Finances

CEO Noel Biderman is the face of Ashley Madison, and he has taken the marketing of the affairs dating site to the next level. He has a partnership with the Howard Stern's Sirius XM radio show, has ads on billboards and has created TV commercials (that most never seem to be allowed on air, see Story). He has even started to market AshleyMadison.com as a place where the married can pursue their same-sex attractions.

Currently The Ashley Madison Agency has between 4.6 and 4.7 million members who have logged on seeking and extramarital affair (I assume since the site launched in 2001). 30 percent (or 1.41 million) of these members are women. Also, about 150 thousand members are looking for a same-sex affair with two thirds being women looking for women. From a survey run on the affairs site, 50 percent of all respondents (both men and women) are not first timers and admit to cheating within a relationship at least once.

It is estimated that Ashley Madison generates tens of millions in revenue a year. People who have created a membership on the website can search for other members for free but must buy credits to message or chat. Ashley Madison even guarantees an affair with their most expensive subscription package. For $249 USD it is guaranteed you will find someone in 3 months to have an affair with, or you will get your money refunded. Currently AshleyMadison.com is the leading extramarital affairs dating site in the United States, Canada and Australia.

For more on this story, read MSN Money.

On November 5th, 2009 Spark Networks reported their third quarter results which ended on September 30, 2009. For Q3, 2009 Spark Networks revenue was $11.1 million. This is a 21 percent decrease from Q3, 2008 of $14 million and a 2 percent decrease from last quarter. For the first 9 months of this year total revenue is now at $34.3 million which is a 22 percent decrease from last year of $44.1 million.

The Jewish Networks saw revenue fall to $7.1 million for Q3. For the same quarter last year, revenue was 16 percent more at $8.4 million. Some good news is to be found though, for the first time in a few quarters, the Jewish Networks had an increase of subscribers to 86,051. This is a decrease of 6 percent from Q3, 2008 but a 4 percent increase from the prior quarter.

The Other Affinity Networks (MingleMatch) saw a decrease of 9% in revenue to $3.2 million when compared to last year. This is 3 percent less than the last quarter. Subscriber wise for the third quarter, there was 66,786. This is virtually identical to Q3 in 2008 and a 2 percent increase from last quarter.

The United States virtual goods market was worth $500 million in 2008 according InsideFacebook.com. This year it is expected to double to $1 billion and in 2010 virtual goods sales are expected to reach $1.6 billion. The huge growth in the market is due to the popularity of social networking and with more video games adding virtual goods to their online components.

With growth like this expected in the next few years, virtual gifts will be on par with the online dating industry which in 2008 was the third highest revenue grossing industry.

These are predictions from knowledgeable experts but they may not live up to expectations. In a recent Date.com press release about virtual gifts (see Story) their leading analysts estimated the revenue for the industry at $1.5 billion in 2008. This is a $1 billion difference between experts, I wonder which one is closer to the truth?

For more on this story, read Online Media Daily.

FriendFinder Networks said on Tuesday that they plan to complete the IPO process by 2010 and intends to list its common stock on the New York Stock Exchange under the symbol “FFN.”.

FriendFinder Networks Inc. intends to use the net proceeds of the public offering to redeem a portion of its outstanding senior secured indebtedness and to pay waiver fees to certain debtholders.

The company owes $442.1 million in debt in connection with its acquisition of Various and about $81 million in debt at the parent level. Here are some interesting facts from the FriendFinder Networks filing which was made public on Tuesday (most points deal with data from the six months which ended on June 30, 2009):

During a conference call about the IAC/InterActive Q1 2009 Earnings report, the owner of Match.com and CEO of IAC, Barry Diller, mentioned they had been talking to Yahoo about the possibility of purchasing their dating site, Yahoo! Personals (see Story).

With this latest news article from Bloomberg it looks like Mr. Diller is not planning to make any new purchases anytime soon.

Diller said in an interview yesterday that he has no plans to make any major acquisitions ... Diller said he would rather invest in IAC’s businesses than acquire large media companies, which he sees as overvalued.

Diller also mentioned at the Goldman Sachs Group Inc. Communacopia conference in New York, that IAC has too much cash at the moment but he doesn't see a better return than investing in their own businesses. At the beginning of July 2009, IAC had $1.61 billion in cash and $95.8 million in long-term debt. The New York based company had also repurchased $300 million in stock since August 2008. Since the beginning of this year IAC stock has risen 31 percent to close above $20.

In my opinion these statements by Diller while not mentioning Yahoo Personals directly, makes it clear he has no plans to buy the dating site. By purchasing Yahoo Personals he would be investing in the dating industry, but not directly into one of his existing businesses which is what Barry Diller says he plans to do.

For more information on the dating sites mentioned, read our Match.com review and our Yahoo Personals review.

The company which owns the Australian dating site RSVP, didn't perform very well last year. Fairfax Media's revenue for the year which ended in June, fell 27 percent to $605 million AUD when compared to the previous year. The online division of Fairfax which includes RSVP, TradeMe (auctions) and Stayz (accommodation) suffered a 8 percent fall in earnings for the last half of the year. In the several year before 2007 the online division had experienced double digit growth.

The loss of income from online job ads was the cause listed for the earnings drop in Fairfax's online division. It is not mentioned how the dating site RSVP actually performed but from reading between the lines it appears to experienced a marginal decrease in revenue as well.

For more on this news, read The Australian Business and to find out more about the most popular dating site in Australia, check out our RSVP review.