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The Beano buys Friends Reunited

Simon Pitt | News | Tuesday 18th August 2009

Brightsolid, part of DC Thomson (publishers of the Beano) have bought Friends Reunited from ITV. Most people probably didn't know (or even suspect) that Friends Reunited belonged to ITV in the first place, let alone imagine that the Beano would buy it from them.

Friends Reunited has had something of an unusual history. In 1999, a couple in Hertfordshire realised they had lost touch with most of their school friends. They decided that, like many things, the solution to this was to make a website. In fact, this was nothing new; sites like classmates.com were already a success in America, and Friends Reunited simply copied the same format of charging people for membership.

The site quickly gathered users: 3000 by the end of the first year, 2.5 million by the end of the second, and fifteen million by 2005. The site was one of the few sites to survive the burst of dot com bubble. For a small website, built by someone who wanted to keep in touch with their friends, it was run as a business. In 2005, the site hired Michael Murphy, Ex-Financial Times executive, as Chief Executive in 2005. And around the same time the site merged with, and rebranded, the antipodean "SchoolFriends Australia & New Zealand".

In December 2005, the site was, quite bizarrely, sold to ITV for £120 million. ITV had big plans for increasing their online presence, linking dating, recruitment and classified adverts to their originally named ITV.com. Friends Reunited was the eighth most visited site in the UK. Profits had risen with additional features like online dating. Jeff Henry (director of ITV Consumer) said at the time of the merger:
The acquisition of Friends Reunited is also a key step in the delivery of our strategy to drive new revenue streams for the company.
In 2005, ITV's aim was to get 50% of its revenues from outside ITV1 by 2012. Part of this plan was to increase the online presence. Things were going well, that is, until Facebook appeared on the scene, and, almost overnight, ITV kissed goodbye to their investment. In 2007, Facebook increased in size by 2393%, while, during the same period, Friends Reunited increased by just 1.2%.

Michael Grade, became chairman of ITV in 2007, and, in his usual stubborn way, refused to hear a bad word about Friends Reunited
Friends Reunited is one of the great undersung jewels in the crown... one of the most important bits of ITV going forward, a massive presence, and it's profitable
This, obviously, was untrue. By 2008, Friends Reunited was hemorrhaging users at a rate of 48% a year.

Then comes now. In August, 2009, The site was sold to Brightsolid, for £25 million, £95 million less than it was worth four years previously. While Brightsolid is a subsidiary of DC Thomson. They run the genealogical site "Find My Past", and no doubt it was GenesReunited that appealed to them. While Friends Reunited has now been made redundant by Facebook, Genes Reunited remains a more original concept. Chris van der Kuyl, CEO brightsolid, said of the deal:
This also marks another step forward in the future strategy of brightsolid, widening its offering to the consumer marketplace, in particular by creating Britain's leading genealogy business
As far as Social Networking goes, Friends Reunited's model has been completely destroyed. They were forced to cancel the registration fee in March 2008. In true business bullshit style, rather than saying they were cancelling the fee, ITV released a pathetic statement saying they were placing a: "reduced emphasis on subscription fees". Now that the bottom has fallen out of the advertising market as well, their business model is almost defunct. Previously, they rely on selling access to other users, which is something of a losing battle. Now they rely on selling advertising, based on their existing userbase, which are decreasing daily. Friends Reunited has always been fighting something of a losing battle. They were never selling a product or a service, but instead providing access to a group of people. These people, in turn, had only joined because there was a critical mass of people already there. It only took a site like Facebook to start offering the same thing for free, and suddenly their business model was blown out of the water. It may have been a happy circle on the way up (as more people joined the value of the site went up) but it was a vicious circle on the way down (as more people left, the value went down).


The Rise and Fall of Friends Reunited

1995: Randy Conrads launches Classmates.com
2000: (July) Friends Reunited launched by Steve and Julie Pankhurst.
2001: The site reaches 3000 members
The dot com Bubble bursts. Friends Reunited survives.
The site is at it's peak, growing by 20,000 members a day
Friends Reunited is the most searched for site in the UK.
Receives 3.6 million hits a day
2002: Reaches 2.5 million members
Jonathan Spencer taken to court over remarks posted on the site.
2003: The Pankhursts give up day to day running of the site
There are 8 million registered members
Value reaches £25 million
Growth begins to slows to 10,000 members a day
A book of members' stories is published
Genes Reunited launched
2004: (February) Facebook launched (membership restricted to Harvard)
Ben Elton's novel Past Mortem heavily features Friends Reunited
2005: (July 19) News Corp buys MySpace
Michael Murphy made Chief Executive of Friends Reunited
Merges with "SchoolFriends Australia & New Zealand"
(December) ITV buys Friends Reunited for £120 million
There are 15 million registered users
Friends Reunited is the UK's eight largest website
2006: (September 26th) Facebook opens to everyone aged over 13
(September) Yahoo offers to buy Facebook for $1 billion. Offer rejected.
The Hussys release a song called "Friends Reunited
The site makes £16 million profit in one year
2007: ITV launch a £7 million TV Advert campaign
The site makes £22 million profit in one year
(October 24th) Microsoft buys a 1.6% share in Facebook for $240 million.
Facebook valued at $15 billion.
2008: Friends Reunited makes £18 million profit (down £4 million)
There are 19 million registered users, but only 1.6 million are active
47% drop in active users
(March) Friends Reunited drop subscription fee
2009: (March) ITV announce they will sell the site
(August) Site sold to Brightsolid Limited for £25 million
Friends Reunited: 290th most popular site in UK
Facebook: 3rd most popular website in the world.
MySpace: 11th most popular website in the world.




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