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classmates22Founded in 1995 by a former Boeing employee, was one of the original social networks. The Seattle company, which was sold to United Online in 2004 and continues to maintain a presence along Elliott Avenue, was later decimated by Facebook (which now boasts more than one billion active monthly users).

But United Online CEO Mark Goldston is holding out hope for Classmates in the Facebook era, noting in a conference call this week that “major progress is being made.” Free memberships to the service — which allows individuals to connect with former classmates — quadrupled in the U.S. during the first quarter.

And Goldston said that paid memberships aren’t decreasing as fast as they have in the past, with Classmates losing 78,000 paying subscribers during the first quarter. That compared to 123,000 defections in the previous quarter, and down from 191,000 lost subscribers in the first quarter of last year.

classmatesIt finished the quarter with 2.8 million paid members, a 15 percent decline from the same period last year.

Goldston, who also announced his intentions to leave the company after it spins off the floral delivery unit later this year, said that Classmates users are adding millions of photos to their profiles and that a new user-generated content strategy is working. The company also has added about 200,000 digitized yearbooks, allowing individuals to tag themselves in photos.

“We believe the massive quantity of new content and the influx of new members will revitalize the growth of Classmates, a critical objective of our company,” said Goldston.

United Online’s content and media business unit, which in addition to Classmates also includes MyPoints and StayFriends, was the company’s worst performing unit last quarter. Its revenues declined 17 percent to $32.8 million, while income from operations fell 21 percent.

The Classmates unit also has been shedding employees, including a layoff that occurred three months ago. And its SchoolFeed business, a Facebook app that connects old high school buddies, took a big hit.

“Facebook seems to be constantly changing the methodology that they use, and so people who are app partners are trying to keep abreast of the internal changes that get made there, and sometimes it can be quite a challenge,” said Goldston, adding that it “can wreak havoc” on an app company when Facebook changes its formula.

Do you use Classmates? Think it has a chance to get its mojo back?

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