OnlyFans: Revolutionizing the Online Sex Industry?
OnlyFans is a platform that connects consumers with content creators (typically erotic content creators). Recently, the website has seen a flux of celebrities and influencers creating accounts to share exclusive content with their fans. Is this success here to stay?
OnlyFans is a content subscription platform where customers can connect with creators and consume their content. Put simply, fans can subscribe to the content creator’s channel for a monthly fee usually between 5 and 20$ per month, and have access to the creator’s content. Generally, the content is more erotic in nature although not necessarily.
OnlyFans was created as a response to trends in the porn industry. On one hand, the internet made porn available for free for a lot of consumers, causing production houses’ profits and business model to be destabilized. A lot of pornography platform aggregators made movies available for free while making money off of advertising services and production houses do not have the money or clout to sue these websites. On the other hand, consumer preferences are leaning more towards having connections with the actors/ content creators, being able to request certain things from them. OnlyFans capitalized on these trends and created a platform where creators are in control and customers have direct access to the creators.
Value for clients
For customers, the main value proposition is having access to exclusive content from the creators. Additionally, customers can send personal messages to the creators and expect a response. They can even send tips and have special requests for the creators.
Value for content creators
For content creators, the main value proposition is that they have direct access to customers – vs in the porn industry production houses were acting as gatekeepers in a sense. That being said, content creators pocket 80% of the subscription fees while OnlyFans takes only 20%. In the porn industry, usually, production houses pocket 50% of revenues.
Value captured by the platform
As mentioned already, the platform pockets 20% of subscription fees. As of December 2020, the platform had 85 Mn users, more than 1 Million content creators, and 400 Mn USD in annual net sales. Bloomberg believes that OnlyFans is a billion-dollar media giant.
Marketing
The platform really picked up when celebrities joined and shared exclusive content on it. Namely, Cardi B joined the platform and used it to share behind-the-scenes footage of some of her photoshoots. Beyonce on the other hand rapped about the platform in one of her songs. That drove high traffic to the platform – adding an estimated 500k users a day to the platform.
Impact of Covid on OnlyFans:
During the pandemic, the website has seen immense growth both in creators’ and subscribers’ base. In a span of few months, the numbers have more than doubled: in March 2020, the website had 26 Mn registered users and 350,000 content creators. As of August 2020, the website had 50 Mn users and 700,000 content creators. This can be explained by different trends: with more people getting unemployed due to the pandemic, a lot of them are finding a new source of revenue through the website. On the other hand, consumers with more time spent at home are looking for new and more intimate content to consumers from creators.
Scalability and sustainability – risks and potential mitigations
In terms of scalability, the platform is simple enough that it can be easily scaled to new geographies and new types of content. In fact, it is already global (people from different parts of the world can join the platform) and is already having nonerotic content on it – some personal trainers, influencers and celebrities are already using the platform to share exclusive content and drive growth into their personal pages.
In terms of sustainability, it is hard to predict whether this growth fueled by the pandemic is here to stay. With more celebrities and influencers going into the website, we can expect some growth; however, realistically, the growth will not be as impactful as the one seen during the pandemic. In fact, not everyone is happy with celebrities joining the platform. Namely, Bella Thorne faced backlash after making more than 1 Mn USD in her first 24 hours on the platform by falsely promising nude pictures to her fans. While that drove traffic into the platform, the identity of the platform has been diluted and other content creators saw this as a threat to the nature of their work and potential subscriber’s base.
One key advantage of this platform is that disintermediation risk is very low. In fact, the fact that it charges only 20% of the subscription cost and creates a constant flow of subscribers to content creators channels, makes it hard for creators to attempt disintermediation. Given the nature of the content, subscribers to a specific channel will most likely switch constantly, so creators need a constant flow of new subscribers to maintain revenues.
Only time will tell whether this is sustainable – for now, the value is clearly there and OnlyFans is growing.
