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The Dating App Paradox

by Greg Rosalsky

Over the last couple years, dating app companies like The Match Group and Bumble have learned that, like love, their business is a battlefield. Their stock prices are on the rocks. Their investors are heartbroken. They’re getting ghosted by users and failing to woo Gen Z. It’s no wonder why the CEOs of both companies have recently resigned.

Lost love in the crowded dating app market is nothing new. One moment a dating app might be hot and heavy with consumers, but the next they’re getting dumped. The Match Group has tried to overcome this problem by incubating new dating apps and, more aggressively, acquiring rival ones. Originally just associated with the dating site Match.com, The Match Group now oversees a sprawling dating empire of at least 45 dating apps, including Tinder, OkCupid, Hinge, and The League.

Before we dive deeper into their problems, it’s worth saying that dating apps have helped many people find love. According to a survey of Americans by Pew last year, “one in ten partnered adults — meaning those who are married, living with a partner or in a committed romantic relationship — met their current significant other through a dating site or app.”

But there’s an awkward tension at the heart of the dating app business model. They are for-profit tech companies that want to attract as many users as possible and inevitably make money from them. But, at the same time, true success for their users — at least for the large population looking for more than just hookups — means that they find love and get off the apps. For each successful match, the dating app loses not just one, but two customers!

Call it the dating app paradox: dating apps are supposed to be matching lovebirds together, but once they do, the lovebirds fly away — and take their money with them.

Malte Mueller/Getty Images

Of all the dating apps, Hinge — a Match Group property that has grown increasingly popular in recent years — is perhaps the most illustrative of the dating app paradox. Hinge markets itself as “the dating app designed to be deleted.” How many other companies market themselves this way? Hinge is literally touting success as constantly losing customers. Their social and business missions are in a messy relationship, to say the least.

A Viral Theory For Why Dating Apps Are So Bad

Last month, TikTok user Bianca (@Infinitebs), who calls herself an “amateur sociologist & silly goose” on her profile, released a viral TikTok video in which she argues that, basically, Hinge is the latest dating app to inevitably fall victim to the core contradiction between its missions of matchmaking and money-making.

Hinge, like many other dating apps, has a “freemium” business model, which means you can sign up and use the basic app for free, but extras — like a higher-visibility profile or the ability to message people who have not shown interest in you — cost money.

According to a poll conducted by the Pew Research Center last year, about a third of Americans who have used dating apps have paid to do so. Morgan Stanley found that dating app users who choose to pay end up spending “between $18 and $19 per month on either subscriptions or a la carte purchases.”

But the dating app companies — and their investors — are apparently not satisfied with the number of users who are choosing to pay for their services. With their stock prices in the gutter and their investors clamoring for more revenue, many dating apps have been shifting gears to entice more free users to become paid users.

Like many other users, Bianca is not happy with that. Hinge, she argues, has “hit the inflection point” where its free-version is “absolute trash.” In its mission to make money, it’s been using tricks and schemes — like, she says, putting desirable matches “behind a paywall” — to convince more of its users to pony up and use premium features.

Dating apps aren’t alone in seemingly getting worse when they try to make money. In fact, last year journalist Cory Doctorow coined a term for this pattern: “enshittification.” Basically, Doctorow says tech platforms start off trying to make their user experiences really good because their first goal is to try to become popular and achieve scale. But over time, they inevitably pursue their ultimate goal of making money, which ends up making the whole user experience “enshittified.”

Historically at least, daters could find an easy solution if a dating app put its money-making interest ahead of its interest in matchmaking and ruined their user experience. That fix: healthy competition. Lovebirds would flock to another app. For example, as Bianca notes in her video, when Tinder went downhill, users headed to Bumble, and then eventually to Hinge.

But, unlike previous sagas in the dating app wars, Bianca asserts, a new, better app has failed to overtake Hinge. The result: “dating apps have never been worse than they are now.” Bianca is hardly alone in asserting that dating apps are now worse than ever.

So, if we accept that we’ve now entered the dark ages of app dating, why isn’t competition working anymore? It’s possible new apps are failing to rise and topple the reigning ones because of monopolistic strategies of companies like the Match Group, which has been systematically acquiring rivals, including Hinge back in 2018.

The Match Group, of course, denies their acquisition strategy hurts healthy competition in the dating app market. And they also reject what we’ve been calling the dating app paradox. They don’t see a contradiction between their goals of matchmaking and money-making. They see their social and business missions as in a stable, beautiful marriage.

