Finances

Spark Networks – owner of ChristianMingle.com, JDate.com, BlackSingles.com, and more – has released financial results for the first quarter of 2015.

Revenue in the first quarter of 2015 was $13.5 million, a decrease of 19% compared to the year ago period and a 5% decrease from the prior quarter. The decrease was primarily driven by a 25% drop in average paying subscribers, particularly in the Christian Networks segment.

Direct marketing expenses in the first quarter of 2015 were $6.1 million, a decrease of 47% compared to the year ago period and an 18% increase compared to the prior quarter. Much of the decrease resulted from a new marketing strategy for Christian Networks.

Dating website Plenty of Fish (POF) has been making headlines recently for its longevity and user milestones, as well as its recent disclosure of financial information about the company. But thanks to the new anti-spam law in Canada, POF now has an unwanted headline that they have to deal with - the popular dating website has been ordered to pay $48,000 in fines for its email practices.

Canadians complained of Plenty of Fish’s marketing tactics, which launched an investigation by the Canadian Radio-television and Telecommunications Commission (CRTC) and the Competition Bureau into the company’s practices. Specifically, the agencies examined how the company handles commercial emails to subscribers.

According to the disgruntled users, POF sent them commercial messages without a noticeable “opt out” or “unsubscribe” feature. One of the key requirements in the law is that each commercial email contain an unsubscribe mechanism to allow recipients to opt-out at any time. Also, according to the wording of the law, the unsubscribe feature has to be prominently displayed and “readily performed.”

Plenty of Fish agreed to paying a $48,000 penalty and developing a new compliance program to address its problematic email practices. The compliance program will include training and education for staff, as well as corporate policies and procedures regarding email marketing.

The new anti-spam law has been in effect since last year, but the Canadian agencies have had their challenges in enforcing it because of how vast and pervasive the problem of spamming seems to be. Millions of spam emails are sent every day by spammers from all over the world. Experts argued that the Canadian Radio-television and Telecommunications Commission (CRTC) and the Competition Bureau were not equipped to handle such a pervasive issue.

The agencies however, are proving the critics wrong. The Competition Bureau recently alleged that rental car companies Budget and Avis engaged in false and misleading advertising when they failed to disclose numerous additional fees as part of their car rental promotions, including their email promotions. The Bureau is seeking $30 million in fines and reimbursement to customers. And the CRTC discovered that Compu-Finder, a Quebec-based corporate training company, sent commercial emails without consent and like POF, without proper unsubscribe mechanisms. The company was hit with a $1.1 million penalty.

CRTC notes in a press release that POF did not argue with the fine or the accusation, and hopes that by example, other companies will be inspired to change their own email spamming tactics. As for POF, the company continues to grow its subscriber base despite its setbacks, recently announcing its user base has grown to 100 million worldwide.

Back in December of 2014 Zoosk abandoned their IPO and hired a new CEO Kelly Steckelberg. This month she did an interview with Fortune in which she discussed the future of the dating service and how she plans to turn it around.

Zoosk earned over $178 million and was profitable in 2013. In 2014 the company earned more than $200 million, but they again slipped into the red and lost money. For this reason they let go 15% of their staff and canceled the planned IPO.

With her eye on Zoosk being profitable again, this pass November Kelly switched Zoosk to a premium model. This means a subscription is now required for Zoosk members to send messages. It is still free to create a profile and search for other Zooskers though and this is the same model that other companies like Match.com, eHarmony and Christian Mingle uses. Zoosk also plans to introduce a number of other new features for their premium service to entice more users to pay. This includes a photo verification system and a badge to identify members who have been verified.

So far it appears the turn around of Zoosk (or at least the start of it) has been a success. Kelly Steckelberg says Zoosk will soon announced that the first quarter of 2015 was profitable.

For more on this dating service you can read our Zoosk review.

IAC, the company who is the majority stakeholder in popular dating app Tinder, no longer wants Sean Rad in the driver’s seat. As of late March, the company has named the new CEO who will be taking his place: Christopher Payne.

Payne previously worked for eBay as a senior vice president in the company’s marketplaces division, where he was responsible for the North American market. He also founded Positronic, a search technology company, which eBay acquired in 2008. Before that, he worked for 13 years at Microsoft, including heading its search unit, which was then called Windows Search Live.

“Christopher brings invaluable experience running consumer technology businesses that operate at massive scale,” Mr. Rad said in a statement.

But the change might not be completely embraced by Rad, who was embroiled in a very public sexual harassment lawsuit brought about by former employee Whitney Wolfe. They settled out of court for an undisclosed amount, and she has now launched a new dating app of her own that directly competes with Tinder. Rad will remain President of Tinder and retains a seat on the company’s board. According to reports, he will still be in charge of product and marketing, but Payne will take over everything else.

The spotlight that has been on Rad the past few years has not been flattering, and the most recent scrutiny has come as a result of the new premium service Tinder Plus, which is costing as much as $19.99 US per month for two additional features. Users have asked to be able to use Tinder in multiple cities, as well as to “go back” and swipe right on matches they’d previously turned down. The new service offers these features for a price – but if you want to just keep the basic free service, the company has also put limits on the amount of swiping you can do in a 24-hour period. This caused controversy when it launched in the UK, and the app’s rating in the iTunes store went down to one and a half stars as a result.

