• 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)

    Ebuyer is a business like Dell. It sells directly to the buyer; there is no need for retail shops. Online order tracking is another benefit. It enables the customers to check every stage of their order from the supplier's website.

  2. Marked by a teacher

    ict online service

    friend because they might not have internet which means they can't use It or they might not internet. Also they might not be online which means you have to wait for them to come online, would recommend people o use instant messaging.

  1. Case Study for Wingspanbank.com.

    ?The management turmoil within the two companies can be avoided. Cons: ?Unsatisfied customers due to the transition from Wingspanbank.com to Bankone.com. ?The expense in marketing campaign is lost. ?There is reputation risk associated. Alternative #2 Increase the "bricks?impression of Wingspansbank by opening physical presence, such as customer service centers.

  2. 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.

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

    The annual estimate of rough sleeping is based on a combination of street counts and estimates, which are conducted by LAs in partnership with local homeless agencies. The Street counts are meant to provide a snap shot of the number of people sleeping rough in a given geographical area on a single night.

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

    The online Bookstore industry have become a fierce business which involves discounts, varied selections and fast delivery in which all three companies are challenging each other. So we can conclude that industry competition was intense. Bargaining Power of Buyers The consumers of this industry can be found in every corner of the population.

  1. The Computer and Video Game Environment

    The pool of active gamers is frequently being revitalized and ensures continued demand. * There is plenty of scope to reach Occasional, Social and Lapsed gamers. Some adults that were engrossed in gaming in their infancy have drifted away due to other time commitments but there is an opportunity to

  2. What is e-commerce used for?

    This means they will become a well-known name. Failing - if the company do not have a lot of sales over the internet they will fail, this could mean existing consumers will lose faith in them and soon everyone will forget their name.

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