Tinder

Let’s face it, we human beings are visual creatures. When you meet someone new in person, what’s the first thing you do? Most likely, you look at him and decide on how attractive he is. Would you pursue him if you had an opportunity?

This type of superficial behavior is pretty standard. Most of us assess and judge others according to their appearance. The soaring popularity of apps like Tinder give us evidence that even in the digital age when we can get more information on almost anybody we meet if we just took the time to Google them – we prefer to say yes or no based on their looks.

Case in point: in the two years Tinder has been on the market, smartphone sales have gone up dramatically, which means more people have access to the app. The statistics speak for themselves. Tinder processes more than a billion swipes daily, matches more than 12 million people in the same amount of time (only a fraction of the overall swipes are mutual however), and though the company won’t release information on the number of users, sources say it could be as large as 50 million active users.

More important than people signing up for Tinder is the fact that they use it – as regularly (if not more often) as other popular social media like Facebook or Pinterest. According to a recent article in The New York Times, on average, people log in to the app 11 times a day. Women spend as much as 8 and a half minutes on it, while men spend 7.2 minutes (sorry guys). If you add it up, that’s almost 90 minutes per day.

But is the phenomenon of Tinder purely based on our basic animal instincts? Are we really only looking for someone who is physically attractive, or who embodies a physical ideal of some sort?

Maybe not. Many of Tinder’s users (mostly men) are looking to rogue apps like Tinderoid that manipulate Tinder’s database so they can “swipe right” to multiple profiles at once without even looking at a single photo. They are looking to increase their odds of matching with a woman, rather than looking for someone they find physically appealing. But what is the goal - is it just to hook up with more women? Maybe, but that’s another matter.

Tinder is a vehicle for meeting more people, and works a lot faster than your traditional online dating process. Maybe it’s appeal is not just about the photos, but instead due to the vast quantity of people you can “pick and choose” anytime, anywhere - and how quickly you can match and meet up.

The real question is: does it improve the overall dating experience? The jury is still out on that one.

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.

At the recent Forbes Under 30 Summit in Philadelphia, Tinder cofounder Sean Rad made the surprise announcement that the company is launching a new premium service in early November. The upgrade will allow paying users more options beyond just swiping left and right.

This might make some Tinder fans uneasy. After all, the value of the app is in the sheer number of people using it. Will restricting certain new features to paying customers cause others to drop off and look for other cheaper alternatives for hooking up?

Not according to Rad. He says the premium service will include functions that Tinder users have long been asking for - including the ability to travel and use Tinder in multiple cities. Currently, you can only use the service locally, which means if you live in Los Angeles you can't look for hook-ups in New York.

But will people pay for this type of technology? Several hackers have taken advantage of Tinder's technology already and used it to create the very features users have been requesting and the premium Tinder will be offering - such as fooling the GPS-based technology into thinking you are in another city so you can scroll through profiles in multiple cities. Also, several hackers have come up with technology to "mass-like" profiles in mere seconds without having to manually scroll through, which is a very popular request from current Tinder users to increase their odds of a match.

And what about Tinder's current features - will new users have to start paying for basic services, or will some features be taken away to add to the new premium service? Rad says there will be no changes under the current free app, so users can rest a little easier. Forbes reported that people now swipe through 1.2 billion Tinder profiles a day, and that each day Tinder makes more than 15 million matches. The company needs to hang on to these users because its value is in the numbers. 

But Rad is trying to continue Tinder's growth, and that means it's time to add revenue - especially for investors like Barry Diller.  “We had to get our product and growth right first,” says Rad. “Revenue has always been on the road map.”

Forbes said the Tinder founder hinted at offering other types of services that go beyond dating, including features for travelers, though he didn't cite anything specific. Could we see a Tinder app that includes restaurant, car service, or hotel choices in the near future?

Clearly, Rad has big plans for his popular app. But we'll have to wait and see how the market (and their pocketbooks) respond. For more on this dating app you can read our Tinder review.

Dating app Tinder has had to deal with a lot of security issues, despite the app’s verification system using Facebook Connect.  In theory, because of Facebook’s security measures, only “real people” can join Tinder, so users can sign up with some reassurance the profiles they'll encounter will be real. But lately, this has not been the case.

Spammers and scammers have been able to lure users away from Tinder and onto their sites, typically, with spam bots - fake accounts pretending to be real people that flirt with users in order to redirect them to adult sites - and take their money. In the past, Tinder users could block profiles, but they couldn’t report spam.

According to website Tech Crunch, things have changed. Users can now not only block accounts but also report spam. Tinder also made a technical update to address the issue, and the update was effective at cutting down on the in-app spam. Unfortunately, the spam bots just found another avenue - SMS. Phone spam for Tinder users skyrocketed.

Instead of luring Tinder users away while they are inside the app, the spam bots changed their scripts and started collecting mobile numbers from the users, sending those users text messages with links to the spammers’ websites. 

It can be really misleading for users to receive text messages from spammers who are pretending to be people. One example Tech Crunch used that came from a spam bot read like this: “sorry my phone’s almost dead and out of mins too. If you go on Tinderpages.com ill be there. Im sweetgirl4u on it. Sorry its free tho if you confirm your email.”

Tinder is still racking up complaints, so it seems the technical update hasn’t actually made a difference. According to security researchers, this is beacuse Tinder was successful in getting rid of the in-app spam bots but not the spam bots themselves. Lead researcher Raj Bandyopadhyay explained to how they conducted their research, and what it meant for Tinder:

“Our topic modeler looks for phone number related complaints, and then classifies them using Data Scientist to validate correlation. In this case, we isolated complaints related to Tinder, and then compared them to historical complaints. This gives us a high degree of confidence that the spike is specific to Tinder activity and not just an overall spike in spam. In addition, it is important to re-emphasize that this is a pattern we have frequently seen – fraudsters migrating to phone after being thwarted online.”

So it seems text messages are becoming the spam bot avenue of choice, since online technology has improved so much. Now, mobile security needs to catch up.