Demand Media: Wikis

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Demand Media
Founded	Santa Monica, California (May 1, 2006)
Headquarters	1333 Second Street #100 Santa Monica, California, USA
Key people	Richard Rosenblatt, Co-Founder, Chairman and Chief Executive Officer Shawn Colo, Co-Founder and Head of M&A Charles Hilliard, President and CFO
Industry	Internet
Revenue	$200 million USD (2008) ^[1]
Employees	500 (2008) ^[2]
Website	www.demandmedia.com

Demand Media, Inc. is a privately held online media company that operates leading online brands such as eHow, Livestrong.com and Cracked.com, and is known for creating online content based on a combination of measured consumer demand and predicted ROI. The company also provides social media platforms to existing large company websites and distributes content bundled with social media tools to outlets around the web.^[3]^[4] The company also owns eNom, the world’s third-largest domain registrar.^[5]

Demand Media was created in 2006 by a former private equity investor, Shawn Colo, and the former chairman of MySpace.com, Richard Rosenblatt.

The company employs an algorithm that identifies topics with high advertising potential, based on search engine query data and bids on advertising auctions. These topics are typically in the advice and how-to field. It then commissions freelancers to produce corresponding text or video content. The content is posted on a variety of sites, including YouTube (where Demand Media is one of the largest suppliers of videos) and the company's own sites such as eHow, essortment.com, livestrong.com, Trails.com, GolfLink.com, Mania.com, and Cracked.com.^[6]^[7]

1 History
2 Company
3 Acquisitions
4 Business model
5 Social media
6 Content creation
7 Content syndication
8 See also
9 References
10 External links

History

Demand Media was co-founded in May 2006 ^[8] by Richard Rosenblatt and Shawn Colo. Rosenblatt has a long history of building and selling Internet media companies. As CEO of Intermix Media and Chairman of MySpace.com, Rosenblatt was one of the innovators of Internet social networking. ^[9] Colo is a financial acquisition specialist. He worked for 10 years in the private equity industry as a Principal with Spectrum Equity Investors specializing in media and communications companies. ^[10]

Demand Media raised more than $355 million in financing over its first two years from investors such as Oak Investment Partners, Spectrum Equity Investors and Goldman Sachs.^[11]

In June 2007 Demand Media hired Charles Hilliard, a former Morgan Stanley investment banker and United Online senior executive, as its President and CFO^[12] and acquired Byron Reese's how-to website ExpertVillage.com for about $20 million. Reese became the company's Chief Innovation Officer and developed the algorithm that the company now uses to identify topics with high advertising potential.^[6] By 2008, Demand Media had acquired more than 30 domain name portfolios and owned 65 destination websites. Demand Media’s 2009 revenue was nearly $200 million and was reportedly making a profit, though exact profit figures were not released.^[1]

In July 2008 it was widely reported that Yahoo! was interested in buying Demand Media for between $1.5 and $2 billion. ^[13] Sources close to both companies said Yahoo! executives were attracted to Demand Media’s generation of advertising impressions and its ability to create niche social networks for media sites. Demand Media CEO Richard Rosenblatt later said that the company was not for sale. ^[14] The deal never got past the talking stage. It was reported that Rosenblatt wanted a price closer to $3 billion for Demand Media. ^[15]

Company

Demand Media employs about 500 people. ^[2] Its headquarters are located in Santa Monica, California. Demand Media also has offices in New York, London, Austin, and the Seattle area. Both of Demand Media’s co-founders are still with the company. Richard Rosenblatt is the Chairman and CEO while Charles Hilliard is the President and CFO and Shawn Colo is the Head of Mergers and Acquisitions. ^[4]

Acquisitions

Since 2006, Demand Media has acquired a collection of relatively unknown sites and relaunched them with social networking features and video capabilities that serve specific niche interests^[16] In the company’s first six months it made nine acquisitions, including the purchase of major registrars eNom and BulkRegister.^[17] On November 6, 2008, Demand Media Head of M & A Shawn Colo said the company would continue to buy niche, well-trafficked sites because the company is profitable and still has a lot of cash in the bank.^[18]

In 2008 Demand Media acquired Pluck, a company providing social networking and commenting solutions to other websites, for a reported $75 million in cash. ^[19]

Business model

Demand Media executives say their websites are content-driven to attract visitors by showing up in multiword search-engine queries. The more words that are typed into a search engine, the more specific the search will be. This is called “the long tail”^[20] search. Demand Media attempts to get visitors to its websites with these long-tail searches. It then tries to retain visitors with related content and social media tools. Demand Media also sells social media tools to businesses that want to expand interactions on their existing websites. ^[21] Their social media platforms get 3 billion interactions per month for clients with already well established brands. ^[22] Demand Media buys website content directly from professionals who both create and use the content. It then distributes that content to its own websites and others where they have advertising revenue sharing agreements. ^[23] As of 2008 Demand Media owned 135,000 videos and 340,000 articles. It is the largest contributor to YouTube, uploading between 10,000 and 20,000 new videos per month, and gets about 1.5 million page views per day on YouTube. ^[24]

Demand Media’s acquisition of Pluck.com in 2008 gave it the means to provide specialized content and social media platforms to any website. ^[25] The content comes with advertising attached. The website owners get free content for their sites and split the advertising revenue with Demand Media. This hybrid Internet publishing model has been referred to as Curated Social Content. ^[26] It is a combination of Enterprise Generated Media, such as newspapers, and consumer-generated media, such as blogs.

Social media

Demand Media’s social media tools allow visitors to websites with specialized content, such as golf, gardening or physical fitness, to share their experiences there instead of trying to find others with those interests in a large social networking group.^[16] Demand Media distributes social media platforms to websites of several large companies with a tool called called SiteLife on its Pluck.com website. Social media tools like personas, groups, blogs, comments, ratings, reviews, recommendations, forums, photographs and videos are designed to encourage interactions with the website and the brand.^[27]

Content creation

Demand Media is one of the largest buyers of articles and video for the Internet^[28] through its website. Demand Studios pays thousands of freelance writers, editors and filmmakers to contribute text and video.^[29] Contributors choose among available titles that were previously identified by the company's algorithm. They are paid once their work has been automatically checked for plagiarism^[7] and is approved by editors. Typical compensation is $20 for a video clip, $15 for an article of a few hundred words, $2.50 for copy-editing an article and $1 for fact-checking an article.^[6] Thousands of titles are written and produced each month. The company says it paid out more than $13.6 million to contributors between its creation in January 2008 and June 2009.^[30]

Content syndication

Demand Media has a content syndication platform available to the public called "Pluck on Demand". ^[4] Virtually any owner of a blog or website can add a widget to their webpage that adds content tailored to the subject of the webpage. Content from Pluck on Demand is free of charge and can come with ads. ^[27] Pluck on Demand uses Demand Media’s rights-cleared articles gathered by its eHow and Expert Village websites as well as the BlogBurst Syndication Network. Advertising revenues are shared between Demand Media and the website or blog owner. ^[31] Pluck on Demand also lets visitors interested in related content to communicate with each other through different websites and blogs elsewhere on the Internet. On December 4, 2008, Demand Media announced the availability of Facebook Connect features within the Pluck social media platform. It allowed users on Pluck customer sites to share their community interactions with people on Facebook. ^[32]