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Online Dating A Billion Dollar Global Industry In Decline?
By Maxine Clark
It's been estimated that the online dating industry revenue has declined as much as 20% - 30% over the last 12 months. Customer acquisition costs have gone up and revenue has gone down Where are the people going and are we seeing the end of the subscription based dating service? This revenue slide in the online dating industry can be attributed to several easily identifiable factors. Quality and user experience is first and foremost for any dating site, the issue that sites face is getting a balance of members and a ratio of men to women on mainstream and adult dating sites that will in turn deliver value to paying members. Keeping this balance in check can be a challenge for any dating site to make money online you don't need many female members in your database but to deliver a good user experience you do. Men far out number women on most dating sites and for the first time paying member this all looks fine but if they don't get any satisfaction on the first upgrade they may not renew a second time. If a user has a bad experience on a dating site and feels they have lost money chances are they will not recommend the service to their friends. Reputable dating sites will monitor their database carefully and often have some type of profile verification system in place to help ensure a quality experience. Often members uploading information about themselves are at best very bad when it comes to marketing themselves online, this can also lead to less then satisfactory results. Industry fragmentation - The mainstream players are established and the online dating industry is heavily saturated, the industry is now fragmenting into niche markets with free dating and social networking sites where people can interact and make contact without getting out their credit card. The free
business model has clear revenue alternatives to subscription based to an advertising based revenue model such as PPC that does not burden the users with ongoing charges and can often help the "viral effect" of the site. Paid sites can expect to loose about 30% of their base on a monthly basis depending on their market sector. With a free social networking site members can enter and exit at will without charge and recruit friends without the stigma of being on a dedicated "dating site" Users can maintain a membership over a much longer time frame even if they are in a relationship. Speed dating has also become very popular and gives users another hands on alternative to subscription based dating sites. Paid dating services won't vanish overnight but the big free community based sites are on the rise. Anyone faced with the challenge of starting a new paid dating site under current market conditions will need to understand considerable investment would be required in order to gain market share, viral marketing will be difficult due to the industry saturation factor unless there is something very unique about the site or application. The large established market leaders have money to burn and established affiliate networks in place that deliver low cost customer acquisition, add this to reoccurring revenue and new comers to the paid dating industry are facing an uphill battle as the industry competes more aggressively for customers. Small companies with minimal staff and overheads have proven they can compete for traffic in the big league and offer the users exactly what they want without charging, these companies can provide a free fully featured service and make a very generous income at the same time. The advertising based business model has little downside and a big future. | 
