We’ve got a lot more to say about this before we’re done. And we’re hoping that Facebook and MySpace make the right decisions for users and begin to enforce their own rules on subscription and other scams. Even if it means a huge drop in advertising revenue from the apps that rely on scams to make money.

But in this post we’re going to let two other people make their points. In a comment to the post yesterday HotOrNot founder James Hong talks about how his company tried, and quickly removed, scammy offers from their site. He says “In a nutshell, the offers that monetize the best are the ones that scam/trick users.”

And PlentyOfFish founder Markus Frind talks about being pitched by companies like Offerpal and SuperRewards. He also follows up with a post on his own blog.

James Hong:

We ran offers like this back in 2005 for a very short period of time at HOTorNOT, that is until we realized what was going on. In a nutshell, the offers that monetize the best are the ones that scam/trick users. Sure we had netflix ads show up, and clearly those do convert to some degree, but i’m pretty sure most of the money ended up getting our users hooked into auto-recurring SMS subscriptions for horoscopes and stuff. When I hear people defending their directory of deals by saying Netflix is in there, i am reminded of how hotel pay-per-view has non-pornographic movies. Sure it gives them good cover, but we all know where the money is made.

In the end, we decided to turn the offers off. Quite frankly, the offers made us feel dirty, and pretty much on the same level as spammers. For us, the money just wasn’t worth it. On top of that, we relied on our goodwill with users and focused on growing by having a product and company that our users liked. Our sense was that using scammy offers would make good money in the short run, but would destroy our userbase in the end. Perhaps apps on facebook don’t feel this pressure because facebook is so huge, and there are always new people to burn.

I’d like to point out that there are some game companies out there who are holding out on using offers to monetize their users. Personally, that makes me 10 times more likely to pull my credit card out for them.

PS. I don’t think the concept of letting people fulfill offers to get credits is structurally a bad one. I for one would like to see the offer networks work together to create some set of public agreement on what types of practices are banned from their network, and perhaps they can evan have some sort of certification logo. These practices will only stop when companies are not competitively crippled by NOT doing them. In effect, we need a nuclear non-proliferation treaty among the offer networks.

Markus Frind:

I’m surprised it took this many years to be reported by the “media”. These kind of scams have been going on for years and I get several emails a month from these vendors promising to make me millions of dollars a month. I’ve no doubt I could make millions a month off these scams, but they are scams and will eventually bring government regulations. Michael mentions tattoo media look up tatto media sued on google and you will see all the government agencies sueing them.

Michael, is just barely scratching the surface, these scams are extremely far reaching and deep. Some of these scams are charging users over $1 million dollars a day, and many of these middle men/networks are nothing more than smoke screens.

There are a number of comments from anonymous posters saying that there’s no fire here behind the smoke. The thing is, they’re lying.

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This post was written by guest contributor Mark Brooks, an analyst/consultant whose blog Online Personals Watch summarizes the daily internet dating industry news.

Earlier this week InterActive Corporation (IAC), which owns and operates popular paid dating sites Match.com and Chemistry.com, launched a completely free dating site called DownToEarth.com (you can check out an ad for the recently launched site here). The somewhat counterintuitive move is IAC/Match.com’s answer to Plentyoffish.com, a popular free dating site that was long run by one man out of his apartment (he now has an office and a small team).

DowntoEarth.com was started by Jacob Solotaroff who spent a year as the Director of Product Management and Member Integrity at Match. Now he runs the site out of Dallas, where Match is also based. Apparently IAC believes if someone is going to put Match out of business, it might as well be Match.

The most interesting feature on the new site is the RealRatings user ratings system for ranking the accuracy of people’s profiles against real life. Users who post inaccurate photographs and profiles of themselves are ratted out by other users who have been on a date with them. Users can grade the accuracy of profiles on a scale of 1 star to 5 stars once they’ve been on a face to face date. 1 star means “not even close” and 5 stars mean “true to life.” Could this be the end of white lies on dating profiles?

Here’s a look at how some of the free competition DowntoEarth will be facing off with in the USA, UK, Australia and Canada.

