Classmates.com 2009 Annual Report Download - page 14

Table of Contents
Internet access services. Our accelerated dial-up Internet access services are also bundled with additional benefits including pop-up blocking,
antivirus software and enhanced email storage. Our dial-up Internet access services are available in more than 11,000 cities across the U.S. and
Canada. The current standard monthly pricing for our dial-up Internet access services generally ranges from $9.95 for basic services to $14.95
for our bundled services. We also offer promotional, discounted pricing plans at various times.
Our broadband Internet access services consist of digital subscriber lines (also known as "DSL") services that we purchase from third
parties and resell under our own brands. These services are primarily used as a means to retain users who are leaving our dial-
up services and we
have conducted very limited marketing of our broadband services to the general public. As a result, we have experienced limited adoption of our
broadband services. The current monthly pricing for our broadband Internet access services ranges from $9.95 to $43.95, which includes certain
new customer promotions that feature discounted fees for a limited number of months and revert to a standard rate at the end of the discount
period. Pricing also varies due to connection speed and geographic region.
Our primary strategy for the Communications segment is to manage our dial-up Internet access business for profitability and cash flows. In
certain instances, we seek to extend the business life cycle and cash flows generated by our dial-
up Internet access subscribers by offering them a
broadband alternative to their dial-up service.
Sources of Revenue
We generate revenue from the sale of services, products and online advertising.
Services Revenues
FTD
FTD services revenues consist of fees charged to floral network members for access to the FTD and Interflora brands and the Mercury Man
logo, access to the floral network, credit card processing services, e-commerce Web site services, online advertising tools, telephone answering,
order-taking, transmission and clearing-house services.
Classmates Media and Communications
Classmates Media services revenues consist of amounts charged to pay accounts for social networking services. Communications services
revenues consist of amounts charged to pay accounts for Internet access, email, Web hosting, Internet security, and other services, with
substantially all of such revenues associated with Internet access. Our Classmates Media and Communications services revenues are primarily
dependent on two factors: the average number of pay accounts for a period and the average monthly revenue per pay account ("ARPU"). The
average number of pay accounts is a simple average calculated based on the number of pay accounts at the beginning and end of a period.
In general, we charge our pay accounts in advance of providing a service, which results in the deferral of services revenue to the period in
which the services are provided. We have offered, and may offer in the future, a variety of price points, subscription periods, discounts, and
promotions, both in connection with offers extended to some of our existing accounts and through external marketing channels. Changes in our
offers, the extent to which we make such offers and the percentage of such offers that are accepted, can have a significant impact on ARPU,
profitability, pay account acquisition metrics, conversion rates of free accounts to pay accounts, and retention rates.
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