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Breaking News: Yahoo! Acquires Latest Internet Sensation For $3.6 Billion (Oh Wait… That Was 1999)

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!

When Yahoo! acquired the company, users were in an uproar and started leaving it immediately. In particular, controversy brewed over the new terms of service, which stated that the company owned all rights and content, including media such as user-uploaded pictures. Yahoo! quickly reversed the new terms. (Sounds a bit like Instagram’s recent Terms of Use fiasco, and reversal, doesn’t it?)

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?

Tweet: Yahoo! Acquires Latest Internet Sensation For $3.6 Billion (Oh Wait…That Was 1999) http://ctt.ec/S2dVU+ via @skillcrush

Leslie Zaikis

Leslie runs point on Skillcrush sales, marketing, and business development. She previously ran business development for a digital media startup and worked as a management consultant in Washington DC.

Outside of Skillcrush, Leslie can be found reading dystopic fiction, scouting NYC for the city's best nachos, or at SoulCycle.

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