OnlyFans: the most profitable company we’ve ever seen

With over 90 million registered users and over one million creators, OnlyFans has become one of the most talked-about content companies globally. Since the start of the pandemic, searches for OnlyFans have increased ~200%. With everyone stuck at home, existential boredom has led to more “creators” and more “fans” alike.

Company Overview

Let’s take a step back — what is OnlyFans?

OnlyFans is a subscription site (no app currently as the App Store doesn’t allow apps with “overtly sexual content”) allowing content creators to monetise their influence by putting content behind a paywall. Fans can get access for a monthly fee or one-off tip.

The site was founded in 2016 by British tech entrepreneur and investor Timothy Stokely.

Stokely founded OnlyFans after creating a series of lesser-known online businesses:

• GlamWorship — a site specializing in a sexual fetish known as “financial domination,” in which a submissive client offers up gifts or money to a dominant partner.
• Custom4U — a service on which customers could order tailor-made videos (primarily utilised by adult entertainers)
• 121with — a marketplace where tradespeople, such as plumbers or real estate agents could sell their expertise via an audio or video call

Two years after launching, Stokely sold a majority stake in the business to Leonid Radvinsky, a Chicago-based Internet entrepreneur with a background in adult entertainment and direct marketing. Radvinsky is now a director of the company along with Tim’s father Guy Stokely, a retired investment banker.

The site currently boasts over 1 million content creators (in 2019, OnlyFans reportedly had 60,000 content creators) and 90 million registered users (in 2019 this number lay somewhere between ~7–12 million).

Who uses the platform?

It’s really important to note that OnlyFans can be used by anyone, however, due to its allowance of NSFW content — most creators are either fitness models or amateur pornstars.

“Hips tik tok when I dance. On that Demon Time, she might start an OnlyFans” — Beyonce on Megan Thee Stallion ‘Savage Remix’

That lyric alone led to a reported 15 percent spike in traffic for OnlyFans. I think it’s important as it signalled that OnlyFans’ appeal is mainstream now and has gone beyond adult entertainment. Fitness enthusiasts and celebrities alike are signing on and creating accounts to earn extra revenue, raise money for charity or connect with followers in a new way.

Back in August 2020, Bella Thorne announced that she would be joining OnlyFans and cleared a staggering $1 million in 24 hours. This set an OnlyFans record and created a lot of controversy in the process. Thorne isn’t the only celeb to have an account on the platform, celebrities such as Tyga, DJ Khaled, and Cardi B have flocked to OnlyFans, offering fans exclusive access that they can pay for.

The advantages of the platform, such as the opportunity to offer independent, exclusive content directly to a set of potentially high-paying users, while cutting out the conventional go-betweens, have appealed to users creating non-sexual content.

Beyond entertainment and hustling for charity, OnlyFans is also becoming a platform to showcase all things from stand-up comedy, online classes, indie artists, tarot readings, DJing, gaming, and more. Recently, verified media publisher Vice became the first media publisher to launch on OnlyFans.

Revenue Drivers

Essentially, OnlyFans operates using a take rate model. Creators can allow their fans to pay for content via a monthly subscription between $4.99–$49.99 each month and OnlyFans retains a 20% fee. Creators can also have free pages where they then charge fans to access content via pay-per-view (PPV). Many creators have both a free page and a subscription page to diversify and optimise their earnings.

After the Bella Thorne fiasco, OnlyFans implemented transaction limits that capped PPV pricing at $50 per post and tips from new fans at $100 per tip.

Since its inception in 2016, the site has paid out over $2 billion in creator earnings. The platform saw over $300 million in fan payments in December 2020, a 370% increase from $64 million in December 2019.

According to Bloomberg, OnlyFans finished 2020 with $400 million in revenue. In 2018, the platform is reported to have paid £641k corporation tax, a figure which implies revenue of around $5 million. Therefore on the top line, the company has grown at a CAGR of 794% (~8x each year).

Cost Drivers

According to TheInformation, OnlyFans earnt $300 million in profits (EBITDA specifically). That’s a huge profit margin of 75%

OnlyFans’ has a subscription business model, like Netflix, Spotify, or Sirius XM. But unlike these companies that spend huge amounts of money to make or license content — OnlyFans pays nothing for the content on its platform. This is because subscribers pay for access to exclusive content and messaging from creators — including a large contingent of adult entertainers. OnlyFans’ only costs are compensating its small employee base of around 350 people and its web-hosting fees.

The level of OnlyFans’ profit margins puts it in an almost unprecedented class among the current cohort of tech companies. For example, Doordash, which recently went public had an EBITDA margin (year to date 30-Sep-20) of 5%.

OnlyFans’ enviable profit margin might be the reason the company has been able to sustain itself without ever having raised venture capital. Given its popularity amongst adult entertainers, the company was largely off-limits to traditional investors, although it looks like OnlyFans did not need them.

Unique Business Strategy

‘Big Porn’ has received a lot of negative recently and is notorious for taking advantage of young women. OnlyFans has completely disrupted the space through their commission-based model, by paying performers their rightful share and giving power back to adult entertainers.

OnlyFans first successful creators were primarily women including Jem Wolfie and Aella Jones. Jones told Bloomberg that she liked that OnlyFans “only takes 20%, which is much lower than the prior industry standard of a 50% minimum,” she also stated that she likes “that it’s much more strategic and disconnected than live camming was; live camming requires very high energy, personable charm, whereas OnlyFans really rewards things like good marketing ability and clever pricing techniques. I also get to interact with my fans throughout the day for very low effort, instead of having to put a lot of time in to get ready to do a full ‘show.”

HTMM Opinion

It may be easy to turn your nose up at OnlyFans’ enormous profitability because of its reliance on adult entertainment. But for as long as it is able to maintain its base of freely generated content and a large and reliable subscriber base eager for new content, its business model will remain hard to compete with.

Recently, however, Twitter announced a new Super Follow system which will offer a new way for those with followings on Twitter to monetise their audience (finally), with everything from exclusive content to special badging. If Twitter allows NSFW content to be monetised (important to note that Patreon doesn’t), it could mean serious competition for OnlyFans.

Hot Take

If you can’t already tell, I’m a HUGE fan of this company and what it has done for content creators and sex workers in particular.

— Kemi, an investment banking analyst who loves tech :)