(light clicks) - [Jaden] OnlyFans has managed to do what many other businesses have failed at. It took a product people were used to accessing for free, adult content, and convinced them to pay for it. - The business model of being naked online was fairly broken.
They managed to piece it together to some degree. - [Jaden] In just four years, the company's revenue grew more than 2000%, bringing in $6. 6 billion in 2023.
- Now other social media platforms, they're like, ooh, ooh, ooh, we can do subscriptions too. It's like, yes, but subscriptions is only part of the picture. - There's a lot of people out there just think you just take some sexy pictures in lingerie and just post it, let the money roll in.
And it's so much more complicated than that. - [Jaden] Despite looking like other social media platforms, OnlyFans' underlying business model is different. - It seems like OnlyFans's approach has just been to figure out what the legal line is and then stop several paces short of it.
- [Jaden] That's why the platform isn't on major app stores and the company says it's built a deliberately hard to use search function. Now it's capitalizing on a creator economy in flux to build a new type of social media. This is "The Economics of OnlyFans.
" - One of the things that got me really interested in the business model was just how different from social media it was. - [Jaden] Most social media companies like Facebook and Instagram make their money from advertisers, but OnlyFans makes all of its money directly from its creators, and its creators make money directly from fans. We only make money when creators make money.
Creators can charge fans up to $50 a month for their content, much of which is explicit, some isn't. The company takes a 20% cut and creators take the rest, which is more straightforward than other platforms that share a percentage of ad revenue once your account meets certain criteria. Now, OnlyFans didn't invent the idea of revenue sharing, but it had timing on its side.
Other websites already existed that allowed creators to monetize their content directly from fans. A couple years after OnlyFans launched in 2016, social platforms like Tumblr restricted adult content. Then in 2020 things really took off.
The platform doesn't have nearly as many users as Facebook, YouTube, or Instagram, but there's a big difference. They're on most app stores. OnlyFans isn't.
- OnlyFans sort of has to be swimming against the current and they have to do this because Apple's terms of service do not allow for pornography as a full-time thing. - That was a decision made by us because we were hopeful that we would end up processing a large amount of payment volume. - [Jaden] By not being on the app stores, OnlyFans doesn't pay Apple and Google a 15 to 30% cut on all transactions made on an app.
- That's enabled us to keep our 80-20 monetization split, which is fundamental to how we do business. If we had to give 30% of our 20% to somebody else, that may change the economics for us. - [Jaden] OnlyFans has paid its creators $20 billion to date.
That's more than quadruple the payouts of Patreon, another creator subscription platform that's been around longer. - We now have 4 million creators, 300 million fans worldwide. Not being on the app store has not had a negative impact on growth.
- As much as OnlyFans is very different from other social media platforms, it is also symbiotic. Where do all the fans for and OnlyFans account come from? And the answer is overwhelmingly other social media platforms.
So what OnlyFans is doing is basically outsourcing to content creators the job of recruiting their own customers. - You gotta do the groundwork. If I'm not making content, you know, I am on a site messaging, I'm doing all my advertising, the marketing, everything.
Like I might watch half an hour of TV, if I'm lucky. You know, and sleep. - [Jaden] In 2021 OnlyFans launched OFTV, a safe-for-work streaming platform as another marketing tool for its creators, but.
- In order to monetize on OnlyFans, really you need to have an existing fan base that you are seeking to monetize. It's quite a hard platform to start off from scratch. - [Jaden] That's because the company says algorithm driven search recommendations don't exist on the platform.
Say you wanna of find creators who post yoga content. It said a simple search for yoga won't get you very far. Instead, you'd have to search the exact username you're looking for to get any results, but it's not quite that simple.
We tried searching for yoga and got a lot of results suggesting different creators and OnlyFans does have a homepage promoting different creators content, and a suggested account section, which the company says are the most popular accounts at the time and aren't personalized based on users previously viewed content or personal data. Still, the company relies on other social media platforms to bring users in. - It would not be possible for them to have succeeded to the scale they had if creators hadn't been able to sort of harness virality and social media.
Even as that was something that OnlyFans itself rejected for its own platform. - There are moments for some reason you'll have like a dip and then you'll question everything. And then like, you know, I'll have content go viral again on Instagram and be like, Ooh, oh, maybe I'm actually good at this.
