The following is a male perspective, but I think the observations should be on par for the other side as well:
First, there is supply and demand. There are not a lot of available women around (once you exclude the spam accounts), and that may very well be in large part due to Hollywood expectations. There are, however, a lot of men. That fact alone means that for most men, this won't work out at all. Once you get past a certain age (say 30), this mirrors the situation of the physical world exactly. At this point, it's a game of playing musical chairs that a lot of us simply can't win. But it only gets worse.
While most of the female profiles portray fundamentally damaged people, the men are overwhelmingly fit, handsome, and great in general. This could mean that women are just more honest in filling out these profiles, but it could also mean that women only join online dating sites if they have absolutely no other alternative left, whereas men create profiles as a matter of course.
So being me, I can't begin to compete with the other guys on attractiveness, or money, or general awesomeness. Not only that, I'm so vastly outnumbered it's not even funny. And the very limited resource we're competing on seems to be mostly reluctant, frustrated women who hate being on the site in the first place.
And in what I can only assume is a typical pattern, I meet exponentially more women AFK than online. Now if it continually isn't working out in meatspace, there is really no reason to assume it's going to be any different if the introduction was through a website. If anything, online-induced meetups are vastly more awkward. At least if you meet organically, it can always be in a friendly non-committal social context. When you meet online dates, it has to be about dating.
I don't think this is fixable. I'm not sure it should be fixable. There are plenty of people who still profit from online dating, but it doesn't really provide any discernable advantages for people who are already at a disadvantage. The perception that there must be someone out there for every single one of us is also a Hollywood myth.
In fact the only reason I can conceive where online dating makes sense is for attractive people who just don't get to meet a lot of potential partners in their daily lives. Now, that's not a small market. It may even be the majority of cases. But it took me a while to figure out that there is not a lot online dating can do for you if you don't belong to that group.
Having friends make your advertising for you doesn't change these mechanics. Of course it might improve the quality of the experience for the above-mentioned privileged group, but at the end of the day I'll have exactly the same odds as on any other dating site. To some degree, all dating sites (even those genuinely interested in making online dating not suck) capitalize on the Hollywood illusion that somewhere out there is my reasonably perfect match. They're playing on the assumption that everyone is dateable, and they in fact have to deceive you into thinking that the world of dating is not as depressing as it actually is.
Online dating works well for people who are already likely to be successful at dating AFK. For these people, online dating could probably be optimized. For others, probably not.