Original title: "42 people make $6.6 billion a year, OnlyFans makes more money than all the AI startups in Silicon Valley"

Original source: Founder Park

OnlyFans has made headlines in the technology sector again.

This adult content platform has an annual revenue of $6.6 billion, which is higher than the total 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.

What's 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.

CEO Keily Blair announced 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 features for the time being.

All 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 Ball's article and WSJ's 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, especially in the creator economy, since TikTok became popular through Musical.ly in 2014.

In 2023, OnlyFans' annual revenue reached a staggering $6.6 billion, up from $300 million five years ago. While the explosive growth during the pandemic is unlikely to be repeated, revenue in 2023 was still 19%, or $1.1 billion, up from the previous year, which was 3 percentage points faster than the growth in 2022. Although the platform is subscription-based, more than 60% of consumption is now completed through one-off 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, the platform does not disclose specific details. In terms of geographical distribution, two-thirds of revenue comes from the United States, the United Kingdom and Europe account for 16% together, and the remaining 17% comes from "the rest of the world".

02 Reasons for growth: market gap, high commission

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 many well-known creators have settled in (some of them do not provide pornographic content).

In addition, regulation has forced many adult content platforms to delete a lot of content (most of which was uploaded without any compliance process) and to conduct 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 market gap, but also forced creators with a large number of fans 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 traffic to OnlyFans customers. In most similar cases, the platform 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 are not directly competing with OnlyFans (and more importantly, they generally prohibit pornographic content), so they generally allow this behavior as long as it complies with their terms of service and is not too public. In addition, these platforms often benefit from the promotion of OnlyFans creators, as this can easily lead to viral content, and at no cost to the platforms.

Another reason for OnlyFans' success is its up to 80% revenue share, which creators share when they work 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 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 a more authentic, differentiated, and valuable experience to their audience.

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, porn apps are not allowed on the iOS App Store and Google’s Play Store. 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 aren’t 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 the revenue appears to follow a traditional normal distribution.

On average, the average creator has 74 followers and pays $24 per year (or $2 per month), totaling $1,800 per year ($1,450 of which goes to the creator). The median creator, however, probably makes much less. But previous data from within OnlyFans shows that the top 0.1% of creators (some of whom make millions per month) make 15 times as much as the top 15% of creators.

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

A common trick among top creators is a series of pricing tiers, including a free tier, 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 may result in further additional charges). In many cases, the responses are actually written by members of the creator's 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 this 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 dedicated to the kind of content that comes with Patreon or Substack, not OnlyFans, or are otherwise just paid access to private (but PG-13-rated) Instagram photos.

Despite 80% of gross revenue going to creators, OnlyFans generates a pretty sizable 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 the overhead, operating profit is $649 million (50% of net revenue and 10% of gross revenue), for a total of $1.74 billion over the past five years.

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

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, who founded a porn live-streaming company in 2018, bought a 75% stake in OnlyFans when he did so, before (probably) accruing more than $1 million in profits.

04 New threats: X, which opens adult content, and AI

In recent years, a number of OnlyFans competitors have emerged, some of which even offer creators a higher revenue share. However, the size of OnlyFans's two-sided market (that is, users and creators) has proven to be durable and more than profitable.

However, there are two interesting questions besides "How big can OnlyFans become?"

First, will X be able to successfully enter this field, and how will it affect 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 will generative AI, not just images and videos, affect this category?

As more alternatives emerge, the demand for "authenticity" decreases, while the premium for parasocial authenticity increases. This trend is foreseeable. Moreover, generative AI creators can really 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 algorithms, no AI

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

No algorithmic recommendations, 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 completely AI virtual accounts are prohibited.

Jeff: Daily usage time is important for social media companies. How do you increase it?

Keily Blair: Unlike many other social media companies, it's not actually a significant growth metric for us.

Jeff: What's the biggest source of traffic to your site?

Keily Blair: I don't know. I don't track it.

Jeff: ...and how did you get this job? (laughs) But you're good at user growth. You must have a background in that, right?

Keily Blair: Unlike a lot of tech CEOs, I studied law and specialized in cybersecurity and privacy issues, which probably says a lot.

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

Keily Blair: I think what's really interesting about Onlyfans is that we are a space for adults to truly have an adult content experience. Sometimes this includes "adult content", but it can also include sports, comedy, mixed martial arts...basically anywhere creators want to monetize their fan base, as long as they abide by our terms of service.

No ads, strict author identity

Jeff: Why doesn't Onlyfans help users discover popular accounts through platform recommendations? After all, the advertising-driven model is at the core of almost every social media platform.

