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Soflex Online is an award winning software and internet
development firm. We have been creating innovative solutions for
24 years. Our product line includes creating turn key solutions
for online dating sites. The Internet's Top Moneymaker? Online Internet Personals Sarasota Herald Tribune - January 10, 2003 Dwayne Fatherree According to a report from the Online Publishers Association, Internet users finally may be ready to pay for online content, as long as they can get a date, make a buck or otherwise amuse themselves. The OPA survey, conducted by comScore Networks, showed that online users paid $975 million for the privilege of viewing content online in the first three quarters of 2002, compared to only $670 million in all of 2001. What's more interesting about the 2002 number is where the money was spent. The big gainer so far is personals/dating, which became the No. 1 content category in the third quarter, surpassing the former leader, business/investment. In third place is the entertainment/lifestyle category. Those three areas make up about $600 million of $975 million spent on content so far in 2002. More than 90 percent of that income was generated from monthly or annual subscriptions, not through individual "micropayments" or one-time purchases. The report showed users are willing to purchase content on a one-time basis, however. Sites in the research and gaming categories reported that most of their income came from one-time purchasers. By comparison, 99 percent of the personals/dating sites were fueled by subscription dollars. The OPA report doesn't draw any conclusions from the numbers, but the figures do fall in line with some thoughts I have had about online content. First and foremost, the categories leading the charge for online content sales are not repackaging existing content. The traffic found on personals sites, business sites and entertainment/lifestyle pages is driven by interactive forums, online-only information and virtual community involvement. Sure, the willingness to pay for repackaged material is still growing (general news sites generate more than half of their online revenues from single-item purchases), but the subscription sales go to sites that have dynamic, constantly changing, one-of-a-kind content, regardless of the source. Second, although the one-time purchase sales grew from $279,000 in the third quarter of 2001 to more than $3 million in the same period during 2002, that method of online content purchase accounted for less than 1 percent of all online content revenue. So, if you want to be an online publisher and actually make money at it, your site needs to have continuous appeal for your target audience. A good story or a couple of cool video clips won't do. Content, in order to drive revenue, has to be fresh, replenished constantly and still maintain credibility and relevance for the user. Third, and last, is the need for manpower to drive the content that will make your site the king of its class. Much of the interest in the personals, business and lifestyles categories is not in professional content, but in the forums and chats available on those sites. It's much easier to let users create content and monitor its appropriateness than it is to have a staff create unique work 24 hours a day. But that community activity must be supplemented with targeted, concise and exclusive content. It's up to the publishers to determine how to direct constantly
shrinking resources to make that content as relevant as possible
for the subscriber in order to grow readership and traffic.
Rarely does anything so firmly considered un-hip manage to slip past the border guards and re-emerge in the realm of the hip. But the Toronto-based Internet company Lavalife did the impossible: it went from being a profoundly un-hip dating service to being an accepted--even stylish--way for young urban singles to hook up. And that success has meant big business. Lavalife is now available in virtually every major city in North America and is measuring its growth at nearly 10,000 new users a day. Suddenly it's cool to be out there, unabashedly looking for romance. BRUCE CROXON, THE 42-YEAR-OLD FOUNDER, chairman and CEO of Lavalife, is maestro of the whole grand revival. Dressed in casual clothes with his sleeves rolled up, he guides me through the Lavalife offices at King and Strachan. They're brightly coloured, with slashes of deep red and burnished gold, and filled with friendly, attractive staffers in their late 20s and early 30s. The space is reminiscent of any number of dot-com companies of a decade ago, with one major difference: people still work here. Between its Web site and telephone service, Lavalife employs over 300. Croxon may project a relaxed demeanour, but his professional history consists of a lifetime of raising capital and launching start-ups. He traces his entrepreneurial bent to his father, who cycled through a variety of businesses before ending up as the owner of a GM car dealership. Young Bruce was raised in Scarborough on the mythos of the self-made man, the belief that a break is just around the corner, that all you have to do is find a need and satisfy it. As a teen, he was sent to Ridley College in St. Catharines, where his passion was rugby. He attended the University of Western Ontario and obtained a BA in economics, but not because he always knew he'd be a corporate exec. "It was the degree everyone took when they