Looking to acquire.
plentyoffish.wordpress.com
plentyoffish.wordpress.com
That being said, I'm not sure where he's going with this. In many ways this seems like the beginning of the end for him. Granted, he knows his industry better than I do, but here's my take:
1. He runs a free service, at huge profit margins. His competitors all run paid services.
2. The likelihood that people would view paid dating as a luxury they can no longer afford is higher than ever.
3. He's worried about "hundreds of millions of dollars" that he's missing out on - that's usually a recipe for disaster.
If anything, I think he should stay as static as possible. The odds that much of the paid traffic from his competitors comes his way in the next little bit is extremely high. Moving to a paid site destroys the only competitive advantage he has. It's suicide.
I've seen this move before with other entrepreneurs, and I've never really seen success from it. What it usually symbolizes is that the particular niche has reached its potential, and no real innovation is required at this point. The founder is basically getting bored, and looking for new challenges. What needs to happen though is that the entrepreneur him/herself needs to leave/end the business. You can't evolve into new markets and bring your business with you without destroying the comfortable fit that your brand already has in the marketplace.
From my 2 cents, he should be looking for buyers, not trying to become one.
Really he just wants to keep users that come to his site and aren't happy with the free type dating site. Instead of them going to match.com or w/e they'll go to his pay site.
What value is adding a pay site to an over saturated market bringing here? Why would you play against companies that are more resourceful and experienced using their rules? Seems to me that - long term - this is a lose/lose all around for him.
In order for this to be even remotely successful, he needs to beat the pay sites at their own game. Otherwise, his "pay site" will still be disregarded, and he'll still "lose revenue" to the big guys. The odds are stacked against him. The big guys can bear a price war much better than he can, and that's what he's jumping into, essentially.
Perhaps the true nature of this post is an effort to bring some of those other players out of the woodwork.
A one time referral fee OR customers that continue to pay for your service month after month, year after year.
He doesn't want to be an affiliate, he wants control of it all.
He doesn't want to be an affiliate, he wants control of it all.
And my point is that this is where greed can sometimes bite you in the ass.
He may get a one-off payout of $100 or so per signup, but if he had his own service he would continue to make money from the original signups while gaining new ones each month.
Recurring payments > One-time payment.
So my question is how should I approach Marcus and what type of agreement do you think would be beneficial for both of us.
My first suggestion would be - assuming what you say here is true - to be concrete at what you would want out of this, if not money. Fame? A nice CV tagline? What?
Once you have that down, you would tailor the approach strategy to enable that outcome.
Another challenge for PoF is reconciling their business models. AFAIK, right now PoF makes its money from selling leads to premium dating sites. If they're going to run their own premium site, doesn't that risk cannibalizing that business?
These assumptions he makes about free vs paid are reasonable but it's probably just a gut feeling guess.
If you actually look at pof it looks like garbage. No one would want to pay to have their photo resized so terribly and have basically no features. When you're paying for a service you have an entirely different set of expectations. pof works because it has a very large user base. That's all you need for a free site to work. For a paid site you need quality and he's famously very lazy so that's why he's looking to buy one instead of actually getting to work to build one on his own.
It's possible for a dating site to work on the freemium model. It's isn't for pof though, not without a lot of work he isn't willing to put into it.
I think he's going to find that the only ones he'd want to buy are the ones that aren't selling.
plentyoffish on the other hand does not get enough $ for driving users away to match.com, so he wants to drive traffic to his own paid site.
Not that odd, IMO.
From what I can tell, while free and paid dating sites are largely the same, their market is different; most people if they can afford it and want to pay will choose Match.com due to its popularity; some may also setup a profile on plentyoffish and the other free sites, but since they paid for Match, they'll likely use it more.
Markus knows exactly what traffic goes out via his ads to third party paid dating sites, and how many of those never return, so if he can make that traffic and sales his, it can only be a smart move!
undoubtably any paid site that is hooked into plentyoffish.com will get a flood of referral traffic, and that is a major competitive advantage. regardless it will be a major time consuming undertaking and he might hate all the work involved.
I feel like he needs a number 2, biz dev guy/gal to put together a big time referral deal with one of the major paid sites. then look at the ad space and hook in some premium ads that pay more then Adsense. google is reaping huge rewards here and a big time advertisers would add huge money to the bottom line, without so much work involved. i would love that gig.