1 00:00:15,516 --> 00:00:24,276 Speaker 1: Pushkin, Welcome back. Here's your reminder. This is a series 2 00:00:24,316 --> 00:00:28,196 Speaker 1: about power and money and the porn industry. Some parts 3 00:00:28,196 --> 00:00:31,676 Speaker 1: of this series are very much for adults. We should 4 00:00:31,676 --> 00:00:36,676 Speaker 1: warn you that this episode contains very graphic depictions of 5 00:00:36,716 --> 00:00:40,556 Speaker 1: a type of pornography that some people might find upsetting. 6 00:00:44,036 --> 00:00:46,916 Speaker 1: In our last episode, we told you all about the 7 00:00:46,956 --> 00:00:49,716 Speaker 1: way mine gee came up against a wall of reckoning. 8 00:00:50,196 --> 00:00:54,156 Speaker 1: The giant of online porn, the company that has dominated 9 00:00:54,236 --> 00:00:58,436 Speaker 1: this industry more than any other, was finally cut down 10 00:00:58,476 --> 00:01:01,596 Speaker 1: to size. It was cut down by two of the 11 00:01:01,636 --> 00:01:06,676 Speaker 1: most everyday businesses you could imagine, Visa and MasterCard, huge 12 00:01:06,756 --> 00:01:10,836 Speaker 1: payments companies that seem to moon as the regulators of 13 00:01:10,916 --> 00:01:15,876 Speaker 1: world porn. But here's the puzzle for this episode. While 14 00:01:15,956 --> 00:01:19,676 Speaker 1: mine geek took down millions of videos, its biggest rival 15 00:01:19,836 --> 00:01:25,436 Speaker 1: seemed untouched by the whole affair. This other company serves 16 00:01:25,476 --> 00:01:28,556 Speaker 1: more pawn to more people in the world today than 17 00:01:28,676 --> 00:01:32,596 Speaker 1: mine Geek, ever did. Not only that, it makes mine 18 00:01:32,636 --> 00:01:36,796 Speaker 1: geek look like a beacon of transparency, just listen to 19 00:01:36,916 --> 00:01:43,836 Speaker 1: its extraordinarily forgettable name. Wgc Z. It stands for Web 20 00:01:43,876 --> 00:01:46,956 Speaker 1: Group Czech Republic. You know, because it's a web group 21 00:01:47,396 --> 00:01:52,716 Speaker 1: in the Czech Republic. Wgcz's tube sites x videos and 22 00:01:53,076 --> 00:01:57,636 Speaker 1: xn xx host about six million visits a month. That's 23 00:01:57,756 --> 00:02:01,396 Speaker 1: roughly the same as Twitter, and much more than mine 24 00:02:01,396 --> 00:02:06,636 Speaker 1: geek's flagship site, Pornhub. But you're probably hearing about WGCZ, 25 00:02:07,196 --> 00:02:10,356 Speaker 1: the owner of all those popular sites. For the first time, 26 00:02:13,116 --> 00:02:16,876 Speaker 1: we've discovered that in the pornography world, the competition between 27 00:02:16,876 --> 00:02:22,236 Speaker 1: the two companies, mine Geek and WGCZ speers. They're like 28 00:02:22,556 --> 00:02:27,676 Speaker 1: rival clans, the Montagues and Capellets of porn. Day by 29 00:02:27,756 --> 00:02:32,356 Speaker 1: day they fight to dominate the industry, mostly for money, 30 00:02:32,516 --> 00:02:36,596 Speaker 1: sometimes just out of spite. And despite having similar origins, 31 00:02:37,316 --> 00:02:41,796 Speaker 1: these two powerful porn empires have taken very different paths. 32 00:02:43,836 --> 00:02:47,276 Speaker 1: They both started out as pirates. But there is a 33 00:02:47,516 --> 00:02:51,476 Speaker 1: time when the pirate ship comes into port and starts 34 00:02:51,516 --> 00:02:53,596 Speaker 1: to improve the island that it's ported at, and it 35 00:02:53,676 --> 00:02:55,996 Speaker 1: ceases to be the pirate. Mine Geek seased to be 36 00:02:55,996 --> 00:02:58,356 Speaker 1: the pirate a long time ago. They're a very different 37 00:02:58,396 --> 00:03:02,556 Speaker 1: kind of company. This is Kelly Holland she knows this 38 00:03:02,676 --> 00:03:06,156 Speaker 1: story well. She was there when the tube sites first 39 00:03:06,196 --> 00:03:09,356 Speaker 1: took a swing at the foundations of the porn industry. 40 00:03:09,636 --> 00:03:13,436 Speaker 1: If you go to Montreal. They've got a seven or 41 00:03:13,436 --> 00:03:16,796 Speaker 1: eight story building right on the freeway with their name 42 00:03:16,996 --> 00:03:19,996 Speaker 1: plastered on the side, and they've got huge departments. I 43 00:03:19,996 --> 00:03:25,476 Speaker 1: mean they're running like any large corporation. WGCZ is running 44 00:03:25,516 --> 00:03:33,596 Speaker 1: out of a throwback Soviet block apartment building in Prague 45 00:03:34,316 --> 00:03:38,196 Speaker 1: and the neighbors complained because they were shooting porno in 46 00:03:38,276 --> 00:03:41,236 Speaker 1: an apartment on the second floor and the neighbors could 47 00:03:41,236 --> 00:03:45,276 Speaker 1: hear it. I mean, they're still operating as if they 48 00:03:45,316 --> 00:03:55,396 Speaker 1: were a shadow company. While Visa MasterCard came down hard 49 00:03:55,476 --> 00:03:59,996 Speaker 1: on mine Geek for failing to police content, WTCZ somehow 50 00:04:00,436 --> 00:04:06,236 Speaker 1: dodgedad bullet. If anything, this little known check company has 51 00:04:06,276 --> 00:04:09,916 Speaker 1: been the winner and the war on mine Geek. This 52 00:04:10,596 --> 00:04:14,316 Speaker 1: is the story of wide paced to stay hidden. If 53 00:04:14,316 --> 00:04:19,356 Speaker 1: you're in the business reporn. I'm Patricia Neilson. He's Alex 54 00:04:19,396 --> 00:04:23,916 Speaker 1: Barker from Pushkin Industries in the Financial Times. This is 55 00:04:23,996 --> 00:05:04,476 Speaker 1: Hot Money, Act one wg WHO. We're in the dusty 56 00:05:04,556 --> 00:05:08,236 Speaker 1: hills of the San Fernando Valley in the northwest, outskirts 57 00:05:08,236 --> 00:05:12,596 Speaker 1: of La Kelly Holland is an old school feminist and 58 00:05:12,676 --> 00:05:16,036 Speaker 1: that's actually withdrew her to make porn in the first place. 59 00:05:17,836 --> 00:05:21,436 Speaker 1: For her, back in the nineties, porn was a way 60 00:05:21,476 --> 00:05:25,276 Speaker 1: to stick it to traditional American values that she found stifling. 61 00:05:27,116 --> 00:05:29,876 Speaker 1: What became apparent to me fairly early on was a 62 00:05:30,036 --> 00:05:34,996 Speaker 1: it was a renegade culture. It was a radical culture. 