Yeah, that was a shameless use of a headline with a hook; but since you took the bait, here’s the switch. I don’t literally mean to say that all content creators need to watch pornography (that’s up to them), but I do mean that professional content creators might want to look at a business dynamic that has occurred in the porn industry. It’s technically legal. It’s reminiscent of the YouTube business model. And it produces exactly the opposite result creators have hoped would be made possible by the Internet.

Let’s review …

Both content producers and digital-age optimists will repeat the premise that the Internet is a catalyst for democratization. In theory, a creator of anything can manage her own destiny because traditional “gatekeepers” no longer hold the only keys to distribution. And it is true that we can all self-publish just like I’m doing now with this blog. But when produced works are popular enough to be the foundation of a business, the prospect of independent entrepreneurism can become an irrelevant technicality in contrast to the market forces and practices that foster financial success on the Web. I have proposed in other posts that democratization for small and mid-sized producers may be illusory because the same cheap means of distribution available to authors of works also provide the mechanisms for predatory companies to exert monopolistic control over an entire industry. It all begins with piracy driving down value, lowering wages, shrinking markets, and even limiting creativity in certain media and genres.

But what happened to porn?

Needless to say, “free” porn abounds on the Internet, and most of the video content is hosted on sites known generically as “tube sites” for the way they mimic YouTube, including enabling users to upload video clips. (And in this context, we’re only comparing clips uploaded to YouTube by users who do not have rights to the material.) But the similarities between these tube sites and YouTube are not merely technological. Historically, at least some of the material hosted on porn tube sites is there by permission, a collection of older clips that had exhausted their primary release windows and were used to drive traffic, primarily to paid subscription sites. In fact, the presence of ads linking to producer/distributors might give any viewer the impression that the tube site is a by-permission enterprise designed by “the industry” to use limited free clips as loss-leaders to sell subscriptions to newer and “premium” material. And this is true — or truish. Because what isn’t apparent to the user is that the lion’s share of the tube sites and the producing entities behind those banner ads are all owned by just one company, today called MindGeek, previously called Manwin. As porn star, entrepreneur, and occasional writer Stoya explains on her blog, Manwin first consolidated the major tube sites and then …

“ … used their traffic to sell ad space to those same production companies they enabled theft from. Production companies paid a lot for banners. Manwin then began buying the companies they had helped devalue, including Digital Playground—the company I was contracted to for a number of years. I believe the worst sorts of capitalists would consider Manwin’s behavior a win of the highest order.”

Naturally, any site that allows users to upload clips, will “unintentioinally” host infringing material, just like YouTube does millions of times each day. And just like YouTube, these sites remain within legal boundaries thanks to safe harbors in the DMCA and because they will comply with takedown notices (though not necessarily with any haste) sent by rights holders. When discussing this particular dynamic in the non-porn world of content, the debate usually becomes somewhat academic, with one side saying that the DMCA is outdated and useless for rights holders and the other side arguing some variation on the theme that “site owners can’t police the Internet” and the DMCA is sacrosanct because it protects free speech. But setting aside the theoretical legal debate, the business reality enabled by these dynamics created a monopoly. At present, as I understand it, most of the performers and performer/producers in the U.S. porn industry have contracts with this one company. David Auerbach, writing for Slate, says the following:

“MindGeek has become the porn monopoly, putting industry members in the paradoxical position of working for the very company that profits from the piracy of their work. The MindGeek hydra exerts so much force that people in the online-porn industry are scared to talk about it for fear of blacklisting. And MindGeek’s dominance should serve as a cautionary tale of the dangers of consolidating production and distribution in a single monopolistic owner.”

