Classmates.com 2004 Annual Report Download - page 6

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Community-Based Networking
Connecting millions of users primarily across the United States and, to a lesser extent, Canada, Germany and Sweden, our community-
based networking services provide a platform to acquire, organize and present user-generated content. Membership in our networking service is
free and allows users to post a personal profile, access and search our database of other registered members and conveniently search and review
personally relevant online communities from school, work and the military. Our pay service also enables subscribers to communicate with other
members and is offered through various pricing plans, generally $39.00 per year or $15.00 for three months. Our community-based networking
properties also contain several advertising initiatives throughout their Web sites.
Web Hosting
Our Web-hosting services, which include domain name registration services, are offered through various pricing plans, generally $7.99 per
month. Our pay Web-hosting services differ primarily from our free Web-hosting services in that the free service requires the Web site to
incorporate advertising placements.
Premium Email
NetZero and Juno offer premium email services with expanded features and storage capabilities through various pricing plans, generally
$9.95 per year. We also offer personalized, vanity email services with enhanced features and storage for $1.99 per month.
Advertising Services
We connect advertisers to consumers through a variety of online marketing properties integrated throughout our services. Our advertising
and e-commerce products include a broad range of targeting techniques for online advertising, email campaigns, start-page placements and
channel sponsorship opportunities, and the ability to deliver video commercials online. We also provide consumers convenient access to third
party Internet search services throughout many of our Web properties and services and generate a significant portion of our advertising and
commerce revenues from our users utilizing such search services. In addition, we offer advertisers sophisticated market research capabilities
through our CyberTarget Division, which can design and execute customized, real-time market research in an Internet environment and help
advertisers better understand their target audience.
INDUSTRY BACKGROUND
Internet Access
Analysts' estimates indicate that, as of the end of 2004, approximately 73 million U.S. households had some form of Internet access,
representing about 70% of U.S. households. Of these "Internet households," analysts' estimates indicate that approximately 45 million use dial-
up access, 27 million use broadband access and a small percentage use both dial-up and broadband. The number of households using broadband
has grown significantly over the last few years, while the number using dial-up has declined. This decline has resulted primarily from users of
premium-priced dial-up access migrating to broadband services. Additionally, there has been a migration of premium-priced dial-up users to
value-priced services, like those offered by United Online. Although long-term projections vary greatly, most analysts expect these trends to
continue.
There are several thousand dial-up access providers in the U.S., with a small number of nationwide providers dominating the competitive
landscape. The top four providers, including United Online, currently account for a significant majority of the U.S. dial-up market. All of these
providers, except United Online, offer premium-priced services as their primary offering, and two of them, America
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