Hotornot goes free.

Looks like hotornot just became the second largest free dating site over night by converting to free.

Here are some of the compete.com statistics.   This is USA only traffic.

 Sitename,   Unique Visitors,   Visits,  Attention (visits*session time)
Plentyoffish 1,247,723 13,056,184 0.094987%
Hotornot.com 734,944 4,255,446 0.015883%
okcupid.com 509,888 1,354,140 0.008969%

The stats here show okcupid has virtually no traction,   or their unique visitor number is mostly made of myspace kids taking the random tests.   The repeat visitor ratio is virtually non existant.

Hotornot is in a very strong position,   lots of uniques,  good visitor to unique ratio.   Hotornot owns a niche and there are currently no real competitors.   If they move outside of the niche then they could have a lot of problems.

People are dramtically over estimating the size of the dating industry,   sure comscore says “20 million uniques” visit dating sites each month,   but the vast majority of those are users being redirected to sites like true.com via affiliates, popups etc.   Then you get sites like eharmony saying they sign up 10-15k a day in the US.  But only 10-20% of those people end up paying.    If you take out the duplicates the number of real people actively (2 or more logins/month) using dating sites in the USA drops to between 2 and 3 million/month.

As a free site all your money is made via advertising.     No matter whose numbers you use there are about 2 to 3 billion pageviews a month in the US from dating sites.   If you are lucky you can get 50 cents a CPM from ALL those pageviews. Myspace monitizes at 5 cents for the bulk, 50 cents is a lot and hard to get as an average when you have hundreds of millions of pageviews.  So assuming you can take 100% of the industry and at least 80% of those page views are monitizable  you end up with a market size of $12 million a year in the US.      If free dating mirrors social networking then 1 player will control 80% of the market and the other players will fight over the remaining $2.4 million in yearly revenues.  This of course assumes that all paid dating sites convert to free,  or free dating sites cause the number of people using dating sites to double.

15 Responses to “Hotornot goes free.”

  1. Arnold Kim Says:

    Hey Marcus,

    I recently read an article on cnnmoney about Andrew Conru (of friendfinder).

    url: http://money.cnn.com/magazines/business2/business2_archive/2007/04/01/8403370/index.htm?postversion=2007033011

    The most interesting statement from that article was this:

    “Conru, on the other hand, believed that people would pay more to be part of a small group of like-minded souls. After all, you don’t shop for a mate at Wal-Mart; you want to go to a cool bar. And if that bar brings in the kind of crowd you like, you’ll pay more for the drinks. The average AFF user pays $20 a month; others shell out as much as $50.

    “The more niche you get, the more value per member,” Conru explains. “People pay money for a filter.” He wasn’t bothering to charge members of his religious dating site, BigChurch.com, until the guy who ran it insisted. Registrations jumped immediately. “He was right,” Conru says. “On the Web there are not enough filters for sincerity.””

    I don’t necessarily agree with it in a large pool. Obviously adultfriendfinder has their own niche that they serve well and people will definitely pay. However… it did make me pause and think.

    I know “free” has been the trend… but have you considered adding a pay section? I know i goes against much of what you’ve written… but it is an interesting thought that some people may pay for a filter. That these other people are also serious about finding someone. Not just signing up because it takes little effort. Obviously eHarmony takes this to the extreme.

    anyhow, just some thoughts.

    HotorNot’s move is interesting… and I agree that they might be chasing too few advertising dollars. There’s nothing precluding them from selling ads on their current site (which I believe they do). They’re banking that the free-aspect will draw more people to offset the loss of pay revenue.

    arn

  2. JT Says:

    That’s it?! That’s James’ big secret? Going free?

    With all his hype, I thought he was going to do something really different. Go for a social network like you are. He really thinks he’s going to make more money going free? Since he has to share his company now, too? (He was going to give shares to employees ’cause he couldn’t find “good people” or something.)

    Color me unimpressed. I vote a “1” on that idea.

