Classmates.com 2007 Annual Report Download - page 8

extent, divided into premium-priced services and value-priced services. In general, premium-priced services usually incorporate, in addition to
Internet access and email, a number of complementary features, while value-priced services incorporate a more limited set of features. While the
primary providers of premium-priced services, particularly AOL and EarthLink, continue to offer premium- priced services, they also offer,
either directly or through related entities, value-priced services. Some of these value-priced services are now including many features that are
also incorporated in premium-priced services. As a result, the distinction between value- and premium-priced services is becoming increasingly
unclear.
Broadband Internet access services, once characterized by high prices and a limited coverage area, are now available to most of the U.S.
population at prices that, in some cases, are equivalent to or lower than dial-up Internet access services. However, broadband continues to have a
lower penetration in rural areas when compared to urban and suburban areas, and it may not be as available or affordable in rural areas. Many
broadband providers, including cable companies such as Comcast and local exchange carriers such as AT&T, bundle their offerings with phone,
entertainment or other services, which may result in lower prices than stand-alone services. Pricing in the broadband market varies based on the
geographic region and speed of the service, among other factors, with introductory pricing for slower speed services as low as $10 per month.
Segment Services
Classmates Media
Our Classmates Media services include online social networking under the Classmates brand and online loyalty marketing under the
MyPoints brand. Our Classmates Media services also include international social networking under the Trombi and StayFriends brands. For
additional information regarding our Classmates Media segment, see Note 10—"Segment Information" of the Notes to the Consolidated
Financial Statements, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
Online Social Networking
On our social networking Web sites, we enable users to locate and interact with acquaintances from school, work and the military. Led by
our flagship Classmates Web site ( www.classmates.com ) that serves the United States and Canada, our social networking properties comprise a
large and diverse population of users, with over 50 million registered accounts as of December 31, 2007.
Using our interactive tools and features, our members have contributed to our social networking Web sites a substantial number of distinct,
relevant pieces of content, such as names, school affiliations, profiles, biographies, interests, and photos. Our large membership base and the
extensive user-generated content posted on our Web sites assist us in acquiring new members, and we receive tens of thousands of new free
account registrations each day. We believe this valuable content also brings existing members back to our Web sites, with a significant number
of our members visiting our Web sites on a recurring basis over many years.
Our social networking members can choose between free membership and a paid subscription offering additional features. Free accounts
constitute the vast majority of our social networking accounts. Revenues from our social networking services are derived from subscription fees
and advertising fees. We had approximately 3.2 million social networking pay accounts at December 31, 2007. During the quarter ended
December 31, 2007, our average monthly revenue per social networking pay account was $3.26 per month.
Basic Membership. Basic membership on our Classmates Web site is free and provides members with access to a number of interactive
features. Visitors to Classmates can become free members by
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