Sex

Sex, porn, prostitution, adult entertainment.

Yes, this issue will be about that. Now, if you’re prudish or a cossetted human with Victorian moral sensibilities, it’s time to make like sheep and get the flock out of here.

In one of the previous issues, we talked about the “creator economy”, an umbrella term for all the people who are monetizing their work online. One of the biggest creator-focused platforms to emerge in the last few years is OnlyFans. It’s surprisingly a family business. It was started by this dude called Tim Stokely, funded by the dude’s father, Gary Stokely and run with the help of Timothy Stokely, his brother. The family later sold 75% of the company to Leonid Radvinsky, a well-known porn entrepreneur.

The site allows creators like artists, yoga teachers, poets, musicians and celebrities to monetize their content like photos and videos through subscriptions and tipping. It also allows paying users to have 1-on-1 chats with the creators. OnlyFans takes a 20% cut and pays the rest to the creators. But the biggest users of the platform have been adult entertainers and sex workers. The adult content ranges from tame nudity to risque hardcore stuff.

By now, if you’re an avid consumer of pornography , you’d be thinking about the similarities between OnlyFans and adult cam sites. They are largely the same, except for the fact that OnlyFans added privacy and personal layers in the form of 1-on-1 chats. OnlyFans is the perfect example of modern parasocial relationships.

Parasocial relationships are one-sided relationships, where one person extends emotional energy, interest and time, and the other party, the persona, is completely unaware of the other’s existence. Parasocial relationships are most common with celebrities, organizations (such as sports teams) or television stars. Parasocial relationships expand the social network in a way that negates the chance of rejection and empowers individuals to model and identify with individuals of their choosing who naturally elicit an empathic response. For some, the one sided nature of the relationship is a relief from strained complementary relationships in their real life.  Parasocial relationships are cultivated by the media to resemble face-to-face relationships. Over time, so many experiences are shared with John Daily or Justin Beiber or Jay-Z that we develop an intimacy and friendship with the ‘media user’ and feel that they know and understand us.

Find A Psychologist

With the pandemic seriously threatening the livelihoods of adult entertainers and sex workers, sites like OnlyFans, CamSoda, and Charturbate became the refuge for these folks to make a living. Given the pandemic surge in users, OnlyFans took off like a rocketship.

Google Trends

The numbers are stunning. The platform claims to have 1.5 million creators, 150 million registered users and paid $5 billion to creators. It’s hugely profitable too. According to The Information, it’s set to make a profit of $300 million from $400 million of revenues.

But in August, the company made a surprise announcement that it would ban explicit content.

“Effective 1 October, 2021, OnlyFans will prohibit the posting of any content containing sexually-explicit conduct. In order to ensure the long-term sustainability of the platform, and to continue to host an inclusive community of creators and fans, we must evolve our content guidelines. Creators will continue to be allowed to post content containing nudity as long as it is consistent with our Acceptable Use Policy. These changes are to comply with the requests of our banking partners and payout providers. We will be sharing more details in the coming days and we will actively support and guide our creators through this change in content guidelines.”

The adult entertainers and sex workers, who largely made the platform what it is today, were pissed. The announcement was a PR nightmare, given that the platform did a piss-poor job of explaining the reason for the move.

But then, a few days later, it abruptly walked back the decision.

At least ostensibly, it later became clear that the reason for the ban on sexually explicit content was due to a couple of reasons:

  1. OnlyFans was trying to raise funds from VCs, and they were jittery about adult content
  2. Banks were refusing to serve the company. There’s a long history of banks refusing to serve adult entertainers and porn stars. Some of this is due to arm twisting by the DOJ, and some of it is due to laws like SESTA-FOSTA, which were aimed at curbing sex trafficking but have indiscriminately affected consensual sex workers adult entertainers, and adult websites by stripping legal protections

Having said that, ostensibly, OnlyFans might not have had a choice. As Charlotte Shane writes in The Cut, the banks and payment processors are to blame here, given that they’re the ultimate gatekeepers:

In an increasingly cashless economy, the banking industry exerts a terrifying degree of control over us all, but sex workers have long been especially vulnerable to denial of accounts, loans, and mortgages, regardless of whether or not their work is technically legal. Paypal, VenmoStripeSquareCashApp, and ApplePay all have terms of service that forbid payment for any sort of sexual product or service — again, including those that are legal — and those processors can also refuse sex workers just by virtue of their engagement in the sex industry, even if their use of the platform is unrelated.

The Cut

This whole charade is interesting for a few reasons.

