adultcontent

It's actually an example of the market mechanism solving the problem, you're just ignoring a few actors here:

The payment processor of Patreon has an interest not to deal with the porn, therefore declines the business.

The payment processor of competing actual porn platforms has a market niche to take exactly that business.

All the middlemen that are required here (for complex reasons) get paid for making it happen.

Nothing is lost, therefore no inefficiency, therefore no failure. The money not spent on one performer through Patreon can instead be spent on any other performer wise enough not to rely on Patreon for payment.

The market hasn't failed, it's perfectly possible to sell adult content online, it's just relatively more expensive.

"From the outside, it looks like this is a market failure that has no reason to exist other than institutional bias that is no longer grounded in reality."

I think you're being a bit naive there. Surely those companies would have no objection to tasteful nudity or educational content, but if you want to process actual porn you'll have accept a lot of seriously offensive content that you definitely don't want to directly associate with your brand.

I can assure you with full confidence that there's practically no limitation on "disgusting material" that you can sell online, as long as it's legal (which bestiality isn't).

In fact, the farther you push the boundaries, the better chance you will have at making money, assuming there still is an audience for it. There's a platform for almost anything.

Patreon just isn't the place for it and it never was. Patreon isn't even on the radar.

That's not to say you will never run into issues with payment, but your ultimate problem isn't going to be the platforms, it's finding customers.

This idea that the livelihoods of adult performers are at stake is nonsense.

Almost nobody in the industry relies on Patreon for their income, not in the least because people don't go to Patreon for adult content. Sure, some performers do set up one for their fans to support them, but practically nobody lives off of it.

Not to name any names, but there are dozens of popular sites where performers can offer their content/services. They all take a relatively big cut (on the order of 50%), but that's due to rampant fraud, chargebacks and because of money laundering. If that service could be offered substantially cheaper, it would. Case in point is that despite the issues, cryptocurrency isn't popular at all.