It was the third-most visited web site on the internet. And Yahoo! shelled out a lot of money to buy it. No, we’re not talking about Tumblr!
On this day in history – January 28th, 1999 – Yahoo! bought GeoCities for $3.6 billion dollars and $1 billion in stock options.
The story of GeoCities may ring a bit too true if you’ve been reading recent tech news. In its story, you can find precious lessons from the dot-com crash of the early 2000s, the never-ending debate of how to keep free services free, and the right (or wrong) way to sustain an internet empire.
If you made a website in middle school in the 90s, you probably hosted it on GeoCities. It was THE most popular free web hosting provider that included all the tools you needed to build a personal website (think SquareSpace or Wix). Everybody was using GeoCities!
Just 2 years later, rumors swirled that Yahoo! GeoCities was not yet profitable. The company had introduced a for-fee premium service and reduced the accessibility of the free hosting accounts, to mixed reviews and success. Analysts and commentators began discussing the imminent shutdown of the service.
The service continued on, but dwindled in popularity. Less than 10 years after Yahoo! took over GeoCities, it announced the official closure of the service in the United States. It was, as many tech publications stated, the end of an era. A story in the BBC stated about the closure, this is “the first proof that you could have something really popular and still not make any money on the internet.”
Are we doomed to lose our free services? How can a “free” business turn into a sustainable business? GeoCities difficulty in transitioning free customers into paying customers is a case study in freemium gone wrong.
More importantly, looking back, what can we learn from history about the business of the internet today? If history repeats itself, what is the fate of Tumblr, Snapchat, Instagram, Vine and more? Is it true that those who cannot learn from history are doomed to repeat it?