Ideally, a competitive market would drive the price of goods close to the price of production, rather than the price that maximizes revenue. Unfortunately, some mechanisms prevent this.
One is the exploitation of the network effect, where a good is more valuable simply because more people use it. For example, a well-designed social media platform is useless if it has no users, and a terrible addictive platform can be useful if it has many users (Twitter).
This makes it difficult to break into a market and gives popular services the chance to charge what people will pay instead of the minimum amount required to keep the lights on. Some would say this is the price that things should be, but I disagree. Life should be less expensive for consumers, and diabetic people shouldn’t need to pay an arm and a leg for insulin.
Or maybe I’m just seething that I just willingly paid $40 for a month’s access to a dating app’s “premium” tier 🤢.
Yes, the increased chance that I find a good person to date in the next month is worth ≥$40 to me. It’s still the most efficient way to discover and filter through other single people near me. But I doubt it costs this much to maintain a dating app, even considering that the majority of people don’t pay for the premium tier.
The other thing that irks me about the network effect is that I don’t always like the thing that matches the puclic’s revealed preferences. I think this dating app is full of dark patterns – UI tricks that make it as addicting as possible. And it encourages shallow judgement of people. I would truly rather see people’s bio front and center, rather than their face, and I want them to have more space to talk about themselves. I wish I could just fill out a survey on what I’m looking for and be matched with the right person. Alas, OKCupid has fallen out of fashion, so instead I must dodge dark patterns and scroll past selfies because human connection has been commercialized.
Most of the “mechanisms which prevent competitive pricing” is monopoly. Network effect is “just” a natural monopoly, where the first success gains so much ground that competitors can’t really get a start. Another curiosity is the difference between average cost and marginal cost. One more user does not cost $40. But, especially in growth mode, the average cost per user (of your demographic) is probably higher than you think—these sites are profitable, but not amazingly so.
None of this invalidates your anger at the inadequacy of the modern dating equilibrium. I sympathize that you don’t have parents willing to arrange your marriage and save you the hassle.
I didn’t know about either of those concepts (network effects being classified as a natural monopoly and the average vs. marginal cost). Thanks!
While I am frustrated by the current dating landscape, I think dating apps are probably a net positive – before they were popular, it was impossible to discover as many people. And while arranged marriages probably have the same level of satisfaction as freely chosen marriages, I’m glad that I have to find my own partner. It adds to my life a sense of exploration and uncertainty, incentivizes me to work on becoming more confident/attractive, and helps me meet more cool people as friends.
Ideally, a competitive market would drive the price of goods close to the price of production, rather than the price that maximizes revenue. Unfortunately, some mechanisms prevent this.
One is the exploitation of the network effect, where a good is more valuable simply because more people use it. For example, a well-designed social media platform is useless if it has no users, and a terrible addictive platform can be useful if it has many users (Twitter).
This makes it difficult to break into a market and gives popular services the chance to charge what people will pay instead of the minimum amount required to keep the lights on. Some would say this is the price that things should be, but I disagree. Life should be less expensive for consumers, and diabetic people shouldn’t need to pay an arm and a leg for insulin.
Or maybe I’m just seething that I just willingly paid $40 for a month’s access to a dating app’s “premium” tier 🤢.
Yes, the increased chance that I find a good person to date in the next month is worth ≥$40 to me. It’s still the most efficient way to discover and filter through other single people near me. But I doubt it costs this much to maintain a dating app, even considering that the majority of people don’t pay for the premium tier.
The other thing that irks me about the network effect is that I don’t always like the thing that matches the puclic’s revealed preferences. I think this dating app is full of dark patterns – UI tricks that make it as addicting as possible. And it encourages shallow judgement of people. I would truly rather see people’s bio front and center, rather than their face, and I want them to have more space to talk about themselves. I wish I could just fill out a survey on what I’m looking for and be matched with the right person. Alas, OKCupid has fallen out of fashion, so instead I must dodge dark patterns and scroll past selfies because human connection has been commercialized.
Most of the “mechanisms which prevent competitive pricing” is monopoly. Network effect is “just” a natural monopoly, where the first success gains so much ground that competitors can’t really get a start. Another curiosity is the difference between average cost and marginal cost. One more user does not cost $40. But, especially in growth mode, the average cost per user (of your demographic) is probably higher than you think—these sites are profitable, but not amazingly so.
None of this invalidates your anger at the inadequacy of the modern dating equilibrium. I sympathize that you don’t have parents willing to arrange your marriage and save you the hassle.
I didn’t know about either of those concepts (network effects being classified as a natural monopoly and the average vs. marginal cost). Thanks!
While I am frustrated by the current dating landscape, I think dating apps are probably a net positive – before they were popular, it was impossible to discover as many people. And while arranged marriages probably have the same level of satisfaction as freely chosen marriages, I’m glad that I have to find my own partner. It adds to my life a sense of exploration and uncertainty, incentivizes me to work on becoming more confident/attractive, and helps me meet more cool people as friends.
Or maybe I’m just rationalizing.