Network Effects in Two-Sided Markets: Why a 50/50 User Split is Not Necessarily Revenue Optimal

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.