Keily Blair: This is because the advertising-driven model is key to social media growth, and social media platforms are generally built that way. But Onlyfans is different from many other platforms in that we are aligned with our creator community. We can only succeed if our creators succeed. We have paid out 150 million to creators since we started. 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 looking to emulate the advertising-driven model of mainstream social media platforms, which seems to be a choice that goes against the tide in recent years. We've seen TikTok, YouTube shorts, Instagram, and Facebook all heavily 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.

I'm curious what you think about this competitive landscape and what trust and safety issues need to be considered for a platform that wants to adopt a model like OnlyFans?

Keily Blair:It's true that other platforms are starting to imitate the OnlyFans model, especially in terms of creator monetization and subscription mechanisms, although they may not be as generous in terms of revenue distribution.

I think creators and younger generations are craving more interaction and fair rewards. Those relatively young adults in Generation Z want to connect with creators and believe that creators should be paid their fair share.

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 doesn't 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, they need to feel that this is exclusive content, they need to feel that they are getting more value.

In terms of creator economy and business trends, we have noticed that subscription revenue is now a smaller proportion of our total revenue than "microtransaction" (single transaction) revenue. "Microtransaction" includes paid unlocks of 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 see a specific thing. So it's really important that we give users and creators the freedom to choose different monetization models, whether it's subscriptions or microtransactions.

As for trust and security, this is critical to our operations. At OnlyFans, we take this very seriously. We focus first on the creator sign-up process because it's 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 accounts, etc., so that we can ensure that you are the same person across all platforms. We don't use this data for any other purpose, we only use it to keep our community safe and to create accountability.

Jeff: But in some countries you can't get valid identification information for these creators, how do you deal with that?

Keily Blair: That's really tricky. In countries where we can't 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 don't allow minors to appear 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: Absolutely not.

Jeff: Okay. So what if, just if, I want to role-play on my OnlyFans account, I'm a girl in a school uniform, what happens?

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

As a social media platform, we take the safety controls we have in place very seriously. We understand that every different platform model has its risks. That's why we are confident that all users over 18 on our platform can have adult content. We have to face different risks, so we invest heavily in content moderation. It's also why our platform does not have end-to-end encryption, even in private messages, which means we can focus on keeping our community safe and making sure it's open to adults only.

Banners for creators

Jeff：Some of your decisions about AI really confuse me. Take Chatbot, for example. It may not be that great at many things right now, but it's pretty good at having 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 don't you allow this?

Keily Blair:You said it was a "simple conversation," but there are really deep and profound things in OnlyFans' private messages, and chatbots can't handle that. Putting that aside, I think there are a lot of risks with generative AI right now, and this involves legal issues again. 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 humans. How can we prevent it? ...

But they didn't address some of the problems that AI is currently facing, such as copyright and attribution. They are not problems that may happen in the future, but they are real problems, and they are problems that are infringing on the rights of creators right now.It's 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 robots, and they 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 for content creation and social interaction?

Keily Blair：We don't think the benefits of introducing AI are enough to outweigh the risks at this point, but we continue to monitor the development of this field. I don't have a crystal ball to predict the future, and technology changes too quickly. So for us, we have a team of lawyers, privacy experts, technology experts, developers who are looking at existing technology and how it can help 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.

Giving users and creators more choice

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 working with this model to some extent. The creators who are successful on OnlyFans are almost all successful creators on Instagram, Twitter, and YouTube. I'm wondering how you view this symbiotic relationship, and whether your business is somewhat dependent on this model that you don't seem to like.

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

There's a very interesting report that says most creators operate on 7 or more platforms, and they offer different content to different audiences on those platforms. If other social media platforms revolutionize the way creators interact with their fans, if other platforms have a negative impact on how creators interact with their fans, we benefit. They may end up choosing OnlyFans as their primary platform, of course, provided they are over 18 and have passed all the verifications.

I do think there is a certain 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 build in safeguards and control the content on our platform. For example, allowing users to have the choice to choose every subscription, every 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 choice, we want control. Our creators also want to be in control of their fan base. Creators can block fans, they can decide not to have certain people follow them. So for me, it's really important for us to keep the incentives aligned and focus on providing a great user experience and creator experience.

Jeff: Is that right? You seem to be suggesting that this platform can be an alternative to other platforms that don't have a good experience. But I mean, should we be thinking about how the internet itself can do better in these areas? Or should we be doing this now? OnlyFans was built on the assumption that it would always be an alternative to the internet. How do you think about the development of the entire internet social product?

Keily Blair: I'm 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 makes us different is that we have been successful in safety 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 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. Therefore, I am hopeful that the Internet can move in that direction, and I look forward to seeing more changes in other social media now, and a more positive and optimistic future for social media.

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