How Xtube Kill the Porn Studio

How a Strip Club DJ Helped Xtube Kill the Porn StudioIn this exclusive excerpt from Guilty Pleasure: The Pornification of the Internet, the Economy, and Everything Else, author Patricia Nilsson chronicles the creation of the very first tube sites.Michael HoutzFor decades, anyone driving down the far-east stretch of one of Toronto’s main arteries would likely have caught a glimpse of a white Cadillac perched atop the entrance of a strip mall beckoning them to stop and step through a set of dark blue doors, behind which lay a world of male fantasy. So iconic was Caddy’s that when the strip club closed in 2017 the Toronto Sun sent out a reporter to mark the moment. In a story titled ‘Last Dance’, the paper somewhat melodramatically bewailed the end of an institution that had provided thousands upon thousands of Torontian men with an ‘escape from the drudgery of [ . . .] lives, wives and troubles’.Judging by the long streak of one-star ratings on Caddy’s now inactive reviews page, its glory days were long gone by the time the classic car was taken down for good—and it wasn’t the only strip club to have suffered such a fate. By 2017 only twelve clubs were still operating out of the nearly fifty joints that had been dotted around Toronto at the turn of the century. Strip clubs have always been controversial, criticized for monetizing the objectification of women in a way many find too crude. Yet the stripper—at once desired and despised, exploited yet feared for her power to corrupt the good man—has not vanished. She permeates popular culture, from blockbusters and music videos to fitness crazes. Why, then, have strip clubs been shutting down? The reason was clear to Canadian stripper and activist Valerie Scott. “It’s called the internet,” she said in the report on Caddy’s closure; now, anyone seeking to escape the drudgery of reality had only to turn to their phone.As fate would have it, Caddy’s made a cameo appearance in the story of how adult entertainment moved online. A little over a decade before the club played its last song it hired a man named Kurtis Potec, a former welder who’d just traded his tools for the DJ booth. “It wasn’t great; it wasn’t horrible,” Kurtis told me over a video call years later. “It was something to pay the bills.” Young and restless, he was a jack of all trades trying to find his way in life, but playing the tunes to which strippers danced and derobed turned out not to be Kurtis’s ultimate calling either. When he spotted a newspaper ad for a desk job at an online start-up not far from Caddy’s he figured he’d try his luck in the emerging virtual world.David Cooper/Getty Images“That was probably one of the most unique interviews of my life,” Kurtis told me with a chuckle. After a cursory skim of the twenty-something’s CV, the interviewer began to spout some “pretty vulgar, sexual-related terms” to check whether Kurtis was prepared for the world of online pornography. On the internet, there were no gatekeepers to control what people said, “so I guess they wanted to prepare me for the worst.”He got the job. Kurtis’s new employer was Xtube, the first tube site targeted at gay men. The start-up’s first office was housed in a warehouse on the outskirts of the city, piled up to the ceiling and wall to wall with boxes, leaving only a two-foot-wide passage for Kurtis and his handful of co-workers to reach their desks. Inside the perilously stacked towers were countless pornographic DVDs awaiting digitization and to be uploaded online, along with merchandise like mouse pads and socks emblazoned with the company logo. Other than the three founders and the main financier—a Chinese man whom the others referred to as Mr X—the only other employee was a video encoder who at times appeared to live in the back room, where he worked and chain-smoked in solitude.Kurtis, by contrast, was drawn into a far more public role. When one of the co-founders left, spooked by the threats that started rolling in from porn producers angry at finding their films on Xtube, Kurtis essentially picked up the day-to-day running of the site. Soon, he became the face of the company. Literally. “If you had any issues on the site, there was my ugly mug plastered in the corner,” he said. His associates didn’t use their real names, let alone their faces, and they had Kurtis—still technically a junior employee—front the company. “They were older and smarter than I was,” he told me, laughing.By 2008, a year after Pornotube halted user uploads over fears of illegal content, business at Xtube was booming. Each month, it was pulling in hundreds of thousands of dollars from advertising. Advertisers were enthralled by this new medium, which allowed them to target their messages with unprecedented precision. Traditional media, including TV and magazines, had long promised access to certain demographics, but the internet offered the ability to drill deeper and glean details about people’s lives without asking a single question. Those being tracked hardly resisted. Many did not grasp the scale of the surveillance, while others were simply distracted by all the free stuff, like porn. Xtube’s users, Kurtis