"Our goal is to make meaningful connections for every single person on our platforms,” says a Match Group spokesperson. “Our business model is driven by providing users with great experiences, so they champion our brands and their power to form life-changing relationships. Unlike many other tech platforms, our business is not driven by keeping users engaged on the apps, but by successful outcomes. We receive wedding invitations and hear Match Group love stories every day, and we celebrate those."

The Match Group argues, in other words, that its business incentives are aligned with the interests of its users looking for lasting love. But are they really? Sure, app executives may get warm, fuzzy feelings about receiving wedding invitations from their clients. Matched couples may even tell their single friends, helping to convince new people to join their apps.

However, we can imagine a dating app business model where its incentives are much more closely aligned with users' hopes of finding love. Imagine the app only gets paid when people successfully match and leave the app! Now that would eliminate the dating app paradox.

Adverse Selection In The Dating App Market?

It’s possible there’s another classic economic problem behind the cycle of dating app degradation. Daters looking for a life partner inevitably confront serious information problems. The people on these apps, after all, are usually complete strangers — and the only information you have about them is what they choose to put on their profiles. That may be fine for people just looking for hookups. But a core challenge for daters looking for true love on these apps: How do you sift through the players and commitment-phobes and find the gems?

The economist George Akerlof won a Nobel Prize for his work explaining how information problems like this can ruin a market (Fun fact: Akerlof is U.S. Treasury Secretary Janet Yellen’s husband. Now that’s a worthy match!) Akerlof famously used the example of used cars to explain how bad information can result in market failures.

It’s well known that as soon as you drive a new car off the lot, its value drops precipitously. For a long time, economists explained this phenomenon by claiming that people just place a premium on having a brand new car.

But Akerlof offered a different explanation: buyers of used cars lack vital information about what they’re buying. When you buy a used car, there’s always the chance it could be a lemon. Because of this risk of buying a piece of junk, Akerlof theorized, buyers become unwilling to pay top dollar for them. It’s too risky. They treat every car like a potential lemon and demand a discount, even if the cars they're buying may actually look and run great.

And that creates a problem for the sellers of used cars that are actually good. These sellers are like, “What the heck?! I KNOW my car isn’t a lemon! It’s worth way more than what you’re willing to pay!” And so they refuse to sell their used car and exit the market. The result is a market where lemons become more prevalent.

It’s a vicious spiral, where, as buyers become more suspicious that every car is a lemon, they demand further price markdowns, and owners of good used cars become even more unwilling to sell at the lower price. Ultimately the whole market gets destroyed. Because buyers have a hard time determining good from bad, the lemons drive quality used cars out of the market. Economists call this adverse selection. (Listen to this Planet Money Summer School episode for more. Spotify/Apple)

It’s possible that dating apps face adverse selection. Basically, a new app starts up, and hopeless romantics looking for real love begin flocking to it. But so do sleazy types who lie on their dating profiles. Over time, the earnest daters go on a bunch of bad dates, encountering people who have no interest in real relationships or whose profiles are completely misleading.

Like lemons driving good cars out of the used car market, maybe sleazeballs push great catches out of dating apps and ultimately ruin the quality of the whole app experience. So people go to a new app with the hopes of finding something better, and the cycle starts again.

Akerlof saw solutions to the lemon problem. Basically, people need warranties or ways to get better information about what they’re buying. We’ve seen advances like this in the used car market. For example, the company CARFAX offers trusted information about the history of used cars. You can find out about a vehicle’s history of accidents or its trips to the mechanic, for instance. This helps buyers overcome their suspicions and helps sellers of good used cars prove their cars are worth top dollar.

It’s possible that dating apps could try to find similar solutions. Think like a CARFAX for daters! Or a rating system, which is Airbnb’s solution to this kind of information problem. Of course, daters will probably object to any system that gives your exes the power to rate you :). It’s possible, however, that app designers could find more suitable solutions to the information problems of the online dating world.

All this said, maybe dating is just hard, especially now that you can potentially match with a much bigger number of people thanks to technology. Whatever the case, if you’re in the market for love, good luck, and, ummm, Happy Valentine’s Day!

Extra Listening: Check out our annual Valentine’s Day episode in the Planet Money feed, where we send love letters to our favorite stories, and books and whatever else that other people have made that taught us things, or just made us jealous. Or, try this Planet Money classic on how all those roses make it to your local florist on February 14th.

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The Dating App Paradox: Why Dating Apps May Be “Worse Than Ever”

The Dating App Paradox

A Viral Theory For Why Dating Apps Are So Bad

Adverse Selection In The Dating App Market?

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