Facebook's Dating Service Could Become Multi-Billion Dollar Business. And Launch Subscriptions?

Keeping its eye on the prize - which is growing demographics attractive to advertisers. JL

Kurt Wagner reports in Re/code:

Facebook doesn’t plan to make money from its new dating feature. (It) seems content to let Dating serve as a reason for young people to open the app and allow Facebook into their personal lives.But like everything Facebook launches, there is potential. There are 200 million people on Facebook who identify as “single.” That’s a  small percentage of Facebook’s 2.2 billion users, but an enormous audience for a dating service. The company will try to find a way to turn that audience into a business, and Tinder has proven that people will pay a fee for extra features that might help them find dates

Facebook wants you to know that its new dating service isn’t like Tinder.

“This is about building real, longterm relationships, not just hookups!” CEO Mark Zuckerberg said when the product was announced back in May — an obvious jab at Tinder and its reputation as a hookup app. “We don’t want this to feel like a speed-dating session,” said Nathan Sharp, the Facebook product manager building the service, in an interview with Recode this week.

But while Facebook doesn’t want its new dating product — which rolled out in its first market, Colombia, today — to emulate Tinder’s user experience, it might be in Facebook’s best interest to emulate Tinder’s business model. Match Group executives say Tinder, which generates almost all of its revenue from subscriptions, will bring in more than $800 million in revenue in 2018.

Facebook

Facebook Dating isn’t launching with a subscription service, and Sharp says the company has no plans to roll one out. In fact, Facebook doesn’t plan to make money from its new dating feature at all, at least not right away. Instead, Facebook seems content to let Dating serve as yet another reason for young people to open the app and allow Facebook into their personal lives.

But like everything Facebook launches, there is potential that Dating could be huge. Facebook executives say that there are 200 million people on Facebook who identify as “single.” That’s a relatively small percentage of Facebook’s 2.2 billion total monthly users, but it’s an enormous potential audience for a dating service.

If Facebook Dating does take off, the company will likely eventually try to find a way to turn that audience into a business, and Tinder has proven that people will pay a subscription fee for extra features that might help them find dates (or hookups). A subscription revenue stream would also help Facebook diversify its business. Facebook does have one subscription product — its Slack competitor, Workplace — but nearly 99 percent of company revenue last quarter came from advertising.

Tinder has 3.8 million paying subscribers; Facebook could surpass that with just 2 percent of its “single” users. An $800 million revenue product wouldn’t make much of an impact given Facebook’s nearly $40 billion in annual advertising revenue, but if Facebook could entice even 10 percent of its “single” users to pay for a dating service — and assuming it could monetize as well as Tinder — that could mean more than $4 billion in subscription revenue.

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Those are a lot of big ifs at this point, especially considering that it’s unclear if people even want to date through Facebook. The company spent the first half of 2018 trying to convince users that it could still be trusted with their personal data following the embarrassing Cambridge Analytica privacy scandal. Now Facebook wants users to trust it with their romantic relationships, too — a tough sell.

Facebook is trying to alleviate some of these concerns. People who use Facebook Dating will need to create a separate profile, and personal info from that dating profile won’t be used for ad targeting, for example. But the idea of dating on Facebook will spook some people off no matter what privacy precautions Facebook builds.

Others will give it a shot, though, and given Facebook’s massive user base and set of social connections, it could be a decent place to find a date. And as Facebook’s ad business matures, a potential new revenue stream that doesn’t rely on selling targeted advertisements doesn’t sound like a bad idea, either.