Network effects in two-sided markets : why a 50/50 user split is not necessarily revenue optimal

Sebastian Voigt ; Oliver Hinz

Our study applies empirical scrutiny to the network effects of a leading European online dating platform. While one might expect equal gender representation on such a platform to yield the best user experience and the highest revenue per user, our analysis shows that the platform requires only 36.2 % of its user base to be female to maximize revenue, primarily because women exert stronger positive cross-side network effects on men than vice versa; this optimum results in 17.2 % higher sales than a 50/50 split. Intermediaries of two-sided markets can use our model to improve user acquisition strategies.

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Year of publication:	October 2015
Authors:	Voigt, Sebastian ; Hinz, Oliver
Published in:	Business research. - Heidelberg : Springer, ISSN 2198-2627, ZDB-ID 2426376-X. - Vol. 8.2015, 1, p. 139-170
Subject:	Network effects \| Two-sided markets \| Online dating \| Willingness to pay \| Revenue optimization \| Netzwerkökonomik \| Network economics \| Theorie \| Theory \| Zahlungsbereitschaftsanalyse \| Konsumentenverhalten \| Consumer behaviour