According to an article on the website of the INSEAD business school, matchmaking markets have certain specific features as described below.
Competition
When active in the matchmaking industry, which is based on subscription fees, companies must consider what they will gain by introducing new technology. Satisfying customers too quickly could in itself jeopardise the company's existence. The incentive to improve their technology is therefore relatively weak.
If, however, competition is intense, companies may need to achieve a competitive advantage by providing better technology and will be more willing to follow this path.
Network effects
To find matches for their users, dating apps need a vast base of subscribers. On the other hand, providing efficient matchmaking leads to a lower number of subscribers since the accounts of successful users are deleted.
That means providers with huge numbers of users probably should not be using the best-in-class technology, which would only reduce the high numbers of people using their own services.
Are users desperate?
The extent to which a user is seeking a serious romantic commitment affects the price that user is willing to pay. If you can’t wait to find your true love, you will pay a premium to find the right person really quickly. On the other hand, some people are quite content with a less efficient but cheaper service.
Asymmetric market
Matchmaking is about connecting two classes of users in a way that produces satisfaction. Sharing economy platforms (Uber or Airbnb) also connect customers, but in these cases there is something tangible involved, be it shared rides, rooms and so on. But it may be the case that, for example, male users of a dating app are willing to pay more for the dating service than female users.
In such a situation, monopoly matchmakers can get away with raising fees for male users. If, however, the platform is competing with others, it should try to attract more precious female users by offering them reduced fees.
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