Full Description

IAC/InterActiveCorp (IAC), incorporated in July 1986, operates diversified Internet businesses in the United States and various jurisdictions abroad. The Company operates in four segments: Media & Advertising, Match, ServiceMagic and Emerging Businesses. Media & Advertising consists primarily of its search business. Match segment is a provider of subscription-based online personals services. ServiceMagic is an online marketplace. Emerging Businesses segment consists primarily of Shoebuy and Pronto. In April 2009, the Company announced the acquisition of Urbanspoon, a online local restaurant guide that aggregates restaurant reviews from across the Web, from newspapers and professional food critics to bloggers and diners. In July 2009, the Company announced the launch of Notional, a video content company.

Media & Advertising

The Media & Advertising segment consists primarily of the Company’s search business, which includes Ask.com and other destination search Websites, through which it provides search and related advertising services, and toolbars and applications, through which it promotes and distributes these services, Citysearch, an online local city guide, and Evite, an online social planning Website. Search services generally involve the generation and display of a set of hyperlinks to Websites, together with a brief summary of information regarding these Websites, deemed relevant to search queries entered by users. IAC provides search services to users who visit its Ask.com and other destination search Websites and portals directly, through toolbars that it distributes to users directly, through toolbars and search boxes that IAC distributes to users through third parties and through the syndication of its search results. Substantially all of the revenue of its search business and Media & Advertising are derived from the display of paid listings and other advertising in connection with the provision of search services. In addition to algorithmic search results, paid listings are also generally displayed in response to search queries. Paid listings are advertisements displayed on search results pages in response to search queries that contain advertiser-selected keywords.

A substantial majority of the paid listings that IAC displays are supplied to it by Google pursuant to a paid listing supply agreement with Google that expires on December 31, 2012. Pursuant to this agreement, IAC transmits search queries to Google, which in turn transmits a set of relevant and responsive paid listings back to IAC for display in search results. The Company also sells paid listings directly to advertisers through Ask Sponsored Listings (ASL). Paid listings purchased through ASL are displayed on the approximately 100 online properties and services affiliated with ASL's distribution network, including IAC properties. The Company also sells display advertising on its portals and other IAC properties through IAC Advertising Solutions.

Through Mindspark Interactive Network, Inc., IAC develops, markets and distributes a variety of downloadable toolbars and applications, through which users can access its search services, as well as creatively and visually express themselves and interact online, which it generally refer to as its FunWebProducts toolbars. The toolbars, which it offers free of charge, generally consist of a search box that it powers (in whole or in part), plus a suite of additional features.

Citysearch is an online local city guide that provides consumer users with local content on merchants and other arts and entertainment categories for cities in the United States, including original and/or locally produced information about a given city's arts and entertainment events, bars and restaurants, recreational and community activities and other businesses (such as shopping and professional services). Merchants that advertise through Citysearch establish a profile page which contains customized content regarding their businesses, coupled with ratings and reviews posted by Citysearch users, Citysearch-generated editorial content and related features, such as links to maps and directions.

IAC provides users with access to its online directory of profile pages and related merchant, user and editorial-content and features free of charge. To access this information online, users must first go to Citysearch.com directly and select a city and/or neighborhood, after which they can search for merchant information through keyword and category-specific queries or otherwise browse its Website. This information may also be accessed online by way of clicking on links or ads appearing on search engine results pages or third party Websites. After accessing a listing online, users can post a review and rating of the related business, as well as forward the information to a mobile device.

The Company provides primarily local advertising services through several online advertising models. IAC sells the substantial majority of its advertising through its Pay-For-Performance model, pursuant to which merchants pay a fixed fee each time their Citysearch profile page is (and in some cases, links to additional merchant information displayed on this page are) viewed, related content appearing on third party Websites is viewed or a user calls a metered number to reach their businesses. In addition to displaying Pay-For-Performance advertising on Citysearch.com, the Company has entered into distribution agreements with third parties to display its Pay-For-Performance advertising on a network of third party Websites and to display advertising sold directly to advertisers by third parties on its Website. IAC markets its services to users primarily through search engines. IAC markets its products and services to local merchants and other advertisers primarily through in-house and outside local sales forces in major metropolitan areas within the United States, as well as through its online self-enrollment model.

Substantially all of the revenues of IAC’s search business and the Media & Advertising segment are derived from advertising, with the substantial majority of these revenues attributable to its paid listing supply agreement with Google. Citysearch revenues are generated primarily through the sale of advertising, predominantly local, Pay-For-Performance advertising, directly to merchants.

