Over the years, the path to a date has changed from meeting someone on the streets, to asking someone out on the phone, towards dating websites and now dating apps.
Dating apps can be categorized as platforms for four reasons. Firstly, dating apps promote interactions between different partners in a multi-sided market through a separation by gender. Secondly they are open to join for anyone (who has a smartphone). Moreover, they scale much faster than a pipeline business because there is no costs of external production. Lastly dating apps exhibit its own architecture and rules about how users communicate with each other, for example Tinder’s well-known swiping matching system.
Platforms, such as dating apps, exhibit network effects as every new user makes the app more valuable. In this case, it means the more choice a person has in picking the perfect match, the more valuable the app to him or her, attracting new people and revenue to the app.
Although there are many dating apps available now, is it likely that this is going to transform in a winner takes all market or a multi-homing market? Three characteristics determine this question. Firstly, the value of the app increases with the amount of users, so the network effect is very strong. Secondly, multi-homing costs, so the costs of using multiple apps, are low. After all, social media login which most dating apps exhibit, makes it easy to set up an account. Lastly, demand for different features is high because people have different ideas about who they want to date. This explains the success of dating apps who purely focus on young professionals (Inner Circle), or only people who one meets in real life (Happn). All in all, multi-homing is expected to stay.
Let us take a look at the business models of two dating apps: The value proposition of Tinder is that it empowers users around the world to create new connections that otherwise might never have been possible. The revenue model of Tinder is the so-called freemium model – basic features, such as swiping and chatting are for free, but users have to pay for extra features. On top of that, Tinder earns money via selling ads. The value proposition for Happn is that it provides dating for people who value a real life connection, so it only displays people who one has physically met (through GPS-tracking). Happn also uses the freemium model. One can pay for extra features such as sending notifications to people one likes.
Rapid expansion of the mobile dating platforms also suggests further changes in the industry. Given many privacy issues these days, dating apps will focus more on creating trust. Additionally, dating apps will open up and allow other apps to access users’ accounts, as third-parties can help dating apps to innovate faster and target new segments to increase long-tail profits. In the meantime, other players such as Inner Circle will move towards targeting niches in order to compete with the mass audience apps.
Sources:
http://brainz.org/history-online-dating/
https://www.psychologytoday.com/blog/the-digital-self/201009/history-the-digital-self-the-evolution-online-dating
http://www.abc.net.au/catalyst/download/PSPI-online_dating-proof.pdf paper
http://expandedramblings.com/index.php/tinder-statistics/
http://www.datingsitesreviews.com/staticpages/index.php?page=Tinder-Statistics-Facts-History