The creator economy is built on a house of cards

The creator economy was supposed to be a better version of the gig economy made famous by Uber, Taskrabbit, Zomato, Swiggy etc. But it turned out to be the same damn thing in a different avatar. Delia Cai put it best in a Vanity fair piece:

That alluring promise is one we’ve been offered before, back at the dawn of the gig economy in the 2010s when companies like Uber, TaskRabbit, Instacart, and Fiverr gussied up the reality of total employment precarity with millennial-friendly UX and copywriting into shining utopian paragons of autonomy. But of course, the ability to work any time meant that you actually ended up working pretty much all the time, whether you were a cab driver or a freelancer. As it turned out, the economics of gig work favored the platform again and again, as if by design.

Vanity Fair

The first problem with the creator economy is that, much like real life, there’s serious inequality. A small number of creators make a disproportionate amount of money. Often, these people tend to have existing followings, which they leverage to make money. Here’s an analysis of OnlyFans from Thomas Hollands:

The revenue of content creators follows a classic power law distribution. The top accounts make something like $100,000 a month (these aren’t in my sample). The median account makes $180 a month.

The top 1% of accounts make 33% of all the money. The top 10% of accounts make 73% of all the money. This isn’t the 80:20 rule; it’s the 80:14 rule.

The standard way to measure inequality of an economy is with a Gini Index. An index of 0 implies a communist utopia, a value of 1 implies a single greedy capitalist owns all the wealth. The Gini index of OnlyFans is 0.83. The most unequal society in the world, South Africa, has a Gini index of 0.68. OnlyFans is less equal than an ex-apartheid state.

OnlyFans is so unequal because chancers make accounts with zero fans, while big Instagram stars take their following with them. A large proportion of accounts have no fans at all, and the lion’s share of fans are shared by the top accounts.

It’s not just OnlyFans; it’s the same across all the other platforms like YouTube and Patreon:

Only 7,500 creators out of 8 million got paid $100,000 from the platform in 2020. That’s 0.09% — and that number was up 79% from the year before.

In 2018, Offenburg University of Applied Sciences professor Mathias Bärtl said that reaching the top 3.5% of YouTube’s most-viewed channels (more than 1 million views per month) is worth only about $12,000 to $16,000 a year in advertising revenue.

the effective average minimum wage in the United States is $11.80 per hour. Multiplied by 40 hours a week and 52 weeks a year, a creator in the United States would need to earn $24,544 annually on these platforms to achieve a comparable baseline

Marker

Then there’s the fact that creators get little or no support from the platforms. The very platforms that were built on the backs of all these creators. Kyle Chayka sums it up best:

But this emerging field, in many ways, resembles a gig economy for digital content. Participants are still precarious workers, relying on the whims of corporations for their livelihoods. Much like an Uber driver or a twenty-tens Instagram influencer, the creator is responsible for her own marketing, health care, and tax contributions. She makes money for the platform that hosts her without receiving the legal and financial protections of employee status, or the stock options typically given to the platform’s engineers, designers, and managers.

New Yorker

In the case of OnlyFans, the risks increase exponentially. There have been reports of data leaks, which is scary considering several adult entertainers choose to remain anonymous. Then there’s the issue of piracy. It doesn’t take a genius to leak images or videos from the platform.

But all these platforms are doing very little to help creators apart from splurging money for a while to attract creators and shore up their metrics and, ultimately, their valuations. While it might sound like a neo-communist rant to expect the platforms to do something to make the distribution of incomes and opportunities a little more equitable, who’s in a better position than them? A creator middle class, if you will.

Of course, not everyone can make money, but certainly, it can be a whole lot better than it is today. Take the recent case of Substack, which has a similar 80/20 distribution of people making money on it. It recently launched a program called Substack Grow to help writers build and grow newsletters. It’s not enough. But it sure as hell is a start.

It’s always the creators that get the shaft. Take the same example of the OnlyFans saga, though it was just a few days from the announcement to the U-turn, several creators lost as much as 50% of their subscribers:

Paige told me they also lost half of her subscribers over the course of that week, amounting to thousands of dollars so far. “Basically all the progress that I made over the last year and a half was gone,” they said. “The loss in subscribers was very painful, actually. It’s impacted both my financial situation and my mental health. I know a lot of folks think anyone with an OnlyFans is able to become a millionaire overnight, but that’s not the case. A lot of us are normal people, making average money.”

Vice

Owning your hustle

Though I hate the word hustle and all the nonsense it implies, I’ll use it in this case to make a point. If you’re a creator and you’re using third-party platforms to share your work, you’re at the mercy of their whims. There’s a long history of platforms screwing over users to protect their margins. I had written about some of the shenanigans at length here.

If you’re a creator, you should work toward owning your work and your distribution. This means having a site, self-hosting your content and so on. There’s a learning curve, sure, but you’re significantly better off in the long run. There are countless tools, including no-code tools, that make this easy today. Sharing things on other platforms should be meant to drive traffic to your own property.

