The Economics of Onlyfans
In our modern age almost all of us share our content online, whether it is our pictures on social media, videos on how to cook, our yoga and gym achievements, even our reactions to other videos. One of the most successful platforms to do that is Onlyfans, mostly more famous for nude content. This blog is going to focus on Onlyfans as an economic model and not on the content or ethics around it.
Onlyfans started up in 2016 by Tim Stokely. He wanted to create a place for creators to post exclusive content and get a better share of the profits from fans compared to other platforms like Youtube and TikTok. While it started with fitness coaches sharing exclusive content, suddenly it got taken over from adult entertainers, making it one of the most profitable platforms in the creator economy.
In 2022 Onlyfans had a revenue of around 2.5 billion dollars, more than a billion higher than it had the previous year. The chart below shows the dramatic growth of Onlyfans over the last few years, highlighting its successful business model, valued around $18 billion in 2022.
Source: usesignhouse
As it is anticipated the increase in revenue is correlated with an increase of users, the platform reached 187.9 million users in 2021 out of which 2.1 million were content creators. That is a dramatic increase of users compared with the 100,000 users the platform had in 2017.
Source: usesignhouse
But what makes Only fans so popular and successful?
Allowing adult content: while other platforms such as Instagram and Facebook have banned pornographic material, Onlyfans actively welcomes adult oriented content. Is that legal? It is a very gray area but Onlyfans follow relevant regulations regarding issues like age verification, abuse reporting etc.
Subscriptions: Another difference that makes Onlyfans so popular especially with creators is the subscriptions. Creators are allowed to keep up to 80% of the subscriptions profits; a much higher percentage than other platforms allow them to do
Timing: the platform launched just before the pandemic and boomed during the lockdowns when individuals were looking for more online entertainment. At the same time people who lost their jobs or were working fewer hours started sharing online content for extra money.
Low barriers to entry: literally everyone can do it and produce their content and sell it on Onlyfans, that has a consequence to increase the supply of new content and creators regularly.
Increased demand: in general there is higher demand for online adult oriented content compared to other online content such as educational programmes. Also the low prices attract more subscribers.
All the above has created, as the economist would say, a good alignment of supply and demand. So the services that Onlyfans creators provide match the willingness of consumers to purchase them for the prices offered.
But do all the creators in Onlyfans make lots of money? Probably not. Some evidence informs us that only a handful of people earn a lot of cash through Onlyfans. The top 1% in the platform earns around 33% of the total earnings, while the top 10% earns 73% of it. To put that in context, in 2021 Onlyfans creators made $12.5 billion. The top 1% of Onlyfans creators earned $4.125 billion in 2021. So there is an unequal distribution of the earnings with only a few people making lots of money from their content while the majority of people make around $180 a month.
But the main problem of that business model is that it relies on adult content. With the current squeeze in household income and individuals not being able to make ends meet, some people may need to start cutting on spending on unnecessary entertainment and it will be interesting to see how this will affect Onlyfans and other media creator platforms.
Source: usesignhouse