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This week, United Online, Classmates.com's parent company, announced that it will be getting out of the social networking game since apparently people don't want to pay for a crappier version of the free Facebook. Despite having a system for making money that a Senate committee called "un-American"--having people pay a subscription fee to find out what their high school crush is up to, then instantly signing them up for other paid offers with no more than the click of a "yes" button--United Online's revenue (and with the company's stock price) has been steadily declining over the last year, according to its most recent filing with the Securities and Exchange Commission. But in case you were wondering, Classmate's popup ads aren't going away, they're just going to change, explains company CEO Mark Goldston.
The website will be revamped as a repository for all things nostalgia. Classmates has already been scanning in thousands of yearbooks and will add old television shows, commercials, magazines and newspapers that will remind you of days gone by, Goldston said this week, according to paidcontent.org.
Part of the plan is to make money by reselling print versions of the old yearbooks and nostalgic merchandise, Goldston says. ("Where's the Beef?" t-shirts coming to a hipster near you.)
Classmates.com will still have post-transaction marketing, though Goldston says that there will be far less of it and you now have to fill in billing information before your credit card is charged for anything else.
Goldston takes umbrage with the characterization of Classmates as caving to Facebook. While he acknowledges that the company is launching a new business model that focuses on the site's repository of all things nostalgia, there will still be a social networking element. (Signing up is free, but as before, you will have to pay to communicate with other members, something you can do gratis on Facebook.)
Also, DW incorrectly characterized the controversy over Classmates' marketing in the original version of this post. The original version said that people were offering their credit card over for a one-time fee, then finding additional monthly charges on their statement. There were actually two separate issues. Last year, the U.S. Senate was upset over Classmates' use of so-called "post-transaction marketing", as reported by Nina Shapiro. Someone signing up for a subscription of three months, 12 months, or two years would find themselves signed up for other subscription services by re-entering their e-mail address and clicking a "yes" button. While the company still uses post-transaction marketing, it is a smaller part of the business, Goldston says. And by having you re-enter all of your billing information for additional offers, he argues that it is more obvious to customers that they are signing up for something else in addition to their Classmates membership.
The second controversy was over allegations that Classmates lured people into paid memberships. Classmates recently settled a class action suit brought by people complaining that the site would give the impression a former friend had checked out their profile on the site. You had to sign up for a paid subscription to find out who it was. And in some cases, people said, those old friends were nowhere to be found. Goldston says that while Classmates settled the suit, the company admits no wrong-doing. Classmates never said the person checking out your profile was an old friend, he explains, calling the suit "completely frivolous."