As an unrepentant degenerate and fan of microeconomics, it should come as no surprise that I find the online sexual economy endlessly fascinating.
Most of what happens there isn't surprising to me, with the exception of pricing for online sexual services, which is much higher than I would have expected.
As an example, take private, one-on-one cam shows. Browsing reddit.com/r/sexsells, the going rate seems to be between $2.50 and $5.00 per minute, or $150 to $300 per hour.
This is mysterious to me.
Looking at ads on eros.com, offline prostitutes seem to charge $300 an hour. This isn't the amount advertised for a one hour session, but the marginal difference in price between a one hour and two hour session, and thus a reasonable estimate of the hourly rate, when preparation and travel are factored out.
Given that private cam shows are legal, can be done at home, and require minimal equipment; while offline prostitution is physically dangerous, illegal, unpleasant1, and highly taboo, it seems strange that they are priced roughly the same.
A priori, I would have expected a price difference of 10× or more, like $300 per hour offline and $30 per hour on cam.
Another interesting point is that girls often charge for things that are free or cheap, like saying the customer's name, or teledildonics.
These are certainly things that customers are willing to pay for, but in a competitive market, sellers that didn't offer them for free would lose business to others that did.
So, what's going on? Who knows, but here are a theories, in order of most to least dubious:
Maybe men are so irrational when they're horny that all of microeconomics immediately goes out the window?
Price theory, supply and demand, competition, production theory, all obliterated by the inability of men to just, like, fucking think for one god-damned second, and try to get a better deal.
I think this is appealing, but probably not true. Most of the time, if you think that supply and demand don't matter in some market you're just wrong.
Customer service overhead. Communicating and handling logistics with customers might take a lot of time. Also, if men only want short cam shows, then the overhead of doing multiple 10 minute shows might be substantial.
This would be plausible, except discounts for longer cam shows are small to non-existent. If scheduling, logistics, and costume changes contributed a great deal of overhead, I'd expect steep discounts for longer shows.
Perhaps there's a supply shortage, because there aren't enough attractive women to satisfy demand?
I don't think this is it either. From what I can tell, men are extremely varied in their tastes, and there's demand for every age, body type, and race. Demand is softer2 in some places than others, but it doesn't drop off a cliff anywhere.
Also, if this were the case, I would suspect that less desirable women would undercut more desirable women with budget services, but I haven't observed this.
It also could be that the women on reddit.com/r/sexsells are simply at the very top of the game. They might be the most sophisticated, online, and educated, and so the prices there just aren't representative of the rest of the market.
I would need to do more research, but this doesn't seem very likely, since I think their prices are inline with those found elsewhere.
Another possibility is that I'm underestimating the social costs of online sex work. It is very hard to prevent someone you know from finding your onlyfans, the sex work taboo is strong, and the possible perpetual loss of privacy is real.
I think this is definitely a factor. However, there are lots of ways to avoid getting outed, and many women seem to successfully do online sex work anonymously, for example by wearing masks, and they charge the same high prices for their services.
The fact that online sex workers receive most of their income via digital payment services probably has a number of nontrivial impacts.
Digital payment services leave a paper trail and are a potential target for audits, might force online sex workers to pay taxes on their earnings when offline sex workers don't.
Also, such services are fabulously prudish, and sex workers are deplatformed regularly.
This all stems from extreme anti-competitive regulation in the underlying finance, banking, and payments industries. There is little competition, a high cost of entry, and ubiquitous fear of association with anything "icky".
This seems like it's definitely a factor, and I think we can actually quantify its impact: Sex workers often list Bitcoin as their preferred payment method, and offering a 20% discount for paying in BTC isn't uncommon.
So, perhaps digital payments being involved accounts for 20% of the high prices.
(Of course, as an unironic ancap, I find all this regulatory interference deeply distasteful. As great Murray Rothbard once said3: "If the state has no right to the sweat of a man's brow, it surely has no right to the sweat of an e-thot's ass.")
Custom sexual services might have an extremely high opportunity cost. An obvious alternative to one-to-one activity like private camming, texting, and making custom videos is one-to-many activities like making content for OnlyFans, marketing on social media, and camming for multiple users.
This is a really one compelling for me. Posting content to a heavily trafficked subreddit to drive users to an OnlyFans page potentially offers a huge return on time and effort.
Top creators on OnlyFans can earn $100,000 per month, so camming with a single man might not make economic sense in comparison.
An additional clue that this is a significant factor is that creators often charge customers $15 or $25 dollars to say their name in a video. Initally this confused me, but I realize now that it's because it makes it harder to repurpose the video for OnlyFans and resale, indicating that minimizing opportunity cost is a very real concern.
None of these theories feel like they explain everything, but in combination they likely explain a lot.
I have some predictions about the online sex industry in general, and since they might be of interest I'll include them here.
I think that OnlyFans will let creators broadcast cam shows from the platform. Existing cam sites charge usurious fees, up to 85% of what performers earn. Since OnlyFans has already undercut the rest of the industry with its modest 20% fee, I look forward to existing cam sites competing on price or being obliterated.
As the taboo around online sex work continues to fade, a supply glut will lead to a price crash. Being an OnlyFans creator will be only slightly more risque then being an instagram thot, attracting a huge number of new creators.
Eventually, this will impact the price of both of content on OnlyFans, as well as the cost of more personal sexual services, as creators who are finding it difficult to succeed in efficient but competitive markets for one-to-many content turn to less lucrative but less competitive one-to-one services.
A service, again possibly OnlyFans, will become popular for custom sexual content creators, but only if logistics, communication, and payment is a significant source of friction.
1 I am basing this entirely on the number of times I've seen prostitutes on Reddit entreat their customers to please wash their assholes before visiting them.
3 Murray Rothbard did not say this.