Hot or Not Goes Free

41 Comments

Hot or Not, the online dating and rating site, is about to end its main revenue stream — subscriptions — and focus instead on online ads and transactions, like selling virtual flowers. Hot or Not founder James Hong, who has gotten rich off of the subscriptions of his cash-cow, emailed us to say that the company plans to soon make its subscription-based ($6 per month) “meeting” section free to users.

Why would they kill a service that 15 percent of people who try are willing to pay for, and has resulted in “multi millions of profits per year”? Hong tells us free is the future.

Free sites are destroying pay sites (at least the ones that do not have extremely powerful network effects.. which dating sites generally do not because users can (and often do) join multiple services.). . . Sites like Match.com, Yahoo Personals, etc.. are going to be in a lot of trouble.

Hong explains it as when the company started out in 2000, subscriptions were the only way for a tiny site like theirs to survive. But as ad-targeting improved, and ad dollars moved online, ad pricing has reached the level where an individual or a streamlined small company can make a significant profit.

Hong says the online dating industry is reaching a “strategic inflection point” as the growth of the amount of paying subscribers for these sites becomes saturated and are forced to generate more revenue from existing subscribers. Over the long run, the result is fewer new subscribers, and a disappearing userbase, Hong says.

It’s not necessarily a new idea. While subscription-based online dating is still the dominant business model, we have covered free online dating sites PlentyofFish, OkCupid, and Iminlikewithyou.com. And Hong admits that they are a little late into the free ad-based game, but that “we are optimistic that it is not too late for us to change, as long as we have the courage (or insanity) to do so.”

Hong has made enough money off his site to afford to take risks. And the employee base is small enough, with no venture capital, that the company has some room to monkey with the recipe.

41 Comments

hugh

WTF, its 3/4/08 and im still paying. i guess my credit card didn’t get the memo… seems like a big lie to me, or is it just free for the chicks like everything else.

imagine

Free is the Future. Just look at Plentyoffish site. Would you rather have 15% become paying, or 100% being marketed to. Sometimes the sure thing is the lowest payout.

suzan

some peolpe just need to know if their hot or not so that they can feel good about themselfs

online dating ireland

As far as i know they are no longer free and have issued a message to all members stating that they couldnt handle the abuse the system was getting.I run a couple of dating sites and free sites are a mecca for 419 scams spam ect also the revenue generated by making hot or not free wouldnt touch what they where earning from subscriptions.

Jeannie

As a long time moderator of HotOrNot I have seen many changes over the years. As for being free letting in the trash this is not the case. It just makes it easier for the trash to talk to you :P You still have the option to say no to people. I don’t agree with the J’s turning the site from “Fun, Clean, and Real” into a free for all porn site in the last couple years though….

Motorcycle Guy

This guy is doing what every other web company should be doing. Generating real revenue and not having to depend on being “bought out”.

Markus

To equal their subscriptions revenues hotornot needs to capture between 25 and 50% of the current dating industry in the US.

I did it but I did it by becoming a leader or top 4 in every english speaking country. Free isn’t so easy and the dating industry is actually pretty small.

CM

Hot or not is soooo old. Why is this even news? eHarmony is a much better dating site and new sites like Campusrank have features that are much more attractive to young singles.

GigaOM just jumped the shark. Bigtime.

live tv

Yea free will mean they compete even more directly with their competitors. I’d hate to be in the dating site game right now, because they’re all going to get whalloped.

Neil

Free is not the future, free is the past. Subscriptions are also not the future.
The future is “mixed”. HoN will still have pay features on the site, all they are dumping (and rightly so) is the subscriptions model which basically strangles their user base.

Damon Billian

“I as a marketing consultant, agree that free websites are destroying the pay ones. Who would like to pay for services and facilities that are available at next door for free?”

Hi Pramela,

A recent article about Adult Friend Finder shows why making people pay is pretty good.

http://money.cnn.com/magazines/business2/business2_archive/2007/04/01/8403370/index.htm

“The more niche you get, the more value per member,” Conru explains. “People pay money for a filter.” He wasn’t bothering to charge members of his religious dating site, BigChurch.com, until the guy who ran it insisted. Registrations jumped immediately. “He was right,” Conru says. “On the Web there are not enough filters for sincerity.”

I do admire James for making a gutsy decision & walking away from that money…let’s hope things go well for them…

mtpuma

I can’t believe people still visit Hotornot, much less pay for it..?!

brian

Wasn’t there a movement about 10 years ago for offering everything for free? While i like many free services and ad-based revenue models, I don’t think it is the way of the future. It’s just another option for SMART web companies.

Tog

I’m not so convinced that “free” (in quotation marks because you are basically selling your eyeballs) is the way to go with these types of businesses. In my opinion, there has to be a line drawn somewhere that divides high quality and low quality products.

There are quite a few services that I would prefer to pay money rather than see ads all the time. Photo sharing is one of these.

The other problem with “free” sites is that it generally lowers the quality of people using the site. Paying a subscription means that the people who do are serious about it. They aren’t looking for a quick laugh at someone’s expense or to simply try it out for a day or two.

FOD

Going free is a bold and somewhat risky move, but I think a free dating site can still make good money, as long as the traffic is there.

Coogie

I’ve met a number of very intelligent and attractive girls on hotornot and the biggest reason for that was that just the idea of having to pay 5 bucks a month automatically scared away all the unemployed guys in bands, potheads, and other gutter trash that myspace is saturated with. Most girls I know don’t even answer their emails on myspace because they get so much spam, losers, and trash. In contrast, hotornot had a nice little nitch where you saw the person’s picture and a little about them and if you liked you could talk if you didn’t, you didn’t have to and nobody’s feelings would be hurt.

P. G.

I think AOL has really set the lead when it started shedding subscriptions and focusing more on Ad revenues. Good move for HotorNot in this very competitive marketplace. Let’s see how it does.

Michael Wales

This is good news! In August of 2005 a girl and I “matched up,” she was moving into the area and needed someone to show her around and what-not.

In December of 2005 we were married and we’ve been happily ever after ever since!

dave mcclure

james is a smart guy, and willing to take risks. he may not figure it out right away, but give him a few tries and i bet he’ll find a workable solution. james is one of the more creative entrepreneurs i’ve met out there… and a big heart to boot.

good luck to him :)

Aaron Dragushan

Bret: I agree, hot or not is very unique, and will probably coast along nicely as long as they don’t mess with their basic premise.

PRAMELA - MARKETING CONSULTANT

For a dating and rating site like hot or not, to move to an ad based business model, really makes sense, its the “FUTURE”,
I appreciate the vision of James Hong, to foresee the trends for online dating.

I as a marketing consultant, agree that free websites are destroying the pay ones. Who would like to pay for services and facilities that are available at next door for free?
The online ad’s sometimes create hassles for easy navigation and are not always liked by the user’s, but till the time no one has to pay for his pocket, they accept them.

Well I wish Good Luck for James Hong, for undergoing the risk of converting their business model from subscriptions based to free-ad based one.

Bret Terrill

I applaud James for making a risky move, especially with a successful service. However, simply adapting a free business model, might not be the best route to growth. Marcus Pincus, the founder of Plentyoffish – the largest free dating site – has indicated on his blog that dating sites are being cannibalized by social networks. People, especially younger people, prefer to use Facebook and Myspace for dating. In fact, Marcus has said that he’s looking to shift his business model as well.

Fortunately, Hot or Not is unique in its approach to dating, and has passerby appeal to people who aren’t looking for a hookup. I expect it will endure when other traditional dating sites fall by the wayside.

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