rawrrang - 6:56 am on Mar 13, 2012 (gmt 0)

(1) How is PROFIT - not revenue - made in the free dating site business.

As people mentioned, ads. Which is sort of a weird concept to me because then to me that means your real customers are advertisers and not really the users. That idea is really not intuitive to me when you are building a website meant to serve end users...

(2) What is (if exists), the business model, "FREE sites." I have heard there is at least ONE successful free dating site out there.

Advertisers, unless by "Free sites" you mean free only up to certain level of features. Then you just upsell them on an upgrade or add on features.

(3)Why is there only ONE free successful site?

Not enough product differentiation between free sites.

(4) Is the market too small?

Definitely not a small market. Some drivers for the markets:
New internet users = up
Divorce rates = up
Time spent at work (less leisure time to find mates via traditionally methods) = up

The market is definitely big. BUT the problem is that its hard to penetrate the market. Mature market with top 5 players holding most of the market = failure for anything but niche market players. You're not going to beat big guys at their own games and most of the obvious niche based on demographic has been snatched up.

The only opportunities I see now for a free site (or paid) is thinking of a niche market that hasn't been targeted yet, or attacking a niche market with better service/price. But the latter option would be pretty difficult as well because the nature of this business is user base attracts user... good luck winning over users that are already on a service.