The top free dating sites in the USA are currently:

#1 Plentyoffish (#2 overall in the internet dating category in Dec ‘09, #2 in May ‘09)
#2 Adam4Adam (#5 overall in Dec, #6 in May)
#3 Date Hookup (#6 overall in Dec, #7 in May)
#4 OKCupid (#12 overall in Dec, #14 in May)
#5 Mingle2 (#13 overall in Dec, not in top 100 in May)
#6 MatchDoctor (#32 overall in Dec, #33 in May)
#7 WebDate (#33 overall in Dec, #22 in May)
#8 FriendsReunitedDating.co.uk (#41 in Dec, not in top 100 in May)
#9 Woome (#46 in Dec, #79 in May)
#10 Connecting Singles (#53 in Dec, #55 in May)

And in the UK the top free dating sites are:

#1 Plentyoffish (#1 overall in Dec, #1 in May)
#2 Person (#2 overall in Dec, #13 in May)
#3 FriendsReunitedDating.co.uk (#8 overall in Dec, #12 in May)
#4 Smooch (#9 overall in Dec, #15 in May)
#5 Freedating.co.uk (#14 overall in Dec, #16 in May)
#6 ProfilePic (#27 overall in Dec, #68 in May)
#7 Flirtomatic (#29 overall in Dec, #36 in May)
#8 OKCupid (#31 overall in Dec, #32 in May)
#9 Speeddate (#44 overall in Dec, #71 in May)
#10 Midsummers Eve (#53 overall in Dec, #43 in May)

And in Australia:

#1 Plentyoffish (#4 overall in Dec, #7 in May)
#2 Person (#7 overall in Dec, #6 in May)
#3 Matchfinder.com.au (#22 overall in Dec, #32 in May)
#4 Speeddate (#23 overall in Dec, #38 in May)
#5 OKCupid (#27 overall in Dec, #30 in May)

90% of the top free dating sites in the USA and UK moved up rankings from May to December 2008.

Data: May and December 2008, Hitwise Competitive Intelligence USA, UK and Australia rankings by market share of visits, which is the % of online traffic to the category.

And in Canada:

#1 Plentyoffish (#1 overall in Nov)
#2 Kijiji.ca Personals (#3 overall in Nov)
#3 Speeddate (#8 overall in Nov)

Data: November 2008, comScore Media Metrix Personals category for Canada.

Disclosure: Plentyoffish and Webdate are clients of Courtland Brooks, Mark Brooks consultancy.

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In the internet dating space, bigger is not always best. According to the latest U.S. numbers from Hitwise, the top niche dating sites are steadily gaining market share while their big mainstream counterparts stagnate.

We compared the overall dating market share of the top 5 sites – Singlesnet, Plentyoffish, TRUE, Yahoo Personals and Match – to the market share of several top niche sites to see how their growth rates compared. In March 2008, the top 5 overall sites held 7% less market share than they did one year ago (Plentyoffish and Singlesnet were the only sites to buck this trend individually). Meanwhile, the top sites from the top five major niche dating categories made considerable gains, with the gay dating and religious dating categories growing the fastest.

It’s apparent that a growing proportion of users is looking for more focused experiences with those who share particular interests and desires; this despite the fact that users can find more fish in the proverbial sea at mainstream sites.

The particular interests mainly relate to sexual preferences, races, and religions. Top sites include Adam4Adam, Manhunt, Gay.com for homosexuals; BlackPeopleMeet, BlackSingles, BlackChristianPeopleMeet for African Americans; and ChristianMingle, JDate, and Christian Café for the religiously-oriented.

Another top niche – and the biggest niche in terms of total traffic – is casual dating, which consists of sites like Fling, AdultFriendFinder, and SexSearch. Although I’m not sure casual dating can really be called a niche. As Adam Small, CMO of SexSearch has put it bluntly: “Our target market is anyone over the age of 21 who is interested in sex, which is almost everybody.”

Casual (or “adult”) dating sites are the antithesis of eHarmony and are definitely not focused on helping people find long-term relationships. Instead, they help the more “casually inclined” to find the people who fit their specific physical and sexual preferences. Very specific preferences in some cases.

These casual sites have shown solid gains in the internet market as a whole. While the top 10 mainstream dating sites gained only 0.01% of total Internet traffic over the past year, the top three casual adult sites gained 0.07%. That’s a hefty 56% increase in the traffic to adult dating sites, although it’s important to remember that smaller sites have an easier time showing big gains in their traffic.

Disclosure: Brooks has worked for FriendFinder and has advised Manhunt. Plentyoffish is presently a client of Courtland Brooks, his consultancy.

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In contrast to their competitor, Jaxtr, they’ve been mainly spreading through a series of direct deals with social networking sites (Match.com, Tagged, AdultFriendFinder, and Fubar) and a Facebook/Bebo application (potentially on 80 million profiles). Jaxtr, on the other hand, has been spreading mainly through email links and personal websites (5 million users in under 5 months).

