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It's been estimated that the online
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
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

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.

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The following comments are for "Online Dating A Billion Dollar Global Industry In Decline?"
by Maxine

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