ServiceMagic 2009 Annual Report Download - page 69

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Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Search
The Search segment's revenue consists primarily of advertising revenue which is generated primarily through the display of paid listings in
response to search queries, as well as from advertisements appearing on its destination search websites and portals and third party websites and
the syndication of search results generated by Ask-branded destination search websites. Citysearch's revenue is primarily generated through the
sale of local and national online advertising. There are several types of internet advertisements, and the way in which advertising revenue is
earned varies among them. Depending upon the terms, revenue might be earned every time a user clicks on an ad, every time a graphic ad is
displayed, or every time a user clicks-through on the ad and takes a specified action on the destination site. The Company obtains the substantial
majority of its paid listings from third-party providers, primarily Google Inc. ("Google"). Paid listings are normally priced on a price per click
and when the Company delivers a user's click to a paid listing supplied by Google, Google bills the advertiser and shares a portion of its resulting
paid listing fee with the Company. The Company recognizes paid listing revenue from Google as soon as it delivers the user's click. In cases
where the user's click is generated by a third party site, the Company recognizes the amount due from Google as revenue and records its revenue
share payment to the third-party site as traffic acquisition costs.
Match
Subscription fee revenue is generated from customers who subscribe to online personals services on Match.com, Chemistry.com and
Match's other personals websites. Subscription fee revenue is recognized over the terms of the applicable subscriptions, which range from one to
six months.
ServiceMagic
ServiceMagic's lead acceptance revenue is generated and recognized when an in-network home service professional is delivered a customer
lead. ServiceMagic's activation revenue is generated through the enrollment and activation of a new home service professional. The activation
revenue is initially deferred and recognized over 36 months, which is the estimated economic life of an in-network home service professional.
Deferred activation revenue totaled $5.2 million and $3.8 million at December 31, 2009 and 2008, respectively.
Media & Other
Shoebuy's revenue consists of merchandise sales, reduced by incentive discounts and sales returns, and is recognized when delivery to the
customer has occurred. Delivery is considered to have occurred when the customer takes title and assumes the risks and rewards of ownership,
which is on the date of shipment. Allowances for returned merchandise are based on historical experience. Shipping and handling fees billed to
customers are recorded as revenue. The costs associated with shipping goods to customers are recorded as cost of revenue.
Revenue of media businesses included in this segment is derived primarily from on-line advertising, television production and
subscriptions. On-line advertising revenue is recognized each time a graphic ad is displayed or over the period earned, television production
revenue is recognized based on delivery and acceptance and subscription revenue is recognized ratably over the term of the subscription.
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