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Online Dating Losing Steam, But Not for Valentine's Day

By Mike Musgrove and Frank Ahrens
Washington Post Staff Writers
Saturday, February 12, 2005; Page E01

While Internet dating services such as Match.com and Yahoo Personals represent the largest category of paid content online, the thrill may be waning for the once-torrid market. Have the online matchmakers done their job too well?

Hopeful singles still flock to online dating services such as Match.com, owned by InterActiveCorp -- the company reported a 9 percent increase in paid subscribers in the third quarter of last year, compared with the same period of 2003.

But the business appears to be cooling off. Revenue for the personals division in the third quarter of 2004 was up 3 percent, to $49.7 million, compared with the same period of 2003, but operating income was off 37 percent, at $2.8 million. The company explained the drop was due to higher marketing costs and other expenses needed to attract customers, which are expected to continue, it said.

As a business, Match.com, the largest of the online dating sites, is dwarfed by InterActiveCorp's other ventures, such as its travel Web site, Expedia.com, which booked $570.5 million in third-quarter revenue. Chairman Barry Diller, a Washington Post Co. director, said his company plans to spin off its travel businesses later this year.

Jupiter Research, which focuses on Internet analysis, forecasts that the online dating market will increase 9 percent in 2005 to $516 million, a dramatic, if inevitable, falloff from the heady early days when the industry was new and reported growth rates of 70 or 80 percent each year.

January and February are the busy time of year for dating sites. Match.com LP spokeswoman Kristen Kelly said that this month, roughly 50,000 people have been registering at the Web site every day.

"We call it the New Year's resolution phenomenon," she said.

For online matchmakers, there's more competition than ever, and growth might depend on sites slicing off market share from their rivals. Other, more specialized Web sites have attracted singles looking for a more defined dating pool, such as JDate.com, which bills itself as "The Largest Jewish Singles Network." And other companies are still trying to figure out how to get into this business; Comcast Corp., for example, is launching a new video-on-demand service on Monday called Dating on Demand. Digital-cable subscribers who are seeking dates will be able to download videos of singles and upload their own videos.

Then there are the free options, such as the Washington version of the popular Craigslist Web site. There are plenty of lonely procrastinators still seeking a dinner companion or more for Valentine's Day -- though the invitations are a little on the R-rated side and do not include much verbiage about walks on the beach.

Or there are options for the cynical at heart. Web sites such as www.meish.org/vd let Web surfers send "anti-Valentine" electronic greetings, such as:

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