OnlyFans 🤝 Crypto
Witnessing the fall of a multi-billion dollar creator-based empire.
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The Big Story
Sex sells. Everyone knows this. But no other company has been as successful in monetizing it as OnlyFans.
For the uninitiated, OnlyFans is a website that allows content creators to sell video clips, messages, and photos directly to their subscribers on a pay-per-view basis. Customers usually pay anywhere between $5-$50 per month. The app rose to mainstream popularity after celebrities like Cardi B, and Bella Thorne set up their accounts. It even got a shoutout from Beyonce on one of her songs. And while the service is now being used by over 130 million people who follow fitness instructors, get cooking tips, and watch interviews, its main source of revenue relies heavily on adult entertainers. And the company has decided to ban this very content.
OnlyFans recently announced that it's banning explicit content from the app starting October 1, adding that it's doing so to comply with the requests from its banking partners and payout providers. The decision comes despite the company making massive revenues for several years. Since 2016, the company has paid out over $3.2 billion in creator earnings. Last year, OnlyFans reported revenue growth of more than 553% as people turned to the platform for another income stream amid the coronavirus pandemic.
As expected, the announcement didn't bode well with the internet, which went all out in criticizing the company's decision. And it did rightfully so because OnlyFans achieved what many firms before it couldn't: it managed to upend the entire adult entertainment industry's business model where producers would usually pay performers a flat fee for reusable content. The service was also monumental in popular culture’s ongoing destigmatization of sex work and adult content.
But why the sudden shift?
Simply put, OnlyFans has a porn problem. For quite some time, the service has been trying to rebrand itself from being a purveyor of pornography to a vital tool for online creators. It's also seeking to receive funding at a valuation of over $1 billion as it aims to become a mainstream media platform for creators.
Why is this a problem, you ask? Two reasons:
Banks and other conservative financial institutions are wary of handling money flowing through these platforms.
Other investors like Venture Capitalists have 'vice clauses' which prevent them from operating in such spaces.
Some investors say that while they could get past the clause, they worry that OnlyFans' reputation would prevent the company from attracting brand partners. To address this, OnlyFans decided to come up with...wait for it...a safe-for-work platform called OFTV. The ad-free, no-nudity app features over 800 videos from some of its biggest stars, and just last week, the company started promoting the app to non-subscribers in hopes of competing with Patreon, another membership-based platform for creators.
But, one wonders, is there a way OnlyFans can keep its revenues intact and access additional capital?
Enter crypto 🚀
The crypto industry can hugely benefit from this newfound market niche by creating crypto-friendly payment infrastructure platforms that won't break under the influence of payment providers. While the porn industry embraces crypto, the adoption rate has been stagnant. In 2018, Pornhub was the first to announce that it accepted crypto payments for subscriptions. Despite being dumped by Visa and Mastercard in 2020, Pornhub still supports subscriptions through crypto payments and ACH bank transfers. So, the only real challenge that new players would face is making the onboarding process simple for new users to both, a new platform and their potentially first crypto wallet, all while ensuring that they stay compliant with regulatory guidelines.
Given the low crypto penetration in the industry, the opportunity to fill in the space after OnlyFans' exit is huge. As to who will tap this trillion-dollar market niche? Only time will tell.
Share what you learn 🤝
Well, that's all for today. If you found this newsletter insightful, share it with your friends and colleagues and let us know what you think in the comments.
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