OnlyFans is making headlines in the tech sector again.

This adult content platform has annual revenue of US$6.6 billion. According to some statistics, this is higher than the combined revenue of all emerging AI companies in Silicon Valley. It is the most successful company in the UK since DeepMind and the most influential content platform since TikTok.

OnlyFans defines a certain type of creator economy.

What’s even more terrifying is that in 2023, they distributed US$5.3 billion in revenue to creators. Even so, they still had an operating profit of US$649 million.

CEO Keily Blair declared in an interview that OnlyFans does not make recommendation algorithms, will not introduce virtual AI characters, and does not even plan to launch AI-related functions for the time being.

All these considerations are to protect the rights and interests of creators and allow users and creators to have more choices.

The content of the article is compiled from Matthew Ball's article, WSJ interview, and was partially abridged by Founder Park.

After TikTok, the most influential content platform

Although it is a private company, as a British company, OnlyFans is still required to disclose certain business and operating data. Although the information is limited, it is enough to give us a glimpse of its revenue, profits, scale and market position.

From a certain perspective, it is one of the most successful companies in the UK since DeepMind was founded in 2010, and it is also the most influential content platform since TikTok became popular through Musical.ly in 2014, especially in the creator economy industry .

OnlyFans' annual revenue has reached a staggering $6.6 billion in 2023, up from $300 million five years ago. While the explosive growth during the pandemic is unlikely to be repeated, revenue in 2023 is still up 19% from the previous year, or $1.1 billion, which is 3 percentage points faster than the growth rate in 2022. Although the platform is subscription-based, more than 60% of purchases are now made through one-time transactions, and these transactions are not small, often amounting to tens of dollars.

Source: Fenix ​​international

In fact, subscription revenue has grown just 9% since 2021, while transactional revenue has soared 70%, accounting for 88% of total revenue growth. Currently, OnlyFans has twice the revenue of adult industry giant Aylo, which owns brands including PornHub, Brazzers, RedTube, YouPorn and XTube. The OnlyFans platform has more than 300 million registered users, although not all users are active or paying, but the platform has not revealed specific details. In terms of geographical distribution, two-thirds of revenue comes from the United States, with the United Kingdom and Europe accounting for 16% combined, and the remaining 17% from the "rest of the world."

Source: OnlyFans

Reasons for growth: market blank period, high profit margins

The growth in revenue is first due to the increase in brand awareness (the term "OnlyFans" has become synonymous with creators' private domain monetization) and the presence of many well-known creators (some of whom do not provide pornographic content).

Additionally, regulation has forced many adult content platforms to remove vast amounts of content, mostly uploaded without any compliance process, and to implement cumbersome identity verification processes for new content uploads.

At the same time, social media platforms like Reddit and Tumblr decided to ban pornographic content, which not only created a gap in the market, but also forced creators with large followings to direct fans to other platforms. And, many OnlyFans creators now look to sites like Reddit, Imgur, Instagram, TikTok, and Twitter as a way to attract OnlyFans customers. In most cases like this, the platform will object to creators directing viewers or consumption to a competitor’s service—or at least try to launch an integrated feature/product that might displace an alternative.

However, these sites don't compete directly with OnlyFans (and more importantly, they generally ban porn), so they generally allow this behavior as long as it complies with their terms of service and isn't too public. Additionally, these platforms often benefit from the promotion of OnlyFans creators, as this creates content that can easily go viral without requiring the platforms to pay for it.

Another reason for OnlyFans' success is its high 80 percent revenue share rate, which creators earn from working as actors for production companies or other agencies.

In 2023, OnlyFans creators received a staggering $5.3 billion in payouts. For comparison, the NBA's total payroll for the 2023-2024 season is $4.9 billion, while the NFL's cap is $7.2 billion. In total, OnlyFans creators have collected more than $15 billion over the past five years. Of course, these leagues each have 500-1,700 players, while OnlyFans has around 4.1 million creators.

Source: OnlyFans

Overall, OnlyFans is slowly eating up the entire porn industry. Creators and porn stars can make more money in a safer way while having greater autonomy and providing their viewers with more authentic, differentiated and valuable experiences.

By the way, OnlyFans' high revenue share only works because it doesn't give Apple a cut (which takes away 15-30% of all revenue). In fact, the iOS App Store and Google's Play Store do not allow pornographic apps. Normally such a ban would be a death knell for a potential business model, but the browser-based experience is adequate for image and movie viewing and chatting (just not very gaming-friendly), and most potential OnlyFans customers won't Will be hindered by the fact that the web-based experience is "not as good" as the app-based experience, and the payment process is slower and more annoying (not good for casual games or e-commerce).