For more on this, I highly recommend watching the documentary on Hulu about Only Fans:
https://www.hulu.com/series/onlyfans-selling-sexy-60c749b8-96a4-48aa-949a-954dc0b14a58
This is also an interesting video on why Bella Thorne faced a backlash from content creators on OnlyFans
Sources:
OnlyFans Blog Website: https://blog.onlyfans.com/
“How OnlyFans Changed Sex Work Forever”. 2019. The New York Times.
https://www.nytimes.com/2019/02/09/style/onlyfans-porn-stars.html
“How OnlyFans Has Become Hollywood’s Risque Pandemic Side Hustle”. 2020. The Hollywood Reporter.
https://www.hollywoodreporter.com/news/how-onlyfans-has-become-hollywoods-risque-pandemic-side-hustle
“OnlyFans Is a Billion-Dollar Media Giant Hiding in Plain Sight”. 2020. Bloomberg Quint. https://www.bloombergquint.com/onweb/celebrities-like-cardi-b-could-turn-onlyfans-into-a-billion-dollar-media-company
“Influencers are flocking to OnlyFans but not everyone is happy about it”. 2020. Mashable.
https://mashable.com/article/influencer-onlyfans-sex-work/
I have never personally used OnlyFans but one of my closest friends back home is a gay Pornstar and absolutely LOVES only fans. I have first hand knowledge of how this platform has not only empowered him to generate an alternative income stream, but also build his personal brand of celebrity. I am personally very long term bullish on OnlyFans because it is so empowering to its creators. Thank you for sharing this article and the details!
Yes! The whole purpose of the platform is to empower content creators and shift the power structure towards them instead of production houses. Another value add is to have this “paywall” system where consumers cannot steal the content or content aggregators. Thanks for adding color with your friend’s story 🙂
Karl – super interesting post. Thanks for sharing.
While I agree with you that OnlyFans faces little risk of disintermediation I struggle to see their platform moat in the long run. The cross-side network effects are relatively weak as creators generally bear the burden of acquiring customers through other channels. I believe this could expose OnlyFans to challengers who attempt to compete on platform take rate, which can threaten their profitability in the long run.
Thanks for your comment. I agree that there is a threat of a new competitor challenging the website – I do feel though that the bigger the platform and its subscriber base, the harder it is for other competitors to challenge it. Even if competition lowers their commission, OnlyFans can follow their lead and charge lower commissions in a way to retain creators. But the risk is definitely there. On the point of customer acquisition, I do not necessarily agree with you. Creators do not acquire customers through other channels, actually, it is the opposite. They usually acquire customers on OnlyFans and try to outsell them their other services through tips, etc. For some Personal trainers actually, Onlyfans is a way to get new followers on social media and actual PT work.
Great post. My worry is on the sustainability of the company. 20% of commissions may also be seen as too high, why would a competitor – sponsored by a celebrity not charge 10% and get all of the users. The network effects on this business are low as all you have to do is attract the content creators to a new site promising lower commissions and then everyone else would move.
Your point makes sense. I just do not see a reason why OnlyFans couldn’t do the same and lower their fees to retain those creators whenever competition is around. It would be much harder for creators to switch, unless it is for free, in which case the economics would not make sense for competitors.
Very interesting, Karl. I’ve recently read news about the fact that Twitter will allow its users to charge their followers for additional content. I wonder if this recent feature was motivated by the success of OnlyFans, given that Twitter is also used by some members as a platform to share and follow erotic content.
Yes! That is true. I think the rise of different content sharing and charging is pushing Twitter and other social media to replicate some features of the model. I think Daniel wrote a post about another similar content-sharing company called Parteon. In his article, he mentions that as well. Totally on point
Bella Thorne was genius for what she did with OnlyFans. My biggest concern is if this will mimic what happens in the music industry – sex workers have already been impacted negatively by Covid & celebrities joining the platform only further erodes their earning potential.
Yeah, you are on point. The video I attached actually explains that in detail. Actually, OnlyFans creators were very disappointed by Bella Thorne. But there definitely is an argument to be made that Bella Throne and other celebrities drove traffic to the website and there must have been a spillover for other content creators.