  3. Zoltan Says:

    Markus, the 2 to 3 million uniques / month US dating traffic is way underestimated in my opinion… Don’t tell me that POF has more than 50% marketshare… (1,2 million / 2 million = 60%). Most probably compete’s estimate of 20 million is high, but there are definitely at least 10 million uniques who visit dating sites in US.
    Any stats about number of break ups or divorces in US?

  4. Markus Says:

    Compete has shown that numbers of uniques has absolutely nothing to do with users using the site.

    2-3 million is probably on the high side. If you add together all the paying subsribers to dating sites that gives you around 1.2 – 1.5 million or so in the US. Something like 30% of those won’t even have visited the dating site that month for whatever reason.

    The math is simple enough, 600Million (industry revenue)/ $30 subscription per month = 1.8 million ACTIVE users/month MAX.

    You can use comscores registration numbers, competes etc they all come about the same.

  5. rob Says:

    Im curious Markus,

    what revenue r u creating with your site now? Im assuming its around the 750k mark/month
    -rob

  6. Dave Evans Says:

    I would disagree that HoN is a dating site. It’s a people rating site with dating capabilities added on. The quality of that traffic is generally pretty low compared to other social/dating sites, so the CPM will be low.

    I’m amazed at all of the discussion about HoN. It was a fun idea when it launched and has some traffic but its a bit of an apples to oranges comparison.

    I have yet to see that free sites have significantly grown the overall dating market, I would attribute that to social networking. Then again, what is dating as compared to browsing myspace profiles? pretty much the same thing.

  7. Tom Says:

    The one thing I find ironic about free dating sites is most of their ad revenue seems to come from other dating site ads. If free dating sites become too popular in the end they will kill themselves.

  8. Zoltan Says:

    Tom, this is not really true. There will always be other advertisers as well and with proper targeting, any community can be a gold mine for advertisers.

  9. Rush Says:

    “John Battelle does deal with google and reveals adsense revshare.” post deleted? I was going to ask who they “payed out” 51% to before giving us our cut. I agree those numbers just don’t seem right.

  10. Tom Says:

    Zoltan, true there will always be other advertisers, but a quick stroll through plentyoffish and other free dating sites will show you that most ads are for other dating services. I would bet that dating ads are the most profiable for them.

    Most likely attempting to sell other products or services would lower revenues a fair bit. I wonder if someone has any numbers on this?

  11. Martin Says:

    If other paid dating sites were really put off by POF why dont they simply filter http://www.plentyoffish.com from the adwords account.? I mean, if every paid dating site using adwords did that, wouldnt it kill POF pretty quickly?

    Its something I have often thought about – but then maybe they are happy to pay to get the members from POF – just a thought thats all!

  12. Martin Says:

    - by the way, as a foot note – and I dont think a lot webmasters are brave enough, but I actually show contectual dating site ads to my PAID members as well as free – and they still pay, and still keep me earning a a very nice living, all beit a very small corner of the dating site world, – It does me well.

  13. Alison Says:

    personally I think it’s obvious that the free dating sites out there are always going to get more traffic than the paysites. One main reason for this is the younger market who are always using these sites.

  14. Ed Says:

    In response to the Adult Friend Finder talk, I have reistered on that site once and I can not believe what people pay for. $19.95 a month for silver and $29.95 for gold membership. The gold does not give you much more than the silver. People pay for it though. The old saying goes, sucker born every minute.
    Anyway, after a month of seeing what they actually had and seeing what other people had as far dating sites, I opened my own on April 2007 (Restless Adults) see what kind of response I get. My site is totally free for all lifestyles I guess you could say like AFF but free. I now have to figure out how to get users to my site. Can somone guide me on this since I am a new guy on the block?

  15. Neil Says:

    Ed,
    Do what AFF does – i.e. pays affiliates…..ooops…youre not making any money therefore can’t afford to pay for traffic!

    welcome to the online dating / profile game. have fun.

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