Now they’ve forged a deal to be featured on the maverick of dating sites, PlentyOfFish. PlentyOfFish is like every other dating site you’ve heard of, but free. Free has actually paid off pretty well for founder Markus Frind, who runs the site from his Vancouver apartment and takes in over $10 million a year in advertising.

Comscore ranked the site the number one dating site in December 2007, with an average of 1.3 billion page views a month (70,000 sessions and 3 million page views an hour).

Jangl’s widget will let daters call each other, send SMSs, and leave voice mails all without sharing a real number. The functionality makes it easy to take the next step in a relationship without sacrificing privacy, or just discreet phone sex. Calls will be terminated on Jajah’s servers as part of their existing relationship. Like PlentyOfFish itself, Jangl will be monetizing the service through text advertising; a first for the company. On other sites, the service is either ad-free or paid for as part of membership (match.com).

I’ve found social calling widgets (particularly Jaxtr and Jangl) to be the most attractive part of the VOIP market because they’re not competing in a race to the lowest calling rates, but adding real utility to our existing phone lines. Other voice widgets include Ccube, Tringme, and Snapvine. While monetization is still somewhat up in the air, both companies are testing out business models (paid Jaxtr minutes, or Jangl’s revenue sharing). Going forward we’ll see which models do and don’t work. I also expect both companies to continue adopting more advanced features similar to Google’s GrandCentral.

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The two largest dating sites are Yahoo Personals and Match.com, respectively, with a combined 9.3 million monthly visitors. Both allow free browsing, but to communicate with other members you must pay a fee. Match.com charges $30/month for the basic plan; Yahoo’s fee is $25/month. Both sites also offer premium plans that attempt to help you find a compatible mate.

An entire batch of next generation dating sites have emerged that are starting to nip at the established players. One, PlentyofFish, launched in 2003 and has over half a million monthly U.S. visitors. Recently, even Google has entered the space through their Google Base product.

One big difference is that these sites are (mostly) free, making revenue from ad sales alone. But many of these sites are also experimenting with new ways to introduce people who may be a good match. More on each below.

Consumating

Consumating launched in the summer of 2005, was acquired by CNET in December 2005 and relaunched last month with a new interface and features. Its tagline is “Find People Who Don’t Suck,” and tagging plays a big part in the service. Consumating is clearly aimed young hipsters, who can make themselves more “popular” by answering questions to fill out their profile. Users search by loose age ranges (20s, 30s, etc.) and tags to find friends and partners. The site also seeks to engage users through a variety of contests and weekly user quizzes. Other Consumating features include a widget that streams member information to a web page based on parameters you set (everyone, zipcode, by tag). The site also has message board features. We’ve included a version of the widget below.

Engage

Engage seeks to hook up couples Fiddler-on-the-Roof-style through matchmaking. Users sign up with the usual descriptive profile, but then take on the role of either “dater” or “matchmaker” (or both). The fact that Engage uses its own member to set others up is their key differentiator, and gives the site a viral touch – even non members can be suggested for a match.

Users can browse as either matchmakers, recommending their friends, or as a dater looking for that special someone for a wing(wo)man to introduce them too. Daters can also directly email each other, however. Added features include user voting on potential couple’s compatibility as well as both dater and matchmaker reputations. Engage will charge members but is offering a 6 month free trial currently. Non-dating matchmakers can use the site for free.

Google Personals

Google Base (TechCrunch profiles here) allows users to enter personal profiles highly targeted towards dating (fields include gender, marital status, sexual orientation, etc.). Other features include labels (tags), a short description, location mapping, and an anonymous email to be reached at. So far, the personals section has been primarily used as a personals aggregator for Hot or Not and FindingSingles.com, a consequence of the mass upload feature. Also, for a bit of humor, check out this post by Damien Mulley on how to use Google to get laid.

GreatBoyFriends

GreatBoyFriends, which was acquired by TheKnot in 2005, tries to remove the exaggeration (or lie) factor inherent in online dating. Friends, family and ex’s are asked to leave feedback about them. GBF then verifies the endorsement or removes it. A key selling point is that married or otherwise unavailable people don’t use the site.

Guided by the recommendations, users search for themselves or recommend matches for their friends. The site drives referrals by waiving a week of the $20/month subscription fee for referrals and adds users by creating accounts for non-users when they are referred on the site.