Another controversial decision was pricing for the new service, which is based on age. For users under 30, Tinder Plus costs $9.99 per month, but for those 30 and older, it goes up to $19.99, and even more in European countries. Rad says a lot of research went into the pricing, and he stands by what he says customers are willing to pay.

Tinder also plans to launch an ad product, but has not disclosed how this will affect the service or user’s experience. Until now, advertising revenue has come from product placement, but the app has a lot of valuable user information for marketing departments to tap into.

IAC hopes that Payne can refocus Tinder’s business goals and help it grow into a more profitable as well as popular company.

Read our review of Tinder to find out more about this popular dating app.

eHarmony has weathered more than a few storms in its fourteen-year history, and has recently shared its trials and tribulations with The Wall Street Journal. The company has redefined itself as a “matchmaking site” as opposed to an online dating site, putting the emphasis back into long-term relationships.

The strategy seems to have worked – according to figures revealed by eHarmony founder Neil Clark Warren and COO Armen Avedissian, the company has more subscribers than ever before – 778,000 – and they make up to 15 million matches per day. But this is after the company almost collapsed. In 2012, after a few ousted CEOs and some advice from a board member, Dr. Warren made the decision to take back the reigns of the company and get it back on track. He came out of retirement at 78 years old to reclaim his spot as CEO and turn the company around – about the time when Tinder hit the market.

Before Warren took over, eHarmony was struggling to figure out its market, delving into new technology instead of focusing on its branding, leaving it vulnerable to the explosion of new dating sites and apps that came along. As Dr. Warren told the Wall Street Journal, “I think under CEO Greg Waldorf, users started seeing us more like the other dating sites Match and Zoosk, when we’re really a social science site. We were never meant to be a dating site. We were meant to be a matchmaking site. I think our leadership lost sight of that, too. We want good technology, but what we’re really, really interested in is long-term relationships.”

For its rebranding campaign, Dr. Warren returned to the television commercials, emphasizing the long-term matchmaking aspect of the technology. The company has also focused on its mobile app, something that has become a necessity for traditional dating sites since Tinder hit the market. When asked about Tinder, Dr. Warren emphasized that the app is actually helping bring more awareness and acceptance of online dating as a whole, which has been good for all online dating sites. According to Warren, eHarmony’s marketshare has stayed even despite the competition – Tinder claims to match about 22 million people a day.

Not to mention, Tinder’s reputation for being a hook-up app has helped differentiate more “serious” dating websites like eHarmony.

Warren told The Wall Street Journal: “People who are eHarmony customers probably aren’t going to be lured away by Tinder. We’re a serious bunch when it comes to matching for long-term relationships. We’re really not interested in short-term relationships.”

Tinder hasn’t been the only thorn in eHarmony’s side. The company came under fire when it didn’t include gay and lesbian relationships in their matching services – only creating “Compatible Partners” after a high-profile lawsuit. And now, eHarmony plans to launch a whole new matchmaking service called “Elevated Careers” – which will match job candidates with potential employers, based on factors like company culture and personality profiles in addition to skill sets. The new service will be available in June.

For more on this matchmaking service you can read our review of eHarmony.

PlentyofFish might not be making headlines the way Tinder has in the past few months, but its growth continues to be one of the online dating industry’s biggest successes. The company has announced that it hit the 100 million user milestone recently, and also revealed that it’s been a profitable company from its beginning, now with a $100 million run rate predicted for 2015.

POF has relied on a mixture of ads and premium subscriptions for revenue since 2008 (prior to this, ads only). In the last three years however, the company’s user base has shifted from primarily desktop computers to 80-85% using their mobile devices to access their accounts. Other traditional online dating sites have noticed the same trend of their user bases from desktop to mobile.

CEO Marcus Frind admits to website Business Vancouver that “finding love on a desktop computer is quickly vanishing.” Really, the appeal and ease of online dating makes more sense on a mobile device, which can be accessed anytime, anywhere. Mobile access means more users logging in and engaging with each other, a necessity for the longevity of any online dating service.

Frind said: “Since our shift to mobile we’ve seen rapid growth both in terms of users and revenue...Our revenue model has also evolved from one driven by advertising to one driven by paid membership, indicating that, now more than ever, singles are willing to pay for an enhanced user experience.”

For POF, that means their source of revenue has shifted to the mobile space and its premium service. An upgraded membership includes features like detecting when another user views a profile or when a personal message has been checked.

According to Frind, the user milestone and financial state of the company is significant in and of itself - and is no indication of his future plans, though he's never revealed this kind of data before. He’s not looking to take the company public, since he is the sole owner of POF. In recent years, the company also acquired speed dating service Fast Company to complement its offerings, but the main revenue source seems to be POF’s premium dating service.

POF has hit some bumps in the road since its launch back in 2003. For one, Frind refocused the dating site’s image, which had garnered a reputation of being primarily a hook-up site. With the facelift – which included focusing on the mobile app technology and re-branding the dating service for long-term relationships, not hook-ups - Frind seems to have found a winning formula.

The company, which used to employ only Frind, now has 75 employees, and doesn’t seem to be daunted by its mobile competition. POF is holding its own, despite a fickle online dating market.

For more information on this online dating service you can read our POF review.