Retail media networks face the same existential threat as tube sites did in 2019

Visa and Mastercard pulled the plug on Pornhub in December 2020. Most people read that as a story about one tube site. It wasn’t. It was a demonstration of the weak point in every ad-driven aggregator model: if you sit between creators and revenue, you are exactly as durable as your shakiest compliance assumption, and not one inch more. Retail media networks like the Kroger Media Network, Walmart Connect, and Target’s Roundel are running the playbook tube sites perfected a decade ago. They are also about to learn what happens when regulators, payment processors, or platform owners decide the risk no longer justifies the margin.

Line the two models up and the mechanics barely differ. Tube sites aggregated content they didn’t produce, sold ads against eyeballs they didn’t own, and took rent from a creator economy that had nowhere better to distribute. Retail media networks aggregate shopping behavior from customers they don’t control, sell targeting data to brands who could in theory go direct, and take margin from an ad stack that is increasingly asking why the middleman is there at all. Both depend on a fragile balance. The creators or the brands have to need the reach badly enough to accept the split. And the infrastructure layer, meaning payment processors, cloud hosts, and card networks, has to believe the compliance exposure is manageable.

For tube sites, that balance snapped the day Visa’s risk committee decided user-generated sexual content created unacceptable exposure under its Acceptable Use Policy. Pornhub’s moderation systems didn’t matter. The legality of the content didn’t matter. What mattered was that Visa could not defend the risk to its board, its regulators, or its merchant partners. Payment processing is a utility right up until the moment it isn’t. Once a middleman becomes a liability, the infrastructure layer cuts them loose without ceremony. Retail media networks haven’t internalized this. They should.

The threat vector is different. Retail media isn’t staring down obscenity law. The structural exposure, though, is identical. In the U.S., the FTC is sharpening its focus on data brokers and surveillance advertising under Section 5 authority. In the EU, the Digital Markets Act requires gatekeeper platforms to give business users access to data generated by their own transactions, which cuts straight through the moat these networks have dug. If a CPG brand can pull its own first-party purchase data out of Walmart without paying Walmart’s media network a 25% margin, why would it keep paying? The only thing holding up these networks’ pricing power is that brands don’t have better infrastructure yet. That gap is closing faster than anyone in retail wants to say out loud.

Adult paid tuition on this lesson. When tube sites collapsed, the creators left standing were the ones who had already built owned distribution: email lists, membership sites, direct billing relationships, an audience they controlled. The OnlyFans model is not just tipping and paywalls. It is a deliberate decoupling of revenue from intermediaries who can vanish overnight. The same shift is coming for brands in retail media. CPG companies now pushing billions through Kroger or Instacart are starting to ask why they pay rent to reach their own customers. Amazon solved this years ago with Seller Central and Brand Analytics. Give brands just enough data to feel in control, keep them tethered to your ad stack. Retail media networks copied the tactic. They did not copy Amazon’s leverage. Amazon owns the buy button. Walmart and Target still think of themselves as landlords, not platforms.

Compliance speeds all of this up. Tube sites assumed their Section 230 protections and content policies were sufficient cover. They were wrong. Retail media networks assume their customer data practices square with GDPR, CCPA, and whatever state privacy law passed last quarter. Maybe they do, today. But the frameworks are tightening and enforcement is rising, and the moment one of these networks lands in a consent-order negotiation with the FTC over data handling, every brand counsel in America will re-score the risk of that partnership. Payment processors didn’t wait for Pornhub to lose in court. They cut the relationship the moment the liability became visible. Card networks will treat any retail media stack that turns into a regulatory headache the same way.

Here is the lesson adult operators absorbed, and the one retail media strategists need to take seriously: ownership of the customer relationship is the only moat that lasts. Tube sites had reach. They did not have relationships, so when the infrastructure failed there was nothing underneath them. Retail media networks have targeting data. They do not have loyalty. Brands put up with them because direct-to-consumer infrastructure is still expensive to build and clunky to run. That is a temporary condition. Shopify’s ad network, TikTok Shop, and even YouTube’s shopping integrations are all laying rails for brands to route around retail middlemen completely. If your business model depends on your customers not having better options, you are not building a platform. You are renting time until someone builds one.

Key Takeaways:

1. Middleman monetization only works as long as the infrastructure layer tolerates the risk. Adult lost payment processing; retail could lose data compliance or card network support.

2. Owned distribution always beats rented reach. Brands that build direct customer relationships survive platform collapse, and the ones dependent on retail media networks don’t.

3. Regulatory tightening on data usage and surveillance advertising will force the same reckoning in retail that content policy enforcement caused in adult. Networks that can’t prove compliance will lose access to revenue rails.

The adult industry didn’t see Visa coming because it assumed the business was too big to cut off. Retail media networks are making the same assumption about their data partnerships, their brand relationships, and their card network dependencies. They shouldn’t.

Max Candy, maxcandy.com