In the end, the ultimate winners of the creator economy will be the platforms and the venture capitalists (VCs) who pump in money, inflate the values and exit these companies.

A use case for crypto?

While we can argue whether crypto is useful or a scam, I think the OnlyFans saga has shown one potential use case, I think crypto could be a useful option in the case of people like adult entertainers and sex workers who always run the risk of getting cut off from the banks or getting deplatfomed. We already see platforms focused on sex workers and other adult entertainers like Charturbate etc., support crypto payments. There are crypto projects like Spankpay and Nafty with an exclusive focus on adult entertainment. I agree with Casey Newton, and I think this whole incident will spur the adoption of crypto technologies among adult entertainers and sex workers online.

Having said that, the risks for these folks are enormous:

  1. There’s an enormous learning curve for adult entertainers wanting to accept crypto. One mistake and the gas fees alone could cost them a lot of money
  2. They still have to deal with the price volatility of crypto. Remember, these aren’t investors but people who are trying to make a living and put food on the table
  3. Then there’s the whole issue of security, given the increasing frequency of hacks and scams
  4. Projects that might claim to help these folks, but could be potential scams
  5. The biggest risk of all is that banks might still cut off these crypto projects:

Take former classifieds site Backpage.com, an alternative to Craigslist that generated much of its revenue from sex worker advertisements. After it lost its credit card processors in 2015, it turned to Bitcoin. The Department of Justice shut it down in early 2018, and secured the conviction of its CEO on money laundering charges the following year. 

But, I have zero doubt that once this bullshit phase of crypto ends, there will be increasing adoption of crypto payments, tokens, NFTs, DAOs and other crypto technologies among adult entertainers.

Economics of sex work

We might be in 2021, but we don’t mind looking fucking stupid by paying millions for pictures of rocks and monkeys, but we collectively gasp and clench our buttcheeks whenever we hear the word “sex”. Most people still have outdated views about porn and sex work because of prudish sensibilities originating from our cultural mores, especially in a country like India where we don’t have sex education. These views are also a perfect example of availability bias, and we just pick up outdated views which are prevalent everywhere and anchor to them and spread them around.

The other issue in this conversation is conflating sex trafficking with consensual sex work. Sex trafficking is a monumental issue, it is an egregious violation of fundamental human rights, but not all sex work is trafficking. There are people, both men and women, who engage in consensual sex work, porn and other forms of adult entertainment, and they like their work too.

Save for a few countries and cities, sex work is illegal across the globe. But this doesn’t change the fact that sex workers are a huge part of our economies. According to a government estimate, there are over 28 lakh sex workers in India, the unofficial numbers will be far higher. Globally, that number is between 40-42 million, but that’s on the lower side of the estimate. They contribute meaningfully to our economies, but we’ve failed them. They have to deal with violence, stigma, social ostracization, mental health issues, police brutality, racism, discrimination and countless other life-threatening risks.

At the risk of sounding insensitive, I think there’s some merit to looking at sex work from a purely economic lens. It’s tough to put a number on the sex economy, given that it’s illegal, but some studies have tried to do this in various forms.

In the United Kingdom:

The ONS (Office for National Statistics, which – unsurprisingly – collects national statistics) says that prostitution alone put £5.3 billion into the UK economy in 2009. Porn is another £1 billion, and strip-clubs £300 million. That’s a decent chunk of money: the Premier League, which is watched by 4.7 billion peoplearound the world, puts just £3.36 billion into the UK economy each year.

Ecnmy

There was an old study in 2014 that tried to estimate the size of the sex economies in eight US cities:

The economics of porn

As a slight aside, we also tend to have this notion that pornstars and other adult entertainers tend to make a lot of money, that’s not the case:

Here’s how things break down. For a “traditional” sex scene between a man and a woman, the average actress’ compensation is typically between $800 and $1,000, depending on the studio’s budget. Top-tier performers can earn as much as $1,500, occasionally $2,000, while newcomers with bad representation might earn as little as $300.

More extreme acts, as you might expect, command higher rates. The most extreme — unsuitable for describing in polite conversation — can go for $1,800 to $2,500.

CNBC

And then add to this the fact that agents take commissions of 10-20%, 40%+ in some cases where young stars are exploited. Then there are additional costs for getting tested, healthcare, grooming and so on. The risk to reward for most adult entertainers sucks. It’s just that we tend to imagine the opposite living in our own safe, sheltered bubbles.

Now back to the topic at hand.

