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