United Online’s Plan to Throw Classmates Under a Bus

Before you heard "Web 2.0" and "social networking" thrown around, there was Classmates, a Web 1.0 survivor that allowed you to register for the site, add your schools, and begin searching for those long-lost friends and acquaintances who knew you way back when.

Someone better at accounting than I am would have to explain the rationale of spinning off a company you bought three years ago for $100 million in an IPO valued at $125 million, of which $50 million goes back to the parent company to repay notes plus interest, while the parent company maintains majority ownership by holding all the "Class B" shares. To me it looks like raising some quick cash with a risky business move that will probably (ultimately) fail.

Classmates has held on for this long with a freemium model; they lure you in with the registration and allowing you to see what classmates of yours have registered, but if you want to see all the information (like who they married and how many kids they had and whether or not they got old and boring), you have to pay for a subscription.

In a world where Facebook is gaining more and more market share in the social networking arena, and even LinkedIn allows you to search by school, Classmates is already facing an uphill battle. It has none of the neat add-ins of Facebook and a small (and infrequently used in my circles) and hobbled networking system compared to that of LinkedIn. It would have made more sense to shop the site around to other social networking sites; Classmates boasts 50 million registered users, some of whom may not be as tech-savvy as those who have moved on to Facebook. (My undergrad class on Facebook appears to be less than 1/20th the size as it is on Classmates).

Along with the sacrificial offering of Classmates, Universal Online is bundling in the loyalty rewards/marketing service MyPoints. Anyone still using MyPoints may want to redeem their points as quickly as they can.