OnlyFans: Democratizing the creator economy
OnlyFans is a subscription-based social media service based in London, United Kingdom. The platform allows creators to charge for access to their content through a subscription fee. In OnlyFans words: “OnlyFans empowers creators to own their full potential.”
The monetization of intangible value has been an incurable cancer for the creative industry. So much so if it weren’t for iTunes & Spotify, we would continue to have free music at the expense of a terrible user experience. Spotify revolutionized the music industry by monetizing access to music (art) through a great platform-based UX. OnlyFans transforms the creative industry in a similar way for artists of all kinds.
OnlyFans acts as an intermediary between the consumer crowd and artists. Creating value by growing an ecosystem of artists while ensuring quality to consumers. It creates a distribution channel with its mobile platform, connecting artists to their fan base. Then, once artists determine the price of their subscription, OnlyFans takes care of payment collection and paywall services for digital rights management.
On the consumer side, fans can get high-quality curated content at their fingertips. Consumers benefit from a large artist base that produces content globally. It also offers a safe intermediate service for transactions, protecting consumers from scams and ensuring the quality of content.
OnlyFans has a commission-based business model. Once an artist sets a monthly subscription fee, OnlyFans takes a 20% cut giving the remaining 80% to the artist. Creators can also earn tips and extra income by selling exclusive content to subscribers via direct message. The transaction volume for this content is capped at a maximum of $100. OnlyFans takes no fee on this revenue.
The best part of OnlyFans is how defensible their platform has become. By being the collector of subscription fees and managing digital rights, disintermediation becomes almost impossible. Artists are negatively incentivized to disintermediate the content regardless of the amount of money, given that once content leaves the platform, it can be copied endlessly without the artist profiting from it.
Another factor defending OnlyFans position is its network effects. All the best artists are on the platform, which draws all new users. This is positively reinforced and will continue to be one of the greatest MOATs for the company. This also creates a sustainable dominance effect and avenue for consumer and creator growth for the coming years.
It is worth mentioning that although these forces are powerful, they have been defeated before. Users and artists can and will multi-home as soon as a better solution comes around. Examples include Facebook versus Instagram, TikTok, etc. Competitors can quickly turn a profitable business into ruinous competition and drive prices to the ground. Such an outcome is equally unnecessary as realistic.
One of the biggest threats to the future of OnlyFans is its adult content. The highest-grossing artists on the platform and a great part of the creators are generating adult content. The willingness to pay for 18+ content is just much higher than for paintings, sports classes, and others. However, this creates an immense risk for the company. If illegal adult content gets uploaded to the platform, OnlyFans would be considered a facilitator for exploitation and liable for damages.
The scalability of OnlyFans depends on artists creating content. Fortunately, there is a vast supply of artists struggling to get by that would be interested in the platform. These artists wouldn’t benefit as much from OnlyFans as the rewards are incredibly skewed. Only top performers feast on the platform, and the rest struggle to go by while dreaming of making it big. Only time will tell if OnlyFans pivots to subsidizing some artists to the benefit of users, or if it continues to allow the uneven distribution of rewards.
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