Classmates.com 2005 Annual Report Download - page 4

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PART I
ITEM 1.
BUSINESS
OVERVIEW
We are a leading provider of consumer Internet subscription services through a number of brands, including NetZero, Juno and Classmates
Online. Our subscription services include dial-up Internet access, social-networking, Voice-over-Internet Protocol (VoIP) telephony, personal
Web-hosting, premium email, Internet security and online digital photo-sharing, among others. We also offer advertising-supported versions of
many of our services at no charge to consumers. On a combined basis, our Web properties attract a significant number of Internet users each
month. Advertisers can reach this audience through the United Online Media Group, which offers marketers a broad array of Internet advertising
products as well as online market research and measurement services.
At December 31, 2005, we had approximately 5.0 million pay accounts representing approximately 6.4 million total subscriptions, and
approximately 17.6 million active accounts. A pay account represents a unique billing relationship with a customer who subscribes to one or
more of our pay services. “Active” accounts include total pay accounts as well as free users who have logged onto our access, VoIP, social-
networking or email services during the preceding 31 days. Active accounts also include those free hosted Web sites that have received at least
one visit during the preceding 90 days and the number of free photo-
sharing users that logged on to the service at least once within the preceding
90 days.
United Online is a Delaware corporation that commenced operations in 2001 following the merger of Internet access providers
NetZero, Inc. and Juno Online Services, Inc. (the
“Merger”). We completed the acquisition of Classmates Online, Inc. (“Classmates”), a leading
provider of social-networking services, in November 2004 and in November 2005, we launched our VoIP telephony service. Our corporate
headquarters are located in Woodland Hills, California.
Consumer Brands and Services
We offer a variety of consumer Internet services, both free of charge and subscription-based, under a number of brands, which include the
following:
Internet Access: NetZero, Juno and BlueLight;
Social Networking:
Classmates, StayFriends and Klasstraffen;
VoIP: NetZero Voice and NetZero FreeVoice;
Web Hosting:
FreeServers, 50megs, Bizhosting and Global Servers;
Email:
NetZero MegaMail, Juno MegaMail and emailMyName;
Online Photos:
PhotoSite; and
Other Services:
NetZero Family Pack, Juno Family Pack and Norton Internet Security.
Internet Access
Our basic pay access services include Internet access and an email account and are offered through various pricing plans, generally $9.95
per month. We also offer accelerated access services, which include accelerated Web surfing and additional benefits such as pop-up blocking,
anti-virus software and enhanced email storage, generally for an additional $5.00 per month, or a total monthly charge of $14.95. Our
accelerated access services utilize compression, caching and other technologies that reduce the time for certain Web pages to download to users’
computers when compared to our basic access services. We offer discounted pricing on our monthly access rates for subscribers that make
extended service commitments, for example a discounted price of $9.95 for our accelerated access plan with a one year commitment. The
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