63 00:05:36,156 --> 00:05:42,636 Speaker 1: It was very disruptive. Long story short, Kelly wanted in. First, 64 00:05:43,036 --> 00:05:47,636 Speaker 1: she made a documentary about porn. Bruce Springsteen had just 65 00:05:47,676 --> 00:05:49,556 Speaker 1: come out with Born in the USA, I think, so 66 00:05:49,596 --> 00:05:52,556 Speaker 1: we decided we would call it Porn in the USA, 67 00:05:52,796 --> 00:05:56,916 Speaker 1: and that's how it started. She then went on to 68 00:05:56,916 --> 00:06:00,916 Speaker 1: shoot the real thing. Eventually she became one of the 69 00:06:00,956 --> 00:06:05,916 Speaker 1: industry's first big female directors. Well things don't always work 70 00:06:05,956 --> 00:06:11,436 Speaker 1: out like they should. Well here's Michael. Now I got 71 00:06:11,476 --> 00:06:14,956 Speaker 1: the same working upstairs in the hall closet final clothes. Well, 72 00:06:14,956 --> 00:06:18,396 Speaker 1: that's great. She made such a strong name for herself 73 00:06:18,796 --> 00:06:21,716 Speaker 1: that in two thousand and six she was headhunted by 74 00:06:21,796 --> 00:06:27,356 Speaker 1: one of the most iconic brands in porn, Penthouse. At 75 00:06:27,396 --> 00:06:30,956 Speaker 1: that point, tube sites were just getting started, and as 76 00:06:30,956 --> 00:06:34,916 Speaker 1: they ripped through the adult industry, Kelly kept rising through 77 00:06:34,956 --> 00:06:38,076 Speaker 1: the ranks of Penthouse. When a boss decided to leave, 78 00:06:38,676 --> 00:06:41,796 Speaker 1: he asked Kelly to fill his shoes he said, well, 79 00:06:41,836 --> 00:06:44,276 Speaker 1: I'll put it to you this way, Holland, You're not 80 00:06:44,316 --> 00:06:46,636 Speaker 1: an easy person to get along with. So if I 81 00:06:46,716 --> 00:06:49,036 Speaker 1: have to hire somebody to be president of Penthouse, they're 82 00:06:49,036 --> 00:06:51,236 Speaker 1: probably not going to like you. And if they want 83 00:06:51,236 --> 00:06:52,716 Speaker 1: to fire you, I'm not going to get in their 84 00:06:52,716 --> 00:06:56,396 Speaker 1: way because I respect verticals. So what's your answer? And 85 00:06:56,396 --> 00:07:00,156 Speaker 1: I went, gosh, I guess put like that. That's how 86 00:07:00,396 --> 00:07:05,396 Speaker 1: I actually became president. But as a business leader, Kelly 87 00:07:05,436 --> 00:07:09,436 Speaker 1: faced new challenges. As her old boss had predicted did. 88 00:07:10,116 --> 00:07:14,236 Speaker 1: She soon started clashing with the CEO of Penthouse. To 89 00:07:14,276 --> 00:07:18,676 Speaker 1: get rid of him, Kelly saw only one solution. She 90 00:07:19,516 --> 00:07:23,476 Speaker 1: had to take over the whole thing. Kelly succeeded, sort of. 91 00:07:24,156 --> 00:07:27,196 Speaker 1: She took over Penthouse in twenty sixteen, but only with 92 00:07:27,316 --> 00:07:31,196 Speaker 1: the help of what she jokingly called street corner gangster 93 00:07:31,356 --> 00:07:34,996 Speaker 1: debt at a twenty three percent interest rate. The thing is, 94 00:07:35,636 --> 00:07:39,196 Speaker 1: Kelly didn't get on with the lenders either. The business struggled, 95 00:07:39,356 --> 00:07:42,836 Speaker 1: and by twenty eighteen, just two years after she took over, 96 00:07:43,316 --> 00:07:47,196 Speaker 1: she filed for bankruptcy. Penthouse was once again for sale. 97 00:07:48,156 --> 00:07:51,476 Speaker 1: So a bankruptcy auction is not like a Christie's auction 98 00:07:52,316 --> 00:07:54,996 Speaker 1: where you get that very subtle nod where you get 99 00:07:55,036 --> 00:08:00,076 Speaker 1: the finger up or the placard comes up. The courtroom 100 00:08:00,156 --> 00:08:03,196 Speaker 1: was packed, It was already hot in Los Angeles, and 101 00:08:03,356 --> 00:08:06,756 Speaker 1: I think people were sweating a little bit. Kelly remember 102 00:08:06,836 --> 00:08:10,236 Speaker 1: standing at the back, too nervous to sit down. The 103 00:08:10,316 --> 00:08:13,116 Speaker 1: clown section had to be shaken out first, and then 104 00:08:13,116 --> 00:08:14,956 Speaker 1: it came down to the serious bidders, and that was 105 00:08:15,076 --> 00:08:20,196 Speaker 1: very clearly mine geek and WGCZ mine geek. Of course 106 00:08:20,236 --> 00:08:22,196 Speaker 1: I knew, and I knew them all the way back 107 00:08:22,196 --> 00:08:25,236 Speaker 1: into the man one times because they were so relevant 108 00:08:25,796 --> 00:08:28,916 Speaker 1: in driving the changes in business, and they were very 109 00:08:28,956 --> 00:08:33,476 Speaker 1: relevant in affecting my broadcast. I didn't know anything about WGCZ. 110 00:08:33,676 --> 00:08:38,196 Speaker 1: It took me a day just to remember the four letters. Wait, 111 00:08:38,396 --> 00:08:48,036 Speaker 1: w what WGCZ or w GCZ A corporate brand so 112 00:08:48,076 --> 00:08:53,116 Speaker 1: anonymous that it hides in plain sight. Remember it owns 113 00:08:53,316 --> 00:08:56,996 Speaker 1: x videos, the world's most highly traffic pawn site by 114 00:08:57,036 --> 00:09:00,156 Speaker 1: some distance. It has about one billion more visits a 115 00:09:00,196 --> 00:09:04,636 Speaker 1: month than pawn Hub today. At the auction that day, 116 00:09:05,156 --> 00:09:10,996 Speaker 1: wgcz's representative was Robert Seafort. Kelly remembers that Robert wore 117 00:09:11,036 --> 00:09:14,556 Speaker 1: baggy jeans and a T shirt with holes. He stood 118 00:09:14,596 --> 00:09:18,156 Speaker 1: out among all the suits, and he was trying to 119 00:09:18,156 --> 00:09:22,516 Speaker 1: become her new boss. Kelly asked a colleague about him. 120 00:09:22,636 --> 00:09:25,436 Speaker 1: I said, who is that? And they said X videos. 121 00:09:26,196 --> 00:09:29,196 Speaker 1: I said what he said, Well, you know, we went 122 00:09:29,236 --> 00:09:31,396 Speaker 1: over the numbers with him. He doesn't know anything about 123 00:09:31,396 --> 00:09:36,916 Speaker 1: the company, doesn't know anything about the numbers. The courtroom 124 00:09:37,076 --> 00:09:41,396 Speaker 1: was tense and quiet. This battle was about more than 125 00:09:41,436 --> 00:09:44,556 Speaker 1: the fate of Penthouse. It was a bare knuckle fight 126 00:09:44,676 --> 00:09:48,036 Speaker 1: for pride between the two heavyweights of the porn industry. 127 00:09:48,556 --> 00:09:51,756 Speaker 1: It was very obvious that mine Geek and wgc were 128 00:09:51,756 --> 00:09:55,236 Speaker 1: going to bid against each other. It was who's got 129 00:09:55,276 --> 00:09:58,476 Speaker 1: the largest penis here kind of thing, and they hate 130 00:09:58,516 --> 00:10:03,356 Speaker 1: each other, so it was all about that. So they 131 00:10:03,356 --> 00:10:06,556 Speaker 1: were bidding against each other. And I don't know why 132 00:10:06,636 --> 00:10:10,196 Speaker 1: I felt that WGCZ in that moment, was a better 133 00:10:10,276 --> 00:10:14,076 Speaker 1: choice than mine Geek. In retrospect, I was dead wrong, 134 00:10:14,956 --> 00:10:17,076 Speaker 1: but I was on a dead wrong running streak at 135 00:10:17,116 --> 00:10:20,636 Speaker 1: that point, because you know, every choice I'd made that 136 00:10:20,716 --> 00:10:24,996 Speaker 1: year had been wrong. The bidding continued, Robert Seafort for 137 00:10:25,276 --> 00:10:29,476 Speaker 1: WGCZ and a guy named Scott Justice for mine Geek. 138 00:10:29,836 --> 00:10:34,436 Speaker 1: He would say here, representing mine Geek, Mine geek bids 139 00:10:35,036 --> 00:10:38,916 Speaker 1: nine million, Sit back down, Seafort slouching in the corner, 140 00:10:39,196 --> 00:10:43,236 Speaker 1: wgc Z nine point two. The judge would say what 141 00:10:43,756 --> 00:10:46,356 Speaker 1: at nine point two? WGCZ I'm sorry, could you say 142 00:10:46,356 --> 00:10:49,396 Speaker 1: what is the company again? I just remember he had 143 00:10:49,436 --> 00:10:53,156 Speaker 1: to past twelve time and Robert was very quiet. It's like, 144 00:10:53,516 --> 00:10:56,996 Speaker 1: w GCC bids nine point eight, I'm sorry, what was 145 00:10:57,036 --> 00:11:00,876 Speaker 1: that bid? The scott Scots, some big guy booming boys. 146 00:11:01,316 --> 00:11:07,396 Speaker 1: Geek bids nine point nine. WGCZ bids ten million. You know, 147 00:11:07,556 --> 00:11:09,596 Speaker 1: it was just back and forth and back and forth. 