42 people, earning $6.6 billion a year, OnlyFans makes more money than all the AI startups in Silicon Valley

Original source: Founder Park

OnlyFans is making headlines in the tech sector again.

This adult content platform has an annual revenue of $6.6 billion, which is higher than the combined revenue of all the emerging AI companies in Silicon Valley. It is the most successful company in the UK since DeepMind and the most influential content platform after TikTok.

OnlyFans defines a certain type of creator economy.

Whats even more terrifying is that in 2023, they distributed $5.3 billion of their revenue to creators, and even so, they still had an operating profit of $649 million.

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

All of these considerations are to protect the rights of creators and give users and creators more choices.

The content of the article is compiled from Matthew Balls article and WSJ interview, and Founder Park has made some deletions.

01 The most influential content platform after TikTok

Although it is a private company, as a British company, OnlyFans still needs to disclose some business and operating data. Although the information is limited, it is enough for us to get a glimpse of its revenue, profit, scale and market position.

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

In 2023, OnlyFans annual revenue has reached a staggering $6.6 billion, up from $300 million five years ago. Although the explosive growth during the epidemic is unlikely to reappear, revenue in 2023 is still 19% higher than 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 consumption is now completed through one-time transactions, and these transactions are not small, often up to tens of dollars.

In fact, since 2021, subscription revenue has only increased by 9%, while transaction revenue has soared 70%, accounting for 88% of the total revenue growth. Currently, OnlyFans revenue is twice that of adult industry giant Aylo, which owns multiple 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 does not disclose specific details. In terms of geographical distribution, two-thirds of the revenue comes from the United States, the United Kingdom and Europe account for a total of 16%, and the remaining 17% comes from the rest of the world.

02 Reasons for growth: market vacancy and high commission

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

In addition, regulation has forced many adult content platforms to remove a large amount of content (most of which was uploaded without any compliance process) and to implement cumbersome identity verification processes for new content uploads.

Meanwhile, social media platforms like Reddit and Tumblr have decided to ban porn, which has not only created a gap in the market, but has also forced creators with large followings to direct their fans to other platforms. Moreover, many OnlyFans creators now view sites like Reddit, Imgur, Instagram, TikTok, and Twitter as a means of attracting customers to OnlyFans. In most similar cases, platforms will object to creators directing viewers or consumption to a competing service - or at least try to launch an integrated feature/product that may replace an alternative.

However, these sites aren’t directly competing 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 promotion by OnlyFans creators, as there’s always the potential for viral content without the platforms having to pay for it.

Another reason for OnlyFans’ success is its 80% revenue share , which creators receive when they work as actors for production companies or other talent agencies.

In 2023, OnlyFans creators received a staggering $5.3 billion in payouts. For comparison, the NBAs total payroll for the 2023-2024 season is $4.9 billion, while the NFLs cap is $7.2 billion. In total, OnlyFans creators have collected over $15 billion over the past five years. Granted, each of these leagues has 500-1,700 players, while OnlyFans has around 4.1 million creators.

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 viewers with a more authentic, differentiated, and valuable experience.

By the way, OnlyFans’ high revenue share is only possible because it doesn’t give a cut to Apple (which takes 15-30% of all revenue). In fact, the iOS App Store and Google’s Play Store do not allow porn 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 video viewing and chatting (it’s just not very friendly to games), and most potential OnlyFans customers are not deterred by the fact that the web-based experience is “inferior” to the app-based experience, and that the payment process is slower and more annoying (not so good for casual games or e-commerce).

03 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 revenue, while most creators receive very little.

There are more than 4.1 million creator accounts on OnlyFans (the company doesn’t 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 fans who pay $24 per year (or $2 per month), totaling $1,800 per year ($1,450 of which goes to the creator). However, the median creator may earn much less. But according to previous data from OnlyFans, the top 0.1% of creators (some of whom earn millions per month) earn 15 times more than the top 15% of creators.

Still, there are few other platforms in the world that have more than 100 million daily average active users who spend more than $20 billion per 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, etc., with 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 can result in further additional charges). In many cases, the responses are actually written by members of the creators team — remember, many of these creators are now heads of multi-million dollar businesses — although this alleged deception has led to some legal action.

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

Even though 80% of gross revenue goes to creators, OnlyFans generates a pretty decent profit. In 2023, the platform will have $1.3 billion in net revenue and $819 million in gross profit (at least half of the $488 million in cost of sales will go to credit card fees, with much of the rest related to bandwidth, servers, etc.). After all expenses, operating profit is $649 million (50% of net revenue and 10% of gross revenue), totaling $1.74 billion over the past five years.

