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Demand Media, founded in 2006, is an online media company that quickly grew to prominence by algorithmically assigning and publishing stories based on user-demand signals, such as search and social media trends.
It typically pays authors a low sum of money for these posts, often about $15 per contribution, and assigns posts only when it believes they will generate enough revenue to earn their keep.
Operating a number of prominent brands such as eHow, Cracked, and Livestrong.com, Demand Media has been criticized as a content farm (a charge CEO Richard Rosenblatt has strongly denied) even as traditional media sites like USA Today have partnered with the company to build an inventory of inexpensive content.
In January 2011, Demand Media went public at a valuation of more than $1 billion, making it worth more (on paper) than the New York Times. Filings related to that offering showed that, despite its low labor costs, Demand Media had yet to make an annual profit. The IPO faced intense scrutiny for the media company’s unusual accounting practices as well as the potential danger of a Google backlash against low-value content.
In fact, Google would crack down on “low-quality sites” just a month later, but Demand Media’s properties were largely spared of negative traffic effects. When Google released an update to its algorithm in April 2011, though, traffic to Demand’s eHow fell sharply. By the end of the year, the company’s stock had dropped sharply, and it was losing money. In 2013, Demand also attributed its first revenue decline since it went public to Google search changes. The only healthy component of its business was reported to be its domain registration, which it was attempting to spin off. By 2014, Demand had begun creating its search-oriented how-to content for marketers.
Demand has made efforts to battle its reputation for cheap content. In May 2011, it announced it was seeking to add longer, feature-length articles to its sites, for which writers could be paid up to $350 for stories of 850 words or longer. It also said it was looking to try new story formats and curatorial methods to increase quality.
Demand Media was founded by Rosenblatt, former chairman of MySpace, and Shawn Colo, a former private equity investor. Rosenblatt abruptly left the company and his position as chairman and CEO in 2013. The company also owns eNom, the world’s second-largest domain registrar, and in 2011 bought blog ad network IndieClick and social media developer RSS Graffiti. It owned the liveblogging software CoverItLive from 2011 to 2014, when it was sold to ScribbleLive. In 2013, it announced that it plans to split off its domain registrar division into a separate company and later bought paid craft site CreativeBug.
The New York Times is a daily newspaper published in New York City and generally regarded as the United States’ leading national newspaper. The Times was the third-largest newspaper in the U.S. by circulation as of 2014, with 2.1 million combined print and digital subscribers, though it is by far the most-visited newspaper website. In…