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March 15, 2006
The Economics of Online Dating Innovation
A new trend is emerging where free dating sites add the phrase Skype on their home page and call themselves the next generation of online dating. Let me say it here once and for all. Starting a new dating or social networking site with a core differentiator solely based on Skype or any other VOIP service will not become profitable to a degree where the business can be considered a success.
Smart companies looking to partner with dating and social networking sites have focused on making simple integration a high priority and kept the cost low, going for market share instead of six-figure licensing deals. Adding in Skype costs as much as the time it takes for developers to add a few logos and a link on the profile page. That's clearly not enough, additional strategy and resources must be allocated to come up with a plan that will actually deliver favorable results.
I read about VerbDate at SkypeJournal. The site is a perfect example of throwing a bunch of Web 2.0 buzzwords into a blender, building 1/2 a website, launching and leaving it that way for six months. A quick search shows the site currently has 55 members. I wonder why? The site is unpolished and inconsistent and the stated goal of the company is to "to kick the incumbents big fat ass!" Then they go on to say they have partnered with Skype, which is bunk.
For two years I've been saying it costs at least $3-5 million dollars to get to the 100,000 paying subscriber mark. No one has refuted this except optimistic startup entrepreneurs who base their entire business model on "new" marketing and branding concepts and pray to the gods of viral marketing.
That's why VerbDate and it's brethren will most likely never succeed. I'm all for supporting two people in the proverbial garage starting up the next big thing, but there is a level of sophistication that a dating site needs to attain before it will be truly be taken seriously by the general public. Most of the press releases and emails I get are from sites that fail to address this important issue.
A question to those of you who run ad-supported sites, let us know in the comments what you consider a successful free site. My general take is that more people + higher quality members&site = greater revenue. I'd like to see if anyone is making more money with targeted advertising on a smaller niche site as opposed to a generic ad network serving of mortgage loan ads on a large free site.
Free social networking sites let members add all sorts of plug-in functionality for free. YouTube and 100 other companies offer free file and video-sharing applications, music players and so on to Myspacers. Most of these features don't run on the social networking site, so the cost is negligible.
Innovation for the dating and social networking industry is good, but at what cost?
Technorati Tags: verbdate, voip, progressive+communication
+ TrackBacks (0) | Category: Dating Site | innovation | partnerships | startups
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