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Online dating

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Tough love

Free dating services are booming, while subscription sites wither

Sep 24th 2014

CUPID s arrow does not always fly true, as investors in the Edinburgh-based

online matchmaking service of the same name discovered on September 23rd.

Cupid, which runs subscription-based dating websites such as Cupid.com,

UniformDating.com and LoveBeginsAt.com, announced 3m ($4.9m) in pre-tax losses

for the six months ending June, an increase of 20% from the previous year.

The problem is that Cupid's lovebirds now seem to be going elsewhere to meet

each other. Although the firm still manages to turn one in every 30 singletons

visiting its websites into paying subscribers, the number of new users has

dropped. At the end of June 2012, Cupid's sites had 113,000 paying subscribers;

by June 2014, they had just 48,000, each of whom pays the company only about

20. Increased competition and a rise in marketing costs to attract and retain

customers has weakened the firm's position, according to Phil Gripton, its

boss. In the first half of 2012 Cupid spent 48p on marketing to attract each

new user across its sites; now it has to spend four times as much. The

development of specialist dating websites for groups as varied as wrinklies and

clowns have also made it difficult for Cupid's main websites to make money.

For all the firm s difficulties, there is no shortage of lovelorn singletons.

Over 7m Britons are actively using dating websites to seek love online,

according to Henning Wiechers of Metaflake, a research firm, up 12% since 2011.

Worldwide, matchmaking is a multi-billion dollar industry. Many have blamed

Cupid's woes on the trend to look for love or simply casual sex on smartphone

apps rather than on websites. In the American market alone, the revenues

generated by dating apps will double within the next five years, predicts

IBISWorld, a market-research firm. The leaders of the pack are Grindr, a

location-dating app for gay men, and Tinder, a similar service for

heterosexuals. These services present the details of potential partners nearby,

and enable those who are mutually attracted to chat or meet up.

The big problem for Cupid is that unlike dating websites, Grindr and Tinder are

free. That, along with their convenience, may be why they are so popular. And

dating websites that are free to use, such as InterActiveCorp's OkCupid.com,

are still growing rapidly. Analysts say all this poses a long-term problem for

fee-based dating sites. And because users of the newer generation of free

services are generally younger than those who use subscription-based ones, the

outlook for future growth is grim.

Cupid's response is to develop its own location-based dating app, called

Tangle, which it will launch in October. It will be free, but it will include

some features that users must pay for. The company will soon find out whether

youngsters think love should always be free.