Classmates.com 2010 Annual Report Download - page 8

Table of Contents
Floral wire services, which we also refer to as floral network services, utilize proprietary network communications systems to facilitate the
transmission and fulfillment of orders among their floral network members. Services provided by floral wire services typically include order
transmission, clearing-house, marketing, and other services in support of the floral network. Order clearing-
house services play an important role
by ensuring the flow of payment between a floral network member sending an order received from a consumer and the member receiving and
fulfilling the order, thereby eliminating counterparty credit risk for the floral network members. The growth of floral mass marketers and the
Internet channel has led traditional retail florists to increasingly rely on floral networks to augment their order volumes. Access to incremental
consumer orders represents one of the principal benefits a member receives from membership in a floral network.
Providers of floral network services typically offer a broad range of services that are designed to promote revenue growth and facilitate the
efficient operation of a retail florist's business, including the ability to send, receive and deliver floral orders. Additional products and services
offered by providers of floral network services include: point-of-sale and related technology systems and services, credit card processing
services, e-commerce website services, online advertising tools, telephone answering, order taking, order transmission, and clearing-house
services. Certain providers of floral network services have recently broadened their focus and developed new product and service offerings to
appeal to supermarkets and mass merchants.
Content & Media Segment—Online Nostalgia Services
The Internet continues to evolve and grow as a platform to enable, among other things, social interaction, consumer engagement including
with content, the sale of goods and services, and advertising. We believe that as people age, they develop a strong interest in reconnecting with
people and events from their past.
The number of Internet users age 35 and older is expected to increase significantly from 108.3 million in 2009 to 132.7 million in 2014,
according to eMarketer, a market research firm. Community affiliations based on schools attended encompass a particularly large population of
individuals. According to the U.S. Census Bureau, as of 2009, there were approximately 195 million high school graduates living in the U.S. and
approximately 125 million people living in the U.S. who had attended college. We believe that the occurrence of class reunions among this large
population frequently strengthens an individual's curiosity and nostalgic feelings about school memories, friends and acquaintances, and popular
culture during such individual's years in high school and college.
Our domestic Classmates service, which launched in 1995 as one of the first social networking services, was originally designed to assist
members in finding friends and acquaintances primarily from high school. Consumers could register for free accounts or pay for premium
accounts that gave the members access to more information. As the Internet has matured, a number of other websites and services, such as
Facebook and Google, have provided alternative means for individuals to find and interact with people from their past. Facebook, in particular,
has become a dominant platform for finding and interacting with people online, including acquaintances from the past as well as the present.
While our services continue to serve as platforms for online nostalgia activities and communications, especially related to the high school
experience, the market has evolved, however, so that certain of the core historical value propositions of our services, particularly our domestic
Classmates service, are being increasingly fulfilled by alternative services that are free to the consumer. Our international services have been
affected by these alternative services to a significantly lesser extent to date than our Classmates service.
During 2010, partially in response to competitive issues created by alternative services, we made the strategic decision to expand upon the
historical value proposition of our domestic Classmates service, which has recently been rebranded as Memory Lane. Our objective is for
Memory Lane to be the premier U.S. website to access, acquire, interact with, and share nostalgic content.
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