Dating Services

Consumers aren't the only ones excited about iOS 8. Apple launched several new features with the operating system that expand the capabilities of third-party apps, and app developers are keen to take advantage of them.

Most excitingly, iOS 8 lets devs use the Touch ID fingerprint sensor included in the iPhone 5s and the new iPhone 6 models. This means apps that would ordinarily use the Passcode feature can now include the fingerprint sensor instead, bypassing the need for a traditional password once a user's account has been verified.

Developers have jumped on the new opportunity and, left and right, are updating their apps. Here's a round-up of some of the apps that have adopted Touch ID:

• LastPass: The popular password management app now uses Touch ID to secure a user's password vault.
• Amazon: Where would any of us be without Amazon.com making our lives 101% easier? And now that the Amazon iPhone app includes Touch ID, it's even easier than that.
• Mint: Users can now log in to this money management app with Touch ID rather than their password.
• Day One: An award-winning journaling app. Users can lock their journals with Touch ID instead of a passcode.
• Evernote: Evernote is a modern workspace that helps you be your most productive self. Now it makes your life even easier by allowing premium users to use Touch ID to secure their accounts.
• YPlan: What are you up to tonight? YPlan is an event discovery app designed to help you answer that question by discovering and booking the best events in your area. Touch ID is now used for purchase authorization.
• eHarmony: You didn't think I'd forget to include a dating app, did you? Say goodbye to the days of user logins... if eHarmony is your dating service of choice, you can now use Touch ID instead.

Let's here it for iOS 8. Logging in to many of your favorite accounts is now as easy as resting your finger on that shiny new Touch ID sensor. Not only does it make sign-ins easier and provide another layer of security, it does so in a way that keeps with the overall Apple aesthetic and ethos. If you use any of these mobile services, take advantage of the Touch ID improvements and update your apps ASAP.

There was a time when Plenty of Fish was squarely at the top of the online dating heap. Founder Markus Frind attributes the site's explosive success to a surprisingly simple formula: in 2003, when rival dating sites paywalled, POF kept things free. Instead of charging customers, POF relied entirely on advertising for revenue.

The model worked like a charm. Frind famously claimed he spent only an hour a day working, while POF blew past the competition to become one of the world's most popular dating sites.

These days, things aren't quite so simple. Five years ago POF had just 3 people on its payroll; today it has 80. No longer does Frind devote only an hour a day to work; now he works half-days. Revenue has grown alongside both of those changes, but not without challenges. Namely, the smartphone.

POF's iPhone and Android apps are incredible popular – second only to Tinder – but they aren't compatible with the revenue model that made the company a success in the first place. Advertising just doesn't work well on the smaller screens of mobile phones, and now POF is faced with a decision: evolve or go extinct.

Frind says that 90% of POF's visits from people under the age of 35 now come from phones rather than web browsers, so it's clear which option the company must choose. Most of its developers are now focused on improving the mobile apps, although Frind says up to 60% of the company's “tens of millions of EBITDA” still comes from the website.

POF's app revenue comes instead from upgraded memberships. Users can pay a monthly fee for extra features, like the ability to add more photos, but the new business model for monetization on mobile is still in its infancy. And while revenue overall is reaching an all-time high for the company, this year also marks the first time the number of people visiting the website is declining. According to web data firm Alexa, OkCupid has now caught up to POF on desktop in the free dating site market.

Can POF hold its own against a site backed by IAC? Mark Brooks, a consultant for the online dating industry, acknowledges that POF lacks the financial resources of IAC, but believes POF's mobile numbers are promising. What's left now is for POF to figure out how to make those mobile visitors as valuable as their desktop counterparts.

POF must now find ways to increase the number of users who upgrade to paid accounts. Exactly what those ways will be remains to be seen.

IAC has released third quarter 2014 results. Revenue for the quarter totaled $782.2 million, up from $756.9 million in Q3 2013.

In the third quarter of 2014, consolidated revenue for IAC increased 3% year-over-year driven by solid growth at The Match Group and strong growth at Vimeo and HomeAdvisor. The Match Group revenue increased 12%, driven by 9% growth in paid subscribers to its dating websites. They now number over 3.6 million globally. Contributions from The Princeton Review and FriendScout24 – acquired on August 1, 2014 and August 31, 2014, respectively – also played large roles in The Match Group's success in Q3 2014.

Several other important segments also ended in the green, making Consolidated Adjusted EBITDA the dark spot in an otherwise-bright quarter. Third quarter adjusted-EBITDA was $135 million, down 18% from the third quarter of 2013. However, it was down only 1% when excluding approximately $14 million in net gains related to asset sales and the impact of around $13 million of acquisition-related differed revenue write-downs for the Princeton Review, FriendScout 24, and Slimwear.

At the end of 2012, dating site Hinge had recently launched and was overshadowed by the popularity of dating app Tinder. Unsure of how to proceed with less than $32,000 in the bank and only a few thousand users according to Business Insider, Hinge decided to bet big on the mobile platform.

"We made some business assumptions that turned out to be wrong," Hinge CEO and founder Justin McLeod told the news website. "We were like, 'This thing is running out of money, and we need to do something drastic."

In what seems to be a spur-of-the-moment business decision, McLeod and a couple of developers holed up for a few weeks and launched a mobile version of Hinge on February 7th of 2013. But the launch wasn't as smooth as expected - Apple at first rejected the app, which caused many sleepless night for McLeod and his company. They had planned a huge launch party in Washington DC where the app first launched, and until the morning of the launch party, there was no app available.

