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What's your business model?

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How does Zoosk make money?

Zoosk sells premium subscriptions, as well as features that can be unlocked with digital currency

Innovation series by Steven Loeb
June 13, 2015 | Comments
Short URL: http://vator.tv/n/3e37

I met my current girlfriend when I was 19 years old, and still a sophomore in college. We've now been together for nearly 10 years. What that means is I never really had to date much. I found the person I wanted to be with when I was pretty young and it was that simple. Given all the horrors stories I have heard, I feel like I dodged a giant bullet on that one.

Still, I have to say that I have been pleasantly surprised by how successful online dating has been for other people I know. I had two friends get married this year, both of whom met their current spouses through one of those sites.

There are numerous sites that we can all name, like Match and eHarmony, and niche networks like JDate, Christian Mingle and FarmersOnly. One that stands out to me Zoosk, which has a pretty interesting business model. Rather than only making money off of its premium members, Zoosk has figured out a way to monetize its free members as well.

Of course, like all of these sites, it makes a lot of money from subscriptions. It also offers a free membership, but paid subscribers get extra features, including the ability to send messages, chat with other members, connect with SmartPick introductions, and see the profiles of people who have viewed them.

A subscription costs $12.49 per month for a six month plan, $19.98 per month for a three month plan, or $29.95 for a single month.

In 2013, Zoosk made $153 million of revenue off of this stream. In the first three months of 2014, it made $42 million.

What makes Zoosk different than others in the space is its other revenue stream: digital currency. The site sells what it calls "Zoosk coins," which are virtual coins that can be used to "unlock and access premium features that help you promote yourself and stand out."

They can be used to purchase Boost, which "highlights you in the search results, messages inbox, and Carousel of other people."  This would cost a Zoosk user 100 coins. 

Zoosk coins can also be used to unlock a profile from the site's Carousel option (which is kind of like Tinder). Coins can also be used to buy virtual gifts, for delivery confirmations to to know when a specific message in a chat is opened, and to send messages with a special delivery.

Both paid subscribers and free members can purchase Zoosk coins to Boost their profiles, unlock Carousel matches, or buy gifts, but only subscribers can use Zoosk coins to purchase special delivery or delivery confirmations on messages. Free members cannot send and receive messages, or chat, even if they use Zoosk coins to unlock a Carousel match.

Coins come in packages; users can spend $99.95 for 1,800 coins, $39.95 on 480 coins or $19.95 on 180 coins.

Digital currency is still a relatively small revenue stream for Zoosk, but it is growing. In 2013 the company made $24 million from this stream, up from $5 million the year before.  

Founded in 2007, Zoosk has raised $61.6 million in venture funding from investors that included Crosslink Capital, Canaan Partners, BDCA Venture, Jeff Epstein, ATA Ventures and Bessemer Venture Partners.

The company filed for to go public in April of last year, but chose to withdraw its plan in December, at the same time that co-founder and CEO Shayan Zadeh, along with co-founder and President Alex Mehr, both revealed that they would be stepping down from their positions, but would remain on the company's board of directors.


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