MatchActivity

MatchActivity is a new site that sets up a date before the introduction. Users post activities in their area by tags and then chose the respondent they like the most and carry out the plan. Added features allow you to add buddies, rate user reliability, target invitations to a specific person, and be notified when that certain someone you admire posts an activity. For an activity based site, it’s surprising there is no date/time filtering for searches and a lack of standard messaging features makes it hard to use the service to keep in touch with successful dates using the site. See a positive review here. MatchActivity is free, but offers a $8/month premium version to allow one-on-one communication outside of activity planning.

MatchTag

MatchTag has the same core activity tagging feature of MatchActivity.com, but wraps it in a more complete social network. Users post activities to the general population and chose partners from respondents, but also has more complete messaging and commenting features to fill out the user experience outside of activities. This is because MatchTag’s founders view it as a service not only to meet new dates, but also friends in your area. MatchTag’s added calendar feature makes it easy to not only find activities you know you like but also stumble upon new ones.

MingleNow

MingleNow, a new venture from BlueLithium, is pre-launch. You can add your email to the home page for updates, or see their blog here. Early reports from testers say that MingleNow aims to join online and offline social gathering. Users registering on MingleNow will group themselves by what real world locations they hang out at (bars, restaurants, cafe’s, etc.) so groups can mingle online and off. The site will also include a rating system to gauge member’s flakiness along with other metrics. We’re looking forward to reviewing this when it launches – it may be great for non-dating social interaction as well.

PlentyofFish

PlentyOfFish started as a way for Markus Frind to teach himself ASP, but quickly marched itself up to become a very large dating site, with nearly 600,000 unique monthly U.S. visitors (Comscore) and claims of 500 million monthly page views (Comscore says only 118 million, in the U.S.). Its look and feel is rough around the edges, but it gives users what they want: the ability to browse personal profiles free of charge. PlentyOfFish also crafted a simple bulletin board system that allows users to freely chat, vent frustrations, and offer up dating advice. The site is doing very well financially.

Poddater

We wrote about Poddater in December 2005. The basic idea is to allow people to create profile videos and allow others to download them and view them. With a bit of a stretch, they also assume people will download these to their video iPod or other video device and review them there. It is otherwise a fairly standard view profile/contact user type site. Users can browse via location, age, and tags. When you find someone you’re interested in you can message them or just admire from afar by subscribing to their RSS feed. Note: a lot of the profiles don’t have videos, and our view is that Poddater is too niche to succeed.

Prescription4Love

We wrote about this one last week. Prescription4Love is a niche site devoted to people facing the stigma of special conditions, such as deafness, HIV, or obesity. It helps members find a better romantic match by allowing them to be open about their conditions with potential partners while maintaining anonymity until users trust each other. Overall, the site’s search feature does the job for finding people in your area by personal traits and certain conditions, but lacks the visual customization of the profile that could be a useful fill-in for the lack of a photo. Commenters have also suggested that search for multiple condition be allowed.

RateOrDate

RateOrDate is a meta-dating-search site that features couple ratings, singles event listings, and a dating site directory. Users can use the directory to find the dating site that most closely fits their needs. A Google maps mashup lets daters can find singles events in their areas. Finally, users can rate potential couple comparability based on photos and a short blurb. They also have a good blog following dating site trends. Overall we found the site to be a bit confusing and lacking in much actual utility.

VerbDate

VerbDate is a new dating site, launched in March, that adds voice to the usual online dating experience via Skype. Verbdate has the usual user profiles with tags, but incorporates Flickr photo albums and allows users to not only email and IM, but initiate a Skype call by “winking” at each other. All-in-all, VerbDate allows the greatest amount of interaction while remaining physically separated. The site only has 117 profiles, however, and has some negative reviews. It’s very young, though, and needs time to fully bake.

Wikia Personals

Wikia Personals has yet to launch, but aims to create a free global personals page. Discussion so far is geared towards a site that allows users to search through personal profiles based on fields such as language, sex, religion, etc. Stay tuned for some more developments from this community created site. Our previous Wikia posts are here, and our podcast interview with CEO Gil Penchina is here.

Summary

We’ve included a summary chart of features but, frankly, such an objective breakdown of the services may be of little value to users looking to just find a date. Numbers of profiles matter – in that case PlentyofFish, a basic but free service, leads the pack. If you are looking for a more structures approach to dating, try one of the sites offering activity based meetings, or matchmaking. Our anticipated favorite is MingleNow – tying socializing to real-world hangouts is a great idea. Most of the sites above support gay and lesbian searches as well.