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Is Friends Reunited Losing Money?

They must be! I didn’t renew my Friends Reunited membership, like I suspect an awful lot of people.. Why? Read on to find out…

A Bit of History

Friends Reunited was a phenomenon, a real home-grown internet success story and everyone loved it, grown out of a card-index in a back bedroom to become a multi-million pound business. There was the usual elements of bullying and trouble – but lets face it, it was just like being back in the school playground!

Back in 2005 Friends Reunited was bought by ITV, a somewhat odd transaction in many peoples minds. The deal at the time was £175m (£120m + £55m in bonuses) for the four year old site that was expected to make £12.4m in that year.

ITV have made some odd decisions in the past, you only have to look at ITV Digital the £788m flop that was supposed to take on BSkyB – it collapsed in 2002 and was later reborn as Freeview. Was this to prove any better?

Fast forward to January 2007 when Friends Reunited decided it would broaden its appeal to older users with a £7m advertising campaign. Gone are the days when it just wanted to appeal to the recent school-leavers and graduates who were going their seperate ways into the big wide world. The time has come to highlight its other services such as its database of universities, work places and local contacts.

Fast forward again to the middle of this year and Friends Reunited has been knocked off it’s pedastal as the number one place to catch up with old friends/flames/enemies – Facebook is the new kid on the block!

Some Opposition

MySpace and Facebook are the new boys (I compared Facebook to Myspace back in May ’07). Rupert Murdoch bought MySpace for $580m, but even that’s looking rough now as Facebook closes the gap in terms of users.

Facebook has it problems mind, the site’s founder is currently being sued over allegations it was built using stolen computer code. Cameron and Tyler Winklevoss and Divya Narinda brought Mark Zuckerberg on board in 2003 to help develop their social networking site HarvardConnection. Mark soon founded Facebook, his former colleagues went on to setup ConnectU, claiming Zuckerberg stole their code and stalled them during his time with them deliberately to get a head start. While Facebook now has 31 million users worldwide, ConnectU has a far less spectacular 70,000.

As you would expect at this point, someone had to try to buy Facebook, Yahoo offered $1bn and was turned down – was this madness? We’ll have to wait and see as most social networking sites don’t seem to have longevity – although the 150,000 signing up everyday might say different.

Friends Reunited in my mind probably made the decision to go for the older market after taking one look at the funky / psychadelic / noisy profiles of MySpace. But I don’t think they expected Facebook to open it’s doors to the wider world resulting in more photo-tagging, hugging, zombifying and comparing than you can shake stick at!

Whichever you prefer, the teen element of MySpace or the full on networking of Facebook, there’s one indisputable fact – they’re both FREE and free is a great business model! Some people still think Friends Reunited is on top – but I doubt it.

Why? Why? Why?

Back to the point – why have I sat down and told you all that?

Because I’m sick of getting adverts in my email from Friends Reunited, I won’t be renewing and I suspect even if I did they’d still send me adverts! I can of course opt-out of receiving mail from them from “carefully screened companies”, but it just seems a change of tack from them to become a mailing list company that tries to sell me life insurance!!

They have to be losing money to even consider doing this to their subscriber base surely?

This entry was posted on Friday, October 19th, 2007 at 5:00 pm and is filed under Blogging & Communities. You can follow any responses to this entry through the RSS 2.0 feed.

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