148 00:11:09,916 --> 00:11:13,996 Speaker 1: So it was a bit theatrical, you know. So then 149 00:11:14,036 --> 00:11:19,116 Speaker 1: the bidding continues, bid it up to eleven. Then Seyffert 150 00:11:19,116 --> 00:11:22,596 Speaker 1: piped up eleven point two and they asked for other 151 00:11:22,676 --> 00:11:28,516 Speaker 1: bids and that was it. Eleven point two BAM Penthouse 152 00:11:28,596 --> 00:11:33,076 Speaker 1: was sold to a company that Kelly knew nothing about. 153 00:11:33,796 --> 00:11:36,436 Speaker 1: Kelly assumed that she and Robert would spend loads of 154 00:11:36,476 --> 00:11:39,836 Speaker 1: time together, at least over the next few days, but 155 00:11:41,156 --> 00:11:44,476 Speaker 1: he had other plans. The next thing I remember him 156 00:11:44,476 --> 00:11:45,836 Speaker 1: saying was that he had to get back on a 157 00:11:45,876 --> 00:11:49,116 Speaker 1: plane because he had a dentist's appointment in Prague. And 158 00:11:49,196 --> 00:11:52,636 Speaker 1: I said, you just bought Penthouse. You bought one of 159 00:11:52,636 --> 00:11:56,036 Speaker 1: the most iconic adult brands in the world, and you're 160 00:11:56,076 --> 00:11:57,996 Speaker 1: going to go to a dental appointment. I think you 161 00:11:58,036 --> 00:12:02,476 Speaker 1: need to reset that, don't you. Kelly later discovered that 162 00:12:02,596 --> 00:12:06,036 Speaker 1: Robert had bid for her company on a win. The 163 00:12:06,076 --> 00:12:08,916 Speaker 1: story goes that Robert heard that Penthouse was up for 164 00:12:09,116 --> 00:12:12,556 Speaker 1: at a Friday night dinner party. He jumped on a 165 00:12:12,556 --> 00:12:16,516 Speaker 1: plane to la and by Monday, Robert had bought Penthouse. 166 00:12:17,076 --> 00:12:20,676 Speaker 1: The whole thing took less than seventy two hours. Kelly 167 00:12:20,756 --> 00:12:24,676 Speaker 1: says he barely knew anything about the company's finances. It 168 00:12:24,836 --> 00:12:28,316 Speaker 1: seemed he just wanted to own it. We had a 169 00:12:28,396 --> 00:12:31,196 Speaker 1: lunch the next day to introduce him to everybody, to 170 00:12:31,196 --> 00:12:34,756 Speaker 1: introduce him to the staff. I actually at that point 171 00:12:34,836 --> 00:12:40,076 Speaker 1: felt comfortable with him for two reasons. I understood that 172 00:12:40,156 --> 00:12:45,676 Speaker 1: he didn't know anything about the company, and I had 173 00:12:45,716 --> 00:12:51,076 Speaker 1: a wrong presumption that he would be wise enough to 174 00:12:51,236 --> 00:12:53,516 Speaker 1: allow the people who did understand what was happening to 175 00:12:53,596 --> 00:12:57,636 Speaker 1: do their job. It didn't work out that way. Penthouse 176 00:12:57,716 --> 00:13:00,516 Speaker 1: was broke. It had bills some way just to pay, 177 00:13:01,396 --> 00:13:07,396 Speaker 1: but getting funds from Robert proved tricky, and the first 178 00:13:07,436 --> 00:13:12,676 Speaker 1: oh my god moment was when Robert Seyffert said, I 179 00:13:12,716 --> 00:13:16,476 Speaker 1: don't understand this. Why do I have to pay any money? 180 00:13:16,916 --> 00:13:21,036 Speaker 1: I already paid eleven point two million, But that point 181 00:13:21,116 --> 00:13:26,196 Speaker 1: had to be explained over and over and over again. Now, look, 182 00:13:26,676 --> 00:13:30,436 Speaker 1: Kelly had run Penthouse into bankruptcy, and we're not making 183 00:13:30,436 --> 00:13:34,156 Speaker 1: a judgment here on who was right or wrong. But 184 00:13:34,236 --> 00:13:36,516 Speaker 1: while Kelly was trying to get on the same page 185 00:13:36,516 --> 00:13:41,316 Speaker 1: with Robert, she was hearing things about WGCZ that really 186 00:13:41,636 --> 00:13:45,876 Speaker 1: made her nervous. She started to suspect that Robert wasn't 187 00:13:45,916 --> 00:13:49,196 Speaker 1: actually in charge. It's not like he has access to 188 00:13:49,236 --> 00:13:53,276 Speaker 1: the money of the company. He's a very small part 189 00:13:53,316 --> 00:13:57,836 Speaker 1: of this. Kelly learned there was somebody else behind Robert 190 00:13:58,236 --> 00:14:00,996 Speaker 1: who was in control. The deber I got into it, 191 00:14:01,076 --> 00:14:06,796 Speaker 1: the more concerned I became about just the general level 192 00:14:06,836 --> 00:14:11,516 Speaker 1: of secrecy around the company. That lying about, you know, 193 00:14:11,556 --> 00:14:14,316 Speaker 1: the money house to move sometimes from a personal account, 194 00:14:14,356 --> 00:14:19,796 Speaker 1: sometimes from a business account, sometimes through multiple accounts. That 195 00:14:19,956 --> 00:14:23,476 Speaker 1: sounded a bit sketchy to me. And here we are 196 00:14:24,396 --> 00:14:27,716 Speaker 1: right back where we started. You might remember to take 197 00:14:27,756 --> 00:14:30,796 Speaker 1: from Kelly. It was the very first thing you heard 198 00:14:30,836 --> 00:14:33,756 Speaker 1: at the beginning of our theories. If you play that 199 00:14:33,796 --> 00:14:37,196 Speaker 1: fast and loose in that environment. I have to assume 200 00:14:37,276 --> 00:14:39,516 Speaker 1: that you're playing that fast and loose in every environment, 201 00:14:40,356 --> 00:14:44,836 Speaker 1: and that you're not concerned about all the regulations that 202 00:14:44,956 --> 00:14:48,396 Speaker 1: underpin our world and his world in Europe, and the 203 00:14:48,436 --> 00:14:52,636 Speaker 1: integration of those two worlds. It was a volatile situation 204 00:14:52,916 --> 00:14:57,356 Speaker 1: that turned worse. Kelly was fired in twenty eighteen. Her 205 00:14:57,396 --> 00:15:00,716 Speaker 1: run at Penthouse was over, and the people she thinks 206 00:15:00,876 --> 00:15:04,196 Speaker 1: made the decisions about her future and the future of Penthouse. 207 00:15:04,836 --> 00:15:07,716 Speaker 1: She never met them. All she knew was their names. 208 00:15:08,316 --> 00:15:12,476 Speaker 1: The pack Hos. That's Stephan Paco and his twin sister 209 00:15:12,556 --> 00:15:16,876 Speaker 1: Mallory to be exact, the twins behind the world's most 210 00:15:16,876 --> 00:15:26,116 Speaker 1: popular porn sites. More about them when we return Act 211 00:15:26,116 --> 00:15:34,636 Speaker 1: two the Prague HQ. We've met some mysterious characters in 212 00:15:34,676 --> 00:15:39,596 Speaker 1: the world of porn, but the Paco's they really topped 213 00:15:39,636 --> 00:15:43,676 Speaker 1: the bill. They are the owners of w GCZ and 214 00:15:43,796 --> 00:15:48,956 Speaker 1: Stefan runs the business day to day. Now, one thing 215 00:15:48,996 --> 00:15:51,036 Speaker 1: they do have in common with the owner of their 216 00:15:51,036 --> 00:15:55,996 Speaker 1: biggest rival is you might easily believe they don't exist. 217 00:15:57,196 --> 00:16:00,796 Speaker 1: They are registered as the owners of w GCZ, but 218 00:16:00,876 --> 00:16:03,756 Speaker 1: there is hardly any trace of them on social media. 219 00:16:04,116 --> 00:16:08,636 Speaker 1: No pictures. They send out guys like Robert Seafort to 220 00:16:08,756 --> 00:16:12,756 Speaker 1: do their business in public. There is even some speculation 221 00:16:12,876 --> 00:16:17,436 Speaker 1: online as to whether the twins are actually made up 222 00:16:18,076 --> 00:16:24,036 Speaker 1: affront for someone else. Well, they're not. Mallory handled the 223 00:16:24,036 --> 00:16:28,236 Speaker 1: corporate side. Stepan is the computer whiz. He loves gaming. 