- As the platform has continued to develop, we added the ability to tip, to have pay-per-view messaging, to have paid direct messaging, to have paid live streams, and paid voice notes. Basically a million different ways to consume and to pay for content. - [Jaden] Today, OnlyFans actually makes more money from those one-off purchases than it does from subscriptions.
- [Louise] And you can see how much it was, how many people viewed it, and how many purchased. - I think microtransactions are a sign of a deepening relationship. People pay good money for this stuff, whereas like how many people have paid for cat videos?
- There's a lot of people that go on there, just they want someone to talk to. You know, they want that kind of like online girlfriend sort of like experience or they wanna like sort of chat about something that's going on in their life or their day. - [Jaden] The company doesn't put a number on the average creator's earnings.
- There are people who earn eye-wateringly large sums. There are people who earn a little bit and there are people who are in between. - Even now I've hit a million on there.
I've come from being a secondary school teacher, being at the food bank, and that's why like I just don't take anything for granted. I always think, you don't know what's around the corner, you don't know if you can have everything one moment and then have it all taken away from you - [Jaden] Making sure creators get paid no matter how much has been a challenge for the business. Back in 2021, it was apparently so difficult for OnlyFans to work with banks that its CEO at the time banned adult content.
That decision was reversed just days later. - Ah, 2021. So obviously it was before my time and the company had grown exponentially over a very short period of time.
I don't think there was a great level of understanding in the market about the sophistication of the controls that were in place at OnlyFans, and I think people frankly got a little spooked just by how big the company was and the amount of revenue being generated. - [Jaden] As for another ban? - Oh, we're definitely not banning adult content.
No. Easy. - [Jaden] Financial institutions can deem accounts associated with sex work as high risk and deny service or raise fees, partially due to the risk of platforming child abuse.
- Absolutely there is risk associated with some of those businesses, but there's often the same risk associated with general social media platforms as there are with OnlyFans. - [Jaden] Payment processors typically take a one to 3% cut of each transaction, but high risk accounts can be charged more than 10% in fees. And payment processors say that's because adult merchants come with reputational risks, rampant fraud, and higher levels of customers disputing credit card purchases.
So OnlyFans works with a combination of providers, which it says is to ensure global coverage. - This is my nerdy lawyer nature coming out, which is what matters is not the headline risk, it's the unmitigated risk that matters. - [Jaden] OnlyFans says it's now able to work with institutions that haven't traditionally worked with the adult industry because it's proven to them they've mitigated risk through safety controls.
- Is there more work to do? Absolutely. Do some banks and financial service institutions still have an outdated risk model that they follow?
Absolutely. In some cases is that just a moral judgment call? Absolutely.
- [Jaden] OnlyFans requires creators to submit more than nine forms of ID to prove they're above 18 before they can post content. But it's a lot easier to create an account as a viewer. It took me just a couple minutes to set up a new account with an email address.
Once I entered a payment method, I was prompted to scan my face using a program by Yoti in order to verify I'm over 18 and within seconds I was able to subscribe to explicit accounts without providing any further forms of identification. OnlyFans says every piece of content is reviewed by a combination of automated and human checks, designed to block certain words and non-consensual images. But the system isn't perfect.
The company's UK regulator is investigating whether it's face scanning system has done enough to prevent under 18s from accessing pornography. OnlyFans said fan verification varies depending on location and that in all jurisdictions they require fans to register with a valid payment card, confirm they're above 18, and accept the terms of service. - Keily talks a very good game in terms of why there is a moral case for running the company the way that OnlyFans does.
There's another reason that I think is a little more unspoken, which is that if you are directly taking a cut of money that is going toward pornography, you better be damn sure that money is going toward legal content and that the whole thing is exceedingly well lit and non-abusive. - [Jaden] Today, OnlyFans is pitching itself as one of the most lucrative choices for all types of creators across the $250 billion creator economy, recruiting athletes, comedians, and adult entertainers alike. - I do want to see more content creators from all verticals join the platform, but I want OnlyFans to be recognized as the incredible business success story that it is.
- They really sort of have to some degree treated this as a business rather than as something dirty and it doesn't really seem like anybody else is stealing it away from them.
