Terrie Lloyd
Last month, Symantec released some of the results from its annual Norton Online Living Report, compiled by Harris Interactive. In the snapshot on Japan, the report states, “Japan is less likely than othercountries to use the Internet as a resource for socializing and entertainment. It is also less likely than other countries to take steps to protect their privacy and to ensure the security of their personal information (and the safety of their kids).”

While I agree that Japanese parents don’t supervise their kids while on the Internet nor take a lot of care over network privacy, I definitely do not agree about the comment that the Internet is not a medium forsocialization — unless you are interviewing people past their reproductive age — which of course in Japan might be half of the respondents.

Instead, the report writers would have done better to recognize the skewed demographics in Japan and cut off respondents over 50. Then they would have found that in fact online socialization is right up there with other countries, if not more so. Japan’s rigid social structures have always made it difficult for unrelated singles to meet and get to know each other. In the days of old, it was the “nakodo” (go-between) who resolved this problem. These days, it is Match.com or one of an estimated 5,000 other matching websites now active here.

The problem with online dating services is that many of them have been fronts for “enjo kosai” (compensated dating, aka teen prostitution), pairing underage school girls desperate for spending money with middle-aged salarymen desperate for some fantasy sex. Over the years, this has led to highly publicized date rapes (but they’re not really dates), and even a murder or two. All of these nefarious goings on have prompted the National Police Agency (NPA) to yet again announce new measures to bring online dating and related crime under control — this is a regular 3-yearly event, so clearly the NPA hasn’t made muchprogress since the focus on “enjo kosai” in the early 2000s.

In the first six months of 2007, the police say that there were 907 crimes relating to Internet dating and apparently about 85% of the victims were under 18 years old. One measure suggested is that the NPA require the operators of dating sites to be registered with local public security boards. The operators will have to show characterreferences and maintain a contact number in order to keep their license. Unlicensed operators will be fined or face imprisonment.

I don’t know how effective this measure will be. Banning the yakuza is unlikely to have much effect — they’ll simply hire front men or go down to the local park and sign up a homeless person as the owner of the site. This is what they do with underground casinos, and the police havehad little luck in closing them down. Also, the proposed regulations will not cover companies with their servers off-shore, and again, this parallels the gambling business — where the Japanese are the 2nd or 3rd largest customer base for many online casinos even though online gambling is illegal here. The reason, of course, is that users arenot prosecuted — only the service providers. At least men buying school girls are now prosecuted, thanks to the law change back in 1999.

In parallel to the NPA initiative, the Ministry of Internal Affairs and Communications decided several months ago to require cell phone operators to enact filtering on all cell phones registered to minors (normally a minor is a person under the age of 20, but in this case the age will be 18), to protect them from solicitation emails and unethicaldating sites. Again, I can’t see this really working too well, since a determined teenager can simply have a friend supply the phone, or the users will subvert the filtering by using euphemisms for the terms people are actually referring to. Much like “enko” is a euphemism forprostitution.

One site that should not have a problem falling afoul of the authorities is Match.com. It is by far the biggest player in the online dating business globally and has had over 10 years to refine its services and navigateinternational regulations. It has also gained some battle hardening along the way — such as a 2005 class action suit filed over the way it allegedly created fake dates and computer generated “winks” for members just before their subscription renewal dates. This lawsuit was dismissed in 2007, but it nevertheless has allowed the company to thinkhard about its business model and corporate governance in general.

Online dating is a big business. Started in 1994, Match.com became part of the publicly listed IAC Internet conglomerate owned by Barry Diller, in 1999. Diller used to be the former head of Paramount and Fox. In IAC’s 2007 financial statements, Match.com was stated to have made profits of $78 million on sales of $349 million. Approximately 30% of these salescame from international sites such as the one in Japan, and this business is expected to grow at least 300% over the next four years. At the same time, the U.S. business has flattened out — so Match.com has good reason to be focused on Japan and countries like it.

Indeed, Match.com is active in more than 37 countries and its websites are in 18 languages. The company has been operating in Japan since 2004. A recent Forbes interview with the CEO Thomas Enraght-Moony mentions that the site has about 840,000 people living in Japan registered with it, up substantially from the 10,000 or so when they first started.

Although the Forbes article doesn’t say how many of the 840,000 are paying members, an ex-Match.com senior manager did disclose in the U.S. media last year that about 11% of members do pay. Thus, assuming that 92,400 people are paying the currently 2,467 yenmonthly membership fee, this means that Match.com is doing about 2.735 nillion yen a year in Japan — not too shabby, and a number that is likely to double next year.

At first glance, and thinking about eBay and other major U.S. Internet companies’ failures in Japan, it is easy to suppose that Match.com will find it difficult to grow in Japan in competition to Mixi and other SNS and dating sites. However, Match.com has a no-minors policy and hascleverly managed to position itself as a site for professionals and middle-aged folks who are too busy to find a partner by themselves. A quick review of user profiles (yes, we signed up!) shows that divorcees also figure high in users over 30 years old. Until recently being divorced in Japan carried a stigma of the person being emotionally troubled. But Match.com’s personality tests and other tools gives someone worried about getting involved with an undesirable first-time date a bit moreconfidence that their date will be normal.

This idea of focusing on professionals, divorcees going around a second time, older folks, and other more serious seekers is apparently very much a trend overseas as well. Media commentators attribute Match.com’s website redesign and content as being reflective of this. Apparently, people in this demographic group are more likely to become paying members and are more likely to use the service in a way that might lead to testimonials (ie, “I met my husband on Match.com“). Expect Match.com and other companies duking it out in this market to start using TV and paper media ads highlighting these successes.

As far as I can see, there is a huge need for matchmaking sites with sophisticated screening and confidence building tools (such as EQ and IQ tests) here in Japan. Single women in their late 30s are viewed by the popular media as running out of time biologically and as 26-year old pop singer Kumi Koda once famously said on TV, she thought women over 35 have “rotten wombs.” Likewise, men in their 50s are waking up to the fact that there is more than work in their lives.

This is not just an idle observation. according to a 2000 survey done Ministry of Internal Affairs, 12.6% of men and 5.8% of women aged 50 or over were still unmarried. Given the drop-off in marriages, presumably this number has climbed several more percentage points. Combine this with more than 260,000 (2006) divorced couples everyyear, and you’re looking at a potential market of millions of people who are not young, attractive, sexy Mixi poster material.

Yes, Match.com has excellent prospects.

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