Match

Through the brands and businesses within the Match segment, IAC is a provider of subscription-based online personals services in the United States and various jurisdictions abroad. The Company provides these services through Websites that it owns and operates in 40 countries, 15 languages and six continents, as well as through a network of affiliated Websites in various jurisdictions in Europe, Asia, the United States and Latin America, and its mobile application in the United States. As of December 31, 2008, it collectively provided online personals services to over 1.3 million subscribers.

The Company primarily provides services through branded Websites that it owns and operates, including Match.com, Chemistry.com, uDate.com, NetClub.com and related brands. These Websites, all of which provide single adults with a private and convenient environment for meeting other singles, generally provide online personal services to registered members and subscribers. Registered members (or those who establish a username and password) may post a profile on these Websites, as well as use any related searching and matching tools free of charge. Subscribers (or those who establish a username and password and pay a subscription fee) may, in addition to these services, initiate, review or respond to e-mails from other subscribers. Its subscription programs start with a single-month term, with discounts for longer term subscriptions, and primarily renew automatically unless terminated by subscribers. Subscribers in the United States may also access the Company’s services via mobile phone through its matchMobile application for an additional fee.

IAC markets its products and services through a variety of traditional offline and online marketing. The Company’s online marketing activities consist primarily of the purchase of banner and other display advertising, targeted e-mail campaigns and, to a lesser extent, search engine marketing. Its offline marketing activities consist of a variety of traditional marketing and business development activities, including television, print, radio and outdoor advertising and related public relations efforts. Revenues are derived from subscription fees for its online personals services and related products and online advertising.

ServiceMagic

ServiceMagic is an online marketplace that connects consumers, by way of various technologies, with home service professionals that are pre-screened and generally customer-rated. When consumers submit a home service request through the ServiceMagic marketplace, ServiceMagic generally matches them with up to four members from its network of home service professionals, which as of December 31, 2008, consisted of more than 56,000 home service professionals providing services in more than 500 categories, ranging from simple home repairs to complete home building and home remodeling projects.

Through the Market Match service, IAC generally matches consumers with up to four home service professionals from its network based upon service requests that specify the type of home services desired and the consumer's zip code. Home service professionals can elect to be matched directly with consumers through the Company’s Exact Match service, pursuant to which it optimizes the placement of its home service professional profiles in a range of marketing vehicles, including the results of local and other search engines and online and offline directories.

The Company’s Exact Match service provides a way for home service professionals to get exposure for their businesses without having to pay significant up-front fees, build and maintain their own destination Websites or develop online marketing expertise. Consumers can also be matched to a home service professional by way of 1800Contractor.com, an online directory of its network of home service professionals that it owns and operates. Consumers that click on results from a search on this site are ultimately matched to a home service professional by way of the Company’s Exact Match service or, if a match cannot be made through this service, by way of its Market Match service. In addition to its matching services, consumers may also access IAC’s online library of home services-related resources, which includes articles about home improvement, repair and maintenance and tools to assist consumers with the research, planning and management of their home services projects, and general advice for working with home service professionals.

IAC markets its services to consumers primarily through search engine marketing, as well as through affiliate agreements with third parties. Pursuant to these agreements, third parties agree to advertise and promote the Company’s services on their Websites and it agrees to pay them a fixed fee when visitors from their Websites click through to its Website (on a cost-per-click basis) or submit a valid service request through its Website (on a cost-per-acquisition basis). The Company also markets its services to consumers through the purchase of paid listings displayed in yellow page directories, portals and contextual home improvement related sites and, to a lesser extent, through traditional offline advertising and, in certain markets, a branded print directory of home service professionals.

IAC’s revenues are generated from fees paid by members of its network of home service professionals for consumer leads (net of amounts paid to affiliates, where applicable), regardless of whether the home service professional that received the lead ultimately provides the requested service, as well as from one-time fees charged upon enrollment and activation of new home service professionals in its network, and, to a lesser extent, from online advertising. Lead fees vary based upon the home service requested, with fees for leads generated through its Exact Match service being greater than those for leads generated through its Market Match service.

Emerging Businesses

Emerging Businesses segment y consists primarily of Shoebuy and Pronto, as well as Gifts.com, Connected Ventures, InstantAction.com, VeryShortList.com, RushmoreDrive.com, Life123.com and The Daily Beast, among other early stage businesses that provide online content and/or services. Shoebuy, an Internet retailer of footwear and related apparel and accessories, generally acts as an agent in connection with the purchase of merchandise through its various Websites, passing purchases made by customers through its various Websites on to the relevant vendors for fulfillment and shipping. Pronto owns and operates Pronto.com, a comparison search engine, through which consumers can search and compare prices for a wide range of merchandise offered by online retailers. In many instances, Pronto.com has entered into agreements with these merchants to prominently display their products in response to consumer searches. In exchange, these merchants agree to pay a fee when Pronto.com users click through to merchant Websites.

IAC Competes with Google, Yahoo! and MSN.