Lots to unpack... Creator subscription platform OnlyFans is famous for #NSFW adult content, but it's been focused on growing its "SFW" creators (like: yoga instructors and Cardi B). Last week, OnlyFans said it would ban "sexually-explicit conduct" by October 1, citing pressure from financial partners. The bombshell decision drew backlash from sex workers, who’ve fueled the platform's rapid growth. Yesterday, OnlyFans did a stunning 180:
- OnlyFans scrapped the major policy change, saying it received assurances from its banking partners that'll allow it to "provide a home for all creators.”
- In context: OnlyFans keeps 20% of subscription sales, and creators keep the rest. Creators have earned $5B+ on its platform — and 300 creators earn $1M+/year.
The "vice" problem... OnlyFans is one of the most profitable Creator Economy platforms, especially since the pandemic. Within a year, it grew from 20M+ users to a stunning 120M+ users. It raked in $375M in revenue last year, and is expected to hit $1.2B in revenue and $417M in pre-tax profit this year. Despite those enviable numbers, OnlyFans has reportedly struggled to find investors.
- Many VC funds have "vice clauses" that prevent them from investing in industries like: tobacco, alcohol, drugs, porn, weapons, and sex-tech. That limits OnlyFans' fundraising potential.
- Vice clauses can also impact investment choices of public funds (think: mutual and pension funds), governments, endowments, and other institutional investors. That could hurt OnlyFans if it decides to IPO.
Zoom out... Vice clauses limit investment in many industries, and are designed to avoid risk. With OnlyFans, some financial partners are concerned about a potential for sexual exploitation of minors — and the legal liability that carries. Mastercard, Visa, and Discover cut ties with Pornhub last year after the site was accused of being complicit in trafficking child abuse imagery.
It’s hard to play both sides... The "vice" identity isn't something companies can dabble in without tradeoffs. For "vice companies," it's hard to please both investors and the community, since success is often rooted in the "vice." They have to plant their flags somewhere, and risk alienating either investors or users. OnlyFans tried to have both — that backfired, so it decided to take the risk with investors.