224 00:16:28,916 --> 00:16:30,796 Speaker 1: They come from a small town in a region of 225 00:16:30,836 --> 00:16:34,836 Speaker 1: eastern France known for its coal mines and its Burgundy wine. 226 00:16:35,356 --> 00:16:37,676 Speaker 1: They still rely on friends and family from there to 227 00:16:37,796 --> 00:16:41,916 Speaker 1: run their business. Stefan is the one who really blazed 228 00:16:41,956 --> 00:16:46,396 Speaker 1: their path into porn and who is ultimately, we learned, 229 00:16:46,996 --> 00:16:50,596 Speaker 1: in control of the company. He was running online porn 230 00:16:50,676 --> 00:16:53,796 Speaker 1: picture galleries back in two thousand and two. He was 231 00:16:53,836 --> 00:16:56,676 Speaker 1: in his early twenties at the time, a skinny redhead. 232 00:16:57,356 --> 00:17:02,076 Speaker 1: But twenty years on he is the master of more 233 00:17:02,196 --> 00:17:06,796 Speaker 1: internet porn traffic than any other man on earth, and 234 00:17:07,796 --> 00:17:11,196 Speaker 1: no one really knows any about him, not even people 235 00:17:11,196 --> 00:17:15,996 Speaker 1: in the industry. Again, a question I've asked so many 236 00:17:16,076 --> 00:17:22,876 Speaker 1: times over the past year, how is this possible? I 237 00:17:22,956 --> 00:17:26,236 Speaker 1: remember looking up the address of their headquarters some Google Maps, 238 00:17:26,236 --> 00:17:29,636 Speaker 1: and it wasn't quite a Soviet department block that Kelly 239 00:17:29,676 --> 00:17:32,796 Speaker 1: hall In described, but it did look a lot like 240 00:17:32,836 --> 00:17:36,996 Speaker 1: the entrance was down a back alley. I couldn't believe 241 00:17:37,116 --> 00:17:40,516 Speaker 1: one of the world's top ten websites was being run 242 00:17:40,596 --> 00:17:44,276 Speaker 1: out of this building. It just didn't make sense. And 243 00:17:44,356 --> 00:17:50,716 Speaker 1: so I hopped on a plane with our producer, Pete Sail. Okay, 244 00:17:50,836 --> 00:17:55,116 Speaker 1: we're recording, so yeah, just have every bit about where 245 00:17:55,116 --> 00:17:58,796 Speaker 1: we are. And so we arrived in Prague yesterday and 246 00:17:58,836 --> 00:18:01,516 Speaker 1: we're sat down this morning to have a coffee and 247 00:18:01,556 --> 00:18:04,356 Speaker 1: we know that WDCZ is based here in Prague, and 248 00:18:04,436 --> 00:18:07,276 Speaker 1: we just wanted to go and look at their headquarters 249 00:18:07,436 --> 00:18:09,956 Speaker 1: and looked it up on Google Maps, and it turns 250 00:18:09,956 --> 00:18:13,596 Speaker 1: out that it's just next door to our hotel, and 251 00:18:13,716 --> 00:18:16,156 Speaker 1: we actually passed it yesterday when we were going for 252 00:18:16,236 --> 00:18:21,076 Speaker 1: dinner and missed it. We walked by the headquarters of 253 00:18:21,076 --> 00:18:24,036 Speaker 1: what's possibly the world's biggest porn company and we didn't 254 00:18:24,076 --> 00:18:28,276 Speaker 1: even notice. It was a shared building with an open entrance. 255 00:18:28,916 --> 00:18:32,396 Speaker 1: There were company signs plastered on the wall, like for 256 00:18:32,516 --> 00:18:36,996 Speaker 1: a creation tourist bureau, but most of them more names 257 00:18:37,036 --> 00:18:42,316 Speaker 1: of w DCZ subsidiaries. So this was the right spot. 258 00:18:46,796 --> 00:18:49,316 Speaker 1: I did try calling them. I didn't try finding a 259 00:18:49,356 --> 00:18:54,356 Speaker 1: press office, but I didn't have any luck. And so 260 00:18:54,996 --> 00:18:57,756 Speaker 1: I decided to walk in and see if I could 261 00:18:57,796 --> 00:19:03,916 Speaker 1: find anyone to speak to. There was no security, no reception, 262 00:19:04,836 --> 00:19:08,076 Speaker 1: nothing stopping me from walking in. Just the property manager 263 00:19:08,236 --> 00:19:11,436 Speaker 1: who to go out to realize I may not be 264 00:19:11,556 --> 00:19:17,276 Speaker 1: their usual type of visitor. So what happened? So this 265 00:19:17,516 --> 00:19:19,636 Speaker 1: very lovely man, who was getting very nervous about us 266 00:19:19,636 --> 00:19:22,396 Speaker 1: standing around and recording here, he chased me up the stairs. 267 00:19:23,316 --> 00:19:25,796 Speaker 1: But because he's quite much older than me, I did 268 00:19:25,876 --> 00:19:31,956 Speaker 1: manage to find one floor that had a WDCZ sign 269 00:19:32,036 --> 00:19:34,316 Speaker 1: on it, and I knocked on the door and a 270 00:19:34,356 --> 00:19:38,476 Speaker 1: man came out and looked quite confused as to why 271 00:19:38,556 --> 00:19:41,196 Speaker 1: I was there, and I told him I'm a journalist 272 00:19:41,236 --> 00:19:42,996 Speaker 1: and you know, I'm trying to reach out to their 273 00:19:43,036 --> 00:19:46,116 Speaker 1: press office, and he said, I don't think we have one. 274 00:19:46,436 --> 00:19:49,116 Speaker 1: I asked, can I speak to you? He said no? 275 00:19:50,276 --> 00:19:52,596 Speaker 1: And you know, I said, is there? Do you have 276 00:19:52,636 --> 00:19:54,436 Speaker 1: any advice for me? What should I do? And he 277 00:19:54,516 --> 00:19:57,316 Speaker 1: said I don't know. And I walked upstairs as well, 278 00:19:57,676 --> 00:20:00,556 Speaker 1: and to the great dismay of the property manager, who 279 00:20:00,556 --> 00:20:03,996 Speaker 1: had by that time caught up with me, I went 280 00:20:04,036 --> 00:20:05,916 Speaker 1: to knock on some of the doors on the other side, 281 00:20:06,276 --> 00:20:09,476 Speaker 1: and these two young women opened the door. It was 282 00:20:09,516 --> 00:20:12,476 Speaker 1: kind of strange because the door was already open, so 283 00:20:12,596 --> 00:20:14,676 Speaker 1: you know, it wasn't locked. I knocked on the door 284 00:20:15,356 --> 00:20:17,716 Speaker 1: and they said, you know, we have nothing to do 285 00:20:17,756 --> 00:20:26,876 Speaker 1: with the business. Looking back, it was the women that 286 00:20:26,956 --> 00:20:31,276 Speaker 1: stuck in my mind. They were young, blonde, thin, and 287 00:20:31,396 --> 00:20:34,356 Speaker 1: seemed nervous to see me there. I'm not sure who 288 00:20:34,356 --> 00:20:38,676 Speaker 1: they were exactly. Several people. Housins told me that one 289 00:20:38,676 --> 00:20:43,196 Speaker 1: of wgcz's production studios is based in that building. They 290 00:20:43,236 --> 00:20:48,956 Speaker 1: actually shoot porn in their headquarters, and this studio, it 291 00:20:48,996 --> 00:20:53,196 Speaker 1: produces the kind of stuff that anti porn campaigners want banned. 