Enom 2010 Annual Report Download - page 58

Table of Contents
Content & Media Revenue
We currently generate substantially all of our Content & Media revenue through the sale of advertising, and to a lesser extent through subscriptions to
our social media applications and select content and service offerings. Text articles and videos, each of which we refer to as a content unit, generate revenues
both directly and indirectly. Direct revenue is that directly attributable to a content unit, such as advertisements, including sponsored advertising links, display
advertisements and in-text advertisements, on the same webpage on which the content is displayed. Indirect revenue is also derived primarily by our content
library, but is not directly attributable to a specific content unit. Indirect revenue includes advertising revenue generated on our owned and operated websites'
home pages (e.g., home page of eHow.com), on topic category webpages (e.g., home and garden category page), on user generated article pages that feature
content that was not acquired through our proprietary content acquisition process, and subscription revenue. Our revenue generating advertising arrangements,
for both our owned and operated websites and our network of customer websites, include cost-per-click performance-based advertising; display
advertisements where revenue is dependent upon the number of page views; and lead generating advertisements where revenue is dependent upon users
registering for, or purchasing or demonstrating interest in, advertisers' products and services. We generate revenue from advertisements displayed alongside
our content offered to consumers across a broad range of topics and categories on our owned and operated websites and on certain customer websites. Our
advertising revenue also includes revenue derived from cost-per-click advertising links we place on undeveloped websites owned both by us and certain of
our customers. To a lesser extent, we also generate revenue from our subscription-based offerings, which include our social media applications deployed on
our network of customer websites and subscriptions to premium content or services offered on certain of our owned and operated websites.
Where we enter into revenue sharing arrangements with our customers, such as for the online version of the San Francisco Chronicle and for
undeveloped customer websites, and when we are considered the primary obligor, we report the underlying revenue on a gross basis in our consolidated
statements of operations, and record these revenue-sharing payments to our customers as traffic acquisition costs, or TAC, which are included in service costs.
In circumstances where the customer acts as the primary obligor, such as YouTube which sells advertisements alongside our video content, we recognize
revenue on a net basis.
Registrar Revenue
Our Registrar revenue is principally comprised of registration fees charged to resellers and consumers in connection with new, renewed and transferred
domain name registrations. In addition, our Registrar also generates revenue from the sale of other value-added services that are designed to help our
customers easily build, enhance and protect their domains, including security services, e-mail accounts and web-hosting. Finally, we generate revenue from
fees related to auction services we provide to facilitate the selling of third-party owned domains. Our Registrar revenue varies based upon the number of
domains registered, the rates we charge our customers and our ability to sell value-added services. We market our Registrar wholesale services under our
eNom brand, and our retail registration services under the eNomCentral brand, among others.
Operating Expenses
Operating expenses consist of service costs, sales and marketing, product development, general and administrative, and amortization of intangible assets.
Included in our operating expenses are stock based compensation and depreciation expenses associated with our capital expenditures.
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