It's been estimated that the online

dating industry revenue has declined as much as 20% - 30% over the last 12

months. Customer acquisition costs have gone up and revenue has gone down  Where

are the people going and are we seeing the end of the subscription based dating

service? This revenue slide in the online dating  industry can be attributed to

several easily identifiable factors.

Quality and user experience is first and foremost for any dating site, the

issue that sites face is getting a balance of members and a ratio of men to

women on mainstream and adult dating

sites that will in turn deliver value to paying members. Keeping this

balance in check can be a challenge for any

dating site to make money online you

don't need many female members in your database but to deliver a good user

experience you do. Men far out number women on most dating sites and for the

first time paying member this all looks fine but if they don't get any

satisfaction on the first upgrade they may not renew a second time. If a user

has a bad experience on a dating site and feels they have lost money chances are

they will not recommend the service to their friends. Reputable dating sites

will monitor their database carefully and often have some type of profile

verification system in place to help ensure a quality experience. Often members

uploading information about themselves are at best very bad when it comes to

marketing themselves online, this can also lead to less then satisfactory

results.

Industry fragmentation - The mainstream players are established and the

online dating  industry is heavily saturated, the industry is now fragmenting

into niche markets with  free dating

and social networking  sites where people can interact and make contact without

getting out their credit card. The free business model has clear revenue 

alternatives to subscription based to an advertising based revenue model such as

PPC that does not burden the users with ongoing charges and can often help the

"viral effect" of the site. Paid sites can expect to loose about 30% of their

base on a monthly basis depending on their market sector. With a free social

networking site members can enter and exit at will without charge and recruit

friends without the stigma of being on a dedicated "dating site" Users can

maintain a membership over a much longer time frame even if they are in a

relationship. Speed dating  has also become very popular and gives users another

hands on alternative to subscription based dating sites.  Paid dating services

won't vanish overnight but the big free community based sites are on the rise.

Anyone faced with the challenge of starting a new paid dating site under

current market conditions will need to understand considerable investment would

be required in order to gain market share, viral marketing will be difficult due

to the industry saturation factor unless there is something very unique about

the site or application. The large established market leaders have money to burn

and established affiliate networks in place that deliver low cost customer

acquisition, add this to reoccurring revenue and new comers to the paid dating

industry are facing an uphill battle as the industry competes more aggressively

for customers. Small companies with minimal staff and overheads have proven they

can compete for traffic in the big league and offer the users exactly what they

want without charging, these companies can provide a free fully featured service

and make a very generous income  at the same time. The advertising based

business model has little downside and a big future.