Dating site Jiayuan grooms new charging plan

Updated: 2011-09-07 17:28


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BEIJING -- In China, where Internet users often expect freebies, individual members of an online dating service are exchanging dozens of love notes every day at 30 cents a pop.

Online dating is "quite fun," said Nick Yuan, a 34-year-old computer technician from Shaoxing, China, who signed up for International Ltd. to meet new people after his divorce. During his first few months on the site, Mr Yuan received about 30 messages a day.

" 'IT technician' seemed to be an appealing job," he said. Most of the women who contacted him asked about his salary and whether he owns a home.

Mr Yuan is among roughly a million users a month who pay to exchange messages on Jiayuan—signaling a shift for some Chinese Internet companies toward generating revenue from user fees and subscriptions rather than from typical, and highly competitive, advertising.

Jiayuan makes money primarily by charging users to exchange love notes through its website for two yuan each. The company is tiny, with a market value of around $400 million. But Jiayuan is growing quickly, with second-quarter revenue more than doubling from a year earlier to $12.9 million and earnings growing at a similar pace. Jiayuan's shares were up 21 percent on Sept 2 from when they listed on the Nasdaq Stock Market on May 11, while shares in almost every other US-listed Chinese Internet company had fallen.

The move toward user fees comes as the online ad market is growing in China and getting crowded with sites seeking advertisers. The market still is small compared with that of the US Total revenue from online ads in China reached $4 billion last year, according to the Data Center of China Internet. In comparison, research firm eMarketer said the US online ad market last year reached $26 billion.

Jiayuan was founded in 2003 by Rose Gong while she was pursuing a masters degree in journalism at Fudan University in Shanghai. Without a clear business plan in mind, she started off in her dormitory by building a simple Webpage with her profile on it. Gong, who is Jiayuan's chief executive, eventually met her husband through the site.

The company experimented with a number of different revenue models, including selling advertising and hosting in-person events like mixers and speed dating for subscribers. But Chief Financial Officer Shang Koo said advertising never was a major source of Jiayuan's revenue. Ads made up 15 percent of the company's revenue in 2008 and at the beginning of this year Jiayuan stopped displaying advertising entirely. Eighty percent of Jiayuan's revenue now comes from paid messaging.