Interesting Turn of Events at HotorNot

In June, James Hong wrote what I found to be a very compelling post about his efforts to reinvent the venerable picture rating / dating site HotOrNot.com.  One of the pillars of the reinvention of the company was to transition from a subscription model to a free, advertising supported model.  Here's an excerpt:

But what happens when an advertising model DOES provide an adequate amount of revenue, even if just for 2 or 3 people? That means it is now possible to offer the same scale of services and still be profitable, entirely on an ad model… and from the customer’s standpoint, if they can do something for free versus the same thing for charge, which do you think s/he is going to pick? This has enabled free sites like Myspace, Facebook, and PlentyofFish.com to pop up, and it is a real long-term threat to most subscription sites.

There is no doubt in my mind that HOTorNOT’s traffic started to drop around 2004 due to free alternatives, primarily social networking sites. It’s not that these services made HOTorNOT worthless to users, it’s just that they had alternatives occupying their time.

Yesterday, James posted that they were going back to a subscription model, primarily due to sophisticated scammers that were using IMs gleaned off of HotorNot for scams:

The level of sophistication of some of these outfits is astounding. It is not a few amateurs here and there doing it as individuals, they are organized outfits that operate like call centers. We found that there were people whose job it is specifically to get IM addresses out of people, at which point the target is passed along (like a call center escalation) to someone who speaks better english to work on chatting the person up and eventually extracting money. In a nutshell, they train specialists on each step of the scam! Because these are actual human beings doing it, they can pretty much get around automated detection systems, and they usually do the dirty work once they are off our system and on IM (where we can't model them anymore).

Personally, I'm surprised to see them jump right back to the paid model after just three months,  as opposed to experimenting  with things like banning IP addresses from certain countries (419 anybody?).

My two cents for what it's worth: I wouldn't be surprised if building Facebook Apps is becoming the true passion of HotorNot.  Under this scenario, the cash cow that is a paid HotOrNot could be used to fund the further development of this model.  Just speculation.   

Comments

[james hong]

we actually ran the free experiment for 6 months..

we've banned ip's from specific countries for a long time now.. we did a lot to fight the spammers.. but they are fairly intelligent people and get around things. banning IP's is especially easy to get around, the spammers just setup machines in the US to proxy through.

james

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