Juno 2013 Annual Report Download - page 27

Table of Contents
our international social networking services to implement the Single Euro Payments Area (or SEPA) initiative, could adversely affect our churn rate.
A number of our pay account subscriptions each month are not renewed or are canceled, which, for the Content & Media segment, we refer to as
"churn." The level of churn we experience fluctuates from quarter to quarter due to a variety of factors, including our mix of subscription terms, which
affects the timing of subscription expirations, as well as the degree of credit card failures. To maintain or reduce the level of churn, we must continually
add new pay accounts both to replace pay accounts who churn and to grow our business beyond our current pay account base. We expect that our churn
rate will continue to fluctuate from period to period. A significant majority of our pay accounts are on plans that automatically renew at the end of their
subscription period and we have received complaints with respect to our renewal policies and practices. As discussed in the risk factors related to
changes in laws and regulations and to legal actions and investigations, the laws being considered and those that have been enacted by certain states
regarding automatic-renewal practices will, and enforcement action or changes in enforcement policies and procedures could, impact certain of our
business practices. We provide automatic-renewal notices to members in only those states that legally require such notices. If we provide such notices in
additional states, or additional states start to require such notices, our churn rate may increase. We also experience an increase in the percentage of credit
card failures from time to time. For example, a large-scale security breach at a retailer may result in the cancelation and re-issuance of the affected credit
cards by the issuing banks, which would impact our ability to charge our members on their old credit cards and if our members do not update their
credit card information with us, their accounts will terminate. Any change in our renewal policies or practices, or in the degree of credit card failures,
could have a material impact on our churn rate. If we experience a higher than expected level of churn, it will make it more difficult for us to increase or
maintain the number of pay accounts, which could reduce our revenues and adversely affect our business, financial condition, results of operations, and
cash flows.
Pay accounts and free active accounts have been decreasing, and we believe such trend may continue. If we are not able to attract visitors to our
websites and convert a significant portion to pay accounts, the number of pay accounts for our social networking services and related advertising
revenues will continue to decline and the business, financial condition, results of operations, and cash flows of the Content & Media segment will be
adversely affected.
Failure to increase or maintain the number of visitors to our websites and members for our social networking and loyalty marketing services or
the activity level of these visitors and members could cause our business and financial results to suffer.
The success of our social networking and loyalty marketing services depends upon our ability to increase or maintain the number of visitors to our
websites, our base of free members and the level of activity of those visitors and members. A decline in the number of visitors, registered or active free
social networking members, or a decline in the activity of those members, could result in decreased pay accounts, decreased content on our websites and
decreased advertising revenues. A decline in the number of registered or active loyalty marketing service members could also result in decreased
advertising revenues. We have experienced a decline in the number of active members. The failure to increase or maintain the number of visitors to our
websites, our base of free members, or the failure to convince our free members to actively participate in our websites or services, could have a material
adverse effect on our business, financial condition, results of operations, and cash flows.
Failure to maintain our standard pricing could have adverse effects on our financial results.
For competitive and other reasons, we have been offering a large percentage of discounted pricing plans on a promotional basis. In general, these
discounted pricing plans offer a subscription term at a significant discount compared to the standard pricing for such subscription term. Any increases in
the
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