Did itch.io ban adult games?
The rumor mill is in full swing in Naughty List News #93
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Earlier this week, adult game developers started panicking about the possibility of Itch.io banning their products from the online storefront. Reports were trickling in about multiple adult game developers receiving an email from the storefront saying their access to itch.io Payouts had been revoked.
The email to this adult games developer reads, in part:
We’ve recently reviewed your account, and unfortunately, we can no longer off our “Collected by itch.io & paid later (aka itch.io Payouts)” system for your account. To continue accepting payments, you will need to switch your account to the “Direct to you” mode. […] To provide uninterrupted service to as many users as possible, we can no longer facilitate payments for your account through our Payouts system.
Itch.io has made the full email they sent to affected developers available here.
What is the itch.io Payouts system, and why did the platform revoke access for this developer? And does this mean the storefront has started cracking down on adult games on their platform in general?
What is the Payouts system?
Itch.io Payouts is a system where the storefront becomes the listed Merchant of Record on the transaction to customers. This differs from “Direct to you,” in which developers must manually connect every payment provider they wish to make available. In that model, the payment provider account (i.e., the developer’s name or their company) will be listed as the Merchant of Record on the transaction.
Customer payments via the Payouts system go directly to itch.io, and developers are responsible for claiming their earnings from the platform. Earnings can be paid out after a seven-day grace period to account for payment processing issues and fraud prevention. After initiating a payout, it is hand-reviewed by itch.io staff and paid “at our earliest convenience.” Payouts are done via either PayPal or Payoneer.
The convenience for developers is that itch.io Payouts handles the complicated patchwork of rules and regulations for accepting payments via a third-party service. For example, European value-added tax (VAT) laws dictate that any business selling to customers in the European Union must collect VAT according to the rate the customer buys from. This means that information about each customer in the EU must be collected and stored securely.
The Payouts service provides another convenience for developers: it will mail them a tax form detailing their earnings on the platform at the end of the (fiscal) year. When using “Direct to you,” developers must request these forms from each payment provider individually. They are also responsible for collecting the aforementioned VAT from customers in the European Union themselves.
So why are some adult game developers reportedly banned from using the much more convenient Payouts service on itch.io?
What’s going on?
On Cohost, @lexyeevee wrote a blog post about the situation last Thursday. She claims to have identified six accounts for which itch.io has revoked access to their Payouts system. There are also unverified reports floating around that as many as 20 developers may be affected. Of the six developers that Eevee was able to verify as banned from the Payouts system, two of them provided a subscription model not endorsed by itch.io, one has published over 40 low-quality adult games in the past year, and three were banned for reasons that were not immediately obvious to her.
Digging into the details of the subscription model these developers provided bolsters the theory that these bans are more about accounting issues than their games' content. Each time the developer releases an update to their game, they duplicate the game’s page and hide the old one. Because each game’s page is treated as a “new” game on the platform, anyone who has purchased a previous build has to repurchase the game instead of receiving updates for free.
Subverting the intended purchase flow causes support issues for itch.io and is toeing the line very close to outright fraud. The convenience of the Payouts system is that all customer money first flows through one of itch.io’s holdings before it gets distributed to developers. But this means that itch.io assumes financial liability for these payments and is on the hook for any shenanigans pulled by the developers on its storefront.
Initial response from itch.io
In a reply to a topic on the itch.io Community forum from adult game developer HH Richards titled “Will adult games be forced into "direct payments" instead of "collected by itch.io"?”, itch.io CEO “leafo” replied, in part:
We haven’t made any global policy changes, but we have notified some developers individually through our support system that they are no longer eligible for our Payouts system, and that in order to continue accepting payments they will have to switch to “Direct to you”.
This means that while the affected developers can no longer use the Payouts system, they can still use itch.io as a storefront if they handle the payments directly through the different payment providers. Leafo also points out that itch.io takes on significant risk with the Payouts system:
When a seller uses our Payouts system, we take on the responsibility and the associated risk for the content they distribute. We strive to offer our platform to as many independent creators as possible, but, since itch.io utilizes multiple third-party services to facilitate its payment services, we have to be careful about the risk we take on.
One of the rumors floating around was the bans were related to the revenue share with the platform set by developers. The CEO denies this in no uncertain terms:
Changing your revenue share setting will not affect the decision on your account. At no time have we ever asked an account to set their revenue share to something specific. […] [T]here is no minimum revenue share requirement for accounts to have access to our Payouts system.
