The Wall Street Journal - How OnlyFans Grew Its Revenue by 2000% in Just Four Years | WSJ The Economics Of
OnlyFans has successfully monetized adult content by creating a subscription-based model where creators earn directly from fans, with the platform taking a 20% cut. This model differs from traditional social media platforms that rely on advertising revenue. Despite not being on major app stores, OnlyFans has paid creators $20 billion, leveraging other social media platforms for user acquisition. The platform's growth was aided by timing, as other platforms restricted adult content, and by avoiding app store fees, maintaining an 80-20 revenue split. OnlyFans offers various monetization methods, including subscriptions, tips, and pay-per-view content, making it a lucrative option for creators. However, it faces challenges with financial institutions due to the adult content's perceived risks, requiring robust safety controls and verification processes to mitigate these concerns.
Key Points:
- OnlyFans' subscription model allows creators to earn directly from fans, with a 20% platform cut.
- The platform's growth was boosted by timing and avoiding app store fees, maintaining an 80-20 revenue split.
- OnlyFans has paid creators $20 billion, surpassing other platforms like Patreon.
- Creators must leverage other social media for user acquisition due to OnlyFans' limited search functionality.
- Financial institutions view adult content as high risk, requiring OnlyFans to implement strong safety controls.
Details:
1. 🚀 The Rise of OnlyFans
1.1. Financial Growth of OnlyFans
1.2. Unique Business Model and Monetization Strategy
1.3. Legal Strategy and Market Position
1.4. Impact on the Creator Economy and Social Media
2. 💸 Revenue Model and Growth
2.1. Revenue Model
2.2. Growth Insights
3. 📱 Navigating Platform Challenges
3.1. Avoiding App Store Fees
3.2. Creator Payouts, Growth, and Strategy
3.3. Challenges and Discovery for New Creators
3.4. Monetization Features
4. 📈 Microtransactions and Creator Earnings
4.1. Microtransactions
4.2. Creator Earnings and Opportunities
5. 💻 Financial and Regulatory Hurdles
- In 2021, OnlyFans faced significant backlash and financial hurdles, leading to a temporary ban on adult content by its CEO, which was reversed shortly after.
- The company's exponential growth raised concerns about its operational controls and the high revenue it was generating, unsettling market perceptions.
- Financial institutions categorize accounts linked to sex work as high risk, leading to service denial or increased fees due to potential child abuse risks and other factors.
- Payment processors typically take a 1-3% transaction fee, but high-risk accounts, like those associated with adult content, can face fees exceeding 10% due to reputational risks and fraud concerns.
- OnlyFans uses multiple payment providers to maintain global coverage and mitigate risks.
- The company has successfully demonstrated to some institutions that it can mitigate risks through safety controls, allowing it to work with entities that traditionally avoided the adult industry.
- Outdated risk models and moral judgments by some banks still pose challenges for OnlyFans.
6. 🔍 Content Verification and Safety
- Users must submit more than nine forms of ID to prove they are above 18 before posting content, ensuring a robust verification process.
- Creating an account as a viewer is simplified, taking only a few minutes with an email address, which balances security with user accessibility.
- Face scanning by Yoti is used for age verification, enabling subscription to explicit accounts quickly without further ID, highlighting efficiency in the verification process.
- OnlyFans employs both automated and human checks to review content, aiming to block non-consensual images and certain words, demonstrating a commitment to safety.
- The UK regulator is investigating the effectiveness of the face scanning system in preventing underage access, indicating a proactive approach to regulatory compliance.
- Fan verification requirements vary by location, with a valid payment card and acceptance of terms of service necessary to confirm age, showcasing adaptability to regional regulations.
7. 🌟 The Broader Creator Economy
- The creator economy is valued at $250 billion, encompassing diverse creators from athletes to adult entertainers.
- OnlyFans stands out as a major success within the creator economy by positioning itself as a legitimate business and attracting a wide audience.
- The platform encourages more creators from various fields to join and leverage its business model, highlighting its strategy of broad appeal.
- Other notable platforms in the creator economy include Patreon and TikTok, which also offer creators unique monetization opportunities.
- Patreon allows creators to earn directly from their fanbase, focusing on membership and subscription models.
- TikTok provides monetization through brand partnerships and advertising, capitalizing on its massive user base and viral content potential.