Call me a cynic, but I get a little suspicious when a product or service conveniently becomes available just at the moment I discover that I need it. Don't get me wrong I am thrilled, but still curious about who is reading my mind. It also seems curious when suddenly a number of companies start offering the same product, and advertisers are quick to help me make a buying decision. A few years ago strawberries appeared in one brand of cereal, now you would think you couldn't possibly have existed without strawberries in your Cheerios. In reality, much research and analysis goes into product development, and while necessity is the mother of invention, profit brings it to the store shelves.
When I discovered my first dating site as a newly single back in 1998, I knew I had stumbled onto a secret society which would not stay so secret for long. While couples who meet on line still are a little reluctant to reveal how they met, others are broadcasting far and wide. I am not surprised that six years later there are probably close to 1000 websites dedicated to online dating. I am definately not surprised that these sites generate alot of money.
The Simplicity of the Online Dating Site
I am pretty sure that back in the early days of the Internet there was some flirty emails exchanged between lonely computer nerds. By 2000 at the height of the internet bubble, the trend was starting to catch on even though internet use in the home was still not that common.
The design of an Internet dating service is pretty simple, which is why it is an attractive business to be in. Provide compelling content--almost all from end-users--and require those clients to respond with an e-mail. Allow users to join and post personal ads for free, then charge a modest subscription fee in order to communicate with other members. A December 2000 article published by Internet Week provides a snap shot of the industry at that time.
Match.com president Cindy Hennessy said the model is the most basic use of existing Internet technology, and the best kept secret on the Web. "In the end that is what (the Internet) is all about--acting on information presented with an e-mail, and there is almost always nearly instant feedback."
Insiders say Internet dating's potential is just being tapped. About 50 percent of the population is single--never married, divorced or widowed--but only 2 percent of Internet users actually use an online dating service, said Hennessy.
MatchNet IPO
One of the name brands of online dating, MatchNet has been in the business from the beginning. MatchNet, with offices in Los Angeles, London, and Frankfurt, is a leading provider of online personals for the U.S. and international markets. The company's leading online properties are AmericanSingles and JDate. The company also operates the online personal sites Glimpse, FaceLink, CollegeLuv, and multiple versions of MatchNet that serve different audiences and countries. MatchNet began operations in September of 1998.
That 2000 Internet Week article noted recorded profits for MatchNet in 1999 were $1.2 million dollars with expectations to reach $5 million in 2000. While the market swallowed up many internet businesses, it appears that online dating perserved.
Fast forward to 2004, with net revenue of $30.9 million in the first two quarters of 2004 almost double the $15.5 million net revenue for the company in the first six months of 2003. On August 8, 2004 MatchNet filed for IPO with the US SEC. However, it now appears that the IPO was now been dropped. CNET reported that MatchNet withdrew its plans to sell its shares to the public, joining a growing number of Internet companies that have canceled or postponed a stock market launch, a day before the Google IPO. In the process their CEO resigned, replaced by another MatchNet board member.
Happy in Lavalife
Timing seems to be a factor in business just as it is in love. But don't despair if you are a sucker for a happy ending. Lavalife, the Canadian success story, sold for $US 152.5 million in cash to MemberWorks in April.
For me, the interesting aspect of this story is not necessariy the price tag (although the mind boggles at the number of love notes had to pass around), it is about the buyer. Lavalife's member base is the hip, well heeled single crowd with money to spend, and coincidently enough MemberWorks is the business of affinity programs. My guess is that much work is being done in boardrooms trying to figure out that very next product I should be ready to buy. The circle of business, like the circle of life, lives on.
A federal court decision was issued today in favour of a "mail order" bride who used an online dating service specializing in overseas matchmaking. The issue related to a Ukrainian woman who abused by the husband she met through Encounters International. 