Demand Media

Content & Media

Demand Media's Content & Media service offering includes leading owned and operated online properties that publish content in text, video, photography, and designed visual formats. This content is published across several key categories on eHow.com, a how-to reference and do-it-yourself destination, Livestrong.com, a health and healthy living destination, and certain niche properties focused on specific interests. It also owns and operates LEAFtv, a lifestyle resource for women that produces high-quality, short-form how-to videos covering stylish living, food and fashion. Additionally, its studioD business develops and executes content marketing strategies and creates custom content for third-party brands, agencies and publishers.

Marketplaces

Through its Marketplaces service offering, Demand Media operates two leading art and design marketplaces where large communities of artists can market and sell their original artwork or their original designs printed on a wide variety of products.

Society6.com, which it acquired in June 2013, provides artists with an online commerce platform to feature and sell their original images or designs on consumer products such as art prints, phone and tablet cases, T-shirts, mugs, blankets, tapestries, wall clocks, duvet covers, shower curtains and throw pillows.

SaatchiArt.com, which it acquired in August 2014, is an online art gallery featuring a wide selection of original paintings, drawings, sculptures and photography that provides a global community of artists a curated environment in which to exhibit and sell their work directly to consumers around the world.

History

Demand Media was co-founded in May 2006 by Richard Rosenblatt and Shawn Colo. Rosenblatt has a long history of building and selling Internet media companies. As chief executive officer of Intermix Media and Chairman of MySpace.com, Rosenblatt was one of the innovators of Internet social networking. 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.

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

In June 2007, Demand Media hired Charles Hilliard, a former Morgan Stanley investment banker, NetZero/United Online senior executive and initial public offering (IPO) specialist, as its president and chief financial officer and acquired Byron Reese's how-to website, ExpertVillage.com of Austin, TX, for about $20 million. Reese became the company's chief innovation officer and developed the algorithm that the company uses to identify topics with high advertising potential. By 2008, Demand Media had acquired more than 30 domain-name portfolios and owned 65 destination websites. It said that its 2009 revenue was nearly $200 million and that it was making a profit, but it was later reported that the company had never been profitable.

In July 2008, it was reported that Yahoo! was interested in buying Demand Media for between $1.5 billion and $2 billion. 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. The deal never got past the talking stage. It was reported that Rosenblatt wanted a price closer to $3 billion for Demand Media.

In August, 2014, Demand Media acquired online art-gallery marketplace Saatchi Art and named the startup's top executive, Sean Moriarty, as the new CEO of Demand Media Inc.

Acquisitions and Dispositions

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 In the company’s first six months it made nine acquisitions, including the purchase of major registrars eNom and BulkRegister. On November 6, 2008, Shawn Colo, head of Demand Media mergers and acquisitions, said the company would continue to buy niche, well-trafficked sites because the company was profitable and still had "a lot of cash in the bank".

In 2008, Demand Media acquired Pluck, a company providing social networking and commenting solutions to other websites, for a reported $75 million in cash. IndieClick and RSS Graffiti were acquired in August 2011. Name.com, a domain name registrar, was acquired on January 7, 2013. Society6 was acquired on June 25, 2013. And Saatchi Online was acquired on August 11, 2014.

In August 2014, Demand Media announced it had successfully separated from Rightside Group, Ltd. and its brands eNom, Name.com and NameJet. As a result of the separation, Demand Media is no longer a provider of domain name services.

In April 2016, Demand Media announced the sale of its brand Cracked.com to E.W. Scripps.

In May 2016, Demand Media announced the sale of its brand trails.com to LoveToKnow.

In February 2017, Demand Media's Airliners.net site was acquired by Verticalscope Inc..

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" 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. Its social media platforms get 3 billion interactions per month for clients with already well established brands. Demand Media commissions specific website content that it then distributes to its own websites and others where it has advertising revenue sharing agreements. 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.

Content is generated via a process in which Demand Media uses algorithms to generate titles, then posts the titles to a screened pool of freelance writers or video creators. The list of available titles used to be over 100,000 but was severely curtailed in the second half of 2011. Typically, writers can claim up to ten titles and then have a week to submit the articles. Format and length are dictated by guidelines. Submitted articles go to an editor (also a freelancer) who can either clean it up or request a rewrite. After writers submit a revised article it is either accepted or rejected. Payment via PayPal is twice a week.

Demand Media’s acquisition of Pluck.com in 2008 gave it the means to provide specialized content and social media platforms to any website. The content comes with advertising attached. The website owners get free content for their sites and split the advertising revenue with Demand Media.

Stock offer

In April 2010, Financial Times reported that Demand Media was planning an initial public offering of shares (IPO), which would mean any acquisitions would be out of the question. IPO filing was completed in August of that year. Shares were at first expected to be offered in December 2010, in a tender that would give Demand Media a value of some $1.5 billion. However, as a result of a Securities and Exchange Commission investigation regarding the company's novel accounting for "long-lived content", the pricing was delayed. On January 12, 2011, the company announced it would price its shares between $14 and $16 each, giving it a valuation of approximately $1.3 billion. Questions were raised about Demand Media's claim to be profitable, given that its IPO filings show that had reported losses for the past several years. Some writers said that the company's accounting practices had been the subject of recent government examination.

Criticism

Demand Media has attracted criticism from Internet watchdogs for being one of the largest buyers of articles and videos, often commissioning low quality articles to cut costs in an effort to mass-produce articles and videos to appear highly on Google search results, purchasing thousands of search engine-driven content from low-paid freelancers to use on its websites to attract advertisers, such as Google AdSense's Simpli.

Demand Media has also been criticized for its methods of accounting, such as capitalizing the costs of content and amortizing them over five years, giving them the appearance of profitability.