Creators of all stripes should notice that MindGeek, even though it now has an interest in paid subscription sites, does not take down its own tube sites which regularly infringe its own works. And if anyone thinks this is about high-minded populist ideas like “sharing” or “cultural diffusion,” pass me that pipe because this is just hardball business; it’s how monopolies are made. It may seem counter-intuitive to own a distribution franchise that infringes one’s own production franchise, but as the monopoly that owns the whole shebang (wrong word choice here?), MindGeek makes money from all revenue streams and can use “self-piracy” to exert downward pressure on wages or fees paid to contractors producing the work. Put another way, any producer/distributor in such a position can use infringing even its own works as a check valve against market value increasing to the point where it has to pay performers or labor higher wages. It’s a bit like Rockefeller owning the ore mine and the shipping company that carried the ore. To quote Auerbach again:

“ … industry workers have been in the difficult situation of seeing their work pirated on sites owned by the same company that pays them—imagine if Warner Brothers also owned the Pirate Bay.”

One need not expend much imagination there as Internet companies continue to enter the production business. What content creators need to understand is that MindGeek was able to attain its monopoly status by employing very similar tactics used by YouTube. Because in the time it takes a site owner to comply with thousands or even millions of takedowns, two important things are happening: 1) the site owner builds a pile of working capital; and 2) the market value of the material in question is driven down. Thus, thanks to outdated remedies and safe-harbors in the DMCA, a site owner with enough scale and capital is poised to first drive the value of works down and then take the next logical step to become an owner, or the owner, of production. And right there is why a frisson goes up my spine every time some well-meaning indie artist says the Internet is the future of production. “The distributor doesn’t necessarily need to make content that generates adequate money for the content producers, as long as it generates money somehow,” writes David Auerbach. And that is the economic model that becomes an existential threat to creators no matter what other debate we want to have about copyright law, free speech, or certainly how anyone feels about pornography.

Now, because pornography lends itself to being exploited in unique ways (e.g. by spammers), it is necessary to make clear that the manner in which porn tube sites play shell game with DMCA are different and seem to be more complexly insidious than the way YouTube does it. For instance, I spoke to Nate Glass, founder of TakedownPiracy.com, who offers the following example:

“Unlike YouTube, when Mindgeek suspends your account, they don’t remove all of the videos uploaded by that person. They just move all your other videos into their in-house ‘Unknown’ account so the videos can still generate them ad dollars. You can only imagine how inviting this is for spammers who use pirated video to promote their stupid ‘enlarge your penis overnight’ garbage.”

As stated, it is technically true that a creator of works is able to self-produce, self-promote, self-distribute, and generate revenue directly from her/his fans. In theory, this should produce a diversity of works, linking fans with their individual tastes; and as is so often the case, pornography appears to be in the vanguard testing this theory. Recently, Stoya and her partners launched an independent, pay-per-scene, site called TrenchcoatX. Offering specific styles of “curated smut,” as the site says, customers can buy short films or episodes for $3.99 each. By all appearances, TrenchcoatX contains the basic elements of the model people are referring to when they talk about democratization in the digital age. But whether or not this model can compete with free content on actual pirate sites or free content on tube sites that play fast-and-loose with infringement is another matter.

In the blog post cited above, Stoya offers her own perspectives on unlicensed use of her material, saying she’d prefer people use torrents than tube sites and is mostly okay with “sharing” her works if they’re attributed and not monetized. That’s for her to decide just as it is for any owner of any material. I understand where Stoya is coming from, though she may be overlooking the presence of traditional piracy as an underlying force giving the tube sites leverage in the first place. It is exactly the same force that puts Spotify and Pandora in a strong negotiating position when offering abysmal rates to creators of musical works. Ditto YouTube’s Music Key deal.

But this article isn’t about railing against piracy or MindGeek or even YouTube per se. What’s intriguing to me about the porn industry story is that by the early 1990s, it seems the industry had transformed from a highly-exploitative, male-dominated business into a more diverse, entrepreneurial, and woman-shared (if not led) enterprise. And it is certainly interesting, to say nothing of disconcerting, that the only catalyst required to swing the pendulum from entrepreneurial to monopolistic was the so-called democratizing power of the Internet.

© 2015, David Newhoff. All rights reserved.

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