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Will Facebook Kill Classmates.com?
By Mark Evans | August 16, 2007
Classmates.com’s plan to raise $125-million through an IPO is curious for a variety of reasons. The biggest question is why now at a time when the capital markets are increasingly volatile.
Other than Classmates’ parent, United Online, wanting to get $50-million of debt repaid, the biggest motivation for the IPO may be the growing threat that Facebook is going to eat Classmates.com’s lunch. After all, why pay for Classmates if you can get many of the same benefits and services (connecting with friends, high school and university alumni, etc.) when you can use Facebook for free?
With 50 million registered users, 2.7-million subscribers, $152.1-million of revenue last year and a solid brand name, Classmates appears to be a solid business. But if I was betting on the next hot social networking tool for high school and university graduates to keep touch with friends, I’d put my money on Facebook. Of course, you’ll have to wait for Facebook’s IPO to put money on it. Classmates’ filing with the SEC can be found here.
For more thoughts, check out ZDNet. As well, allfacebook talks about how the impact of Classmates’ IPO on a possible Facebook IPO, although his math is wrong. Paul La Monica suggests Classmates’ IPO will be a litmus test for other social networking such as Reunion.com and LinkedIn.com, which may have aspirations to doing a public offering as well.
Technorati Tags: Classmates.com, Facebook
Topics: Web-based Services |
August 16th, 2007 at 11:55 am
Classmates.com doesn’t get it. As Mathew Ingram writes in today’s Globe and Mail (http://www.theglobeandmail.com/servlet/story/RTGAM.20070815.wgtingram16/BNStory/Technology/) opening content to a broader audience could provide even more revenue in the form of advertising. Mathew’s talking about online newspapers, but the same premise works for sites like Classmates.com. Classmates.com charges way too much for their cost-based services. By your stats, they’ve got 47.3 million non-paying users (and I’m one of them). I’d gladly spend more time at the site, and delve deeper into the content, if I didn’t have to pay to do so — and that would mean a lot more advertising impression opportunities and revenue for Classmates.com.
I believe Classmates.com could still have a future despite Facebook because it addresses a specific niche. While the origins of Facebook once lay in addressing that same niche, FB has now become a much more generalized and multi-purpose destination and in doing so is less effectively addressing that niche. Classmates.com still has an opportunity, but they need to wake up to the fact that subscription revenues based on excessive subscriber fees aren’t the answer — open and free access to ad-sponsored content is.
August 16th, 2007 at 12:28 pm
Alan,
Like you, I’m one of Classmates’ 50 million registered users but never done much with it given I just don’t see the value of paying for a subscription.
That said, I do think people in the U.S. are more likely to pay because they have more interest in keeping touch with high school/university friends than we do in Canada. That may have to do with the fact, there are more big cities to live in the U.S. so people tend to scatter more than they do in Canada. Of course, this theory could be completely wrong.
July 10th, 2008 at 6:28 pm
Classmates already runs too many ads to offset their costs.
If I where to pay for a service like this I would expect to see no advertisements at all. It’s filled with dating ads. I am looking for old classmates not a date!