In 2023, the average company had just 42 employees , down from 61 two years earlier. During the year, each employee generated $31 million in net revenue and $15.5 million in operating profit.

OnlyFans has paid $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 founded a porn streaming company in 2018, when he bought 75% of OnlyFans, and at that time the profits (probably) had not yet accumulated more than $1 million.

04 New threats: X that opens adult content and AI

A number of OnlyFans competitors have emerged over the years, some of which even offer higher revenue shares to creators. However, the size of the two-sided market (i.e., users and creators) of OnlyFans has proven to be durable and more than profitable.

However, there are two interesting questions besides “How big can OnlyFans get?”

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

Second, how will generative AI, not just images and videos, impact this category.

As more alternatives emerge, the demand for the “real thing” decreases, while the premium for parasocial authenticity increases. This trend is predictable. Moreover, generative AI creators can truly do everything you want, just for you. Unlike real creators, these AIs can speak multiple languages, are available anytime, anywhere, and may be integrated into immersive 3D environments in the future.

05 No recommendation algorithm, no AI

In May this year, in a media interview, OnlyFans CEO Keily Blair elaborated on their ideas on content recommendation and their views on AI. Founder Park made a brief compilation.

No algorithm recommendation, no AI

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

Keily Blair: We dont have any personalized recommendation system for fans.

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

Keily Blair: So we dont allow AI-generated content. Real creators can use AI to enhance their own content, but completely AI virtual accounts are prohibited.

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

Keily Blair: Unlike a lot of other social media companies, this isnt actually a big growth metric for us.

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

Keily Blair: I dont know. I dont track that.

Jeff: …So how did you get this job? (Laughs) But you’re pretty good at growth, so you must have a background in that?

Keily Blair: Actually, what’s different from many technology company CEOs is that I studied law and specialized in cybersecurity and privacy issues, which probably explains a lot of problems.

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

Keily Blair: I think what’s really interesting about Onlyfans is that we’re a space for adults to actually have an adult content experience. Sometimes that includes “adult content,” but it can also include sports, comedy, MMA…basically anything where creators want to monetize their fan base, as long as they abide by our terms of service.

No ads, strict review of author identity

Jeff: Why doesnt Onlyfans help users discover popular accounts through platform recommendations? After all, the advertising-driven model is the core of almost every social media platform.

Keily Blair: That’s because the advertising-driven model is key to social media growth, and social media platforms are typically built that way. But Onlyfans is different from many other platforms in that we align our interests with our creator community. We can only succeed if creators succeed. We’ve paid out $15 billion to creators since we founded. Our business model means that for every dollar we make, creators make $4, and I’m very proud of that.

Jeff: So, OnlyFans is not pursuing the model of those mainstream social media platforms that are dominated by advertising, which seems to be a choice that goes against the tide in recent years. We have seen TikTok, YouTube shorts, Instagram, and Facebook all vigorously promote subscriptions and direct payment features to creators. Interestingly, this trend is happening at the same time as they are reducing their revenue from creators.

Im curious about what you think about this competitive landscape and what aspects of trust and security need to be considered for a platform that wants to adopt a model like OnlyFans?

Keily Blair: Yes, 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 revenue distribution.

I think creators and younger generations are hungry for more interaction and fair rewards. Gen Z, those relatively young adults, want to connect with creators and they believe creators should be paid what they are paid.

A key differentiator for OnlyFans is that creators always own the copyright to their content. They can remove content from the platform at any time, and it doesnt belong to us, it belongs to the creators themselves. For other platforms, if they rely on advertising revenue, I understand that this is an additional way to monetize. But OnlyFans has always adhered to this subscription revenue model, and our users and creators are used to this rule. I think the challenge for other platforms when they move to a subscription model is that users are used to getting content for free, and they need to feel that this is exclusive content, and they need to feel that they are getting more value.

In terms of creator economy 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 unlocks, private messages, customized content, and behind-the-scenes Easter eggs. Sometimes, as a user, I may not want to subscribe to all content, I just want to see a specific thing. Therefore, it is very important to allow users and creators to freely choose different monetization models, whether it is subscriptions or microtransactions.

As for trust and safety, thats critical to our operations. At OnlyFans, we take this very seriously. We focus on the creator signup process first because thats the most important part. Creators have to go through a very rigorous vetting process where they have to provide us with nine different pieces of personal information, including in certain jurisdictions, like the United States, you have to provide your social security number. We ask for government-issued identification, full name, bank account details, other social media handles, etc., so that we can ensure that you are the same person across all platforms. We dont use this data for any other purpose, we only use it to keep our community safe and to establish accountability.

Jeff: But in some countries you cant obtain valid identity information of these creators. How do you deal with it?

