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Revenue Theories on Dating Sites

Revenue Theories on Dating Sites

March 27, 2012
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" Billing mobile sites seems to grow fast not only for one-off transactions, but also, for weekly and monthly memberships. "

A wide variety of adult dating websites can be found on the Internet, ranging from gay dating sites to BDSM dating sites to dating sites with a MILF/cougar focus. But if there is one thing that all the many different types of adult dating sites have in common, it is a desire to make money. How they go about making money, however, can vary considerably from one company to the next. Some adult dating sites don’t have any paid memberships at all; they make their money from an entirely advertising-based revenue model. Others, meanwhile, offer members the option of either free memberships or paid memberships with platinum features (members can’t access the platinum features unless they pay for them). When dating sites offer the option of paid memberships, they need to think about the ways in which customers are going to be billed — and that can differ quite a bit, depending on where the customers live.

If a company that specializes in online dating is based in the U.S., that doesn’t mean that all of its customers are based in the U.S.. In fact, online dating heavyweights like Adult-FriendFinder.com (which has said that it has more than 30 million members worldwide) and the Northern California-based Dating Gold (whose CEO Allan Henning has estimated that it has about 15 million members worldwide) have an abundance of customers outside the U.S. as well as an abundance of customers within the U.S. Both of those companies offer either paid memberships or free memberships, and when companies that offer paid memberships are doing that much business internationally, they must cater to the different payment needs that exist in different countries.

In the U.S., credit cards are still the dominant payment method for adult e-commerce, and that includes dating sites. The majority of Americans who have paid memberships with adult dating sites are paying with their credit cards just as most U.S. payments for membership porn sites are being made with credit cards. But in Europe, alternative payment methods dominate e-commerce — and those alternative payment methods, depending on the country, range from phone billing to debiting and bank-based solutions. The vast majority of consumers who become paid members of adult dating sites in Holland, Italy, Spain, France, Germany or the Czech Republic are not paying for those memberships with credit cards.

Asked how the billing needs of adult dating sites might differ from the billing needs of other types of adult sites — including live webcam sites, membership porn sites, or sites that sell sex toys or BDSM equipment — Daniela Ganick, senior account manager for mobile payment specialists iTelebill, said that she has observed “nothing different in needs.” Ganick said that whatever type of adult site one is operating — dating or otherwise — the important thing for businesses to remember is that there are millions of potential customers all over the world who spend a lot of money online but don’t own any credit cards. Ganick explained: “Alternative billing methods are always important to have to enable those clients who do not have credit cards or simply don’t want to pay by credit card to become members as well…. In some countries where credit card payments are not as popular, like some European countries, you will find more focus on the local payments…. In Germany, you have a credit card penetration of less than 20 percent. There, you will find direct debit the strongest method, followed by credit cards and alternative (methods) like phone payments.”

At online dating companies, there has been much discussion of the merits of paid memberships versus free memberships.

One school of thought says that paid memberships are better for dating companies than free memberships not only because paying members are getting billed by the company on a regular basis, but also, because they bring an element of seriousness to the table.

Those paying members, according to that school of thought, take their online dating more seriously than non-paying members. That said, non-paying members are still good for business; they drive traffic, and more traffic means more advertising revenue. But when customers upgrade from free memberships to paid memberships, they go from profitable to more profitable because they are both driving traffic and getting billed on a regular basis. Henning has estimated that about 90 percent of Dating Gold’s members will remain free members and that about 10 percent will become paying customers at some point.

Another theory one hears in the world of online adult dating is that customers who are interested in specific niches or micro-niches — whether it is MILFs and cougars, gay BDSM leathermen or cross dressers — are great customers to have because they can be very obsessive and passionate about their interests.

“Alternative billing methods are always preferred when it comes to niche content,” Ganick asserted. “It seems that the more (niche-driven) content is, the less people want it showing up on their credit card bills — meaning anonymous payment methods are more likely to be used than credit cards.”

Mobile/wireless payments, Ganick added, will continue to grow in popularity for niche sites—whether they are porn sites or dating sites—because they offer both convenience and privacy. “In general,” Ganick said, “billing mobile sites seems to grow fast not only for one-off transactions, but also, for weekly and monthly memberships.”


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