 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.”
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 realised how much money there was to make on free porn.

He remembers the last of those calls. 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, “If you're going to sell XTube for whatever you want, just give me that number right now.”

The owner replied: “35 million.”

The man on the phone said, “Sure, I'll be there next week.”

Before long the new owner of XTube showed up in his office - a German software engineer called Fabian Tillman. “I believe they were just setting up basically the takeover of the adult industry,” says Curtis.

Remember that name, Fabian Tillman. Because there aren't many that are more important in the history of online porn.

To find out what happened next in Nilsson and Barker’s investigation, you can listen to the full series of Hot Money on BBC Sounds now.