Classmates.com 2010 Annual Report Download - page 18

Table of Contents
providers. In addition, we expect retail florists likely will continue to lose sales to supermarkets, mass merchants and floral mass 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 is expected to intensify.
Online Nostalgia Services
As consumers continue to spend more time and money online, the competition for their time and engagement has continued to intensify.
Consumers have a great number of options for online content and entertainment, including, by way of example, websites offering news and
current events, movies, television shows, videos, information about any and virtually every topic, and the opportunity to communicate, socialize
and interact with acquaintances and others. The historical value proposition of our Classmates service competes with major social networking
websites such as Facebook as well as Internet search engines such as Google. Our expanded online nostalgia service continues to compete with
these types of websites, as well as other websites that offer online content and entertainment, such as, by way of example, YouTube with respect
to videos, Hulu with respect to television shows, websites offering games, and websites offering other forms of social media, such as Twitter.
Many of our competitors offer their content and services free of charge. We believe the primary competitive factors are price, features,
functionality, size and engagement of the user base, and quality and scope of the content. We believe we compete favorably with respect to
certain of these areas, although many competitors have a significant advantage over us in certain other areas.
Internet Access Services
We compete with numerous other dial-up Internet access providers as well as providers of broadband services. Our principal 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 dial-up Internet access services do not
compete favorably with broadband services with respect to certain of these factors, including, but not limited to, speed and, in certain cases,
price.
Online Loyalty Marketing
The market for online loyalty marketing services is highly competitive, and we expect competition to significantly increase in the future as
online loyalty marketing programs continue to grow in popularity. Our MyPoints online loyalty marketing business faces competition for
members from other online loyalty marketing programs as well as offline loyalty marketing programs that have a significant online presence,
such as those operated by credit card, airline and hotel companies. In addition, we also face competition for members from online providers of
discounted offerings and coupons. We believe the primary competitive factors in the online loyalty marketing industry are the number, type and
popularity of the participating merchants, the attractiveness of the rewards offered, the number of points awarded for various actions, the ease
and speed of earning rewards, and the ability to offer members a robust, user-friendly shopping experience. We believe that we compete
favorably in certain of these areas, although some of our competitors have an advantage over us in some or all of these areas. We also believe
that the time, effort and expenses required to successfully develop certain of these areas serve as effective barriers to entry.
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