292 00:20:53,836 --> 00:20:57,156 Speaker 1: A lot of it is rough and degrading, and that's 293 00:20:57,196 --> 00:21:00,436 Speaker 1: not just my take, it's the whole point of it. 294 00:21:00,436 --> 00:21:03,996 Speaker 1: It's humiliation porn. The videos shot here are at the 295 00:21:04,036 --> 00:21:08,356 Speaker 1: hardest edge of the industry, the physical extreme. The kind 296 00:21:08,396 --> 00:21:12,796 Speaker 1: of stuff performers told me, crosses the line for them. 297 00:21:12,956 --> 00:21:16,076 Speaker 1: Paco's studio isn't the only one making this kind of porn, 298 00:21:16,916 --> 00:21:20,036 Speaker 1: but it is the biggest name in the genre. His 299 00:21:20,196 --> 00:21:25,276 Speaker 1: subscription site, called anal VIDs, is the go to destination 300 00:21:25,476 --> 00:21:29,356 Speaker 1: for people looking for these kinds of videos. Analvid members 301 00:21:29,476 --> 00:21:32,796 Speaker 1: pay roughly thirty dollars a month for the basic plan 302 00:21:33,156 --> 00:21:42,876 Speaker 1: and they pay with MasterCard and Visa credit cards. How well, technically, 303 00:21:43,116 --> 00:21:47,436 Speaker 1: humiliation pawn isn't banned under Visa and MasterCards core rules, 304 00:21:47,796 --> 00:21:50,316 Speaker 1: you know, all those commandments we told you about in 305 00:21:50,356 --> 00:21:53,796 Speaker 1: the last episode. But the banks and billers they work with, 306 00:21:53,996 --> 00:21:57,636 Speaker 1: the ones who actually process payments for Visa and MasterCard, 307 00:21:58,276 --> 00:22:01,556 Speaker 1: they often take a more conservative view. They say no 308 00:22:01,836 --> 00:22:04,756 Speaker 1: to some of the acts you'll find on Paco's site. 309 00:22:05,156 --> 00:22:07,836 Speaker 1: They don't allow it because they think you will harm 310 00:22:07,876 --> 00:22:12,796 Speaker 1: their reputation, or rather that of Visa and MasterCard. But Paco, 311 00:22:13,196 --> 00:22:16,476 Speaker 1: he has found some way to make the business work. 312 00:22:17,156 --> 00:22:21,276 Speaker 1: And it's not just the paywall sites. Paco's tube sites 313 00:22:21,596 --> 00:22:25,076 Speaker 1: also host content with the least amount of restrictions in 314 00:22:25,116 --> 00:22:29,316 Speaker 1: the industry. That's according to what we've seen, what sources 315 00:22:29,316 --> 00:22:34,116 Speaker 1: have told us. And a spreadsheet, a pawn spreadsheet to 316 00:22:34,156 --> 00:22:38,276 Speaker 1: be exact, made by a performer called Sophie Ladder. She 317 00:22:38,596 --> 00:22:42,236 Speaker 1: meticulously charts the acts and words that might get you 318 00:22:42,396 --> 00:22:46,796 Speaker 1: kicked off adult platforms. Many top sites are covered with 319 00:22:46,916 --> 00:22:52,476 Speaker 1: boxes highlighted in red. No menstrual, blood, no kidnapping, role play, 320 00:22:52,956 --> 00:22:57,836 Speaker 1: no hypnosis. The platforms that stand out as mostly green. 321 00:22:58,956 --> 00:23:04,396 Speaker 1: They are owned by Stefan Paco vomit that's okay, swallowing urine, 322 00:23:04,636 --> 00:23:12,436 Speaker 1: fine blood, no problems, the whole thing confused. US Performers 323 00:23:12,436 --> 00:23:14,796 Speaker 1: like Stoya have told us how tricky it can be 324 00:23:14,996 --> 00:23:19,716 Speaker 1: to navigate complicated rules on porn set by financial institutions. 325 00:23:20,596 --> 00:23:23,956 Speaker 1: The Paco's empire seems to stay on the right side 326 00:23:23,956 --> 00:23:27,836 Speaker 1: of Visan MasterCard while hosting and making some of the 327 00:23:27,876 --> 00:23:31,956 Speaker 1: most extreme content. This industry in general seems to have 328 00:23:32,076 --> 00:23:34,516 Speaker 1: a lot of backstories that if you are not aware 329 00:23:34,636 --> 00:23:38,396 Speaker 1: you're in deep shit, you just don't get some bookings. 330 00:23:38,436 --> 00:23:41,516 Speaker 1: This is Sabian Pneumonia. She is a porn performer who 331 00:23:41,556 --> 00:23:45,276 Speaker 1: has worked for Paco studios, including the one at his headquarters. 332 00:23:46,036 --> 00:23:50,396 Speaker 1: Many people in the industry shy away from speaking publicly 333 00:23:50,436 --> 00:23:53,756 Speaker 1: about their experiences. There's a lot of stake for them. 334 00:23:53,836 --> 00:23:55,876 Speaker 1: If you get on the wrong side of the people 335 00:23:55,916 --> 00:24:00,276 Speaker 1: in charge, it can be hard to get work with Sabian, 336 00:24:01,116 --> 00:24:04,796 Speaker 1: she agreed to talk with me on the record. Sabian 337 00:24:04,916 --> 00:24:07,076 Speaker 1: is covered in tattoos all the way up to her neck, 338 00:24:07,676 --> 00:24:10,396 Speaker 1: and even though her the art brands are as so 339 00:24:10,516 --> 00:24:14,076 Speaker 1: called alternative, meaning it's not always easy to get cast. 340 00:24:14,556 --> 00:24:18,236 Speaker 1: She's quickly become quite a big name. Don't let me 341 00:24:18,316 --> 00:24:22,596 Speaker 1: ask twice, I've been good girl. Oh yeah, come on, 342 00:24:24,116 --> 00:24:26,156 Speaker 1: So how did she become so big, because that's what 343 00:24:26,236 --> 00:24:29,476 Speaker 1: everyone's saying. Everyone's like, she just kind of suddenly came 344 00:24:29,516 --> 00:24:32,276 Speaker 1: in and now you're everywhere, You're involved in everything. So like, 345 00:24:33,716 --> 00:24:36,836 Speaker 1: I mean, I don't I don't really know. I guess 346 00:24:37,076 --> 00:24:40,436 Speaker 1: we're working our asses off. Sabian was a glamor model 347 00:24:40,476 --> 00:24:44,276 Speaker 1: for years, mainly as a hobby, but then she realized 348 00:24:44,316 --> 00:24:48,316 Speaker 1: that the fantasy woman she was cosplaying could actually make 349 00:24:48,356 --> 00:24:51,436 Speaker 1: her quite a bit of money. So for the past 350 00:24:51,516 --> 00:24:55,116 Speaker 1: three years, Sabian's been a full time porn star. In 351 00:24:55,276 --> 00:24:58,956 Speaker 1: that time, she's worked with loads of studios, including Pacos. 352 00:24:59,596 --> 00:25:02,516 Speaker 1: If you talk to people in the industry about his studios, 353 00:25:03,196 --> 00:25:05,636 Speaker 1: they tend to refer to them by an old umbrella 354 00:25:05,756 --> 00:25:09,996 Speaker 1: name Legal Porno, and that work brought her lots of attention. 355 00:25:10,596 --> 00:25:13,276 Speaker 1: I did my two first scenes and my following one's 356 00:25:13,476 --> 00:25:18,836 Speaker 1: crazy just because I was on legal Partner, Sabian says, 357 00:25:18,876 --> 00:25:23,156 Speaker 1: to the studio operating in Paco's headquarters pays well because 358 00:25:23,236 --> 00:25:26,716 Speaker 1: of the physical and mental strain that performers are put under. 359 00:25:27,556 --> 00:25:30,556 Speaker 1: She described what it was like to shoot for the studio. 360 00:25:31,316 --> 00:25:34,276 Speaker 1: We have chosen to include it because we don't want 361 00:25:34,276 --> 00:25:37,716 Speaker 1: to gloss over the fact that the porn industry asks 362 00:25:37,756 --> 00:25:41,316 Speaker 1: a lot of performers. When I speak to people inside 363 00:25:41,316 --> 00:25:43,516 Speaker 1: the industry, everyone's saying like, no one wants to do 364 00:25:43,596 --> 00:25:46,916 Speaker 1: that stuff, Like it's like the perverts outside of the 365 00:25:46,956 --> 00:25:49,956 Speaker 1: industry who want this and we need to supply it. 366 00:25:50,396 --> 00:25:53,116 Speaker 1: I've spoken to people who just like say, like, you 367 00:25:53,156 --> 00:25:55,396 Speaker 1: know what, keep your money, like I'm gonna I'm not 368 00:25:55,436 --> 00:26:00,316 Speaker 1: gonna finish, you know, the shoot here people unfortunately facing 369 00:26:00,356 --> 00:26:04,236 Speaker 1: the situation they have to work on them. One's supply situation. 