If we needed any evidence of the dot com 2 boom being at it's top it's this article in the New York Times.
It's not that plenty of fish's founder, Markus Frind, is making a killing with the web site, I admire him and wish the best.
What I think indicates we're at the top of the market is the fact his advertisers are paying affiliate commissions of 100%. That is just plain silly and clearly unsustainable.
Markus' business model illustrates the point of my curse of the free post a while back; Plenty of Fish is popular because it is free and is profitable because it gets free labour. If Markus had to pay the 120 volunteers who vet photos for the site, that 10 million suddenly looks pretty ordinary.
Anyway, the real gains for people like Markus haven't been in the turnover of the business, it's been in selling the business to big operators. I wonder if that business model too may be coming to the end given the recession talk we are now hearing.
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I disagree that 100% commissions is unsustainable. In fact, it's a common practice in the continuity and fundraising industries to spend 100% of the first sale (or first year's) revenue in marketing acquisition cost. As you correctly point out, the profit is all in the 2nd/3rd/etc. sale.
I've made that model (100% marketing expense or B/E in first year) work for years, with a number of different organizations and so have many others. I don't even expect all the acquired customers to be profitable. If I can get just 10-20% of the acquired customers to be profitable, long-term customers, you can usually achieve your internal ROI objectives. The percentage varies on the industry of course.
I see Plenty of Fish as a great model for a lot of today's Web2.0 startups to try to emulate. Why go the VC route when you can build a fairly sustainable $10MM/year business?
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