GeoCities

What did it do?

GeoCities was a hosting service that let users build and publish websites for free. Pages were placed in neighbourhoods named after real places according to their content: technology sites lived in SiliconValley, entertainment sites in Hollywood. The service was bought by Yahoo in 1999.

Why did it shut down?

Yahoo bought GeoCities in January 1999, close to the peak of the dotcom bubble, for $3.57 billion in stock. After the acquisition, new terms of service handing the company the rights to users' content sparked a mass backlash and users began to leave. Making money from a free service was hard; in 2001 paid hosting was introduced and data transfer on free accounts was restricted. Monthly unique visitors in the US fell from 18.9 million in March 2006 to 11.5 million in March 2009. Yahoo announced the closure in April 2009, and the US version shut down on 26 October 2009.

The story

Opening a web page on GeoCities was like owning a plot of land in a virtual city. Users were called 'homesteaders', and pages were built in neighbourhoods such as SiliconValley, Hollywood or WallStreet according to their content. Launched by David Bohnett and John Rezner in November 1994 as Beverly Hills Internet, the company took off in mid-1995 when it began offering users 2 MB of free home page space.

The growth was dizzying. By December 1995 thousands of new members were signing up every day and more than six million pages were being viewed each month. On 2 October 1997 the millionth homesteader registered. Adverts and a watermark added to pages drew criticism, but the growth continued. Floated at $17 a share in August 1998, the stock rose above $100, and by 1999 GeoCities was the third most visited site on the web after AOL and Yahoo!.

In January 1999, close to the peak of the dotcom bubble, Yahoo! bought the company for $3.57 billion in stock. The merger got off to a bad start: new terms of service handing the company all rights to users' content triggered a mass exodus, and Yahoo! soon backed down. In July 1999 neighbourhood addresses gave way to addresses based on member names. In 2001, amid analyst talk that GeoCities was still not making a profit, Yahoo! introduced paid hosting and restricted data transfer on free accounts.

Visitors steadily drifted away. Monthly unique visitors in the US fell from 18.9 million in March 2006 to 11.5 million in March 2009. On 23 April 2009 Yahoo! announced that it would close the US service and stopped new sign-ups. GeoCities shut down on 26 October 2009, leaving behind at least 38 million pages. Groups such as the Internet Archive and Archive Team moved to rescue that legacy. The Japanese version lived on until 31 March 2019.

GeoCities was one of the first big communities to get millions of people used to publishing their own page on the internet. Its story shows that even a hugely popular product may not survive without making money, and that a place where users feel they belong can quickly fall apart when the acquiring company's priorities change.

Lessons for founders

• In a community built on user content, consult the community before changing your terms of service; a single clause can trigger a mass exodus.
• Build the revenue model for a free service while your user base is growing; restrictions introduced later quickly kill interest.
• When selling your company, ask where the product will sit in the buyer's strategy; when the buyer's priorities change, the product can be shut down.

Sources

1. GeoCities (Wikipedia)
2. Yahoo Quietly Pulls The Plug On GeoCities (TechCrunch, 2009-04-23)
3. Yahoo pulls the plug on GeoCities (BBC News, 2009-04-24)

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