370 00:26:04,676 --> 00:26:08,316 Speaker 1: Let's be honest. Porn as a thing supposed to supply 371 00:26:08,436 --> 00:26:12,556 Speaker 1: you with the best way of expressing your sexual desires, 372 00:26:13,036 --> 00:26:20,076 Speaker 1: and human beings are known for having weird, skinky sometimes 373 00:26:20,076 --> 00:26:24,636 Speaker 1: super they pray fantasies. I did this and for me, 374 00:26:25,036 --> 00:26:28,796 Speaker 1: it's just gape on with backup dancer period Sabian says 375 00:26:28,916 --> 00:26:31,156 Speaker 1: she thinks there's a demand for this kind of porn 376 00:26:31,236 --> 00:26:36,076 Speaker 1: from viewers who just want to see women degraded. That's it. 377 00:26:36,716 --> 00:26:39,436 Speaker 1: The girl never had it. Let's see how quickly will 378 00:26:39,516 --> 00:26:42,836 Speaker 1: make her cry. I should point out Sabian is one 379 00:26:42,876 --> 00:26:45,916 Speaker 1: of many performers who have chosen to perform this kind 380 00:26:45,956 --> 00:26:48,916 Speaker 1: of porn. She knew exactly what she was getting into. 381 00:26:49,556 --> 00:26:53,356 Speaker 1: She actually did some in depth research watching hours of 382 00:26:53,436 --> 00:26:57,916 Speaker 1: content on Paco's side. But the industry is full of 383 00:26:58,156 --> 00:27:01,996 Speaker 1: very young people, especially in Prague, which is one of 384 00:27:02,036 --> 00:27:06,756 Speaker 1: Europe's porn production hubs. Many performers come from countries like 385 00:27:07,036 --> 00:27:11,236 Speaker 1: Ukraine and Russia and don't speak Czech or English, and 386 00:27:11,356 --> 00:27:15,196 Speaker 1: more importantly, they don't have rights to work in EU countries, 387 00:27:15,836 --> 00:27:18,836 Speaker 1: which makes them more dependent on whoever helped them get 388 00:27:18,836 --> 00:27:22,276 Speaker 1: the gig in the first place. The point is it's 389 00:27:22,316 --> 00:27:26,156 Speaker 1: hard to imagine that everybody can do or does as 390 00:27:26,236 --> 00:27:30,796 Speaker 1: much research as Sabian did going into it. Another quick 391 00:27:30,796 --> 00:27:34,916 Speaker 1: warning here, Sabian is about to describe in explicit terms 392 00:27:35,236 --> 00:27:38,596 Speaker 1: some of the things she experienced shooting for Paco Studios. 393 00:27:40,036 --> 00:27:44,076 Speaker 1: We can blame them for many things, but I don't 394 00:27:44,076 --> 00:27:47,516 Speaker 1: think any of people who broke on the scene stand 395 00:27:47,556 --> 00:27:51,236 Speaker 1: on front of the mirror and be like tomorrow, they 396 00:27:51,236 --> 00:27:54,196 Speaker 1: will piss on me, they will fuck me hard, My 397 00:27:54,316 --> 00:27:57,076 Speaker 1: ass will be sure. You know, how can I avoid 398 00:27:57,276 --> 00:28:00,956 Speaker 1: breaking internally, how I will feel about myself after that 399 00:28:01,156 --> 00:28:05,516 Speaker 1: all happened. Even though Sabian says shooting for Paco Studio 400 00:28:05,676 --> 00:28:09,196 Speaker 1: put her body in danger, she doesn't think the making 401 00:28:09,196 --> 00:28:11,956 Speaker 1: of this kind of porn should be illegal. She sees 402 00:28:11,996 --> 00:28:15,636 Speaker 1: it as a matter of choice. In this series, we 403 00:28:15,716 --> 00:28:20,116 Speaker 1: haven't sought to expose illegal practices on porn sets. We've 404 00:28:20,116 --> 00:28:24,116 Speaker 1: looked at the porn business within the rules. But even 405 00:28:24,156 --> 00:28:27,476 Speaker 1: if Paco Studios follow the rules set by the financial 406 00:28:27,476 --> 00:28:30,876 Speaker 1: institutions that oil the wheels of the porn industry, it's 407 00:28:30,916 --> 00:28:33,956 Speaker 1: clear that the kind of porn he makes and selves 408 00:28:34,316 --> 00:28:38,236 Speaker 1: is high risk, a level of risk that is simply 409 00:28:38,236 --> 00:28:42,796 Speaker 1: too much from many banks, payment processors, and other pornographers. 410 00:28:43,756 --> 00:28:47,556 Speaker 1: As we heard in the last episode, this content carries 411 00:28:47,796 --> 00:28:51,676 Speaker 1: exactly the sort of reputational risk that payment companies want 412 00:28:51,716 --> 00:28:57,396 Speaker 1: to avoid. I did ask Sabian about Paco. She had 413 00:28:57,436 --> 00:29:00,356 Speaker 1: never met him, but she did have something to say 414 00:29:00,396 --> 00:29:03,636 Speaker 1: about him. Obviously, it's not a fair that the person 415 00:29:03,716 --> 00:29:09,476 Speaker 1: who get the least shame get the most money. But 416 00:29:09,716 --> 00:29:12,196 Speaker 1: you know, life is life. It's it is I mean, 417 00:29:12,436 --> 00:29:16,516 Speaker 1: it's I mean, come on, it's politics, per No, there 418 00:29:16,556 --> 00:29:19,836 Speaker 1: are so many other industries where the top guys you 419 00:29:19,876 --> 00:29:22,356 Speaker 1: will never know their names. I mean, I agree with 420 00:29:22,396 --> 00:29:24,796 Speaker 1: you that it is true that like in any industry, 421 00:29:24,836 --> 00:29:27,476 Speaker 1: their private companies. You don't have owned companies one. But 422 00:29:27,516 --> 00:29:29,716 Speaker 1: I feel like with porn it's there's the slight difference. 423 00:29:29,836 --> 00:29:32,236 Speaker 1: You know, performers, you don't have a right to take 424 00:29:32,236 --> 00:29:35,316 Speaker 1: down content. Once you're out there, you're out there right 425 00:29:35,396 --> 00:29:37,316 Speaker 1: and as a performer you face a lot of stigma. 426 00:29:37,436 --> 00:29:39,716 Speaker 1: Back in the days, you'd have like Larry Flynt and 427 00:29:39,796 --> 00:29:42,916 Speaker 1: you Heffner and people are making shitloads of money, but 428 00:29:42,996 --> 00:29:45,596 Speaker 1: they went out there and defended the industry. I think 429 00:29:45,756 --> 00:29:50,676 Speaker 1: Stefano's just a businessman, and businessmen's like to keep quiet 430 00:29:50,716 --> 00:29:53,956 Speaker 1: about their money, where other people who do it for 431 00:29:54,036 --> 00:29:59,636 Speaker 1: their ego they will flash everywhere what they do. So 432 00:29:59,716 --> 00:30:02,956 Speaker 1: let's not make James Bond out of Stefano. He's just 433 00:30:03,356 --> 00:30:06,236 Speaker 1: very good in business making. I guess that's why he 434 00:30:06,316 --> 00:30:13,516 Speaker 1: keeps his privacy as a priority. Maybe Stefan Paco is 435 00:30:13,556 --> 00:30:16,436 Speaker 1: not quite your secret agent, but he seems to have 436 00:30:16,476 --> 00:30:19,756 Speaker 1: a special license in this business. He can make and 437 00:30:19,876 --> 00:30:22,836 Speaker 1: distribute some of the most fringe porn on the Internet 438 00:30:23,236 --> 00:30:26,476 Speaker 1: and still get paid for it. Could staying below the 439 00:30:26,636 --> 00:30:31,076 Speaker 1: radar be the key to how he does this. Before 440 00:30:31,076 --> 00:30:34,796 Speaker 1: I left Prague, I found someone who helped us understand 441 00:30:35,236 --> 00:30:39,396 Speaker 1: what really makes Paco stand out from his rivals. That's 442 00:30:39,396 --> 00:30:49,716 Speaker 1: after