ServiceMagic 2011 Annual Report Download - page 67

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, services are rendered or merchandise is delivered to
customers, the fee or price charged is fixed or determinable and collectability is reasonably assured. Deferred revenue is recorded when
payments are received in advance of the Company's rendering of services or delivery of merchandise.
Search
The Search segment's revenue consists principally 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 certain third party
websites and the syndication of search results generated by Ask-branded destination search websites. The Company obtains the substantial
majority of its paid listings from third-party providers, primarily Google Inc. ("Google"). Paid listings are 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 when 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 the revenue share
obligation to the third-party site as traffic acquisition costs.
CityGrid Media'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 an ad is displayed, or every time a user clicks-through on the ad and takes a specified action on the
destination site.
Match
Match's revenue consists primarily of subscription fee revenue generated from customers who subscribe to online personals services on
Match.com and most of Match's other personals websites. Subscription fee revenue is recognized over the terms of the applicable subscriptions,
which primarily range from one to six months. Deferred revenue at Match totaled $94.9 million and $57.4 million at December 31, 2011 and
2010, respectively. Match also earns revenue from online advertising, primarily from OkCupid, which was acquired in January 2011. Online
advertising revenue is recognized every time an ad is displayed.
ServiceMagic
ServiceMagic's lead acceptance revenue is generated and recognized when an in-
network home service professional is delivered a consumer
lead. ServiceMagic's activation revenue is generated through the enrollment and activation of a new home service professional. Activation
revenue is initially deferred and recognized over 24 months. Prior to 2010, the period of recognition was 36 months. The change was based on an
updated estimate of the economic life of an in-network home service professional. Deferred revenue totaled $3.8 million and $5.0 million at
December 31, 2011 and 2010, respectively.
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