Breaking Down Only Fans’ Stunning Economics — Matthew Ball.co
Breaking Down OnlyFans’ Stunning Economics — MatthewBall.co #
Excerpt #
Due to UK disclosure requirements, it’s possible to examine the P&L of the privately owned/controlled OnlyFans. And the results are shocking.
Though a private company, Felix International (“OnlyFans”) is a UK company and therefore required to publicly disclose certain information pertaining to its business and operations. And while these disclosures are limited, they reveal enough about the OnlyFan’s revenues, profits, scale, defensibility, reach, and impact to say that it is probably the most successful UK company founded since DeepMind in 2010, and the most significant media platform founded since TikTok (via Musical.ly in 2014), and dedicated creator economy platform… ever
In 2024, OnlyFans generated $6.3 billion in gross revenues, up from $300 million five years earlier. Though the company is unlikely to ever match its pandemic growth rates given its current scale, revenues in FY 2023 grew 19% (or $1.1 billion) year-over-year, three percentage points greater than 2022 (which grew $754 million). Though OnlyFans is based around subscriptions, over 60% over consumer spending is now via transactions (and unlike say, Candy Crush, these are not micro transactions but instead add-on purchases that can cost dozens of dollars or more). Indeed, subscription revenues are up only 9% since 2021 (or $227 million) whereas transactional spending is up 70% (or $1.6 billion), representing 88% of total growth. OnlyFans revenues are now believed to be twice that of pornography giant Aylo (formerly known as MindGeek), which owns PornHub, Brazzers, RedTube, YouPorn, and XTube, and the platform counts over 300MM registered users (not all of whom pay or are active, but no such disclosures have been made). Two thirds of revenues are from users in the United States and, while the UK plus Europe is another 16%, with the remaining 17% “Rest of World.”
Revenue growth is propelled by growing brand awareness (including the genericization of “OnlyFans” to mean intimate creator subscription), the addition of high profile creators such as Cardi B, Bella Thorne, Denise Richards, Carmen Electa, Larsa Pippen, Tyga, DJ Khaled and Fat Joe (some of whom do not offer any pornographic content), regulatory action that has (quite rightly) forcing many X-Rated market leaders to delete the majority of their catalogues (much of which was uploaded without any compliances processes whatsoever) and undertake laborious know-you-customer processes for new uploads, and the decisions of social media networks such as Reddit and Tumblr to ban (or de facto ban) pornography, which created an addition market vacuum while also compelling creators with large followings to actively redirect their fans to an alternative. More broadly, many OnlyFans creators now treat sites such as Reddit, Imgur, Instagram, TikTok, and Twitter as “front doors” for OnlyFans customer acquisition. In most analogous cases, platforms rebel against creators who try to redirect their audiences (or their spend) to rival services - or at least try to launch an integrated feature/offering that might displace an alternative. However, none of these sites compete with OnlyFans directly (what’s more, they usually ban pornography), and thus they typically allow this behavior as long as it complies with their terms of service and is not too overt. Moreover, these platforms tend to benefit from the investment of OnlyFans creators as it results in (often highly viral) content that they don’t need to pay, explicitly encourage, or involve themselves with.
Another reason for OnlyFans success is its high revenue share rate - 80% - which far exceeds that which a creator might get as a performer working for a production company or other agency. In totality, OnlyFans is slowly consuming the entire porn industry. Everyday creators and porn stars can make more money, in a safer way, while having greater autonomy and offering audiences experiences that feel more authentic, differentiated, and valuable.
In 2023 OnlyFans creators received a stunning $5.3B in payouts. As a point of comparison, total NBA salaries during the 2023-2024 season was $4.9B, while the cap for the NFL was $7.2 billion. Over the past five years, OnlyFans creators have collected over $15 billion. Incidentally, OnlyFans high revenue share rate is practical only because it does not support App Store billing (which would take 15-30% of all transactions first). In fact, neither the iOS App Store nor Google’s Play Store even allow for pornographic apps. Usually such a prohibition is a death knell for a would-be business model but browser-based experiences are sufficient for image and video viewing, as well as chatting (it often cripples games, conversely). Most would-be OnlyFans customers aren’t dissuaded by the fact that web-based experiences are “worse” than app-based ones, and that the payment process is slower and more annoying, too (again, this is less true for casual games or ecommerce).
