Introduction
OnlyFans, the adult content platform, has reportedly increased its revenue 20-fold in 4 years, from $330 million to $6.6 billion, making it the most successful British company since DeepMind and the most influential content platform after TikTok.
As an adult content platform with a simple and transparent business model, OnlyFans only takes a 20% commission, without the complex traffic incentives or ad revenue sharing that other platforms use. Since OnlyFans doesn’t have an app, it avoids Apple’s 30% tax. Of the $6.6 billion total revenue, $5.3 billion is distributed to creators, leaving the remaining $1.3 billion for the platform. After deducting all costs and taxes, the platform’s net profit is approximately $480 million. With only 42 employees, each person generates over $10 million on average.
Key Features of Business Model
- Creator Empowerment: OnlyFans provided a platform for adult-content creators, who faced censorship and exploitation on other platforms, allowing them to directly monetize their content and build a loyal fanbase through subscriptions. This is also a disruptive innovation, as OnlyFans started from a niche and low-end segment of social media platforms. Social media platforms like Instagram, Twitter, and Reddit used to prohibit or limit adult content because they focused on other categories, mainly profiting through advertisements. OnlyFans seized the opportunity and became dominant in this category by offering creators autonomy and ownership of their work.
- Subscription and Pay-per-view: As a user wanting to view content on OnlyFans, you have two options for access. You can either subscribe to a creator by paying a monthly fee for unlimited access to all their content, or you can pay a fee to view individual pieces of content. The trend shows that pay-per-view is gradually taking a larger portion of OnlyFans’ payouts to creators. This feature provides viewers with more personalized experiences and gives creators additional income streams.
- Low Commission: Another barrier for OnlyFans’ competitors, such as Aylo (which owns multiple adult content brands), is that OnlyFans only charges a 20% commission, which is considered very low in this industry. This low commission is possible because OnlyFans takes advantage of the “platform” model; it merely provides a space for viewers and creators to connect, rather than creating content itself, which keeps its costs lower than those of competitors. There is also a network effect: the more creators are attracted by the low commission, the more content they produce, which in turn generates more profit for OnlyFans, allowing the company to maintain the low commission rate.
New Challenges
- Threat from Incumbents: In June 2024, Elon Musk ended the ban on adult content on his platform, a move that came shortly after the introduction of paid subscriptions and closed messaging.
- Threat from AI: In a May 2024 interview, CEO Keily Blair stated that OnlyFans will not introduce virtual AI characters and has no plans to launch any AI-related features for the time being. These considerations are aimed at protecting the rights of creators and providing users and creators with more choices. Nevertheless, some competitors are more “open-minded,” such as Fanvue, which currently features an AI influencer, Emily Pellegrini, who already has 256K fans on Instagram. As more AI characters emerge, the demand for “the real thing” may decrease. Unlike real creators, these AI influencers can speak multiple languages, are available 24/7, and may eventually be integrated into immersive 3D environments. AI could potentially disrupt the industry once again.
Reference:
How OnlyFans Makes Money: The business and revenue model explained. (2024, February 9). Untaylored. https://www.untaylored.com/post/how-onlyfans-makes-money-the-business-and-revenue-model-explained
42 people, $6.6 billion in annual revenue, OnlyFans makes more money than all the AI startups in Silicon Valley. (n.d.). BlockBeats. https://www.theblockbeats.info/en/news/55014
Cuofano, W. I. G. (2024, June 7). How does OnlyFans make money? The OnlyFans business model in a nutshell. FourWeekMBA. https://fourweekmba.com/how-does-onlyfans-make-money