didn't know what they wanted to do," he explains. After various ventures in the hospitality industry, Croxon stumbled upon a Kenyan-born entrepreneur named Rasool Verjee. This was back in the '80s, when new computer-based communications technologies were emerging and Verjee was travelling the world hawking them. Croxon and three friends--Ed Lum, Nicholas Paine and David Schamandy--licensed a new phone technology called interactive voice response. Together, they formed a company called Phoneworks and set about making their fortune. PERHAPS IT'S IMPOSSIBLE TO REMEMBER now, but there once was a time without voice mail. IVR technology was a huge innovation, because for the first time it allowed dialers to call up and choose options using their telephone keypads. Phoneworks partnered in the mid-'80s with such businesses as CHUM FM and Toronto Life to crease information lines that would list events or, in the case of this magazine, restaurant reviews by category. Solid, entrepreneurial stuff, and moderately successful, too--but not the apogee of cool by any means. Then Croxon and his partners noticed that callers kept punching "3" on their phones. This option didn't lead to a listing of the newest place for sushi; instead it allowed callers to leave messages and scan those banked by other callers. In other words, users were transforming the information line into an audio equivalent of the personals page of your newspaper. And that made sense: after all, the intonation of a voice, its pitch and emphasis, tells you a lot about whether you might get along with someone--not to mention whether you'd be willing to wake up next to them. Toronto Life became irritated that its restaurant reviews were being ignored in favour of what was essentially a dating service, but Croxon and his partners--all young guys--were on their way. They reorganized in 1990, calling their new service Telepersonals. It reflected their own difficulties meeting women while working 60 or more hours a week, and it took off. They expanded to Montreal and Vancouver. A partner was dispatched each time to set up the service and take out preliminary advertising, mostly in the local weekly, but also in the burgeoning arena of direct response television (now used most often on the ubiquitous infomercials you come across at the end of a late-night movie). An expansion to San Francisco proved the phenomenon wasn't limited to the Canadian market. All that was required was a critical mass of singles in a large, somewhat alienating urban setting. The partners folded their profits back into the company to fuel further expansion, and soon Telepersonals was popping up in four to six cities a year. "It was an incredibly exciting time," says Croxon, "a lot of young people working seven days a week in an exciting environment to grow a company quickly." By the late '90s, the service was active in 40 cities in North America and Australia, generating an impressive $80 million in annual revenues. The phones were ringing off the hook, so the company hired many new staffers and opened a call centre out by Highway 427. Yet telephone dating services never quite managed to escape the stigma that hung over personal ads--and they certainly didn't serve up any of the potent, brightly coloured cocktails that make a singles bar so terrifyingly seductive on a dark and lonely night. The slightly utilitarian approach of Telepersonals also proved a limitation, emphasizing the service aspect of dating services. As a result, the company was stuck between two seemingly contradictory impressions: on the one hand, it suffered from the slightly tawdry associations of the singles scene, while on the other it had connotations of serving those who couldn't otherwise find a date. Losers, in other words. Definitely not cool. THE INTERNET, AS VIRTUALLY EVERYONE knows by now, was a creation of the American military, to enable its scientists to exchange information about weapons systems quickly and efficiently. The intention, at least in those early days, was never to enable singles to exchange phone numbers quickly and efficiently. That just turned out to be the Internet's main purpose. By the mid-'90s, Croxon noticed several upstart dating services appearing on the Web, one of which was called Webpersonals. Though the site was rudimentary in design and hadn't made much of an impact among singles, the Telepersonals crew didn't welcome the competition. In 1996, they bought the site and rights to the name for, according to Croxon, "a low six figures." He then stepped back from the business to enjoy his success, ski and invest in two high-end British Columbia spas. All he while, he kept an eye on Telepersonals. At first, the Web site was little more than a digital replica of the phone dating system, an afterthought, but as awareness of the Internet exploded in the late '90s, so did the site. The telephone side of the business had essential]y plateaued, but the Internet was taking off, demanding a radical change in company thinking. What was going on reminded Croxon of his halcyon start-up days. He rejoined Telepersonals in 2000, and, along with his colleagues, decided to rebrand. The purpose was "to define a behaviour that was already happening, unstructured, within our systems," Croxon says. "This is what people are doing, so let's brand it and organize it." In the decade since the advent of Telepersonals, though, the marketing landscape had shifted radically. Whatever brand the company was