the break Act three, White pace to stay low. 443 00:30:52,956 --> 00:30:57,436 Speaker 1: So you found a whistleblower. I mean, people are so 444 00:30:57,596 --> 00:31:01,876 Speaker 1: reluctant to talk about Paco's empire that when we finally 445 00:31:01,916 --> 00:31:04,956 Speaker 1: found someone from the inside who would talk, it certainly 446 00:31:04,996 --> 00:31:09,596 Speaker 1: felt like a whistleblower. We recorded an interview, but I 447 00:31:09,636 --> 00:31:12,716 Speaker 1: can't use his name. I can't play his voice. He's 448 00:31:12,756 --> 00:31:16,796 Speaker 1: too worried about recriminations for that. I can tell you, though, 449 00:31:17,196 --> 00:31:21,676 Speaker 1: about his experiences working for the Paco Twins and WGCs 450 00:31:21,676 --> 00:31:24,436 Speaker 1: and Douz. He know the place well, yeah, definitely, I 451 00:31:24,476 --> 00:31:28,116 Speaker 1: mean well enough to understand the relationship between twins. Apparently 452 00:31:28,156 --> 00:31:31,156 Speaker 1: they're not always on great terms. Mallory used to handle 453 00:31:31,196 --> 00:31:34,956 Speaker 1: the books and some stuff feared her, but she has 454 00:31:34,956 --> 00:31:38,676 Speaker 1: stepped back from the company in recent years. Stefan is 455 00:31:38,676 --> 00:31:42,956 Speaker 1: the one who really calls the shots. Apparently he micromanages things. 456 00:31:43,556 --> 00:31:48,116 Speaker 1: Our insider called him megalomaniac and the master of puppets. 457 00:31:48,796 --> 00:31:52,076 Speaker 1: He has a company for everything. It's a really complex empire, 458 00:31:52,276 --> 00:31:56,076 Speaker 1: split into small cells for each business, and he sits 459 00:31:56,076 --> 00:32:00,516 Speaker 1: in the middle of it. All. Sounds like he's pretty headstrong, 460 00:32:01,036 --> 00:32:04,036 Speaker 1: self reliant kind of guy, And that's the key word, 461 00:32:04,436 --> 00:32:10,156 Speaker 1: self reliant. This guy I spoke to mentions something crucial 462 00:32:10,396 --> 00:32:14,876 Speaker 1: about Paco's business that I missed at first. It wasn't 463 00:32:14,916 --> 00:32:19,116 Speaker 1: until months after our conversation that the lightbulb moment finally came. 464 00:32:20,316 --> 00:32:25,116 Speaker 1: He told me that Paco had built his own payment processor. 465 00:32:26,036 --> 00:32:28,676 Speaker 1: You know those companies at the bottom of the visa 466 00:32:28,716 --> 00:32:32,956 Speaker 1: and MasterCard ecosystem that write detailed rules on what type 467 00:32:32,956 --> 00:32:37,596 Speaker 1: of porn is allowed. Well, that's one way to gain 468 00:32:37,956 --> 00:32:41,956 Speaker 1: real independence. You still need a bank, but it just 469 00:32:42,196 --> 00:32:46,076 Speaker 1: gives you much more operating freedom, especially on content that 470 00:32:46,316 --> 00:32:50,236 Speaker 1: might be banned by other sites. Exactly. This is how 471 00:32:50,236 --> 00:32:52,636 Speaker 1: he can run some of the most permissive porn sites 472 00:32:52,676 --> 00:32:56,716 Speaker 1: on the Internet and still make money. The payment processor. 473 00:32:57,276 --> 00:33:00,636 Speaker 1: Some other porn companies have their own payment processor, but 474 00:33:00,796 --> 00:33:05,316 Speaker 1: few rely so heavily on them. It allows Paco to 475 00:33:05,396 --> 00:33:08,636 Speaker 1: make a direct link between subscribers who pay for his 476 00:33:08,716 --> 00:33:13,556 Speaker 1: porn and his bank. Because he owns the payment processor, 477 00:33:14,156 --> 00:33:19,276 Speaker 1: he needs to rely on fewer financial companies. He essentially 478 00:33:19,276 --> 00:33:24,956 Speaker 1: cut them and their regulations out to differentiate yourself. Now 479 00:33:24,996 --> 00:33:27,716 Speaker 1: you've got to do something different, Edgy. I mean, you know, 480 00:33:27,836 --> 00:33:29,836 Speaker 1: keep it legal, but it's got to be some different. 481 00:33:30,316 --> 00:33:34,116 Speaker 1: This is Kevin Smith. He's a payment's consultant and has 482 00:33:34,156 --> 00:33:37,356 Speaker 1: been in the industry for close to three decades, specializing 483 00:33:37,356 --> 00:33:41,516 Speaker 1: in risk management. My question was, how big a deal 484 00:33:41,796 --> 00:33:45,476 Speaker 1: is it that Paco has his own payment processor. It 485 00:33:45,516 --> 00:33:49,596 Speaker 1: gives some extra flexibility on that particular content. It means 486 00:33:49,676 --> 00:33:52,316 Speaker 1: that if they have to make some dramatic decisions to 487 00:33:52,916 --> 00:33:56,076 Speaker 1: pull or change, it doesn't affect other parts of the business. 488 00:33:56,876 --> 00:34:07,316 Speaker 1: It primarily just gives them more control, control, independence, the 489 00:34:07,636 --> 00:34:12,756 Speaker 1: very things that appeal to man like Stefan Paco. Kevin said, 490 00:34:12,876 --> 00:34:15,996 Speaker 1: setting up a payment processor is not easy. It's a 491 00:34:16,076 --> 00:34:20,796 Speaker 1: tech challenge. There is lots of data regulation. Most companies 492 00:34:20,916 --> 00:34:23,356 Speaker 1: think it's better to just pay someone to handle that. 493 00:34:24,276 --> 00:34:28,596 Speaker 1: But being independent does have benefits, especially if you want 494 00:34:28,596 --> 00:34:31,356 Speaker 1: to set your own rules, if you want to decide 495 00:34:31,476 --> 00:34:34,996 Speaker 1: what porn is acceptable to make and what is acceptable 496 00:34:35,036 --> 00:34:37,156 Speaker 1: to sell. At the end of the day, you look 497 00:34:37,156 --> 00:34:39,236 Speaker 1: at it and go the Visa MasterCard rules at the 498 00:34:39,316 --> 00:34:43,236 Speaker 1: highest level basically say keep it legal. In the jurisdiction 499 00:34:43,316 --> 00:34:46,276 Speaker 1: of the seller, and the buyer for adult has the 500 00:34:46,316 --> 00:34:49,756 Speaker 1: extra flavor said keep it legal and none of the following, 501 00:34:50,436 --> 00:34:52,436 Speaker 1: and then you're right. The rest of it is open 502 00:34:52,516 --> 00:34:56,316 Speaker 1: to interpretation. If it isn't any of the above, you 503 00:34:56,396 --> 00:35:02,676 Speaker 1: have absolute flexibility. Those words are still ringing in my head. 504 00:35:03,196 --> 00:35:08,196 Speaker 1: Absolute flexibility, and Stefan had found a way to minimize 505 00:35:08,236 --> 00:35:13,676 Speaker 1: the constraints escape through many restrictions faced by other porn sites. 