Top creators take most of the revenue

As is the case with other UGC platforms, OnlyFans revenue is highly concentrated in the hands of top creators, who receive the vast majority of the revenue, while most creators receive very little.

There are more than 4.1 million creator accounts on OnlyFans (the company does not disclose the number of unique creators; some people operate multiple accounts) and more than 305 million followers. Some creators are estimated to generate millions of dollars per month, but revenue appears to follow a traditional normal distribution.

On average, the average creator has 74 followers and is paid $24 per year (or $2 per month), for a total of $1,800 per year ($1,450 of which goes to the creator). However, the median creator likely earns much less. But according to previous internal OnlyFans data, the top 0.1% of creators, some of whom make millions per month, earn 15 times as much as the top 15% of creators.

Source: OnlyFans

Still, few other platforms in the world have more than 100 million average daily active users who spend more than $20 a year on the platform.

A common technique among top creators is a series of pricing tiers, including a free version, such as Basic: Free, Standard: $5 per month, Premium: $10 per month, VIP: $100 per month…, which also There can be additional deals (such as pay-per-view messages or images).

To reduce churn, many benefits are only available to long-term subscribers. Top subscribers can also communicate directly with creators (which allows these users to make requests that may result in further additional charges). In many cases, the responses were actually written by members of the creator's team—remember, many of these creators are now heads of multimillion-dollar businesses—although this alleged deception resulted in took some legal action.

In this sense, we should recognize that many fans are paying for fantasies of parasocial relationships and connection, not just photos and videos. Many of the top accounts are not R-rated, some are entirely focused on Patreon or Substack kind of content rather than OnlyFans, or are otherwise just paid access to private (but PG-13 rated) Instagram photos.

Although 80% of total revenue is passed on to creators, OnlyFans generates considerable profits. In 2023, the platform will have net revenue of $1.3 billion and gross profit of $819 million (at least half of its $488 million cost of sales will be credit card fees, with most of the rest related to bandwidth, servers, etc.). After all expenses, operating profit was $649 million (50% of net income and 10% of total revenue), for a total of $1.74 billion over the past five years.

Source: OnlyFans

Companies will have an average of just 42 employees in 2023, up from 61 two years ago. During the year, each employee generated net income of $31 million and operating profit of $15.5 million.

OnlyFans has paid out $1.1 billion in dividends to its two owners since 2019, with $472 million paid out in 2023 alone. It’s worth noting that Leonid Radvinsky previously founded a porn live-streaming company in 2018 when he bought 75% of OnlyFans, before profits (probably) accrued more than $1 million.

New Threats: X, Open Adult Content, and AI

A number of competitors to OnlyFans have emerged over the years, some of which even offer creators higher revenue shares. However, the scale of OnlyFans' two-sided market (i.e. users and creators) has proven to be durable, not just profitable.

Source: OnlyFans

However, there are two interesting questions beyond "How big can OnlyFans get?"

First, will X be able to successfully enter the industry and how will it impact OnlyFans? In June 2024, Elon Musk ended the platform's ban on pornographic content, a move that came shortly after it launched paid subscriptions and closed messaging.

Second, how not just images and films, but generative AI, will impact the category.

As more substitutes become available, the demand for the "authentic" falls, while the premium for parasocial authenticity rises. This trend is foreseeable. What’s more, generative AI creators can literally do everything you want, and only you. Unlike real creators, these AIs can speak multiple languages, be available anytime and anywhere, and may in the future be integrated into immersive 3D environments.

No recommendation algorithm, no introduction of AI

In a media interview in May of this year, OnlyFans CEO Keily Blair elaborated on their thoughts on content recommendations and their views on AI. Founder Park does a simple compilation.

No algorithm recommendation, no AI

Jeff: How do you attract fans through the recommendation system?

Keily Blair: We don’t have any personalized recommendation system for fans.

Jeff: Okay, do you plan to add AI to the product?

Keily Blair: So we don’t allow AI-generated content. Real creators can use AI to enhance their content, but full AI virtual human accounts are prohibited.

Jeff: Daily usage time is very important for social media companies. How do you improve this indicator?

Keily Blair: Unlike a lot of other social media companies, this isn't actually an important growth metric for us.

Jeff: What is the biggest source of traffic to your website?

Keily Blair: I don't know. I don't track this metric.

