A four-year-old publishing company called Demand Media, which churns out an astounding 5,700 articles and videos daily, filed with the SEC this month to sell an initial public offering. Their IPO anticipates raising $125 million for a company which has never made a nickel of profit. That would value the company at US$1.5 billion.
The editor of Demand Media is an algorithm which analyzes search terms bought from search engines and ISPs. It digs down a level to see what the question is. If the term is apple pie, what is really being asked: how warm to heat it, what wine goes best with it or how many apple pies were sold in France last year?
This data is then crossed with the advertising value of each, be it advertisers of cookbooks, wines or French vacations. The result is a request for the perfect article that will both answer the question and get maximum ad dollars from an ad network.
Demand Media has been paying writers 1¢ per word, but they are about to reduce that. Soon writers will take a chance, working free and getting some small piece of any ad revenue earned by those ads the article attracts.
This highly hyped and fast-growing online publisher expects to produce one million articles and videos per month soon. They do own some of their own websites which together make them the 17th largest web publisher, according to the Wall Street Journal.
"These content-creation models, sometimes referred to as 'content-farms,' have stirred controversy by churning out poor quality stories," Emily Steel wrote in an Aug. 12th WSJ article.
"Because our business is transforming traditional content creation models and is therefore not easily understood by casual observers, our brand, business and reputation is vulnerable to poor perception," Steel quoted from the IPO filing.
The company was founded in 2006 by the former chairman of MySpace, Richard Rosenblatt.