There are over 4 million creator accounts on OnlyFans (the company does not disclose the number of unique creators; some operate several accounts) and over 305 million fan accounts. Some creators are estimated to have generated millions per month, but earnings appear to follow a traditional talent distribution. Mathematically, the average creator has 74 fans who pay $24 per year (or $2 per month), which sums to $1,800 annually (of which $1,450 nets to the creator). The median creator, however, likely earns far less. This is partly evident in the declining average revenue and fans per creator since 2020 and 2021 respectively, despite the overall increase in spending. As OnlyFans is only required to disclose the number of fan accounts that have not been deleted by the user or deactivated by the platform, “active users” would be fewer than the 305 million stated above and thus per user spending would be higher. Still, there are few platforms on earth that have a hundred million plus average active users spending $20+ per year.
A common technique among top creators is a series of tiers, including a free tier, that become increasingly expensive (e.g. Basic: Free, Standard: $5/month, Premium: $10/month, VIP: $100/month) and where additional transactions (e.g. pay-per-view messages or images) not only require additional transactions, but are only available to subscribers in the top tier in the first place. To minimize churn, many benefits (e.g. back catalogues) are only available to long-running subscribers. Top subscriptions also receive the ability to directly communicate with the creator (which enables these users to make requests that might lead to further upcharges). In many cases, the responses are actually written by a member of the creator’s extended team – remember, many of these creators are now multi-million dollar enterprises – though this alleged subterfuge has resulted in some legal action. In this sense, we should recognize that many fans are paying for parasocial relationships and fantasies of connection, rather than just photos and video. Many of the top accounts are not X-Rated and some focus altogether on the sort of content one might expect from Patreon or Substack, rather than OnlyFans, or are otherwise just pay-gated access to a private (but PG-13 rated) Instagram with additional features and upsells.
Though 80% of gross revenues are relayed to creators, OnlyFans generates considerable profits. In 2023, the platform had net revenues of $1.3 billion and gross profits of $819 million (at least half of the $488 million in sales costs would be for credit card processing fees, with much of the rest relating to bandwidth, servers, etc.). After all overhead, operating profit was $649 million (50% of net revenue and 10% of gross revenues), with the last five years totaling $1.74 billion ($400 million was then paid in taxes).
The company counted an average of only 42 employees in 2023, down from 61 two years earlier. During the year, it generated $31MM in net revenue per employee and $15.5MM in operating profit (OnlyFans is also supported by hundreds of contractors).
OnlyFans has paid its two owners $1.1 billion in dividends since 2019, with $472 million paid in 2023 alone. Remarkably, Leonid Radvinsky, who had previously founded a pornographic livestream company, bought 75% of OnlyFans in 2018, at which point profits had (likely) not yet passed one million on a cumulative basis.
For several years, a number of direct competitors to OnlyFans have emerged, some of whom offer greater revenue sharing with creators, too. Yet, OnlyFans two-sided marketplace scale (i.e. with users and creators) has proven durable, not just lucrative.
There are, however, two interesting questions beyond “How much bigger can OnlyFans become?” First, will (the appropriately renamed) X be successful in attacking the category and how will it affect OnlyFans? In June 2024, Elon Musk ended the platform’s ban on pornography in June of 2024 - a move that came not long after it launched paid subscriptions and gated messaging. Second, how might GenerativeAI, inclusive not just of images and videos, but also personified agents, affect the category.
[The videos below are non-pornographic; the essay continues afterwards]
We are not real.
The AI music video created by more than 10 AI tools.🌅img: midjourney , grok, flux, freepik, fal, ideogram …
📽️vid: runway, luma, kling, vidu, haiper, pixverse, dreamina, minimax …
🎼music: suno
🎬edit: capcut pic.twitter.com/2SAGPXIFbY— PixelWise (@PixelWiseAI) September 2, 2024
Create virtual characters with stunning realism and lifelike lip-sync, all generated 100% by AI in just a few minutes
Would you like to know how I created this influencer girl?
I show you my workflow below👇 #RendernetCollab pic.twitter.com/XC9VTmTBUp
— MayorkingAI (@MayorKingAI) August 30, 2024
It’s just as easy to imagine demand for the “real thing” going down due to the emergence of more substitutes as it is to imagine the premium for parasocial authenticity going up. And yet only Generative AI “creators” will truly do whatever “you” want and only for you. And unlike real ones, they speak in every language and are available at any time (and eventually, in immersive 3D).
Matthew Ball ( @ballmatthew)