Jeff: ...and how did you get this job? (Laughs) But you are very good at user development. You must have a background in this area, right?

Keily Blair: Actually, unlike many CEOs of technology companies, I studied law and specialized in network security and privacy issues, which probably explains a lot of problems.

Jeff: But anyway, you can easily generate revenue now, right?

Keily Blair: I think what's really interesting about Onlyfans is that we're a space for adults to really have an adult content experience. Sometimes this includes "adult content," but it can also include sports, comedy, MMA... basically anywhere a creator wants to monetize their fan base, as long as they comply with our Terms of Service.

No ads, strict verification of authorship

Jeff: Why doesn’t Onlyfans help users discover popular accounts through platform recommendations? After all, an ad-driven model is at the heart of nearly every social media platform.

Keily Blair: That's because the ad-driven model is key to the growth of social media, and social media platforms are generally structured that way. But Onlyfans is unlike many other platforms in that our interests are aligned with the creator community. We can only succeed if the creators succeed. Since our founding, we've paid out $15 billion to creators. Our business model means that for every dollar we make, creators make $4, and I’m extremely proud.

Jeff: So, OnlyFans does not seek to imitate the model of mainstream advertising-led social media platforms, which seems to be a buck-the-trend choice in recent years. We’re seeing TikTok, YouTube shorts, Instagram, and Facebook all heavily promote subscriptions and the ability to pay creators directly. Interestingly, this trend coincides with their reduction in revenue to creators.

I'm curious, what are your thoughts on this competitive landscape and what are the trust and safety issues that need to be considered for a platform that wants to adopt a model like OnlyFans?

Keily Blair: Indeed, other platforms are beginning to imitate the OnlyFans model, especially in terms of creator monetization and subscription mechanisms, although they may not be as generous in their revenue distribution.

I think creators and younger generations are hungry for more interaction and fair pay rates. The relatively young adults of Gen Z want to connect with creators, and they believe creators should be paid their dues.

A key difference with OnlyFans is that creators always own the copyright to their content. They can remove content from the platform at any time, and the content does not belong to us but to the creators themselves. For other platforms, if they rely on advertising revenue, I understand this is an additional way to monetize. But OnlyFans has always adhered to this subscription monetization model, and our users and creators are accustomed to this rule. I think the challenge that other platforms face when they move to a subscription model is that users are used to getting content for free, and they need to feel like it's exclusive content, and they need to feel like they're getting more value.

In terms of creator economics and business trends, we noticed that subscription revenue now accounts for a smaller proportion of our total revenue than "microtransaction" (single transaction) revenue. "Microtransactions" include paid unlockable content, private messages, customized content, and behind-the-scenes Easter eggs. Sometimes, as a user, I may not want to subscribe to everything, I just want to watch a specific thing. Therefore, it is very important to give users and creators the freedom to choose different monetization models, whether it is subscriptions or micro-transactions.

As for trust and security, this is critical to our operations. Here at OnlyFans, we take this very seriously. We focus first on the creator registration process because this is the most important part. Creators have to go through a very strict vetting process where they have to provide us with nine different pieces of personal information, including in some jurisdictions, like the United States, you have to provide a Social Security number. We ask for government-issued identification, full name, bank account details, other social media handles, etc. so we can ensure you are the same person across all platforms. We do not use this data for any other purpose than to keep our community safe and build accountability.

Jeff: But in some countries you cannot obtain valid identity information of these creators, how do you deal with it?

Keily Blair: It's really tricky. We choose not to operate in countries where we cannot actually verify identity. We must determine the age and identity of our creators before joining the platform, especially if they choose to share adult content.

Jeff: It’s obvious that you don’t allow minors on the platform either as creators or as viewers. So what happens if I have a photo of my child that, as a creator, I want to share with my fans?

Keily Blair: Definitely not.

Jeff: Okay. So what if, just what if, I wanted to cosplay on my OnlyFans account and I was a girl in a school uniform?

Keily Blair: That's not okay either. So we don't allow any role play that suggests age, Jeff. This is a matter of principle for me. I have two children myself, ages 9 and 11. I hope they can have a healthy environment online.

As a social media platform, we take appropriate security controls very seriously. We understand that each different platform model has its risks. That’s why we’re so confident that everyone over 18 on our platform allows adult content. We have to face different risks, so we invest very heavily in content moderation. That’s why there’s no end-to-end encryption on our platform, even in private messages, meaning we can focus on keeping our community safe and accessible to adults only.

