What is business infrastructure and why do we need it?
Business infrastructure are the key facilities, structures, and services (including technology and software) that a business requires to grow. The sex industry (including femtech and sextech) has long encountered many barriers to accessing such infrastructure—whether they are seeking anything from payment gateways to social media platforms to scale their businesses, they are typically flagged as “high risk."
This is due to a combination of factors. The most obvious? The industry is shrouded in stigma and secrecy and often associated with illegal behaviors like human trafficking and child pornography. From the industry perspective, this affiliation increases the propensity for chargebacks, fraud, and security issues. Many mainstream platforms, preferring to avoid any of these risks, have taken the straightforward route: ban all high-risk businesses.
As one sextech co-founder, Soumyadip Rakshit of MysteryVibe puts it, such companies’ decisions probably don’t have anything to do with ethics or morality. “It’s completely commercial,” he says. “If [payments providers] are saying ‘no’ to money, there has to be a really good reason. And the really good reason is they might lose a lot of audience if they didn’t say ‘no’.”
“It’s completely commercial,” he says. “If [payments providers] are saying ‘no’ to money, there has to be a really good reason.
But with recent growth and investment in the space, mainstream providers have begun to relax their stance. According to Statista, the size of the sexual wellness market is estimated to reach $37.2 billion dollars by 2023. Of course, business infrastructure players aren’t ignorant of this growth opportunity.
Mainstream players like Apple Pay have reconsidered a blanket ban, working instead on a case-by-case basis. The payments service provider has allowed sextech venture MysteryVibe, for instance, to transact on its platform—MysteryVibe sells vibrators, which are technically classed as medical devices. However, being on the platform requires conforming to many restrictions. The brand was not allowed to use product photography in their marketing.
Meanwhile, PayPal allows the sale of “certain types of adult products and content” but “prohibits ...the sale of materials that depict criminal behavior” - which effectively shuts out all adult film content.
Sextech companies face similar hurdles with other forms of essential infrastructure, such as social media and marketing, channels that are critical to reach new customers and grow the business. For similar reasons as outlined above, many mainstream advertising channels prohibit sex-related services and products. This includes sexual wellness products, even from an educational perspective.
These stringent rules and subtleties have posed challenges to sextech businesses looking to scale globally.
Overcoming infrastructure challenges
Some sextech businesses have cleverly tweaked their marketing and worked around the rules. Take MysteryVibe again, because they were not allowed to use images of their vibrators, they hanged all their photos to line drawings.
And brands such as Womanizer, Lora DiCarlo, OMGYes, and Maude have partnered with mega influencers from Lily Allen to Cara Delevingne, Emma Watson, and Dakota Johnson. This allowed them to reach a wider audience outside of traditional marketing channels.
But not every brand entering this space has the capability to engage such mega influencers. Nor will every brand want or be able to disguise what they are selling. A few alternatives have emerged to cater to this specific population of businesses. This includes payment platforms that serve high-risk merchants such as PaySimple, Epoch, and Payment Cloud. The downside to using these niche platforms, however, is that they come with hefty transaction fees due to their smaller scale.
The normalization of sextech and rise of platform alternatives
In recent years, many controversial industries have seen a surge in mainstream acceptance and with acceptance comes more investment and liberalization of policies restricting marketing and sales. The biggest of these industries are blockchain/crypto, cannabis, and of course, sextech.
The greater investment and funding coming into the sextech industry have allowed for greater lobbying of policies upheld by big players. It has also galvanized new built-for-purpose business infrastructure players market entry, including everything from payment gateways to social media platforms and alternative marketing channels.
In the payments space, new payment gateways CCBill, Paxum, and SkyPrivate cater to very niche, specific aspects of the industry at less exorbitant fees. But these platforms might not suit all types of sextech businesses. Paxum, for instance, has a strict copyright policy so they are only suitable for businesses who produce 100% original content. SkyPrivate serves businesses built upon intimate Skype interactions, which is an extremely niche subset of the industry. Aside from these payment providers, the industry has also seen a rise in crypto-based payment gateways. Many adult businesses were quick to implement the technology due to its ability to offer security and anonymity to customers.
On the social media front, as Tumblr, long a haven for freedom of expression and NSFW content, instituted a controversial ban against adult content in 2018, a host of other more niche, sex-positive social platforms invited Tumblr users and NSFW content over. This included MeWe, Newgrounds, and Mastodon. Meanwhile, new platform NewTumbl launched out of the Tumblr fallout in 2019 as a censorship-free haven. This year, sex-positive platform Lips launched to cater to women-identified and LGBTQIA+ creators and their fans. And NSFW microblogging platform Pillowfort returned after temporarily being taken down to address security issues.
Some players in the sextech space are also branching out into infrastructure to serve the communities that are essential to their own growth. In 2020, a new sex positive podcast hosting service was launched by Tickle.Life as a new service, in addition to its community-based online discovery platform and marketplace. Initially, the Tickle.Life platform focused on bringing together sex educators, content creators, brands, and audiences in a one-stop-shop for sexual wellness. But realizing the limitations content creators face in reaching their audiences through mainstream key channels such as podcasts, the team branched out into building their own podcasting infrastructure.
These new emerging platforms have given sextech players a wider range of options and opportunities for reaching new customers and growing their businesses. This is particularly beneficial for female-oriented and LGBTQIA+ inclusive businesses, who in addition to facing the usual challenges of growing a business, have to work harder to overcome hurdles and access funding.
Mainstream awareness has around what sextech means. Today, the definition of sextech has expanded to include not only sex robots, but everything from pleasure and wellness to education, health, crime and assault reporting medicine, and gender identity. It has also opened up opportunities for new entrants to disrupt the market and cater more inclusively to a wider range of audiences.
Covid-19 has woken us up globally to the importance of maintaining connection and intimacy, while staying safe and healthy. And with greater education, supportive infrastructure, and greater funding in the space, we believe the time is ripe, more than ever before, for this new wave of sextech startups to thrive.