going to embrace had to be distinctive. The old Telepersonals might have pioneered the telephone dating industry, and Webpersonals may have faced only a handful of competitors, but the Internet was fast becoming crowded with Web sites dedicated to young, urban singles. Some of those Web sites also happened to be owned by companies like Yahoo! with frighteningly deep pockets. If Croxan and his partners were going to cross over to lifestyle marketing, where the big boys get down and dirty, they had to be sure of what they were doing. And to start with, they needed a name that was, well, cool. NO ONE SEEMS CERTAIN WHO CAME UP with "Lavalife"--or if management does know, they're not saying. Agneta Owen--who joined the company as vice-president, branding and strategic initiatives, for the relaunch and who plays the imperturbable Scandinavian blonde corporate spokesperson to Croxon's boyish CEO--will concede only that it was the product of "internal brainstorming to appeal to a younger target group." Uh-huh. "It wasn't a huge strategic process," Croxon admits. "We generated a lot of names, and at the end of the day, through testing with focus groups, this was the one everybody liked." And the meaning of "Lava" in Lavalife? "It creates a feeling of warmth," he says. "After all, what's a 'Nike'?" Thus did the company manage, in one fell swoop, to free itself from over a decade of deeply un-hip associations. It was the on-line dating service equivalent of the librarian who takes off her glasses, shakes down her tresses and reveals herself as a supermodel. Cementing this discovery of the suppressed hipster inside the geek Telepersonals body are the print and billboard ads of the award-winning Toronto-based agency Zig. The Lavalife campaign sells a style of dating. The ads feature cartoon characters who would be right at home in Japanese anime, unapologetically eyeing each other across pink cocktails. They're better dressed and more self-assured than you are; how can you not want to jump inside and hang out with them--even if they are only animated? Croxon and Owen were careful to advertise in places where singles congregate. Hungover after too much partying? The Lavalife subway ads remind you how much fun you had last night. Alone at the end of the evening? The Lavalife girl peers out at you from above the urinal just before you head home to log on. The Lavalife advertising is no accident. It does exactly what hipsters have done since the emergence of pop culture: congratulate each other for being cool. You're now a member of an exclusive club, it whispers--yet, mysteriously, it's also a club that's so well subscribed that you stand a chance of actually finding that special someone. The advertising promotes a feeling that's both giddy and strangely comforting, a rare combination. LAVALIFE HAS ENJOYED A STUNNING growth rate of over 100 per cent for each of the past four years. This fiscal year's revenues are $125 million, up 25 per cent from 2002's. The company is now active in over 65 cities, from New York to Austin, Melbourne to Winnipeg. Then there are those 10,000 new Lavalifers a day--an important stat if your business relies on the perception that it's a shortcut to finding that needle in the romance haystack. The success of the company isn't entirely a product of marketing. Lavalife was the first among its competitors to be based on a credit system, as opposed to a monthly subscription. Developed by Lavalife based on its experience with Telepersonals, the credit system lures users in by giving them a tantalizing taste of what the site has to offer. Here's how it works: Without paying a cent, you enter a user name and obtain a password. That allows you to create a profile with basic information about yourself, a brief statement and a photo (optional). You can then choose to be listed in one or more of the site's three categories: dating (short term), relationship (long term) and intimate encounters (maybe 20 minutes). Owen admits that initially the categories divided along gender lines, with men seeking quantity and women interested in quality: "Maybe exploring the intimate encounters category is a natural thing for guys, but they quickly realize that isn't where the women are. So they move over." It's possible to send "smiles"--Lavalife's cyber-flirting--and reply to mail you've received, still for no cost. What does cost, much as in life itself, is going beyond searching and flirting to reaching out and initiating communication with another human being. Sending a message to someone requires a credit; $14.99 (U.S.) buys 60 credits. (Given the meagre cost of credits, the company's high revenues illustrate just how much men and women, even in this electronic age, still really want to talk to each other.) Also essential to Lavalife's success is the perception that it's cooler than other dating services, such as Match.com and Yahoo! Those sites give off a less stylish feel. For one thing, they market themselves with testimonials from people who met on the Internet and are now exchanging vows. "They promote the end-game," says Croxon, "the walk down the aisle. It's very functional, very serious. Lavalife is definitely more about the journey than the end. You can do a lot of socializing that doesn't necessarily have to do with finding the love of your life." Plus, even with their enormous financial resources (Match.com is a subsidiary of Barry Diller's media empire, and Yahoo! has dominated its corner of the Internet