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OnlyFans and the Rise of the Creator Economy

Aug 27, 2021 4:09 AM 6 min read

OnlyFans, the online subscription service which raked in billions of dollars through its business of distributing pornographic content, announced on August 16th that it would soon be blocking all "sexually-explicit" activity.

Six days later, faced with a barrage of criticism from users and creators, the company reversed its decision, declaring that it would provide a "home for all creators".

The platform’s abrupt repositioning - which some have likened to a strip club focusing on chicken wings - and immediate u-turning generated a lot of attention from the mainstream media. As such, it has shed renewed light on the burgeoning “creator economy” and the growing power of financial companies to enact company-wide changes.

First Off, What is OnlyFans?

The platform enables content creators to earn money directly from "fans" aka users who subscribe to their content. While it hosts many creators, from musicians to fitness experts, OnlyFans is most popularly associated with sex workers and the pornographic content they post. This is why it is often referred to as the “paywall of porn” or as “NSFW Snapchat”.

Founded in 2016 by 33-year-old Tim Stokely, the platform enjoyed a jump in popularity last year (when it grew by 500%) when youngsters and out-of-work people sought alternate avenues to earn a living during lockdowns around the world.

OnlyFans and the Rise of the Creator EconomyOnlyFans rarely features on lists of booming digital platforms (for obvious reasons). But with $2bn in sales in 2020, 130 million users, 2 million contributors (who earn more than $300m per month), and celebrity traction from the likes of Beyonce and Michael Jordan, the British startup is clearly one of the larger internet firms in the world.

FYI: The creator with the most subscribers - Belle Delphine - reportedly made over $2m in a month. The top creators can make around $100,000/month, and 10% of creators make 73% of all the money. Meanwhile, the average earnings per account stands at $180/month.


The Mystery of the Missing Greenbacks

Despite the growing popularity of platforms like OnlyFans, investors are wary. Some naturally don’t want to be associated with such sites in the first place. As Axios put it:

Sex sells...but it also scares off venture capitalists.”

But the larger threat, arguably, is that such platforms' honeymoon period is very tenuous.

And no, we’re not talking about the receding wave of lockdowns ending the pandemic spurt for OnlyFans the same way it may hamper the growth of other digital platforms like Netflix and Zoom. Sites like OnlyFans face a more existential threat. The "threat of being shut down by payment processors" always hangs over this industry's head, as one VC investor put it.


Content Moderation by Bankers

Why did OnlyFans announce its ban on explicit content in the first place? "...We had no choice - the short answer is banks," Stokely, the company's CEO, told Financial Times in a recent interview.

Many banks have reportedly refused to work with the company, citing "reputational risk". The platform's temporary pivot was attributed to “the requests of our banking partners and payout providers” like JPMorgan Chase, BNY Mellon and Metro Bank. Incidentally, the turnaround was also credited to “banking partners’ assurances”.

FYI: Traditional banks’ accelerating exit from such sites has been to the benefit of cryptocurrencies. Pornhub, for instance, began accepting Bitcoin, Binance Coin and Dogecoin as payment for its premium content.


Banking for Change

The OnlyFans episode highlights the growing trend of financial services companies deciding what content can be allowed or prohibited on digital platforms. Nowhere is this trend more marked than in the porn industry.

PayPal, Visa and Mastercard have already cut ties with Pornhub. Backpage, the former ad business popular with sex workers, was cut off by Mastercard and Visa in 2015. OnlyFans now joins this growing list of targeted companies. (It also has specifically limited ties with some fintech firms: Stripe, for example, only allows its payment platform to be used for non-adult content payments.)

Mastercard has been particularly vocal. Back in April, the company had released a statement saying it would be “taking an even more active stance against the potential for unauthorised and illegal adult content. This starts by ensuring there are strong content control measures on sites where our products are accepted.” As per its updated policies, from October it will require banks to guarantee that platforms they have their payment options on review and certify content before publication.


Why the Animosity?

To be fair, the hard stance of banks and payment processors is not on account of some Victorian notion of purity. They aim to tackle the very real problem of these platforms profiting off of videos of assault, exploitation and child abuse.

Visa and Mastercard abandoned Pornhub after The New York Times published a column on how the latter failed to stop the spread of content on non-consensual sex. Backpage was taken down by the US government over allegations of facilitating prostitution, besides money laundering. OnlyFans, despite its repeated claims of deleting child-sex images, has been found to actually give second chances to accounts that were found guilty of these crimes. It had reportedly also directed its content moderators to be more lenient with “successful accounts''. (Some argue that the BBC expose on this directly led to the platform saying it would ban all explicit content.)

For What It’s Worth: Taking stringent action against platforms that host and don’t strictly act against child abuse content is objectively a good thing. However, such action would also be warranted against larger companies like Facebook and Google, which have their own well-documented problems with objectionable content.


The Rise of the Creator Economy

For many years, the central idea behind social media platforms was that the content was free. In the digital age, anybody with a phone can become a content creator. But except for a handful of big names - celebrities and mega-influencers, for instance - all that most of these creators received for their content were a few likes on Facebook or video views on Instagram or YouTube.

OnlyFans and the Rise of the Creator EconomyThe creator economy is changing that. The rise of subscriber-based platforms is enabling content creators of all kinds to make a buck, so long as they find an audience interested in what they have to offer. Bloggers and Twitter thread-masters are embracing Substack, podcasters are moving to Clubhouse, video game experts are exploring Twitch, celebrities are using Cameo to send personalised videos to fans, and so on… And all these platforms are offering creators the bulk of what they earn, whilst taking a tiny cut of the proceeds as their share.

The bigger tech companies have been watching on with increasing alarm. Inadvertently, they have tried to revamp their own business models. Facebook launched paid subscriptions, is testing a Cameo-like feature called Super, and is inviting gamers to join Facebook Gaming. Amazon bought Twitch. YouTube is incorporating new features to provide creators with tips. TikTok launched a "creator fund", Snapchat launched Spotlight. Twitter bought a Substack-like newsletter firm named Revue and launched Spaces, an audio streaming feature akin to Clubhouse.

The focus is gradually shifting from the tech platforms hosting the content to the content creators themselves. OnlyFans is a part of this systemic shift in the industry. But ironically, its u-turning has infuriated the very people that enabled it to make a killing - its creators, who now fear that sustained pressure by banks and fintech firms could see them lose their business in the near-term.

To be fair, their fears are not baseless. They have precedent. Tumblr did something strikingly similar in 2018, when it banned all “adult content”. The damage to its countless content creators was immense. But Tumblr also lost its sheen. Its popularity, as measured by site traffic and app downloads, immediately plummeted. A year later, it was bought for less than $3m compared to its once-$1.1bn price tag.


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