Classmates.com 2011 Annual Report Download - page 8

Table of Contents
retailers have established or increased their presence in the floral products retail market in recent years by adding a variety of floral and related
products to their merchandise assortments. The emergence of supermarkets and mass merchants as increasingly important distribution channels
within the floral products retail market has led many traditional retail florists to expand their merchandise offerings to include giftware, outdoor
nursery stock and seasonal decorations, among other items.
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 services, 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 for fulfillment is one of the various 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, clearing-house services, order transmission, and after-hours telephone answering and
order taking services, as well as floral-related products, such as fresh flowers and containers. 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, the sale of
goods and services, and advertising. We believe that as people age, many will 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 116.6 million in 2010 to 136.0 million in 2015,
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 2010, there were approximately 198 million high school graduates living in the U.S. and
approximately 127 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, is designed to assist members in
finding friends and acquaintances primarily from high school. Consumers can register for free accounts or pay for premium accounts that give
them 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. Our services continue to
serve as platforms for online nostalgia activities and communications, especially related to the high school experience. We are also beginning to
use the Facebook platform as an additional location to access our content and services.
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