Sunday, February 24, 2008

Online dating: The economics of love

As Valentine's Day arrives, the online dating business is in the midst of an extreme makeover.

About 16 percent of all US Internet users -- or roughly 33 million people -- visited a dating site in 2006, according to JupiterResearch, and Americans spent $650 million last year on digital hookups.

But only about 5 percent of US Internet users purchase paid subscriptions to online dating services, and that percentage has hardly budged for several years, forcing industry leaders and tiny start-ups alike to try new gimmicks to coax more revenue out of existing customers and attract new ones.

EHarmony.com of Pasadena, Calif., is fighting back with science.

Founded by psychologist and marriage counselor Neil Clark Warren, the company is best known for its high prices -- $60 a month -- and its questionnaire. Members must answer more than 400 questions; the answers help eHarmony select the most likely candidates for romance
EHarmony is perhaps the most marriage-focused dating site. Waldorf proudly cites a Harris Interactive survey that found that 33,000 eHarmony members married each other in 2005 -- over 90 marriages a day.

Last February, the company launched eHarmony Marriage, a guidance service for people who've already found a mate but need help making the marriage last. For $49.95, couples get a questionnaire that helps identify problems in their marriage. For a monthly $49.95 subscription, they can access online video exercises that teach relationship repair techniques.

Match.com of Dallas, a business unit of IAC/InterActive Corp., is also making some moves. Prices at match.com, the leading dating site with about 15 million members worldwide, range up to about $30 per month. Last year, the company hooked up with popular TV psychologist Dr. Phil McGraw.

Subscribers who pay about $9 a month extra can receive video and audio messages from Dr. Phil, as well as specialized dating advice.

"If there's any remaining social stigma to this category, dating online, we wanted to put an end to it once and for all," said Jim Safka, chief executive of Match.com. "Dr. Phil -- it doesn't get more mainstream America than that."

Match has also copied eHarmony's questionnaire-based matching system in a service called Chemistry, developed with the help of a cultural anthropologist. As with eHarmony, Chemistry subscribers are only introduced to people whose test results indicate they're a good match. Match has hired Jay Manuel, one of the stars of the TV series "America's Next Top Model," to help members attract more suitors. Manuel suggests that members post appealing photographs with good lighting and creative camera angles and upgrade their personal profiles with short, revealing anecdotes

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