506 00:35:14,556 --> 00:35:20,236 Speaker 1: We had spent six months trying to contact Stephan phone email, 507 00:35:20,876 --> 00:35:25,396 Speaker 1: Patricia visited his office, and then, in a late breaking surprise, 508 00:35:26,316 --> 00:35:32,076 Speaker 1: WGCZ actually confirmed what we had suspected in writing it 509 00:35:32,156 --> 00:35:35,556 Speaker 1: was incredible. Right when we were about to lock this 510 00:35:35,596 --> 00:35:39,196 Speaker 1: episode for a release, we got a response from Paco's 511 00:35:39,236 --> 00:35:43,636 Speaker 1: tube site x Videos, an email that explained the company's 512 00:35:43,636 --> 00:35:49,076 Speaker 1: strategy and overall outlook on porn. And what's so weird 513 00:35:49,276 --> 00:35:53,356 Speaker 1: about that message is that it's unsigned, but written in 514 00:35:53,356 --> 00:35:56,556 Speaker 1: the first person, and it references a meeting that only 515 00:35:56,636 --> 00:36:00,636 Speaker 1: Paco could have attended, so it sounded to us like 516 00:36:01,116 --> 00:36:05,636 Speaker 1: Paco wrote it himself. It said, hello, ft, here are 517 00:36:05,676 --> 00:36:09,516 Speaker 1: some comments from us. We're a little late. Sorry, And 518 00:36:09,636 --> 00:36:13,396 Speaker 1: the most important point the email makes is this. It 519 00:36:13,476 --> 00:36:18,156 Speaker 1: basically says that Visa and MasterCard care most about stopping 520 00:36:18,276 --> 00:36:24,716 Speaker 1: illegal sexual content, which is absolutely true. The company or Paco, 521 00:36:24,916 --> 00:36:28,436 Speaker 1: has realized that what prompts Visa and master Card to 522 00:36:28,476 --> 00:36:33,796 Speaker 1: take action are videos made or distributed without the consent 523 00:36:33,876 --> 00:36:36,916 Speaker 1: of the people in them, and that's what they say. 524 00:36:37,116 --> 00:36:42,036 Speaker 1: Their priority is meeting the core MasterCard and Visa rules, 525 00:36:42,596 --> 00:36:47,196 Speaker 1: not all the extras and detailed additional restrictions that banks 526 00:36:47,196 --> 00:36:51,076 Speaker 1: and processes in the Visa and MasterCard networks might require. 527 00:36:52,876 --> 00:36:56,316 Speaker 1: The email said that as far as Paco's company is concerned, 528 00:36:56,836 --> 00:37:00,956 Speaker 1: all porn made with concent is fine, including the type 529 00:37:00,956 --> 00:37:05,036 Speaker 1: of humiliation porn that Sabian told us about, and that 530 00:37:05,476 --> 00:37:09,956 Speaker 1: quote efforts should be spent on fighting actual non consensual 531 00:37:09,996 --> 00:37:15,596 Speaker 1: content rather than consensual kinks and role plays. They'd love 532 00:37:15,636 --> 00:37:19,236 Speaker 1: for all the payment intermediaries that ban certain types of 533 00:37:19,316 --> 00:37:24,916 Speaker 1: porn to just back off. The email argues that lots 534 00:37:24,916 --> 00:37:28,796 Speaker 1: of sites and social media platforms carry similar content to Paco, 535 00:37:29,476 --> 00:37:33,476 Speaker 1: but that press and politicians keep in their words, hammering 536 00:37:33,516 --> 00:37:36,756 Speaker 1: away at the same two or three tube sites. Their 537 00:37:36,836 --> 00:37:41,796 Speaker 1: point is that wild user generated content has been transformative 538 00:37:41,796 --> 00:37:46,476 Speaker 1: from mainstream media. It's been a disaster for pawn. To 539 00:37:46,636 --> 00:37:50,596 Speaker 1: quote his email today, the adult industry is a giant mess. 540 00:37:51,076 --> 00:37:54,716 Speaker 1: People fight each other a lot. You've got systematic industry, 541 00:37:54,716 --> 00:38:01,396 Speaker 1: scale piracy, revenge, pawn, stolen content everywhere. And Paco controls 542 00:38:01,436 --> 00:38:05,636 Speaker 1: about a third of all pawn traffic, a third mainly 543 00:38:05,716 --> 00:38:08,676 Speaker 1: through his free tube sites. And yet here he is 544 00:38:09,436 --> 00:38:12,716 Speaker 1: saying he's not happy with how the industry is developed. 545 00:38:13,436 --> 00:38:16,796 Speaker 1: And this is a surprising part. He went on to 546 00:38:16,876 --> 00:38:22,836 Speaker 1: say that the industry could be fixed again by politicians, 547 00:38:23,876 --> 00:38:26,316 Speaker 1: but only as long as they dropped the bias against 548 00:38:26,356 --> 00:38:30,516 Speaker 1: porn and quote talk to people who actually understand the 549 00:38:30,636 --> 00:38:34,716 Speaker 1: industry and the Internet. Could one of the most secretive 550 00:38:34,756 --> 00:38:39,436 Speaker 1: men in porn be calling for government intervention? Stephan Paco 551 00:38:39,676 --> 00:38:43,236 Speaker 1: has shown us that if you understand the payment's world, 552 00:38:43,796 --> 00:38:46,676 Speaker 1: if you do just enough to never upset master Card 553 00:38:46,756 --> 00:38:51,116 Speaker 1: or Visa, you can glide on. So there he is 554 00:38:51,476 --> 00:38:55,756 Speaker 1: with this enormous growing empire and an anonymous entity at 555 00:38:55,756 --> 00:38:59,516 Speaker 1: the top of it that hasn't been cracked down on 556 00:38:59,716 --> 00:39:03,476 Speaker 1: by Visa or MasterCard. Well they haven't cracked down on 557 00:39:03,556 --> 00:39:14,116 Speaker 1: it yet. Next time on Hot Money. If the company 558 00:39:14,156 --> 00:39:17,956 Speaker 1: behind x videos taught us one thing, It's that if 559 00:39:18,036 --> 00:39:21,916 Speaker 1: you want to revolutionize pawn, it's payments that you have 560 00:39:21,956 --> 00:39:26,396 Speaker 1: to figure out, and it just so happens that a 561 00:39:26,436 --> 00:39:29,996 Speaker 1: fresh wind of change is blowing through the world of pawn. 562 00:39:31,036 --> 00:39:34,276 Speaker 1: Will tell you how it finance Fetish helped make a 563 00:39:34,316 --> 00:39:39,716 Speaker 1: groundbreaking side called Only Fans, and how uptide bankers almost 564 00:39:39,836 --> 00:39:42,556 Speaker 1: chased it out of the porn industry. I mean for 565 00:39:42,596 --> 00:39:44,756 Speaker 1: a lot of people it was It's like being cut 566 00:39:44,756 --> 00:39:48,476 Speaker 1: down at the knees. Do you have regrets on how 567 00:39:48,636 --> 00:39:51,876 Speaker 1: you handled it? Looking back? Not on how it was handled. 568 00:39:51,916 --> 00:39:54,396 Speaker 1: I don't think we had much of a choice, but 569 00:39:54,556 --> 00:40:00,076 Speaker 1: I deeply regret the amount of concern an anxiety it caused. 570 00:40:13,116 --> 00:40:15,676 Speaker 1: Hot Money is a production of The Financial Times and 571 00:40:15,676 --> 00:40:18,956 Speaker 1: Pushkin Industries. It was written and reported by Me, Patricia 572 00:40:18,996 --> 00:40:23,356 Speaker 1: Neilson and me Alex Barker. Peter Sale is our lead 573 00:40:23,396 --> 00:40:27,956 Speaker 1: producer and sound designer. Edith Russolo is our associate producer. 574 00:40:28,156 --> 00:40:33,636 Speaker 1: Our editor is Karen Shakerjie Amanda Kwong is our engineer. 575 00:40:33,996 --> 00:40:39,596 Speaker 1: Music composition by Pascal Wise, fact checking by Andrea Lopez Kusado. 576 00:40:40,116 --> 00:40:44,756 Speaker 1: Our executive producers are Cheryl Brumley and Jacob Goldstein. Special 577 00:40:44,796 --> 00:40:47,916 Speaker 1: thanks to Renee Kaplan and Ruler Kalov for The Financial Times, 578 00:40:48,276 --> 00:40:53,356 Speaker 1: and Mia Lobel, Lital Molad, Justine Lang, Julia Barton, and 579 00:40:53,516 --> 00:40:56,916 Speaker 1: Jacob Weisberg at Pushkin Industries. We had a lot of 580 00:40:56,916 --> 00:41:00,796 Speaker 1: help for this episode from our external researcher, Voiche Mihauak. 581 00:41:01,476 --> 00:41:04,916 Speaker 1: If you like this show, consider subscribing to Pushkin Plus, 582 00:41:04,956 --> 00:41:08,196 Speaker 1: offering bonus content and ad free listening across our network 583 00:41:08,356 --> 00:41:11,156 Speaker 1: four dollars nine nine a month. Look for the Pushkin 584 00:41:11,196 --> 00:41:37,116 Speaker 1: Plus channel on Apple Podcasts or at pushkin dot Fm.