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Business Segments
9 Months Ended
Sep. 30, 2011
Business Segments
Note 16 – Business Segments

Starting in 2011, the Company has begun segmenting operating results into two segments: Consumer Subscription Services and Transactional Services. This change was precipitated by the fact that effective January 1, 2011, the Company’s Chief Operating Decision Maker (“CODM”) began to review the operating results in assessing performance and allocating resources in a manner based upon the operations of these separate segments.   This change in approach was caused by changes in the structure of the organization due to the restructuring of the Company that took place in the second half of 2010 and was completed at year end.  During this restructuring, the Company closed its unprofitable lead generation business.  As a result of this, beginning in 2011, the Company purchases media separately for each business segment and no longer looks at this purchase as a fungible transaction between the segments.  Additionally, due to the restructuring and turnover among executive personnel, the members of the Company’s management making up the CODM function changed in 2011.

The Company’s CODM reviews the revenue (as it had in previous periods), operating expenses and operating income (loss) information for each of the reportable segments.

The Subscription Services segment derives revenue from monthly subscription services consisting of music content and other services. The Transactional Services segment derives revenue from the development and management of search engine marketing campaigns for third party advertising clients.

Segment operating income (loss) includes allocations of “Cost of media-3rd party,” as well as allocations of “Product and distribution,” and “Selling and marketing.”  There are no internal revenue transactions between the Company’s reporting segments and the Company does not identify or allocate its assets by reportable segment since assets are not a measure used by our CODM function.

The Company does not allocate Administrative Overhead expenditures such as rent, insurance, technology costs and compensation for certain corporate employees such as finance, human resources, information technology and executive staff members.  These are analyzed by the Company’s CODM separate from the Subscription Service and Transactional Service operating segments.

The Company’s accounting policies are discussed in more detail in the Company’s Annual Report on Form 10-K, under the heading, Note 2 – Summary of Significant Accounting Policies.

Segment information for the three and nine months ended September 30, 2011 and 2010 are as follows:
 
    
For the Three Months Ended
    
For the Nine Months Ended
  
(in thousands)
  
Subscriptions
    
Transactional
Services
    
Administrative
Overhead
    
Consolidated
    
Subscriptions
    
Transactional
Services
    
Administrative
Overhead
    
Consolidated
  
September 30, 2011
                                                
Revenues
   $ 2,496     $ 9,830     $ -     $ 12,326     $ 9,495     $ 16,157     $ -     $ 25,652  
Impairment, depreciation and amortization
     -       -       1,654       1,654                       2,061       2,061  
Operating Income (Loss)
     (1,604 )     16       (3,430 )     (5,018 )     (5,799 )     (725 )     (7,371 )     (13,895 )
                                                                 
September 30, 2010
                                                                
Revenues
   $ 4,261     $ 4,916     $ -     $ 9,177     $ 15,234     $ 16,956     $ -     $ 32,190  
Impairment, depreciation & amortization
     -       -       325       325       -       -       972       972  
Operating Income (Loss)
       (466 )     (439 )     (2,763 )     (3,668 )     (266 )     (3,159 )     (7,949 )     (11,374 )