AI banned to protect creators

Jeff: Some of your decisions regarding AI really confuse me. Chatbot, for example, may not be that great at a lot of things right now, but it's pretty good at having simple conversations. In addition to subscribing, creators need to spend a lot of time and talk. In fact, this is not a secret of social platforms. Those popular creators have dedicated customer service teams. They can train robots to imitate themselves, and then let them go. This can save a lot of money. Why don't you allow this?

Keily Blair: You say it’s a “simple conversation,” but there’s a lot of really deep content in OnlyFans private messages that a chatbot can’t handle. Putting this aside, I think there are quite a lot of risks in generative AI now, which also involves legal issues. Now everyone is discussing the future of AI: some say that AI will bring about huge changes, and some are worried about the doomsday scenario in which AI will rule mankind. How should we prevent it? …

But they did not solve some of the problems AI is currently facing, such as copyright, ownership, etc. They are not problems that may occur in the future, but real problems that are infringing on the rights of creators now. There are risks in actually allowing AI to run freely in a system. So for us, we allow creators to use AI to enrich content, but it must clearly belong to the creator and it must be proven to us.

Jeff: Meta has robots over there that occasionally pretend to be parents of kids in New York public schools. Are you saying you would never allow the use of generative AI to create content and social interactions?

Keily Blair: At present, we believe that the benefits of introducing AI are not enough to offset the risks, but we continue to pay attention to the development of this industry. I don’t have a crystal ball to predict the future, technology changes so fast. So for us, we have a team of lawyers, privacy experts, technologists, developers who are looking at the technology that exists and how it can empower our community of creators. If one day we have confidence in safeguards, we may consider exploring this direction. But right now, given the current circumstances, we are not in a position to do that.

Give users and creators more choices

Jeff: I noticed that you have publicly expressed dissatisfaction with some recommendation algorithm platforms before. But at the same time, you seem to be working with this model to some extent, where the creators who are successful on OnlyFans are almost all creators who are already successful on Instagram, Twitter, YouTube. I'm wondering what you think about this symbiotic relationship, and whether your business is in some way dependent on this model that you don't seem to like very much.

Keily Blair: Every creator is running their own business. Essentially, we are a platform that helps creators and fans connect.

There is a very interesting report that states that most creators operate on 7 or more platforms and provide different content to different audiences on these platforms. If other social media platforms revolutionize the way creators interact with their fans, and if other platforms negatively impact the way creators interact with their fans, we will benefit. They may end up choosing OnlyFans as their primary platform, assuming of course they are over 18 and pass all the verifications.

Really, I think there's a degree of symbiosis between us and other platforms because it's all about the creators themselves and their fan base. But we still need to put safeguards in place and control the content on our platforms. For example, giving users the option to choose each subscription and choose each creator they want to follow is very important. Because as a fan, I'm not interested in everything. I'm only interested in certain things. I'm a fan of certain people. I like certain musicians, I like certain journalists…

We don’t want push notifications, we want choices, we want control. Our creators also want to be in control of their fan base. Creators can block fans, and they can decide not to let certain people follow them. So it's really important to me to keep our incentives consistent and focus on delivering a great user experience and creator experience.

Jeff: Is that so? You seem to be suggesting that this platform can be a substitute for bad experiences on other platforms. But I mean, should we be thinking about how the network itself can do these things better? Or should we do it now? OnlyFans is built on the assumption that it will always be an alternative online product. How do you see the development of online social products as a whole?

Keily Blair: I'm an optimist. I really hope we can build better social media platforms and we can make a change. I think some of the structural issues we talked about earlier do make that difficult. What sets us apart is our success with security, while considering and being aware of the risks prevalent on our social platforms and controlling them appropriately.

Because we build security into the design from the beginning, rather than fixing it after the fact. This security-by-design approach allows us to better protect our users while also providing a safer, more controlled environment for our creators. This forward-thinking approach allows us to be unique in the social media industry and create real value for users and creators.

Of course, hindsight and effort are always valuable and are better than no action. So I'm hopeful that the web can move in that direction, and I look forward to seeing more changes happening in other social media now, and a more positive and optimistic future for social media.

Further reading
Think you can only go to Web3? Strict censorship, banks blocking payments, OnlyFans stars defect to decentralized platforms!
Web3 can be sexy! Solana’s version of OnlyFans receives additional funding, what do adult creators think?
It’s time to get horny! Musk's X is open to adult content, but "3 conditions" must be met before it can be viewed

[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.

  • This article is reproduced with permission from: "Deep Wave TechFlow"

  • Original author: Founder Park