PornHub’s New Ethical Owner
Ethical PE buying an adult entertainment website raised the eyebrows of a few of us. But in the world of shareholder activism, this purchase makes more sense than ever …
What is going on?
Last month, Ottawa-based private equity Ethical Capital Partners purchased MindGeek the parent firm of PornHub, a company that probably does not need an introduction. If you have never visited PornHub, you must have at least heard about it. A digital marketing study concluded that after Google and Facebook, PornHub is the tech company with the third greatest impact in the 21st century. With an average traffic of 3.2 billion visits a month, the adult-video streaming platform beats Netflix in visitors. PornHub gathers an incredible amount of data on its users and publishes its Year in Review with trends, terms and searches as an annual recap.
In March, Netflix released Money Shot a documentary on PornHub’s business, its success to disrupt the porn industry, the rise of performers and the controversies in the recent years, such as the National Center on Sexual Exploitation accusations of sex trafficking content. So we could not help but wonder, why would an investment firm with “ethical” in its name purchase an adult entertainment conglomerate?
How does it link to ESG and sustainability?
You might have heard of sin stocks, companies involved in activities that are perceived unethical such as alcohol, tobacco, or gambling. Indeed, adult entertainment is a typical candidate to screen out in the investment process since the industry is infamous for scandals and exploitation. But what better way to influence PornHub’s business practices and decision-making, than to “simply” buy the platform. And that is what Ethical Capital Partners did.
Since 2020, Pornhub has been facing a wave of criticism for its lack of stringent controls around the monitoring of content. New York Times opinion piece The Children of PornHub wrote that the website was hosting videos featuring children, rape, revenge porn, and monetizing such content. The same accusations were made by a platform called TraffickingHub, which shared truly horrifying stories of victims whose videos were uploaded on PornHub. A woman, whose video from when she was 14 was on the website, also sued MindGeek and accused the payment processors for knowingly facilitating the distribution of child pornography. As a result, Mastercard and Visa stopped processing payments from the website. You may remember our article on OnlyFans, a platform that found itself in a similar pickle with payment processors and banks due to reputational concerns around adult content. However, these payment companies’ bans are not threatening the livelihood of MindGeek executives but the sex workers, whose income depends on the platform.
In response to allegations, PornHub removed 10 million videos nearly 80% of its content, which was content uploaded by unverified users. In addition, the platform banned downloads and uploads of content by unverified users. Ethical Capital Partners, the new owners shared that they see the potential in moderating content about “sex-positive expression between consenting adults.” It also promises to support sex workers and content creators adding that “there is stigma and there is shame and that means there are discussions and debates happening in the absence of those who are most affected by it.” The firm has also appointed a special advisory board to reinforce appropriate business practices, workers’ safety and well-being. The series of proposed action would tick any ESG strategy implementation plan, but will PornHub be able to execute these ambitions? We will see…
Final thoughts
According to Ethical Capital Partner’s website, the firm is “seeking out opportunities in industries that require principled ethical leadership”. But what is “ethical” or a “sin stock” for one, might not be aligned with the values and beliefs of the other… As always, we will leave the moral evaluation to you.
Nevertheless, PornHub seems to be on an ESG-righteous path with its new owners. Shutting the industry down and banning any type of adult entertainment is not a solution as it would only lead to more illegal practices and an increase in sexual deviates, who “generally came from homes where pornography was restricted and sex was never discussed” according to academia. For the safety of workers and victims, we hope that PornHub’s new measurements will create a positive shift in this infamous industry.
Until next time!
