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The number of U.S. Internet users visiting dating Web sites is falling

Date: 2007-02-10

Valentine's Day approaches, but it seems consumers are being standoffish about online dating.

The number of U.S. Internet users visiting dating Web sites is falling, says a report set to be released Monday.

Last year, only 10% of Internet users visited at least one online dating site, down from 16% in 2005 and 21% in 2002, says the report by Jupiter Research.

The decline in unique visitors hasn't yet resulted in a decline in subscribers, the study found, but the trend likely will at some point, analysts say.

Other research firms track the same trend. Traffic to seven of the top 10 online dating sites declined in the last year, says Nielsen/Net-Ratings. Some fell 30%.

The appeal of online dating may be wilting, says Jupiter analyst Nate Elliott. "The number of visitors has gone down in the last few years, but this is the biggest drop we've seen," he said.

Companies that count on online dating sites for profit and revenue include Yahoo (YHOO) and IAC. (IACI)

Most of the major online dating sites charge members $25 to $35 a month. The number of paying customers to U.S. dating sites has stayed steady. Jupiter says 5% of Internet users polled said they signed up for an online dating service last year, a percentage that's stayed about the same in the five years of the annual survey.

Key To Getting Subscribers

Online dating services, though, need to attract casual visitors.

"The core health of the business has to rely upon getting new users in the door and converting them into subscribers," Elliott said.

Yahoo Personals, a unit of the most-visited Web portal, ended December as the No. 1 online dating site in the U.S. Still, traffic to Yahoo Personals declined 10% to 4.4 million unique visitors in December vs. a year earlier, Nielsen says.

Another research firm, comScore Networks, says traffic to Yahoo Personals declined 24% in the last year.

Visitors to Yahoo Personals are spending more time on the site than ever — a more important measure than traffic volume, said Jason Khoury, a spokesman for Yahoo, in an e-mail.

"The bottom line is that the (traffic) measurement is outdated," he said.

Traffic to AmericanSingles, another online dating site, fell 36% to 1.3 million visitors in December, says Nielsen/NetRatings. For the first nine months of 2006, the number of paid subscribers to AmericanSingles fell 22% from the year-earlier period, to 84,410, the company says.

A company spokeswoman says AmericanSingles expected the decline because it cut its ad spending by $2.4 million to $9.2 million in that span. AmericanSingles can operate more profitably by reducing its ad spending and servicing existing subscribers, says Gail Laguna, a spokeswoman for Spark Networks, (LOV) which operates the site and several others.

"We have been focused on maintaining our marketing at (acceptable) levels by both reducing and being smarter with our marketing spending," she said.

Match Strikes With Ads

Some online dating services, though, are going the other way.

In late December Match.com, a leading online dating site, launched what it says is its biggest ad campaign yet. It didn't say how much it would spend.

The IAC unit has reason to be bullish. Match.com and sister site Chemistry.com ended the fourth quarter with 1.27 million paid subscribers, up 7%. IAC says revenue for the two sites jumped 17% in the quarter vs. the year-earlier quarter, to $79.4 million. Annual revenue rose 25% to a record $311.2 million, says Jim Safka, chief executive of Match.com.

"You look at the iconic brands of the Internet and we are one of the fastest-growing properties there is," he said.

In December, Match.com ranked as the third-most-visited online dating site behind Yahoo Personals and True.com, says Nielsen/Net-Ratings. It had 3.9 million unique visitors in December, down 3% from a year earlier, Nielsen says.

But Safka doesn't put much stock in third-party traffic data. "They never seem to get it right," he said.

Match.com is growing despite raising its monthly fee last year to $34.99 from $29.99, Safka says.

"That tells us that this market is alive, well and vibrant," he said.

Many online dating sites try to attract new members by letting people post personal profiles for free. But users have to pay to contact other members. Most aren't willing to take that step.

Ten percent of the consumers in Jupiter's survey said they posted a free profile on an online dating site last year vs. 11% in 2005.

Online dating sites could be losing ground to social networking sites such as MySpace.com and YouTube, says Jonathan Hurd, a director for Altman Vilandrie & Co., a communications and media consulting firm.

"When you look at the amount of growth these social networking sites have had, it's not surprising that this subtracts growth from other sites," he said.

Elliott disagrees. Social networking isn't the culprit. Online dating sites need to offer more special discounts to lure visitors back, Elliott says.

"People who go to online dating sites go to satiate their curiosity," he said. "Once they have been there and decide it's not for them, they may never go back."

And then there are singles like Michael Corbett.

Following a divorce, Corbett, chief executive of a hospitality services company, tried one service before deciding on using a mostly offline service. That service, Selective Search in Chicago, charges $10,000 for each match.

Corbett would rather spend more money for an in-person service than spend less with an online service.

"I don't trust that online stuff," he said. "I want someone in the middle who speaks to each person, as opposed to a computer program."





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