said, “really liked it.” But most of his days were spent fielding calls from within the industry, and their reaction was less enthusiastic. “People hated us.”Around this time Kurtis started feeling depressed and began using drugs to cope with a job that, more and more, involved people shouting at him. “I got very used to hearing the words: I’m going to sue you.” But the threats were toothless. Free-speech laws governing the internet meant that user-generated platforms were, in essence, not legally responsible for what users uploaded.All the studios could do was stand by and watch as their films were repeatedly stolen and re-uploaded by fans and, insiders complained, by tube sites themselves. It didn’t take long before their powerlessness began to attract investors’ attention. User-generated platforms seemed legally untouchable. And while there were plenty of platforms selling ad space, few received as many visits as the free porn sites. Kurtis was told to fend off callers claiming they wanted to buy Xtube. But one day in 2008 a man on the line refused to take no for an answer. He kept repeating: “Just give me a number.”Kurtis walked into the back room, where one of the owners was sitting, and asked if there was any amount of money that would make it worth parting with Xtube. The slightly facetious reply was 35 million Canadian dollars. ‘I walked back, picked up the phone and said: “You’re not gonna like this,”’ Kurtis recalled. The man on the phone didn’t hesitate; he’d be there early next week to sort out the details.In the months that followed a German in his early thirties would regularly occupy the carpet by Kurtis’s desk. Fabian Thylmann would stretch out on it to ease a back battered by his now frequent flights to Toronto. Fabian was a self-proclaimed nerd who as a teenager in the late nineties had developed one of the earliest pieces of software capable of tracking what internet users clicked on. Crucially, it allowed website owners to earn money when a link on their page redirected a visitor to make a purchase elsewhere. Hawking online advertising space had been a fairly unsurprising evolution of traditional marketing, but here was something that made it possible to monitor what people did next, and profit from it. The internet was turning into a game of digital chess, with money to be made by those who could anticipate, and manipulate, the whims of anyone who entered their domain.Fabian’s first company had given him a rare glimpse into the back end of some early online businesses. Many were trying to sell porn, which was one of the first things people were willing to pay for on the internet. But these were small, makeshift operations, and few were making real money. In the early noughties, most of the people buying smutty DVDs or renting pay-per-views alone in hotel rooms hardly knew how to use the internet. Sure, they would eventually find their way to adult sites. But Fabian realized that a truly successful enterprise could do far more than tap into existing demand—it could bring pornography to people who had not even looked for it, through pop-ups, ads and search results, turning it from something you searched for into something that found you. Once porn became part of the internet’s background noise, those who’d never have dared to cross the threshold of a sex shop or an erotic cinema, or breach any of the other hurdles the curious had once faced, could now stumble upon porn with a single click.The purpose of tube sites, like that of virtually every internet platform since, was not to replicate what existed in the physical world but to construct a new, disembodied mode of interaction built around visual stimuli—what we now call “content.” Their rise marked the start of a new era, when every step online began to be tracked. It was a turning point in the story of how data, harvested without people’s informed consent, became one of the world’s most valuable commodities, eventually proliferating to a point where it could be used to teach artificial intelligence to think and act like us. The tale of tube sites, then, is also the story of how the digital world came to be organized around priorities that do not necessarily align with those of the people who inhabit it.The practice Fabian helped pioneer as a teenager is today known as affiliate marketing—put simply, the business of getting people to click on things. It’s how content creators make money when they offer their followers discounts on whatever must-have food supplement, skin cream or therapy app they claim to love. And the business of funneling people’s attention was first stress-tested in the porn industry. Long before influencers started peddling protein powder, porn sites were paying webmasters to drive clicks to their content, offering a cut for every paying visitor who came to their site through a tracked banner ad or link. It was the logic of the early thumbnail galleries, like the one built by the pale programmer who had filched sandwiches from Mario Salieri.Chris Hondros/Getty ImagesOne of the key reasons why Amazon grew to become the place for online shopping was its early adoption of an affiliate programme which paid website owners