Keily Blair: Its really tricky. In countries where we cant actually verify identity, we choose not to operate in those regions. We have to determine the age and identity of our creators before they join the platform, especially if they choose to share adult content.

Jeff: Obviously, you dont allow minors on the platform either as creators or viewers. So what if I have a photo of my child that I, as a creator, want to share with my fans?

Keily Blair: Definitely not.

Jeff: Okay. So what if, just if, I want to roleplay on my OnlyFans account and Im a girl in a school uniform?

Keily Blair: Thats not okay either. So we dont allow any age-relevant role play, Jeff. This is a matter of principle for me. I have two children myself, one is 9 and the other is 11. I want them to have a healthy environment online.

As a social media platform, we take security controls very seriously. We understand that every different platform model has its risks. Thats why we are confident that all users over 18 on our platform allow adult content. We have to face different risks, so we invest heavily in content review. This is also why our platform does not have end-to-end encryption, even in private messages, which means we can focus on protecting the safety of the community and ensuring that the community is only open to adults.

Banning AI to protect creators

Jeff: Some of your decisions regarding AI really confuse me. For example, Chatbot may not be so good at many things now, but it is quite good at simple conversations. In addition to subscriptions, creators also 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 leave them alone. This can save a lot of money. Why dont you allow this?

Keily Blair: You said it was a simple conversation, but there are really a lot of very profound things in OnlyFans private messages, and chatbots cant handle that. Putting that aside, I think there are a lot of risks with generative AI right now, and this involves legal issues. Now everyone is discussing the future of AI: some say AI will bring about huge changes, and some worry about the doomsday scenario where AI will rule over humanity. How can we prevent it? ...

But they didnt solve some of the problems AI is currently facing, such as copyright and ownership. These are not problems that may happen in the future, but real problems that are infringing on the rights of creators right now. It is risky to really allow AI to run freely in the system. So for us, we allow creators to use AI to enrich content, but it must clearly belong to the creator and must be able to prove it to us.

Jeff: Meta uses bots that occasionally pretend to be parents of children in New York public schools. Are you saying that you will never allow the use of generative AI to create content and social interactions?

Keily Blair: We dont think the benefits of introducing AI are enough to offset the risks at this point, but we continue to monitor developments in this area. I dont have a crystal ball to predict the future, and technology changes too fast. So for us, we have a team of lawyers, privacy experts, technologists, and developers who are looking at existing technology and how it can empower our creator community. If we have confidence in the safeguards one day, we may consider exploring this direction. But right now, based on the current situation, it is not appropriate for us to do so.

Give users and creators more choices

Jeff: I noticed that you have publicly expressed your dissatisfaction with some recommendation algorithm platforms before. But at the same time, you seem to be cooperating with this model to some extent. The creators who are successful on OnlyFans are almost all successful creators on Instagram, Twitter, and YouTube. I want to know how you view this symbiotic relationship and whether your business is also dependent on this model that you don’t seem to like.

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

Theres a very interesting report that says most creators operate on 7 or more platforms and have different content for different audiences on those platforms. If other social media platforms revolutionize the way creators interact with fans, if other platforms have a negative impact on creators interaction with fans, we will benefit. They may eventually choose OnlyFans as their main platform, of course, provided they are over 18 and have passed all the verification.

I do think there is a certain level of symbiosis between us and other platforms because its all about the creators and their fan base. But we still need to build in safeguards and control the content on our platforms. Allowing users to have the choice to choose every subscription, every creator they want to follow is really important. Because as a fan, Im not interested in everything. Im interested in certain things. Im a fan of certain people. I like certain musicians, I like certain journalists...

We dont want push notifications, we want choice, we want control. And our creators want control over their fan base. Creators can block fans, they can decide not to have certain people follow them. So for me, its really important for us to keep the incentives aligned 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 replacement for the bad experiences on other platforms. But I mean, should we think about how the Internet itself can do better in these aspects? Or, should we do this now? OnlyFans is built on the assumption that it will always be an Internet alternative product. How do you think about the development of Internet social products as a whole?

Keily Blair: Im an optimist. I really hope that we can build better social media platforms and that we can make changes. I think some of the structural issues that we talked about earlier do make that difficult. What differentiates us is that we have been successful in terms of security while considering and being aware of the risks that are prevalent on our social platform and controlling them appropriately.

Because we design security into our app from the beginning, rather than adding it as an afterthought. 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 differentiate ourselves in the social media space and create real value for our users and creators.

Of course, afterthought and effort are always valuable and better than no action, so I am hopeful that the Internet can move in that direction, and I expect we will see more changes in other social media now, and a more positive social media future.

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