Classmates.com 2009 Annual Report Download - page 18

Table of Contents
We expect competition in the floral network services market to continue to increase as well. We believe we will continue to experience
increasing competition from the other floral network services providers. In addition, we expect retail florists likely will continue to lose sales to
supermarkets and nationwide floral marketers, which likely will result in a continuing decrease in their revenues and in the number of retail
florists. As the number of retail florists and their revenues decrease, competition for the business of the remaining retail florists will intensify.
Online Social Networking
The social networking market is highly competitive and is characterized by numerous companies offering varying online services. This
market has been rapidly evolving to respond to growing consumer demand for compelling social networking services and functionality. As this
market continues to evolve, we believe that demand will be met by a number of social networking companies. In addition, we believe a large
number of social networking users generally will continue to register with and frequent more than one social networking service. We believe the
factors that drive long-term success are the ability to build a large and active user base and the ability to monetize that user base through
subscriptions and advertising. We believe the principal competitive factors in this market are the size of the user base, volume and quality of
user-generated content, price of the service, and the scope and quality of features. We believe that we compete favorably in certain of these
areas, although certain of our competitors have an advantage over us in some or all of these areas.
Our social networking services compete with a wide variety of social networking Web sites, including broad social networking Web sites
such as Facebook; a number of specialty niche Web sites, including LinkedIn and MyLife.com, that offer online social networking services
focused on particular affiliations such as school or work communities; and schools, employers and associations that maintain their own Internet-
based alumni information services. We also compete with a wide variety of Web sites that provide users with alternative networks and ways of
locating and interacting with acquaintances from various affiliations, including online services designed to locate individuals such as White
Pages and US Search, Internet search engines that have the ability to locate individuals, including by finding individuals through their profiles on
social networking Web sites, and Web portals such as Yahoo!, MSN and AOL. We believe that there are currently only a small number of
competitive online social networking services that are focused specifically on our niche of the market, which is to help people find and reconnect
with enduring relationships and important memories from school. However, as the membership bases of social networking Web sites continue to
grow, users may be able to locate individuals from their past, free of charge in certain cases, without having to use a niche Web site or other
online search service. As a result of the growth of the social networking market and minimal barriers to entry, a number of companies have
entered or are attempting to enter our market, either directly or indirectly, some of which may become significant competitors in the future. In
addition, many existing social networking services are broadening their service offerings to compete with our services.
Internet Access Services
We compete with numerous other dial-up Internet access providers as well as providers of broadband services. Our key dial-up Internet
access competitors include established online service and content providers, such as AOL and MSN, and independent national Internet service
providers, such as EarthLink and its PeoplePC subsidiary. We believe the primary competitive factors in the dial-up Internet access industry are
price, features, coverage area, scope of services, speed, and quality of service. While we believe our dial-up Internet access services compete
favorably based on these factors when compared to many other dial-up Internet access services, we are at a competitive disadvantage relative to
some or all of these factors with respect to the services of certain of our competitors. Our
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