a commission to direct people to products sold on the platform. Once people got accustomed to buying all their stuff on Amazon, the companies that actually made the stuff—anything from phone chargers to vacuum cleaners to cat litter—realized that if their products weren’t on the site, no one would buy them. Needless to say, affiliate marketing is still one of the main legs of Amazon’s business model, and its foundations were laid by people like Fabian, who understood that to make real money online you need to attract plenty of people and make sure they keep coming back. This is called “the network effect,” and it is one of the basic laws of the digital economy—the more people use your service, the more powerful you become.As sites such as Xtube were attracting a critical mass of visitors, they could essentially dictate terms to studios that were now, in desperation, drawn into partnerships with the platforms. The tube site’s offer was to feature ten or fifteen minutes of footage and call it “advertising.” The only problem was that the average visit to a porn site ends—rather abruptly—after about nine minutes.Still, as free content washed over the Web, studios started uploading their own clips to tube sites, hoping a few hundred or thousand viewers might click the affiliate link and pay for the full film. If they did, the revenue would be split 50:50 with the tube site. “We put a lot of studios out of business,” Kurtis said, “they couldn’t afford to get traffic from us.” Companies like Xtube quickly learned to steer what users clicked on next, and once they controlled enough traffic to funnel millions of potential customers towards paying sites or advertisers, they became powerful.This dynamic has since spread beyond porn. Many news outlets now depend on posting their stories to Facebook, TikTok or X, hoping to lure readers back to their own sites, where some might eventually pay for their journalism. Few do. Like porn, news has become something most of us expect to get for free. The number of independent newspapers has collapsed, many swallowed by conglomerates that rely on scale to profit from advertising and, increasingly, from affiliate links.Fabian’s ambitions were clear from the beginning. Xtube was offering more than a quick buck. It was a stepping stone in the making of an empire. He wanted to “basically take over the adult industry,” Kurtis said. As the traditional studios buckled under the tube-site business model, many went up for sale, which meant that their huge libraries of content could be bought on the cheap. For a site like Xtube, buying studios and their subscription platforms made perfect sense. It gained access to more content, and could funnel its huge traffic towards paid sites it now controlled. If people paid for porn, the company profited; if they preferred the free stuff, it profited too.It was a business model that thrived on relentless expansion, and Fabian had his sights set on a much bigger rival. In nearby Montreal, another group of young men were running a site that would become to pornography what McDonald’s is to the burger: Pornhub. To simplify, it was founded in 2007 by three Concordia University students—Matt Keezer, Steph Manos and Sam Youssef—whose company, Mansef, was already running several porn businesses, including the still influential production studio Brazzers (a slang take on “brothers”). Publicly, Youssef posed as a concerned studio owner and railed against tube sites on the industry forum GoFuckYourself.com: “They will not steal it and get away with it. Their days are counted!” What few in the industry realized was that Pornhub was run by the same group.In a 2023 interview about his most recent venture Youssef said that he and his co-founders made the decision to sell Pornhub to Fabian in 2010 for roughly $140 million because he “didn’t feel comfortable at all with what the company had become.” He sounded almost surprised to have found himself in the sex industry, despite having made his money from sites such as JuggFuckers and RacksAndBlacks.When I tried to contact them all in 2020, Youssef declined to talk to me about those early years, saying he was never really “much involved” with the business he had founded. Keezer likewise responded: “To be honest with you, I never had any involvement in the ‘industry.’ I just made Pornhub in 2007 with a couple of friends and sold it [ . . .] and that was about it.” I had no response from Manos. This detachment was typical of the internet entrepreneurs who profited from unleashing pornography. Many preferred to remain anonymous, even as the industry’s most important workers literally have to bare all. In a move that reflected the trolling culture of the nerds who were taking over porn, Fabian—the new king of smut—renamed his empire Manwin.Excerpted from GUILTY PLEASURE: The Pornification of the Internet, the Economy, and Everything Else by Patricia Nilsson. Published by Farrar, Straus and Giroux. Copyright © 2026 by Patricia Nilsson. All rights reserved.Patricia Nilsson is a reporter for the Financial Times and the author of Guilty Pleasure: The Pornification of the Internet, the Economy, and Everything Else. ... Read More