The core functionality of these apps is very cheap to build, ideally these apps should be near free.
What match.com does is capture the network. When a new cheap and better network appears, they offer the founders the kind of cash that simply cannot be earned by running their original network. For eg, okcupid was free. There was no way to make money from it. And then as per their plan - they ruin it.
1) Make a non-ruined dating product.
2) Get users. Should be easy because the incumbents are intentionally ruined and turnover is high.
3) Profit. (Match Group buyout)
Worst case they run out of money and you have a successful dating product which continues to siphon their users because it's the non-ruined one.
Not sure why it's so hard to make money from something like that. Sell flowers and chocolate and movie tickets to a captive audience. Do promotions for entertainment venues. Be Groupon for dating stuff.
The math you are proposing simply doesn't work.
Then why aren't they asking for more money? Match Group to maintain their $30B enterprise has to buy you out or you by being a non-ruined dating site will destroy their entire company by out-competing them. That should be worth substantially more than 1% of the company. (It also seems to be that it is; Tinder got $3B.)
Match Group owns more than 45 subsidiaries. Obviously the size of the network necessary to be viable would support more than one other challenger. But if there were 15 each of size similar to their own subsidiaries, they'd still have to buy all of them or whichever ones they didn't buy would continue to eat their market share by being non-ruined, and then have to be bought for a higher price later.
Match makes shitty products optimized for revenue. Good dating products optimized for users have low revenue and valuation. Match acquires virtually all of them and keeps its monopoly alive and thriving.
There is no point arguing with reality.
The question is, how does that turn out? The theory says people should keep creating dating products to make Match buy, because it costs less to do than they have to pay. That doesn't mean it happens instantaneously. It doesn't mean they can't buy some of them. But it's an evolutionary process. They buy the ones they can buy, until one shows up they can't. Maybe because there are too many of them. Maybe one gets too big too fast. Maybe the owners are some stubborn purists who refuse to sell. It hasn't happened yet doesn't mean it won't.
Apparently Facebook is getting into the dating game. They already have the network effect and Match doesn't have the money to buy them. Facebook sucks, but now where's your monopoly?
And what's to stop FB dating from sucking. So the final solution is to replace one monopoly with an even bigger one? That's just talking out of both sides of the mouth.
Where this serves as an instance of irrationality is that the investors in Match keep allowing them to spend money acquiring more products to ruin, as if This Time Things Will Be Different. What they ought to do is spin off what they already own with the hopes that someone less incompetent could potentially un-ruin some of them.