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Online dating: The economics of love

Matchmakers hope science boosts bottom line

As Valentine's Day arrives, the online dating business is in the midst of an extreme makeover.

Internet dating was once scorned as the last resort of nerds and losers. No more: About 16 percent of all US Internet users -- or roughly 33 million people -- visited a dating site in 2006, according to JupiterResearch, and Americans spent $650 million last year on digital hookups.

But only about 5 percent of US Internet users purchase paid subscriptions to online dating services, and that percentage has hardly budged for several years, forcing industry leaders and tiny start-ups alike to try new gimmicks to coax more revenue out of existing customers and attract new ones.

EHarmony.com of Pasadena, Calif., is fighting back with science.

Founded by psychologist and marriage counselor Neil Clark Warren, the company is best known for its high prices -- $60 a month -- and its questionnaire. Members must answer more than 400 questions; the answers help eHarmony select the most likely candidates for romance.

Now eHarmony has just launched eHarmonyLabs -- a romance think tank where Ph.D. psychologists hope to quantify the secrets of lasting relationships. The lab is undertaking a five-year study of married couples to determine the traits that make for long-term bliss. The lessons learned will help eHarmony improve its matching criteria and find better partners for its members. "The better we can make our matching model, the better our business will do," said chief executive Greg Waldorf.

EHarmony is perhaps the most marriage-focused dating site. Waldorf proudly cites a Harris Interactive survey that found that 33,000 eHarmony members married each other in 2005 -- over 90 marriages a day.

Last February, the company launched eHarmony Marriage, a guidance service for people who've already found a mate but need help making the marriage last. For $49.95, couples get a questionnaire that helps identify problems in their marriage. For a monthly $49.95 subscription, they can access online video exercises that teach relationship repair techniques.

Match.com of Dallas, a business unit of IAC/InterActive Corp., is also making some moves. Prices at match.com, the leading dating site with about 15 million members worldwide, range up to about $30 per month. Last year, the company hooked up with popular TV psychologist Dr. Phil McGraw.

Subscribers who pay about $9 a month extra can receive video and audio messages from Dr. Phil, as well as specialized dating advice.

"If there's any remaining social stigma to this category, dating online, we wanted to put an end to it once and for all," said Jim Safka, chief executive of Match.com. "Dr. Phil -- it doesn't get more mainstream America than that."

Match has also copied eHarmony's questionnaire-based matching system in a service called Chemistry, developed with the help of a cultural anthropologist. As with eHarmony, Chemistry subscribers are only introduced to people whose test results indicate they're a good match. Match has hired Jay Manuel, one of the stars of the TV series "America's Next Top Model," to help members attract more suitors. Manuel suggests that members post appealing photographs with good lighting and creative camera angles and upgrade their personal profiles with short, revealing anecdotes.

In addition, Match has launched a new advertising slogan, "It's Okay to Look," along with ads featuring happy subscribers, including a 72-year-old widow from New York.

Safka welcomes customers of all ages, but he said that Match is more aggressively reaching out to aging baby boomers. "The segment of people who are over 50, that traffic is growing rapidly," Safka said. Meanwhile, the 18-to-25 crowd seems to be losing interest. "Those people are going to MySpace," the popular social networking site, said Safka.

Some companies hope to gain a foothold in the dating market by targeting narrow niches -- single Christians, Jews, liberals, or conservatives. But Hotenough.org of Nutley, N.J., has chosen an especially challenging market. This site charges $29.95 for the first month and $9.95 a month thereafter. But it accepts only unusually good-looking men and women. Applicants must pass muster with existing members, who rate their looks on a scale of 1 to 10. The applicant must get 25 votes of 8 or more to be admitted.

"Ninety percent of the sites are composed of not very attractive people," said Hotenough chief executive Jason Pellegrino, who claimed that the truly gorgeous have been neglected by online dating services. "I look at it as filling a void in the industry." he said.

But Harvard-trained mathematician and entrepreneur Sam Yagan thinks fee-based online dating services are doomed. His company, Humor Rainbow Inc., runs OKCupid.com, a dating site that relies on advertising to pay the bills, while charging its members nothing.

Like eHarmony or Match's Chemistry service, OKCupid uses a series of questions to identify good matches. But many of the questions are created by members.

Members have submitted about 10,000 questions to OKCupid, ranging from politics and religion to a person's taste in furniture. "As you answer more and more of these questions," said Yagan, "you personally are creating your own algorithm about what constitutes a good match for you."

That algorithm is combined with OKCupid's own mathematical techniques to produce a list of likely new friends.

JupiterResearch's Elliott thinks free dating sites have too few members to offer a good variety of matches.

Besides, there's the question of commitment. "If someone's going to the trouble of paying for a dating site, then you can surmise that they're more serious," he said. But "it's easy to sign up for a free dating site and then forget all about it."

Still, Yagan thinks OKCupid's combination of mathematical wizardry and low cost will eventually make it the Google of online dating. "The combination of better and free is unstoppable," he said.

Hiawatha Bray can be reached at bray@globe.com.

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