for years), their sites look hopelessly outdated. They're, like, so 20th century. Several of them are trying to catch up. Sites like Nerve.com are starting to follow Lavalife's lead by adopting a pay-as-you-go system. Some of the larger services are becoming, in Croxon's terms, "flirtier," and their publicity now concentrates on the idea that on-line dating is fun. Still, last winter, when Paramount Pictures wanted an innovative way to promote its faux-hipster romantic comedy How to Lose a Guy in 10 Days, it went to Lavalife. It was a straight cross-promotional deal in which the Lavalife logo was included as a sponsor in advertising for the film while the site included a banner promoting its release. Lavalife had a cachet the other sites lacked. Problem was, the film was nowhere as cool as the Web site promoting it. Which brings up another point: the purpose of being cool is that not everyone partakes of your charms--in fact, perhaps the quickest route to mundaneness, as countless rock stars have discovered, is popularity. The most popular girl in the class and the coolest were never, ever the same. IF SUCCESS--RAMPANT, UNHINGED, UNCONtainable success--threatens to take the edge off the cool Lavalife vibe, the company has a serious problem, because expansion is inevitable. The Internet knows no borders, and already Lavalife has seen a surge of users from Europe log on to find that perfect someone in San Francisco or Austin or Portland when they stop over on a business trip. Like so much of the Web, Lavalife is driven by the need for immediate gratification. As Cruxon says, "The site is about 'Who's on-line now, because I really want to hook up tonight.' That's what drives it." The birth, or rebirth, of Lavalife has tempted back a couple of the old partners. Nicholas Paine, who took off to live in London, England, is heading up European and Asian expansion; and Ed Lum, who spent some of the intervening years creating video games, takes a particular interest in the site's design. Croxon himself is currently working on the third round of private financing so that Lavalife, can pursue acquisitions and expand further into mobile messaging. When he talks about the old partners collaborating again, it sounds a little like some half-forgotten Eastwood movie. Yet only 15 years have passed since they first set out in business together--an eternity in the technology age. The fastest-growing group on Lavalife is the highly sought-after 19-to-25 cohort, which comes as a big surprise. The presumption had always been that older singles, those staring down the prospect of a lonesome middle age, were the natural targets for dating services. Kids, everyone assumed, had school, plus all of pop culture--concerts, indie movies, clubbing, drugs--to bring them together. Why would they need Lavalife? But 19-to-25-year-olds are more interested in cool than anybody else, and, of course, they have the greatest comfort level with the Internet. So what happens as that age group grows older, marries, has children, divorces? (Croxon himself is now married and has a new baby.) Does the brand grow with its clientele, or is it best to stay forever young, forever cool? It's an issue definitely on everybody's minds at Lavalife: "There's nothing wrong with being the Gap--a service for people who are young at heart," says Agneta Owen, only slightly defensively. Cool is a fickle thing. Cool moves on. Cool looks for the next
discovery. Cool is unforgiving. That's why it's cool. Those who
ride the wave for the longest time like, say, Madonna of Batman--do
so by reinventing themselves for each successive generation. They're
protean creatures, constantly shape-shifting, and their success
stems from our fascination with what conjuror's trick they'll pull
from their sleeve next. It's a heavy burden to carry, being cool,
and eventually it exhausts you, but Bruce Croxon's not complaining.
After all, he endured all those years of being uncool, and cool
is definitely better. Userplane's Michael Jones Welcomes Comcast's VOD Offering to Sector, Addresses Recent Jupiter Report on Growth of Online Personals Market WHO: Michael Jones, newly elected chairman of IDEA OASIS, the Based in New York, IDEA OASIS -- the Internet Dating Executive Alliance/Online Association for Social Industry Standards -- includes individuals involved with web-based businesses for online dating, social networking, niche-community and common interest sites, weblogs, face-to-face meeting sites, social analysis sites, social network sharing sites and business social network sites. IDEA OASIS promotes ethical social networking and online dating management for members and to the online community at large. About Userplane Based in Los Angeles, Userplane is the premier provider of enterprise
social software for online communities. Userplane Apps are elegant,
easy to use, and rapidly deployed Web-based applications. Leveraging
Macromedia Flash, the Apps are lightweight, cross-platform with
nouser installation, and customizable for a site's specific needs.
Userplane Apps are deployed internationally on sites ranging from
onlinecommunities to intranets. The application suite reaches tens
of millions of users and supports more than three million live conversationsa
month in twelve countries. Userplane continues to provide forward-thinking
Web and software development for industry-leading clients including
Red Bull, Honda and 1-800 Flowers.
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