Why Pay Match.com When Dating's Free Sites Beckon?

Debbie Slowey used to look for love on paid online dating site Match.com. Then she discovered PlentyofFish.com, which provides similar services at no charge. "It was free, and there were more [people] to choose from," says Slowey, a 49-year-old Florida resident who got engaged to a chiropractor she met on PlentyofFish last summer. "If it's free, why would I go to Match?"

Singles around the country are asking the same question, creating a quandary for a whole slew of paid personals sites besides IAC Interactive's (IACI) Match.com. Among the most prominent are Singlesnet.com, Yahoo! Personals (YHOO), and eHarmony.com.

Sites that charge users to help them find companionship dominate the online dating market. But free services—including PlentyofFish.com, Adam4Adam.com, DateHookup.com, OkCupid.com, and Craigslist—are catching up quickly. In December, free sites accounted for about one-fourth of all traffic to the top 10 U.S. dating sites, from 15% a year ago, according to researcher Hitwise.

And while free sites have been around for several years, they're finally amassing large enough followings to give the paid sites a headache. At times during the second half of 2008, PlentyofFish was the most-trafficked dating Web site in the U.S., according to Hitwise. Last year, founder Markus Frind moved PlentyofFish's operations out of his apartment and into an office building in Vancouver, B.C., and hired six staffers. "We are going to double [our staff] this year," Frind says of the five-year-old site. "The economic downturn doesn't affect me."

Free Is the Right Price in a Recession

Paid sites, on the other hand, may well be hurt by the recession. Consumers who are out of work or struggling to make mortgage payments—but still looking for a date—are less inclined to fork over monthly subscription fees that can run as high as $60. OkCupid.com says growth picked up in September, as the economic decline accelerated. "We've grown in particular since the economy has gotten worse," says Sam Yagan, OkCupid.com co-founder. While the free site's number of daily searches typically rises 20% year over year, lately the growth has revved up to 50%—with no advertising. "This is the perfect storm for us," Yagan says. "People are [closing] their purses." Match.com costs as much as $35 for a one-month subscription, while eHarmony.com services go for as much as $60 a month.

Free sites are gaining traction just as social media services steal a march on paid dating services. More people are using free networks such as Facebook and News Corp.'s (NWS) MySpace to find companionship, romantic or otherwise. Ronald Lewis, a 29-year-old who in the past used Match.com and Yahoo Personals, now snags dates via social networks like Meetup.com. "The big seller is that it's free, so you'll find the community to be larger," says Lewis, a Denver resident.

The shift toward free online services matches a trend shaking up local classified ads. Wherever possible, consumers are flocking to free postings for cars, jobs, and real estate. "There are more and better free personals classified sites than ever before," says Peter Zollman, founding principal of consultancy AIM Group, which focuses on the classifieds business. "And people would rather get something free than pay for it.…It's a vicious spiral from the perspective of a paid site. Over the long term, more of the paid sites face irrelevance."

Paid Personals' Continuing Appeal

Some paid sites are getting hurt more than others. Traffic to Yahoo Personals fell 15% in December from a year earlier, according to Hitwise. In the same period, eHarmony's traffic dropped 61% and True.com's tumbled 68%. At the same time, traffic to Match.com jumped 31% while Singlesnet.com's traffic rose 16%. In November, Match reported its largest hike in subscriptions in seven years. The site may be benefiting from new features, such as the Daily5, which introduces five new matches to every member each day.

Another appeal of paid sites is that they may be able to provide greater security and selectivity for users. A person who harasses another user can be tracked down using credit-card information, for example. Charging a fee can also weed out less serious daters.

For their part, free sites will need to continue signing up advertisers to thrive. Since September, OkCupid has clinched deals with brand-name advertisers such as Colgate-Palmolive (CL). By contrast, fourth-quarter sales at much-larger Match.com slumped 3% to $88.1 million, though membership and profit rose. Even Match.com advertises on free sites in hopes of converting users.

Match.com Has Its Own Free Site

Some paid sites are even experimenting with the free personals market. On Jan. 15, Match.com launched its own free dating site, DownToEarth.com. The site functions a lot like Match.com but also lets people report whether profiles don't reflect reality. Launched in the U.S. in November, DownToEarth.com has jumped from 33,000 members at New Year's to 70,000 on Jan. 28, when it also launched in Canada.

For now, Match isn't worried about cannibalization from DownToEarth. "They [address] fairly different demographics," says Jacob Solotaroff, founder of DownToEarth.com. The free site lures people who are 18 to their early 20s, while Match's sweet spot are users older than 28, he says. "This is a good way for people who've never tried it before to try online dating for free," Solotaroff says. Today, Match is one of DownToEarth's biggest advertisers.

Converting free users to those who are willing to pay may be a hard sell. A user survey at PlentyofFish revealed that an average dater uses three different dating sites before settling on a favorite. Of the current PlentyofFish members, only 15% are also paying for a subscription dating service, while 62% had tried paid online dating in the past, Frind says. That's not the kind of math paid sites want to hear.

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