Classmates.com 2006 Annual Report Download - page 10

COMPETITION
The industries in which we offer services are intensely competitive. Many of our competitors have longer operating histories, greater name
recognition, larger user bases and significantly greater financial, technical and sales and marketing resources than we do. A summary of
competitive factors is set forth below. For more information on competition, see “Item 1A—Risk Factors.”
Internet Access Services
We compete with a broad range of companies for Internet access services including AOL, Comcast, AT&T/SBC, Road Runner, Verizon
and EarthLink. We believe the primary competitive factors in the Internet access industry are price, speed, features, coverage area and quality of
service. While we believe our dial-up services compete favorably based on these factors when compared to many dial-up providers, we are at a
competitive disadvantage with respect to some or all of these factors with respect to some of our competitors. Our dial-up services do not
compete favorably with broadband providers with respect to speed. The limitations on the coverage area of our broadband services and,
potentially, price, may put us at a disadvantage with respect to certain other broadband providers.
Social Networking
Our social-networking services compete for members directly against a small number of companies, including Reunion.com, offering
similar online social-networking services, and against many schools, employers, Web sites, and associations that maintain their own Internet-
based alumni information services. In addition to this direct competition, we compete for subscribers with companies offering a wide variety of
social-networking services including Web portals, Web community services, and other community-based Web sites and personal-networking
communities. We believe the primary competitive factors in social networking are size of user base, volume and quality of user generated
content and scope of features. We believe we compete favorably in each of these areas with our direct competitors, although certain of our
indirect competitors have a competitive advantage over us in each of these areas.
Loyalty Marketing
Our loyalty marketing business competes for members with other loyalty programs that offer competitive online products or services, such
as Ebates, Upromise and Points.com. We also compete indirectly with airline, hotel and credit card programs to the extent they promote online
shopping opportunities. We believe the primary competitive factors are the number, type and popularity of the participating merchants, the
rewards offered, the ease and speed of earning rewards, and the ability to offer members a robust shopping experience. We believe we compete
favorably with respect to each of these factors.
Advertising
We compete for advertising revenues with major Internet service providers, content providers, large Web publishers, Web search engine
and portal companies, Internet advertising providers, content aggregation companies, social-networking Web sites, direct marketing businesses,
and various other companies that facilitate Internet advertising. We also compete with television, radio, cable and print media for a share of
advertisers’ total advertising budgets. We believe the primary competitive factors for Internet advertising are size of user base, the amount of
time users spend on a site, the ability to target advertisements to users and the demonstrated success of advertising campaigns. We believe we
compete favorably in each of these areas, although certain competitors have a competitive advantage over us as it relates to the sale of
advertising on our social-networking and Internet access services.
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