The launch party turned out to be a success, and more people signed up right after it than had signed up for the beta in all of 2012. It seemed Hinge struck a chord with users where Tinder left them feeling insecure - especially women. Hinge does not just match users based on location like Tinder does (which means a lot of random profiles get into the mix) - you only get matched through your circle of Facebook friends of friends, so everyone you meet on Hinge has some kind of link to your circle. This security has been particularly attractive to female dating app consumers.

McLeod is not about to sit still. He is grabbing a good portion of the dating app market share, and expects to compete heavily with Tinder for its core user base. But he's taking things one step at a time.

Instead of launching his app nationally, he has launched city by city, building up a solid user base based on demand before he moves into a new market. Also, potential Hinge users must be invited by current Hinge users - adding a level of exclusivity and security to the app.

Hinge is now one of New York's hottest startups. Although Tinder is much larger (it makes more matches per day than Hinge has in its entire history), McLeod's company is starting to steal some Tinder users. It has expanded to 20 cities including Los Angeles, San Francisco and Washington, D.C. It uses a waitlist to assess demand in other cities, then launches when a few thousand people have signed up.

"There is no shortage of companies that have tried to build what we've built," McLeod says to Business Insider. "But we're using the organic, city-by-city method, which I think is the biggest thing ... We're a utility to help users meet great people in the flesh as effectively as possible ...We want to be a house party that has a really good host."

Online dating sites like OkCupid and Plenty of Fish have had a free model for a long time, which has managed to expand their membership databases and make them tough contenders with paid sites such as Match.com and eHarmony. But now that free dating apps like Tinder have entered the picture and taken the dating world by storm, the paid dating sites have seen not only a decline in membership, but also in revenues.

Is online dating on its way out?

According to a recent article in The Economist, paid online dating sites have reason to worry. In the article, The Economist points out Cupid, who runs subscription-based dating websites such as Cupid.com, UniformDating.com, and LoveBeginsAt.com, announced a $4.9 million loss in the first 6 months of 2014, up 20% from last year. The number of members has dropped, too. At the end of 2012, Cupid’s sites had 113,000 paying members, but by June 2014, they had just 48,000.

While this is a disturbing trend for online dating sites like Cupid – which haven’t really taken off like other paid sites Match.com and eHarmony – it could weed out many contenders in the online dating market over the next couple of years. However in contrast to Cupid's earnings, eHarmony recently reported incredible subscriber growth and better earnings than they have seen in years, due to focusing on long-term relationships and technology that they market as extremely valuable for finding the “right” match.

But what about popular free dating apps and websites like Tinder and old-timer OkCupid? They have attracted users because of their easy set-up and accessibility. They have made online dating less intimidating, (although a little more sketchy according to some users). Are they responsible for the decline in companies like Cupid? 

Not necessarily. Even free apps and websites aren’t so free anymore.

There has been a shift for the free dating apps and online sites to offer “freemium” services – that is, additional features to the basic service but for a price. In the current online dating market, revenue growth needs to happen for investors to remain interested, and that means charging for services once the user base is built. Tinder recently announced that it will launch a premium paid service in early November, while the basic features of the app will still be free. OkCupid started with a freemium model a while ago, charging users who want to filter profiles according to user preferences, or to be able to review and see reviews of other members.

Still others like eHarmony are adding more personalized matchmaking services at a very high price – thousands per year – for those who want a relationship but would like someone else to do the heavy lifting. eHarmony has not reported numbers to see the success of this particular service.

So what does the future look like for online dating? One thing is for sure: free models likely won’t last forever.

It's one thing to speculate about what's going on with eHarmony these days, but it's quite another to hear it straight from the horse's mouth.

Ok, not a horse – Dr. Neil Clark Warren, CEO of eHarmony and instantly-recognizable white-haired man from the eHarmony commercials. On August 22nd, 2014, the 14th anniversary of eHarmony's founding, Warren sent an internal memo with an insider's look at the company he believes could become “one of the most important companies in the history of the world.”

Read the full thing www.onlinepersonalswatch.com/news/2014/10/eharmony-internal-memo.html and check out some of the highlights below:

• After nearly losing the company in 2012, eHarmony is back on track with a five-year turnaround plan.
• It wasn't easy. Board members were asked to step down, employees were fired, vendor contracts were terminated, and an all-new executive management team was put in place.
• Even some of eHarmony's top leadership changed. Grant Langston and Dan Erickson were appointed to the Management Team, and Armen Avedissian was hired as the new COO.
• Just two years in, the company is showing signs of a major comeback. “Instead of losing 100,000 end of period subscribers each year,” writes Warren, “suffering EBITDA losses of 50% every single year, our EBITDA for 2014 will literally be dramatic and the cash in the bank increasing substantially each month.” eHarmony's end of period paying subscriber count has hit an all-time high.
• A major move is in the works. eHarmony's offices will be relocating to prestigious digs on Wilshire Boulevard in Los Angeles.
• The current business plan includes building ten separate relationship businesses with ten separate revenue streams.
• eHarmony intends to scale up by increasing its international reach. The company now employs 190 staff members in North America, the UK, and Australia, but hopes to reach other countries in the future – first in English, then in their native languages.
• Selling the company is definitely not part of the plan. “We do not ever again wish to expose the ownership and management of our business to persons who know almost nothing about relationships,” says Warren, “and have even less commitment to the sacredness of the relationships we are attempting to assist.”

Warren is feeling confident about the future of eHarmony. Maybe even a little over-confident, actually. Case in point:

“Bottom line, as a company, we want to bring about a world in which literally everyone has peace, love, joy, patience, kindness, goodness, faithfulness, gentleness and self-control. Then, we will know that we have reached our loftiest and most idealistic goals.”

Whew. “Idealistic” is right. But all the best to them, and if they get even halfway there, eHarmony will be a rousing success. For more on this dating site you can check out our eHarmony review.