Hot or Not Changes Business Model

Katie Fehrenbacher from GigaOM has the story:

Hot or Not, the online dating and rating site, is about to end its main revenue stream — subscriptions — and focus instead on online ads and transactions, like selling virtual flowers. Hot or Not founder James Hong, who has gotten rich off of the subscriptions of his cash-cow, emailed us to say that the company plans to soon make its subscription-based ($6 per month) “meeting” section free to users. (…)

Hong says the online dating industry is reaching a “strategic inflection point” as the growth of the amount of paying subscribers for these sites becomes saturated and are forced to generate more revenue from existing subscribers. Over the long run, the result is fewer new subscribers, and a disappearing userbase, Hong says.

It’s not necessarily a new idea. While subscription-based online dating is still the dominant business model, we have covered free online dating sites PlentyofFish, OkCupid, and Iminlikewithyou.com. And Hong admits that they are a little late into the free ad-based game, but that “we are optimistic that it is not too late for us to change, as long as we have the courage (or insanity) to do so.” (…)

What it means: it usually takes large “cojones” to make such a move, i.e. reinventing yourself as you see your industry reach a ceiling and possibly a declining point. Reminds me of the BCG Matrix, where eventually you have to take your cash cows and either transform them into a new rising star or they become dogs. Makes me thing of Kodak, who did not see the inflection point. Makes me think of traditional media as well. TV, Radio, Newspapers, print directories. How do you know when you’ve reached a ceiling and face a declining future in one of your core products? And have you invested enough to be prepared for that moment? Many questions, but no easy answers. James Hong offers some perspective in his blog on why he can “afford” to do this move.

2 thoughts on “Hot or Not Changes Business Model

  1. It’s undeniable that this move away from the paid subscription model in the online dating industry is absolutely true! I think it is very important to include in the conversation what the consumer experience has to do with the trend. The online dating industry leaders such as match.com and eharmony haven’t been able to innovate an offering that adds up to a better, more successful dating experience for the consumer. The subscription based and the advertising based business models are offering essentially the same thing! So of course, why pay for lemons if you can get them for free?

    What do you think would happen if the dating site offered something that actually meant more success for the customer whether they paid or not? Customers would flock to that offering and pay if they had to. Why? For the simple reason that they are getting their most important personal needs met.
    Compatikey represents that kind of value, with the radical new approach to understanding and defining Compatibility from each individual’s point of view. The concept is simple, the subscriber uses it to see and understand what didn’t work for them in their own current and past relationships. The visual result matrix presents images representing the subscribers past relationships showing the degrees of invisible sameness and difference that defines each. The majority of people show a clear pattern of attraction to one or the other, and once they see the pattern the choice is clear. Yes invisible differences can feel exciting, but when your track record shows that pattern to be unsuccessful, you have the option of identifying and choosing different degrees of the opposite.

    Compatikey.com has the capability of redefining the landscape of online dating and social networking. The question is which companies have the vision and courage to offer it to their customers? Compatikey.com

  2. It’s undeniable that this move away from the paid subscription model in the online dating industry is absolutely true! I think it is very important to include in the conversation what the consumer experience has to do with the trend. The online dating industry leaders such as match.com and eharmony haven’t been able to innovate an offering that adds up to a better, more successful dating experience for the consumer. The subscription based and the advertising based business models are offering essentially the same thing! So of course, why pay for lemons if you can get them for free?

    What do you think would happen if the dating site offered something that actually meant more success for the customer whether they paid or not? Customers would flock to that offering and pay if they had to. Why? For the simple reason that they are getting their most important personal needs met.
    Compatikey represents that kind of value, with the radical new approach to understanding and defining Compatibility from each individual’s point of view. The concept is simple, the subscriber uses it to see and understand what didn’t work for them in their own current and past relationships. The visual result matrix presents images representing the subscribers past relationships showing the degrees of invisible sameness and difference that defines each. The majority of people show a clear pattern of attraction to one or the other, and once they see the pattern the choice is clear. Yes invisible differences can feel exciting, but when your track record shows that pattern to be unsuccessful, you have the option of identifying and choosing different degrees of the opposite.

    Compatikey.com has the capability of redefining the landscape of online dating and social networking. The question is which companies have the vision and courage to offer it to their customers? Compatikey.com

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