Given all these things, there’s been a long debate over the merits of decriminalizing consensual sex work. But it’s worthwhile to understand why consensual sex work is illegal. As professor Manisha Shah explains in this podcast, sex work is often associated with spreading crime, drugs and sexually transmitted diseases. And then there are the moral, cultural, and social dimensions where we think sex work is plain wrong. We assume by default that anybody engaging in sex work is a victim, and it possibly cannot be a choice or be construed as gainful work, which should have all the legal protections just like other forms of work.

We are all murderers and prostitutes – no matter to what culture, society, class, nation one belongs, no matter how normal, moral, or mature, one takes oneself to be.

R. D. Laing

Studying the impact of legalizing and decriminalizing sex work is quite hard. But there have been a growing number of published studies that show the benefits of decriminalizing sex work in various settings. Most recently, in 2020, a district in East Java of Indonesia criminalized sex work while it was legal in neighbouring districts. This allowed professors Lisa Cameron, Jennifer Seager, and Manisha Shah to study the impact. They found that though the move shrank the sex market initially due to increased enforcement, police raids etc., anecdotal evidence indicated that the effect wasn’t sustained, and the markets recovered slowly.

More importantly, the ban on sex work increased risky sexual behaviour by decreasing condom usage, increased the rate of sexually transmitted infections (STIs) and economic hardship among women who left sex work. They also found that kids were affected due to the negative income shock from the criminalization, even those under 18. They had to start working to supplement the lost income.

Similarly, Paul Bisschop, Stephen Kastoryano, and Bas van der Klaauw studied the impact of legalization when the Netherlands introduced legal prostitution areas called tippelzones. They found that legalizing sex work reduced the incidence of sexual assaults and drug crimes.

The American Civil Liberties Union (ACLU) in 2020 published a research brief that analysed 83 studies and came to the following conclusion.

In sum, the research points to negative impacts of criminalization on the physical safety, health, and financial well-being of sex workers, with repercussions for clients seeking consensual sex between adults. These findings are only amplified when specifically examining the impact of the criminalization of sex work on marginalized communities, including LGBTQ people, people of color, and immigrants. People without adequate financial resources, such as those living in poverty, are also more harmed by the criminalization of sex work.

Overall, the evidence suggests that going from less to more prohibitive laws on adult consensual sex work is damaging to sex workers and appears to have little impact on curbing trafficking or other crimes. Conversely, as laws move down the continuum frommore to less prohibitive or restrictive on consensual sex work, workers experience less harm, and there is no strong evidence to indicate negative impacts on crime, health, or safety. The existing body of research indicates that full decriminalization of adult consensual sex work best supports the safety, health, and financial well-being of sex workers and can help curb the overuse of the prison and jail systems that disproportionately punish sex workers from the most marginalized populations, such as transgender women of color.

ACLU

Keeping up with this charade has serious costs. The quantifiable costs include legal and judicial costs. For example, one estimate in the US put this at $120 million a year.

Law enforcement agencies in America’s biggest cities spend an average of about $2,000 for each arrest of a prostitute, which amounts to more than $120 million a year in enforcement costs nationwide, according to a new study that describes itself as the country’s first “cost-benefit analysis” of prostitution laws.

LA Times

I can only imagine the cost in India. The unquantifiable costs such as the impact on physical and mental health, racism, discrimination, physical harm, exploration are far more costly. But pushing for the legalization of sex work needs a political constituency, and very few politicians want to or are willing to take that risk. There’s also the fact that it’s very easy for people with wrong motivations to frame sex work in a negative light. It doesn’t take much talent. And such negative framing of a hot button issue can have a huge societal impact. It’s very easy to sway public opinion against the issue for political ends.

Dive deeper

Given how complex an issue this is and how our priors tend to distort our perceptions, it pays to get out facts straight. This thread has some brilliant resources.

Oh and given how complex this issue is, I might have gotten a few things wrong. None of it is intentional, so please don’t cancel me. I’m willing to learn


Good reads

Personal finance & investing

  1. Our personal finances are a series of trade-offs
  2.  Six Things I Learned in Business School That Were Absolutely Wrong
  3. Learning About Doomer Optimism
  4. Factor Timing Is Tempting
  5. Most stocks are duds
  6. Capitalism For Realists

Fintech, VC nonsense and silicon valley BS

  1. We’re not a bank. We’re a software company.
  2. Silicon Valley’s Thin Line Between Hype And Fraud
  3. Andreessen Pulls a Bezos
  4. Silicon Valley is falling apart — force feeding us lazy and derivative tech
  5. The Ad-Based Internet Is About to Collapse. What Comes Next?

World

  1. How the US created a world of endless war
  2. Afghanistan’s Corruption Was Made in America
  3. 20 Years After 9/11, Surveillance Has Become a Way of Life

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