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Online dating

2014-09-25 13:08:21

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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.