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The global economic meltdown that occurred in 2008, and the ripple effects that can still be felt today, had a profound impact on internet business models. The notion that services free to the consumer would dominate suddenly didn't look so good anymore. Charging consumers directly for services was suddently sexy again.
But that isn't necessarily true across the board. In the market for online dating services, where millions of consumers have ponied up to join sites that promise a shot at love, 'paid' has found it difficult to compete with 'free'.
That has some wondering: are paid online dating services, once some of the internet's biggest cash cows, beyond their peak?
In an article on the subject, Fortune.com editor Paul Smalera notes that some of the major players, like Match.com, seem to be treading water. In many cases, growth comes through acquisition, not organically. At the same time, there is no shortage of large free dating sites, like Plenty of Fish, which was largely unsuccessful when it tried to experiment with some paid elements.
Smalera also points out:
As free alternatives become even more sophisticated, paid dating Web sites will have to ask what battle they’re trying to win. For example, while Apple helped the music industry regain (some) moneymaking ability online, and print media is now doing its damnedest to follow, paid dating sites must contend with the fact that there’s no way to force people to pay money to date each other. That means, as with peak oil, that while the same big sites might scuffle over an ever-declining user base of singles, the days of paid online dating as a growth business seem numbered. So why continue to invest in them? Internet users have simply become comfortable with the idea of having online profiles more attached to their “real world” identity—with far more utility than “just” that of a dating site’s. So let the frantic scrambling for gasoline and girlfriends begin.
Smalera, of course, speaks of the Facebooks of the world. Even though they're not dating sites per se, the rise of social networks has probably disrupted the online dating business more than, say, free competitors. After all, profiles on Facebook are far more likely to contain details you won't find on a dating site profile, and it's far easier on Facebook to find your soulmate through a mutual friend.
So is online dating dead? Not quite. Instead, it serves as a good example of an industry that must transition from a growth phase to a mature phase. That, of course, means customer acquisition may be more difficult, and parabolic revenue growth is probably a thing of the past. The players that succeed will be the ones who recognize that they need to transition.
Ironically, the fact that finding a date online no longer requires a subscription to a site like Match.com or eHarmony could be a good thing for paid services: they can differentiate themselves by focusing in on the needs of a narrower market. After all, if a good portion of the mainstream market is content to use social networks to search for love (or somebody to spend Saturday with), paid dating services have the opportunity to redouble their efforts to deliver value to a smaller but potentially more loyal audience -- 'serious singles' and serial daters.
From this perspective, a maturing market isn't such a bad thing, and here, it's arguable that as the market for paid online dating services shrinks, the services can become far more valuable to their paying members even if there are fewer mates to choose from.
Photo credit: The Udall Legacy Bus Tour via Flickr.