• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12
  13. 13
    13
  14. 14
    14
  15. 15
    15
  16. 16
    16
  17. 17
    17
  18. 18
    18
  19. 19
    19
  20. 20
    20
  21. 21
    21
  22. 22
    22

Online dating services - review

Extracts from this document...

Introduction

1 Executive Summary Online Dating Services, once a haven for the desperate and lonely are starting to attract a significant user and revenue base and are growing at an increasing rate. These services now attract over 30 million users a year in the U.S. and soon will be the highest revenue subscription content service on the Internet. The growth of online personals and many of the industry's characteristics are similar to those of products such as fax machines, DVD players, and the Internet itself. The main similarity is that the value of these services for each user increases with each additional user. However, many other characteristics hold true as well. It has significant economies of scale, requires highly complimentary products, and displays some semblance of standards and compatibility between its competitors. Since online dating services have proven to be so similar to other networked goods, much of the knowledge gained by examining these other services can be applied. This means that one can expect these services to continue to grow rapidly, gain mainstream acceptance and that subscription prices will remain low as long as the major services remain incompatible. Further, they likely will remain incompatible for a variety of technical and strategic reasons. 2 Table of Contents 1. Executive Summary 1 2. Table of Contents 2 3. Introduction 3 4. Online Dating Industry Overview 4 5. Online Dating Growth 7 6. Network Characteristics of Dating Sites 8 6.1. Required complementary products 8 6.2. Compatibility and standards 9 6.3. Consumption externalities 10 6.4. Switching costs 11 6.5. Significant Economies of scale 13 7. Decision to Date Online 14 8. Decision Between Services 16 9. Conclusions 19 10. Bibliography 21 3 Introduction Online dating services have been around since 19951. Computer dating services date (no pun intended) back as far as the 1960s2. However over the last three years these services have seen explosive growth. ...read more.

Middle

Male Users Female Users Total Users Total Possible Connections Ratio of Users to Connections 1 1 2 1 2:1 3 3 6 9 2:3 5 5 10 25 2:5 10 10 20 100 1:5 100 100 200 10,000 1:50 While other networks such as fax machines increase at a faster rate: Vn = n(n-1)/2, these networks are homogenous in that every fax machine can connect to every other fax machine, where as on a heterosexual dating site each new user can only connect with the opposite population. However, even at this rate it is easy to see how the adoption rates for network products can be slow at first and gain tremendous momentum. This factor has been confirmed by increases in how long the average user now spends on personals sites. When the pool of users was smaller one year ago the average subscriber spent 9 hours per month on dating sites. According to a study by Jupiter-Media Metrix that number as of Oct 2002 is up to 13 hours a month. Site activity, and likely implied in this the value of the service, has increased with increased site traffic and registered users. 6.4 Switching Costs A fourth characteristic of networked industries is a high switching cost or lock-in. Shapiro and Varian have separated these costs into five categories16: * Contracts * Data Conversion * Training and Learning * Search Cost * Loyalty Cost With 54% of users on monthly contracts, and significant discounts for users who have subscribed annually, the economic loss from contract lock-in on dating sites is relatively minor. For instance, subscribing yearly to Yahoo.com is equal to the price of 4.5 months at the monthly rate; therefore any loss associated with leaving the service relative to the more flexible monthly option only exists for the first third of the year. Re-entering data on a new site is a relatively minor switching cost. ...read more.

Conclusion

Many small sites do share databases or license other match making services. These sites do not have a large enough user base themselves to build a worthwhile service or simply find it faster or cheaper to license the services of others rather than build their own, trading the large fixed cost and low marginal cost for a flat average cost line. In Yahoo's case, it has a large enough user base to make building a service that reaches critical mass possible so does not necessarily need to collude with Match.com. Further, since Match.com licenses its service to other sites including Yahoo arch-rival Microsoft, it may have reasons beyond the success of its dating service for staying independent. Yahoo and Microsoft both run portal sites (yahoo.com and msn.com), instant messengers, shopping sites, investment sites, and free email services to name just a few of the lines on which they compete. For Yahoo to share its database with Match.com could allow Microsoft to pluck these users for its other services. As long as the major dating service sites compete using non-compatible services, prices will remain low and vary with the differentiation between the services (more differentiation making it less price competitive) and the value users place on network size (more value making it more price competitive). Further, due to the complicated competitive landscape, it is unlikely the largest services will become compatible with each other. 9 Conclusions Online dating services are a large and rapidly growing market displaying several characteristics of networked industries. These sites require that another complimentary product (the Internet) be in place, have some emerging standards and compatibilities between various services, have high network externalities, and significant economies of scale, however they do not have much in terms of switching costs. Online personals can be analyzed using theories developed for other networked industries. With this in mind, it is clear that these services will continue to grow rapidly as more users increase the value of the service. Further, the fight for users is fiercer than in non-networked industries so prices will be suppressed as long as the services continue to be incompatible. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Internet section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Internet essays

  1. Marked by a teacher

    Benefits of an Online Business Presence

    3 star(s)

    The system sends automatically email to customer informing about tracking order. In other systems customers can check at any time the progress of the order. Ebuyer.com is a business operating online that enjoys this benefit. Businesses can reduce overheads and labour costs.

  2. Marked by a teacher

    ict online service

    Advantages of using email * Managing email is very easy and simple and often the email company you are using like hotmail often teaches you how to use email. * Email is very fast so as soon as you send it the other person receives it this is an advantage for sending important messages.

  1. Online Business Activity

    the user's computer from virus and some websites allow to free access to information whereas other do not. Also other websites specialists in information charge a fee to get access of it. Examples Some good research websites are: www.google.com, www.yahoo.co.uk and www.altavista.com.

  2. In assessing the competitive position of a large online trader, we would use the ...

    These are mostly people who have had some form of higher education and have access to the Internet and computers. The segment of online shoppers has increased dramatically in recent years due to the convenience of shopping in the comforts of the home and the accessibility of the Internet.

  1. This essay critically discusses the social issue of homelessness and its impact on young ...

    The Government through their count on a single night in 2006 stated there were 502 people sleeping rough in England on any single night (see appendices for table). These statistics are problematic and manipulated. This target was met by narrowing the goalpost and by changing the Government definition of rough sleeping.

  2. The Digital Native generation. The main themes of this report are how young ...

    The professional or expert is seen as the important one because they know most about the situation. Young people using the internet for advice because of anonymity felt they could say anything they want. They could delve into more personal issues so they can seek help.

  1. Potential Disadvantages of an Online Business Presence

    The situation is a lot easier if the business is the market leader and has the "edge" over other businesses. * Adaptability of key staff - Businesses expect people to have certain skills in order to get to job. The businesses do this to ensure they have the right staff to care about the business.

  2. Ict Report Template

    Data Design View both pages of the website Plan of Work Order of Work Sub Task 1. To be able to buy stuff. 2. To make all of my products available on the website. 3. To make sure my links between my homepage and products page work.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work