Risqué Business: The Economics of OnlyFans

An In-Depth Analysis of the Business Model, Revenue and Growth of OnlyFans

Are you ready to explore the inner workings of OnlyFans? This platform has disrupted the adult entertainment industry with its unique business model and impressive revenue growth. In this in-depth analysis, we go deep into the economics of OnlyFans, uncovering the secrets behind its success. Whether you're a curious economist, or just looking for some juicy insights, this article offers views from all different angles. Join me as I explore the intricacies of OnlyFans.

OnlyFans was launched in 2016 by British entrepreneur Tim Stokely as a way for content creators to monetise their work and connect with fans. The business was financed with a modest £10k loan from Tim’s father, reportedly with the caveat “this is the last one”.

The platform mainly attracted models and performers looking to monetise their adult content, but it wasn't until 2020 that the platform really took off in a perfect storm. 

When COVID-19 pandemic hit the world and large portions of the population were stuck at home, many turned to the internet for entertainment, and OnlyFans saw a significant increase in users and revenue as a result. The aftershock of this was a huge increase in earnings for creators, and a rush of news articles covering the platform, and the kind of money being made by its creators. 

Meanwhile, everyday people, with typical run-of-the-mill jobs , found themselves furloughed, with all the time in the world on their hands to seek an additional source of income. With outrageously high creator earnings being splashed all over the press, OnlyFans became a tempting option for many. In the end this created a virality effect, and a gold-rush of new adult content creators joining the platform.

By the end of 2020, OnlyFans had become a mainstream success. The platform had grown to over 1.6 million content creators and over 82 million registered users. It had also expanded its offerings to include a wide range of creators including musicians, comedians, and influencers. OnlyFans reported paying out over $1 billion to content creators in 2020, which is more than many major tech companies.

It’s gone on to be a post-pandemic success too, with the company already reporting that over $233M has been paid out in dividends in the 2022 calendar year.

Adult content sites have consistently been amongst the top 10 visited websites each and every year over the last couple of decades. The market is huge and global.

What OnlyFans succeeded in doing was taking this huge market from the seedy underbelly of the internet, into a legitimate, paywalled, self-serve platform - enabling creators to take control of their own destiny, and charge what they want for the content they create. In the process, OnlyFans managed to catapult themselves in to the zeitgeist of 2020’s pop culture.

Creators are able to post paywalled content on the platform, with the option to charge a monthly subscription to ‘fans’, or standalone paid content. OnlyFans gives autonomy to their creators, by leaving them to decide what they would like to charge for their content. Creators are able to build a steady stream of income from subscriptions, standalone content, or a combination of the two. Creators often brought their existing fans to the platform, who would then go on to find other creators to subscribe to. Others were able to build audiences from scratch on the platform itself.

So, that’s how the creators make money, but how about OnlyFans itself? I took a look in their 2021 company accounts and was astounded by the financial success this business has become.

OnlyFans take a 20% cut of all sales on their platform, leaving the other 80% to their creators. In 2021 this represented $489M from subscription based revenue, and $443M from non-subscription revenue. The majority of this came in from the USA, but Europe and the rest of the world are substantial too.

From here, OnlyFans pay processing fees, and some other direct costs associated with their platform. Their gross profit in 2021 was $560M … not a figure to be taken lightly. After this comes administrative expenses - this will include things like server costs (hosting spicy content doesn’t come for free, you know). It also includes around $24.3M for salaries (of which ~$8.6M went to the highest paid director!).

With a very lean staff for this size of business, the average number of employees was just 61. When you exclude the highest paid director, the average salary per employee in 2021 was over $260k. Not too bad either.

After some other costs like R & D and foreign exchange losses, OnlyFans earnings eventually net out to a $433M profit before tax. A phenomenal number for a business owned by one individual (OnlyFans was acquired from Tim Stokely by Ukrainian-American businessman Leonid Radvinsky in October 2018).

Usually, a tech-platform driven business like this would attract a price-to-earnings ratio of around 20, implying a valuation of the business of ~$6.5B. However, in practice, OnlyFans unshakable links to the adult industry would bring this down significantly. A more realistic valuation for this type of business would be around half that, or ~$3.25B.

Perhaps now is a good time to pivot, and talk about creators earnings. A couple of stats really drew my attention to this when reading through OnlyFan’s accounts.

• Stat #1: as of 2021, OnlyFans has 2.16M creators on its platform

• Stat #2: as of 2021, OnlyFans did $4.8B in gross sales on its platform

Individually, each of these statistics sounds incredibly impressive. But what about when you put them together? I couldn’t help but notice that $4.8B divided amongst 2.16M creators is a meagre $2,219 per creator. And that’s over the course of a year.

What’s going on here? The truth is that in fact, creators on OnlyFans aren’t all making a killing, in fact far from it. An overwhelming majority of OnlyFans revenues are driven by its top 1 or 2 percent of creators. Outside of that, there’s really not a lot of money being made at all.

Digging a little deeper into the data, and from some research online, I came to the conclusion that the inequality among OnlyFans creator’s earnings is drastic. While accurate data on this is not public, I put together a model based on my own research, adjusted based on the actual known sales figures from OnlyFans company accounts:

The real payoff for creators seems to be around the top 1% mark. At this point, earnings begin to skyrocket into the headline grabbing earnings that have been seen in the press. For me though, the more headline grabbing stat should be the fact that 95% of creators are barely making any money at all.

Selling adult content online is not without its side-effects including hateful comments, abuse, and the ever-present risk of your content being leaked onto the internet forever. These things should never be tolerated, but it’s important for would-be creators to know the risks and rewards of the industry they are entering.

OnlyFans presents itself as having a very robust stance on each of these risks, stating in its annual report that it has made several senior level hires to ensure the continued safety and security of creators on the platform. However, with so much activity on this platform, and such a low head-count at the company, it’s something that I find hard to believe. Fortunately for OnlyFans, it has more than enough profitability to continually reinvest in making the experience for its creators better and more secure. I just hope that they do.

Outside of the adult industry, OnlyFans has been repeatedly trying to shake its NSFW image. One of the strategies it is attempting to execute is attracting well known stars in other areas onto the platform. For example Actors and Music Artists.

In fact back in 2021 OnlyFans tried a little too hard in pivoting towards this strategy, making the decision to phase out all NSFW content. This strategy had to be swiftly ditched, as the platform came under a tremendous amount of pressure from sex industry workers from around the world.

It seems that the adult industry has been through an inflection point because of OnlyFans, and that return is not an option. It’s now a truly disrupted industry.

As the main player in the disruption, this is a very powerful position for OnlyFans to be in, but one of great responsibility too. To cement their dominant position, it will be important for OnlyFans to invest in protecting and serving its creators, even sacrificing some of their profits to do so. They should be establishing a strong governance structure, and a culture of putting the creators at the centre of what they do. This will earn the loyalty of the creators it depends on, and make its position of dominance more permanent.

Whatever you think of OnlyFans, I think we can all agree it’s a tremendous business, and one that truly delivered on its mission to disrupt the broken and unsafe adult entertainment industry. Whether or not this industry has been ‘fixed’, though, is another question entirely, and one that’s up for debate.

What do you think of OnlyFans? Leave your thoughts in the comments and I’ll answer.