OnlyFans figured out the best porn business on the internet
OnlyFans is an astonishingly big, and astonishingly profitable business.
That's because it combines two longtime internet staples: porn and user-generated content.
How come no one figured this out before?
You have probably heard of OnlyFans, the not-just-porn-but-definitely-a-lot-of-porn site. You may also know that OnlyFans is a big business.
But you may still be shocked to see just how big a business OnlyFans has become: Last year, the company posted operating profits of $650 million, on revenue of $1.3 billion.
Maybe I'm missing something, but from what I can see, that makes OnlyFans the biggest and most profitable (mostly) porn operation in the world.
MindGeek, for instance, the holding company that operates porn sites like PornHub and Brazzers, looks to be about half its size. Playboy, once the leading brand in porn, has just barely survived the internet era and is now just a fraction of OnlyFans' size.
Not only that, but OnlyFans is simply an astonishing internet business, compared to other mega-successful internet businesses. Last year the company posted a 50% operating profit margin. Meta (35%) and Google (27%) would love to have numbers like that. Snap has no operating profit at all. And while we don't know if Elon Musk has managed to generate a profit at Twitter/X after laying off the majority of his employees, his disappearing ad revenue would make it quite hard to pull that off.
And the thing is, there's no secret to what OnlyFans has done: It has connected one of the internet's favorite things (porn), with one of its favorite content strategies (getting users to create all of its content, for free), and one of its favorite monetization strategies (payments and subscriptions).
In other words: OnlyFans works by getting its 4 million creators to sell a variety of products — some combination of videos, photos, and private messages — to some 300 million recurring users, who pay one-time fees or a recurring subscription to consume that stuff. Then OnlyFans takes a 20% cut.
That's a super-simple, super-lucrative model. And it's way better than traditional porn companies, which have to pay people upfront to make videos. And at least for now, it has a lot of advantages over traditional user-generated content plays like YouTube or Instagram, which rely on the more fickle whims of the ad business.
So you can see why Twitter was looking at an OnlyFans clone before Elon Musk bought the company. And why people think Musk might still try to build something similar.
OnlyFans isn't a flaw-free business. Banks and credit card companies can be skittish about working with its customers and creators. Would-be investors have also had qualms. Porn sites are magnets for human traffickers, though OnlyFans says it tries to fight that. And some people simply don't want to have anything to do with porn, which is one reason OnlyFans doesn't have apps on Apple and Google's platforms (on the flip side, that means it doesn't have to give either company a cut of its sales).
Still: Porn has been on the internet from the very start. User-generated content plays have been around for a couple of decades. It's kind of wild that no one figured out how to combine the two until a few years ago.
And now that everyone can see how lucrative this marriage is, expect to see more of them.
Read the original article on Business Insider