The bitter truth about Dating Apps

Do Dating apps really want people to find love?

We are living in a dating world.Prospective men and women are looking for relationships through the dating apps.Hence Dating apps are often blamed for the death of the romance. Dating apps like Tinder is usually considered as someone right swiping the photos of nearby singles to find an easy hook up.

Of late dating apps have taken a new meaning to the millennial and are fast replacing the matchmaking apps.Many people are looking for a committed relationship in dating apps.This takes us to a question whether dating apps ensure successful matchmaking and are these platforms solely intended to find their soul mates?

Dating apps revenue models are aligned for serial flings than lasting relationships. This is because more money can be made as customers will keep paying subscription fees.If customers find their partner, then they are more likely to delete their accounts. Hence dating apps would make money being hook up facilitators rather than a matchmaker.

Dating apps are also constantly innovating by using cutting edge proprietary algorithms in pairing up users.At the same time, these algorithms are more of a marketing gimmick because if these algorithms do their actual work of finding the right partner for every person, then it will start eroding their existing customer base faster than they can acquire new customers.

Competition

  • Technology companies like Google and Facebook are known for their innovation. At the same time when a company innovates to come up with a new offering then the incentive for that company is to raise the prices but competition can limit innovation incentives ability to raise prices.
  • In the case of a matchmaking service, if the underlying technology used is able to satisfy the customers then they stand to lose.Hence their incentives to innovate is weakened especially when customers highly value the dating service.On the other hand if there is competition, then the intense competition will reduce the profit margins which will incentivize dating companies to refine their technology offerings for competitive advantage.

Network effects

  • For a dating app to be successful, it is necessary that they have a large subscriber base and a robust underlying technology. At the same time, if the matchmaking is effective then the subscriber base will start to erode.
  • Hence when the dating apps reaches the stage of enjoying a network effect, then they should deliberately weaken their technology so that they can continue to enjoy the network effects.This is the reason why apps like Tinder that have network effects continue to have large number of singles as subscribers.

Customer patience

  • Let us now look at the dating apps from the customer perspective. Whether the customer intent is to find a life partner or a hook up is purely his personal prerogative. At the same time from the dating apps perspective, they would want the customer to stick to their platform for a long period which means that they need customers with high patience.
  • The customer’s commitment will be reflected in the price they are willing to pay for matchmaking services.Customers who are desperate to either get married or find a life partner will pay a premium for a service where as singles who are open about their options generally act stingy.They will be fine with a normal service until they have the urge to find the right partner. In that time they will pay a premium.
  • Hence when customer is patient, then the dating apps is happy and not incentivized to innovate. At the same time if customers are impatient then innovation becomes a necessity.

Dating apps is asymmetric two sided

  • Dating apps connect two different genders in ways that they produce intangible satisfaction.Here we assume dating apps in a heterosexual dating context. When we compare other platforms like Uber or Airbnb, they add value by connecting customers with a tangible product – rooms and rides.
  • We also find that dating apps are not asymmetric.This is because number of men always tend to be on a higher side than the women.In that case it would be prudent if men are charged more than women because men value the dating service more than the women. At the same time, higher competition can compel the dating apps to charge less services for women in order to incentivize them to join their platform.

Final Takeaway

Dating apps may not be incentivized to innovate because they stand the risk of losing their subscribers base.

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