Eevee then contacted the CEO of itch.io on Discord directly and asked them the burning question on everybody’s mind, which is whether these bans are specifically targeting adult game developers:
Eevee: I know you can’t clarify the precise reasons for shunting accounts onto “direct to you.” But is it possible that, for comparable reasons, the same might be done to an account that had only ever sold SFW games?
Leafo: Good question, I can think of at least one developer off the top of my head in our past where we may have considered using this restriction if we had implemented it at the time. It’s the same justification, mitigating [our] risk. We assume a liability [and] cost with running accounts in our Payouts system, and sometimes we have to make [a] difficult decision for the greater stability of the platform.
Leafo: Unfortunately, I don’t think it’s appropriate to share who this is and why, as we do not make private account matters public.
Leafo’s answers seem to confirm the suspicion that the current situation is not related to adult games on their platform but that some developers are creating a headache for their accountants and/or lawyers.
Rumors swirl in an information vacuum
Instead of being wishy-washy about why certain developers were banned from using the Payouts system on itch.io, it would have been much better for everyone involved if the platform had immediately come with a strong statement saying they are trying to stop fraud on their platform and would continue to sell adult games on its storefront.
Unfortunately, itch.io can’t do that.
If it’s true that the current debacle is about preventing fraud on the platform and not banning adult content, then itch.io cannot tip its hand. One of the tenets of fraud prevention is that you shouldn’t let fraudsters know how you’ve detected their fraud because it might help them to, you know, hide their fraud better next time. This creates a frustrating situation for all parties involved. Itch.io cannot comment on individual cases for fear of leaking information about their fraud detection, and developers don’t know what they did wrong when they receive a vague email from the platform informing them they’ve been cut off from certain payment features.
This lack of information creates an environment in which rumors run rampant. Is itch.io targeting adult game developers in particular? Or is it because some developers had set their revenue share percentage with the platform to zero? Maybe adult games were always secretly banned, and it was only by the graces of the platform holders that they were allowed on the storefront.
To be clear, none of these rumors have been confirmed. As far as we know, adult games are still allowed on the itch.io storefront. But this panicked reaction from adult game developers is understandable if you look at the bigger picture.
Always waiting for the other shoe to drop
Itch.io, like any other store on the Internet, is beholden to payment processors who handle millions of transactions for them for regions with wildly different payment methods and regulatory requirements. To put it bluntly, even if itch.io wanted to, it would not be possible for them to take your credit card themselves and charge you directly when you purchase a game on their platform.
But this creates a problem for adult game developers, who are beholden to the terms of service for payment processors that often treat perfectly legal adult content as high risk or even adjacent to fraud. The requirement to conform to third-party terms of service is explicitly stated in the original email from itch.io to developers banned from using its Payouts system:
As a reminder, per our Terms of Service, your account’s activity must comply with the Terms of Service and Acceptable Use Policies of any third-party payment processors you utilize through your itch.io account.
Sex worker and erotic game maker @boarlord points out that developers are right to be worried about violating the terms of service of payment providers, as they’ve seen a similar issue with adult content play out many times on other platforms. Everything was fine until it suddenly wasn’t. Sex workers have sounded the alarm about financial discrimination from payment processors for years, for example, during OnlyFans’ brief porn ban two years ago.
And there’s precedent for games stores to ban adult content suddenly. Last year, I reported that Game Jolt, another small storefront for indie games, dropped the sales of adult games on their platform without any prior warning:
Conclusion
No, itch.io did not ban adult games from their storefront this week. It is much more likely that the platform had to deal with developers who were abusing their payment systems for unsanctioned activities. The fact that this ban impacted adult games is an unhappy coincidence.
Nevertheless, adult game developers should remain vigilant about changes to the storefronts they use to sell their wares while keeping their heads cool about any rumors floating around, which is about as easy as rubbing your belly while patting your head.
A big shoutout to @lexyeevee, @boarlord, and @Bigg on Cohost, and everyone else who gave me tips about the rumors floating around the adult games community. Today’s reporting was only possible thanks to your hard work! Please check out the original posts I’ve linked. In particular, consider supporting Eevee on Patreon for her queer game development.
Writing Wrap-Up 📖
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NCOSE launches a campaign to ban all adult content from Reddit. The group calls for the platform to take action against “hardcore pornography and sexually explicit content.”
Artist spotlight 💡
Thanks for reading this far!
-Mr. Hands
Thank you so much for the due diligence. This was a great write up. One question: in this debacle I learned that itch allows a developer to payout a higher cut to them voluntarily. Why? Are there concrete benefits to going from 10% to 30%?