Free to Revenue Generating back to Free?

May 8, 2007 at 5:48 pm Leave a comment

Hmmmmm. I never thought I would ponder the business realities of Hot or Not? But so it goes in the wild world of the internet.

It seems that Hot or Not started as a free website in 2000, and six years ago moved to a pay feature that allowed you to sign up for dating at a cost of $6 per month, thus allowing you to meet the Hotties or Notties. Also with the combination of dating and virtual flower sales the site was bringing in $600,000 per month.

So what would you do if your site produced $600,000 a month?

How about, get bored, switch it over to a break-even investor driven free web site? That’s what Hot or Not did.

Here is a link to James Hong’s blog that discusses the change to free and how the move is to “facilitate relationships” on a much larger magnitued : http://james.hotornot.com/2007/03/return-of-free.html 

Due to “said boredom” and “pressure and competition” from free similar services – the Hot or not guys did switch the paid services to free. Completely inhialating $500,000 in month in what appeared to be pure profit (via Tech Crunch):

In the last year though a few competitors have popped up (see yesnomayb, a copy of the business model) and a number of free dating sites also started to eat away at traffic. Traffic started to drift sideways, and the developers were getting bored at doing little more than site maintenance.

So… there it is. Dumb? Brilliant? Will the traffic generated be worth the same revenue later? Would they have lost that much market share? Should they not have taken the revenue and invested in other business features that would have more legs?

I don’t know if these guys are married… but my life would be in danger had I made a similar decision.

I just don’t see how the ad revenue compares. And I am believer in paying for services that are acutally worth money. To me – I could care less about dating…. but someone (many someone’s) out there is willing to pay $6 a month.

Let’s hear it? I understand the allure of free to increase viewership, but what is the point? What is the point of business?

Entry filed under: Uncategorized.

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