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Millions of people use the Internet to find love. Whether searching for a mate for life or just one night, they are fuelling an industry that rakes in $700-million annually in North America, and is seeing a continuous stream of new players.
Canadian companies -- from Lavalife to plentyoffish.com -- have made a huge mark in this space. Some would argue Canada is the capital of the online dating business, with many of the leading trends in the industry taking shape here first.
"Lavalife is an institution," says David Evans, who runs the blog Online Dating Insider. "Peoples' grandmothers know Lavalife." Lavalife, which was sold in March, 2004, to U.S.-based Vertrue Inc., for about $150-million, was the start of it all. In the late 1980s, a Toronto-based company called Interactive Media Group started a telephone dating service, one of the first of its kind in North America. Growth was explosive and the company eventually expanded across Canada and into the United States.
As the Internet spread, IMG launched a Web dating service to complement the telephone service, and as the '90s wound down, the company determined it needed a new brand to leverage its now substantial advertising across both platforms. Former employee Lloyd Mac-Neil headed that project, and was involved in creating the company's new name--Lavalife.
"[It] was originally intended to be a brand created around, and for, singles," says Mr. MacNeil. "Lavalife was saying, 'it's OK to be single.' "
The brains behind Lavalife -- which today pulls in more than US$100-million annually in revenue -- didn't fade away once the company was sold. Former Lavalifer Mitchell Solway, for one, has taken that pioneering experience and parlayed it into a dating site targeting single parents. He says 25% of North American singles are parents, and 40% of online daters are single parents. He wouldn't say if his site, Single Parent Love Life, is profitable, because the company is "still in the early stages."
But while Lavalife in the early days chased a broad demographic -- basically anyone who wanted to find a date -- the new crop of online dating sites are wooing specific niches with a variety of business models. Lavalife originally sold users credits that could be cashed in to contact other members, a unique system at the time. The site recently switched to a subscription-based system.
Single Parent Love Life charges users a low subscription fee to weed out people who just want to look and targets advertisers to bring in the lion's share of revenue. "We're taking sort of a contrarian's approach to both free and paid sites," says Mr. Solway. "We still want a low enough price to serve up the mass and quantity for our customers and advertisers in a tough-to-reach niche market."
The Canadian dating site making the biggest splash at the moment is Plentyoffish.com. The founder and sole operator, 29-year-old Markus Frind, runs the site from his West Vancouver apartment. He hit the jackpot by making his site completely free. Started in 2003, it is now the third-most popular dating site in North America, according to Web traffic tracker Hitwise. The site pulls in more than US$5-million a year from text ads that appear beside user profiles.
Another Canadian dating site attracting its share of attention is Toronto-based Ashley Madison Agency. The site delivers
its customers a dating pool filled with people all looking for the same thing: a relationship outside of the one they are already in. The site's motto is "When monogamy becomes monotony."
"The more you actually make your site cater to people of like mind, the more you can charge. So, from a business perspective, there's a lot of value there," says Noel Biderman, chief operating officer at Ashley Madison. He says the best-focused sites are able to charge the largest premiums and attract the most loyal followings.
He describes Ashley Madison as "wildly profitable," saying it has earned around $20-million since beginning operations five years ago. The company employs about 30 people with 1.35 million users registered. (Small numbers compared with U.S. heavyweight eHarmony, which claims 12 million memberships. But measuring a site's popularity based on registered users can be tricky -- some people sign up and just browse without ever paying a cent.)
Ashley Madison uses a pay-as-you go system. Mr. Biderman says his narrow target market -- wandering partners and spouses --may mean fewer overall users, but a more attractive group. "People want as much filtration as possible, that's what you learn in this business," he says. "And the more you can provide that to them, the more successful you'll be."
The key for dating sites looking for niche markets is finding the right one, says Mr. Evans. "It has to be a clearly defined niche market," he says. "There are, like, 50 golfing dating sites. How do you know which one to go for?"
He says the future of online dating sites lies in the realm of social networking, with sites like Facebook enjoying explosive growth. Ideally, a person would have one dynamic profile that can be updated and appears simultaneously on a number of different dating sites. He is less certain about innovations like cellphone-based dating services or online video. "The minute a guy has a video camera on him, the pants come off," he says.
If the future does indeed include technology that transforms the traditional dating site into online communities of people with the same interests, Canadians may again be at the forefront.
Last year, Vancouver-based Utherverse went live as an online 3-D adults-only virtual universe. Users pay a monthly subscription to interact in virtual environments like the Red Light Center, modelled after Amsterdam's Red Light district, in which online characters called avatars can rave, smoke dope and engage in intimate encounters of the cyber kind.
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