What We Learned from Pornhub’s Committee Appearance and What it Could Mean for Payment Processing in the Adult Entertainment Industry
Feb 9, 2021 8 minute read
History was made last week as executives from MindGeek (the parent company of leading adult brands such as Pornhub) were grilled for two hours by members of Canada’s House of Commons Standing Committee on Access to Information, Privacy, and Ethics.
While it’s clear that the investigations being led by prominent Canadian politicians are only just beginning, the meeting shed light on the problems faced by operators in the industry monetizing user-uploaded content.
So before delving into potential ramifications for the wider industry moving forwards, let’s recap the events leading up to and including the afternoon of Friday the 5th of February.
MindGeek Executives Compelled to Appear in Front of Members of Parliament Over Pornhub Scandal
Feras Antoon and David Tassillo, CEO and COO of MindGeek respectively, appeared in front of the cross-party committee on Friday afternoon to discuss the revelations first uncovered by New York Times journalist Nicholas Kristof in an exposé entitled The Children of Pornhub.
The article alleged that there were hundreds, if not thousands, of videos uploaded to the site depicting illegal sex acts, including those involving minors and others without the consent of those filmed.
The scandal saw major credit card networks such as Visa and Mastercard suspend their payment processing services supplied to the company. The company took several steps to combat the issue of moderating user-uploaded content and safeguarding their platform.
Those measures included:
- Taking down all user-uploaded content
- Restricting uploads to verified content partners, studios, and members of the model program.
- Banning downloads
- Expansion of moderation teams and software solutions
- Ordering an independent compliance review from an outside legal firm (occurred before the scandal back in April 2020)
- Instigating the creation of a Transparency Report (yet to be released) detailing the number of reports filed concerning CSAM (Child Sexual Abuse Material).
However, Canadian politicians still demanded a committee meeting to investigate the operations of MindGeek more closely and hold them to account.
Antoon and Tassillo Dragged Over the Coals in Two-Hour Committee Meeting
The committee meeting started with an opening statement from CEO Antoon in which he stated that 4 million Canadians visit Pornhub every day and that 1.3 million of those were women.
He relayed some of the changes that were taking place (as we’ve outlined above) and mentioned that Pornhub was the first social media site in the world to require a thorough identity check before someone could upload content onto their site. For reference, sites such as Twitter and Reddit continue to allow the anonymous upload of adult content.
He then went onto state that the company is developing an industry-leading “Safeguard” tool that they intend to share via a licensing agreement with other sites needing better moderation of user-uploaded content.
Over the next two hours, the two executives were then pressed on how content that was illegal, non-consensual, or considered CSAM had continually passed automated and human moderation checks.
They were asked for documentation regarding their incredibly complex corporate structure, which includes at least 48 subsidiaries, and what their moderation team budget was pre-December 2020. Legal settlement figures for cases before December 2020 were also requested.
In one of the most interesting exchanges of the session, Antoon also revealed that he could find no record of one of the women named in the exposé articles, Serena Fleites, ever contacting them regarding videos of her uploaded without her consent.
Finally, Tassillo said he “didn’t know off the top of his head” how many people had reported content or requested it to be taken down in the years 2018 and 2019, but pointed to the upcoming Transparency Report as a place to find the 2020 figures.
The meeting concluded with the chairman detailing a list of documents the parliamentarians wished to see from MindGeek, which could spark much broader investigations into the practices of the world’s most prominent pornography company.
So what are the ramifications for the adult industry from this committee meeting?
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Tube Sites Will Need to Step up Verification Efforts or Face Scrutiny from Payment Partners
It’s clear from the exchanges on Friday afternoon that free platforms that monetize user-uploaded content via advertisements will have to step up their verification game.
Card networks and payment processors do not want to be associated with funding child pornography or non-consensual sex. Any adult site that currently allows anonymous uploads of materials could be next on the chopping block when it comes to accepting debit and credit card payments.
Much more effort will need to be put in on your part to identify and ensure that all parties involved in the media submitted to your site consent to the uploading of the video/images and the acts contained within them. Stringent age verification will also be required.
Porn studios have the upper hand in this regard as the models have signed legal contracts outlining consent and the age of performers in black and white. However, it will be much harder for typical amateur models to prove. The Pornhub scandal has shown that a government ID won’t necessarily be enough, although it will help bring about better accountability in cases involving illegal material.
Does this mean the end for tube sites? Only time will tell. But solo performers and amateur couples may have to move to other platforms (such as OnlyFans) or set up their own websites to secure the right to upload and monetize their adult content.
Many of the performers who fall into this category may feel that they are effectively being censored through no fault of their own. But governments may see this as a necessary price to pay to fight child sex abuse and non-consensual pornography allegedly prevalent on Pornhub.
Visa Resumes Payment Processing for Several MindGeek Properties
The move from Visa to resume payment processing for MindGeek properties that sell professionally-produced adult studio content confirms this shift in the stance of card companies. The systems in place for professional adult studios, including signed contracts and safeguarding controls, were enough to prove to Visa that payments could continue using their card network. Mastercard has not yet made the same move but could follow suit.
Initially, both card companies banned payments to all MindGeek properties following the New York Times article, sparking outrage from adult models who depended on sites like Pornhub to make their income. Neither major card network has since allowed the return of processing to what is one of the most popular pornography sites on the internet.
So, where does this leave adult content websites, the performers, and adult companies in general? Payment processing has always been challenging in this space if you are a solo performer or a couple. Smaller operations aren’t given the time of day by acquiring banks, and over 32 third-party payment services providers discriminate against sex workers and the adult industry.
This has meant that hundreds of thousands of cam and live sex performers have had to rely on bigger sites such as Pornhub to gain access to payment processing, losing as much as 20-30% of earnings off the top. However, in this instance, those larger sites have been robbed of their right to process payments too, leaving the entire ecosystem in a state of disarray.
Could Crypto Prove to be the Savior of Porn?
This could be the moment that crypto, which has so far failed to make any meaningful impact on the industry, is thrust into the limelight. When Verge crypto payments became part of Pornhub’s processing ecosystem back in 2018, it was hailed as a pivotal moment in history.
However, despite many adult-only crypto coins being launched off the back of Verge, in 2020, crypto payments still only accounted for 1% of payments made on the platform. Visa and Mastercard’s actions may push both customers and platforms into the widespread use of crypto in response to the challenges.
It’s easy to see why cryptocurrency payments would work so well in this space. Crypto offers these consumers low cost, instant, and private transactions that don’t leave potentially embarrassing entries on their credit card statements. There’s also no threat of chargebacks on the merchant side, and processing fees could come down to as low as 5%, instead of the 50% some of the worst-affected performers are currently losing from their sales.
It would allow small performers to grow and scale their businesses with reasonably-priced crypto payment gateways. However, the issues with unverified uploads would remain for tube-style sites. At least for now, the solution looks like pairing verified identification procedures with cast-iron contracts between sites, performers, professional studios, and any other relevant parties concerned that provide consent to the acts contained within, and to the distribution of, adult content.
Have You Been Affected by the Pornhub Payment Processing Ban? Speak to the Adult Payment Experts to Find a Resolution!
If you’ve been left scrambling by the actions of Visa and Mastercard, it’s best to speak with adult payment experts such as those at DirectPayNet to secure the best possible payment solution for your business.
Not only can we help your adult company to obtain a domestic merchant account with favorable fees, but we can also diversify your payment channels and strategies to ensure your processing fees remain under 10% of sales.