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Get Four
|  | OCTOBER 11, 2004
By Olga Kharif Online Dating Faces Rejection Once thriving, these sites are enduring tougher times as social networks online and flirting over mobile devices catch users' fancy Among the pumpkins of the dot-com boom, one of the few Cinderella stories had been online dating. While many Internet startups ended up with bottom lines scarier than a date from hell, searching for love online has became the largest category of paid Web content, after porn -- for which statistics are difficult to get. Until this year, revenues for Match.com and Yahoo! Personals (YHOO ), two of the biggest players, had been doubling annually. Profits had been piling up even though fewer than 20% of these sites' users had paid to seek their mates online. Then, e-dating's charm began to pall. In September, market leader Match.com, a property of IAC/InterActive (IACI ), laid off 30 people and replaced its longtime CEO. Rival True.com cut 90 employees, or 60% of its workforce. In August, MatchNet, which owns dating sites JDate.com and AmericanSingles.com, canned its initial public offering. The outfit cited unfavorable market conditions, and its president and CEO has resigned. Growth rates for the established players are slowing rapidly. The U.S. market will expand a mere 19.4% this year, to $473 million, according to market consultancy Jupiter Research. And growth will rise only 32%, to $623 million, over the following five years. "The big growth in the U.S. is over," says Nate Elliott, an analyst with Jupiter in New York. "Things are going to get a little bit tougher. Companies are going to have to buckle down." SMALLER SHARES. Why is the honeymoon over for these sites? "Some of the fad and excitement has worn off," says Peter Zollman, a media consultant with NewsProNet.com in Alpharetta, Ga. Also, as some customers' attempts to find the right match have failed -- check out the rants on edatereview.com or datingsitesreviewsonline.net -- they're "going back to old ways of dating," Zollman says. The lovelorn may also be finding other tech-driven options to make connections, be they social-network sites or mobile technology such as text messaging. These newer avenues may have revenue potential, even as the original online-dating players confront hard times. It's not that Web surfers aren't still looking online to hook up. This September, the U.S. had 844 dating sites, up 11% from a year ago, estimates Bill Tancer, an analyst with online researcher Hitwise in Redwood City, Calif. It's not just a proliferation of players: "Over the last couple of years, our competitors have had more resources than previously, and they're committed for the long term," says Joe Cohen, chief operating officer of Match.com. Nor are users hard to find. Total traffic to online dating sites overall has increased by 16% over the past year, according to Hitwise, even as it has fallen for players like Match.com. PEOPLE VS. PROFILES Disrupting established players' happy-ever-afters are niche sites like SingleRepublican.com, whose front page features the American flag and offers eager candidates for those who don't want to date Kerry backers. LiberalHearts.com, with a peace sign on the entry page, attracts those on the left side of the spectrum. You can now find sites for dating Ivy Leaguers, those over age 60, and Christians. Traffic of Christian site eHarmony, for one, is steadily climbing, according to Hitwise. Social-networking sites, such as Friendster.com and FriendFinder.com, add to the competition. Already, both score higher on Alexa traffic tracker than traditional dating sites. Unlike the latter group's usual catalog of profiles, social-networking sites allow for more personal interaction. For instance, users of FriendFinder.com gather in chat rooms to exchange dating advice or play games. And Friendster.com allows users to talk, through voice over Internet protocol (VoIP) technology, via their PCs. "When you deal with real people and not a catalog of profiles, you can't just walk away," says Stowe Boyd, president of tech researcher Corante Research in Reston, Va. "It's like breaking out of your social circle."
BW MALL
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