Leaf Group

Type:	Public
Industry:	Internet, Social Media
Founded:	Santa Monica, 2006
Founder(s):	Richard Rosenblatt, Shawn Colo
Headquarters:	1299 Ocean Ave., Ste. 500 Santa Monica, CA 90401
Country:	USA
Employees:	400 (2015)
Revenue:	$325 million (2011)
Website:	leafgroup.com
Twitter:	@Leaf_grp
Key People
Shawn Colo, Co-Founder, CEO Byron Reese, Chief Innovation Officer Taryn Naidu, EVP Statton Hammock, VP of Business and Legal Affairs, Registry Operations Jeff Eckhaus, SVP of Business Development

Leaf Group, formerly Demand Media is an online media company focused on buying and creating niche, in-demand content for both outside publishers and its own network of websites including eHow.com, Livestrong.com, Trails.com, GolfLink.com, Mania.com, and Cracked.com.

Leaf Group owns eNom, the world's second largest domain registrar. Recently, Demand and eNom came under fire from ICANN, as Internet security group HostExploit reported that eNom is host to an unusually large number of malicious websites and is a preferred domain name registrar for pharmaceutical spammers.

In 2013 Leaf Group split off its Internet Names section of its business into a newly created subsidiary, Rightside. The move was made to keep the content and domain names sections of the business separate.

Demand also owns web media syndication company Pluck, which has developed commenting and social networking systems for websites to implement.

As of February 2013, Leaf Group is investigating whether to spin its two distinct divisions into separately traded companies. The first would be a media company that enjoys a high amount of web-traffic to its many popular sites and expands via outsourced content creation, while the other would be a registry services company, offering TLDs and domain-related aftermarket solutions.

New gTLD Applications

On May 8, 2012, during a conference call, Kristen Moore, Leaf Group's Vice President for Corporate Marketing & Communications confirmed that the company invested $18 million to become the registry operators of a number of TLDs. Moore did not give any further details about the TLDs because the application process was still on going. Domain Name Wire reported that Leaf Group selected two backend registry service providers as partners.

In June 11, 2012, the company confirmed its application for 26 gTLDs and announced its rights-sharing partnership for 107 gTLDs with Donuts, a start-up registry operator founded and managed by domain industry veterans. Under the agreement, Leaf Group has the right to acquire some of the approved gTLDs from Donuts' portfolio. The gTLDs pursued by Leaf Group represent ecommerce, personal & professional identity, education, entertainment, internet life, sports, small business and social media. In addition, Leaf Group's wholly-owned back-end registry services provider (Leaf Group Europe Limited) will provide technical solutions for its own gTLDs and for Donuts entire gTLD portfolio, which is made up of 307 applications.

Applications

Leaf Group, now as Rightside, has applied for the following 26 applications through its subsidiary United TLD Holdco Ltd. with ICANN: .actor, .airforce, .army, .bar, .cam, .dance, .democrat, .engineer, .fishing, .gay, .gives, .green, .immobilien, .kaufen, .map, .moda, .mom, .moto, .navy, .ninja, .pub, .rehab, .republican, .rip, .social, .wow

A few prominent blogs and community members expressed some concern when Leaf Group (under the name of subsidiary United TLD Holdco Ltd.) passed its ICANN gTLD background checks as part of the Initial Evaluation process. The concern was due to the fact that the company has a history of cybersquatting and thus should not have passed the background checks under ICANN rules outlined in the Applicant Guidebook.

Trademark Clearinghouse Model

In October, 2012 a coalition of the world's most prominent registries, Neustar, ARI Registry Services, Verisign and Leaf Group jointly proposed two models for the mandatory new gTLD Sunrise period and Trademark Claims service involved in the Trademark Clearinghouse that differ from ICANN’s. To excerpt their letter:

"This proposed model simplifies the ICANN model by decreasing the coupling between the Trademark Clearinghouse (TMCH) and registries. The model is as follows:

1. The TMCH generates and maintains a global public-private key pair and provides the public key to the registrars and registries. This can be done simply by publishing the public key on the TMCH website. This website should be provided over HTTPs using a digital certificate from a reputable certificate authority. The DNS records associated with this website should be protected using DNSSEC. We believe that there are no issues with security of the public key and anyone in the world can have access to it.
2. Once the TMCH has authenticated the trademark information provided by the trademark holder, and validated the use requirements for eligibility to participate in sunrise, the TMCH signs the sunrise (trademark) data with its private key. The digitally signed information is referred to as the ‘Signed Mark Data’ (SMD) and is provided to the mark holder. Typically, this would be in the form of a file download from the TMCH website. The SMD includes all of the domain labels (domain names) possible to be used in registrations for the validated trademark (IDN variants excluded).
3. As each TLD begins its sunrise phase, the mark holder selects a registrar and provides the registrar with the SMD as part of an application for a name within the applicable sunrise period. The registrar (or its reseller) has the ability, if it chooses to, to validate the information using the TMCH public key and then forward the information to the registry to create the application.
4. The registry verifies the signature of the SMD with the public key and verifies that one of the labels within the SMD matches the domain label being registered. The registry may also then verify any other information in the SMD to ensure it is consistent with the registry’s sunrise eligibility policies. The application, or domain name, is then created.
5. At the closure of the sunrise round, the registry operator will then make allocations of domain names.
6. The registry notifies the TMCH of the registered domain names for the purpose of notifying mark holders about the fact that a name was registered that matches their mark as well as reporting purposes. These notices will be referred to as ‘Notification of Registered Name’ notices (NORN). We believe that a daily upload of registered names to the TMCH is sufficient for the purpose of generating NORN notices.

This solution also works for those that are conducting ‘first come – first served’ style sunrise processes."

GAC Early Warnings

Leaf Group received a total of 11 GAC Early Warnings, mostly directed at its applications for .army, .navy, and .airforce, which the U.S. and other governments noted were the names of official government institutions and would endager their safety and public image. It also received a warning against its application for .engineer.

PICs

Leaf Group submitted a Public Interest Commitment (PIC) for every one of its gTLD applications. PICs are voluntary amendments that applicants can create, sign, and undertake along with the general registry agreement in order to hold their registry operations to certain standards. They seem to originally have been developed as a way to allow applicants to appease GAC members that may be concerned about how their application stands as is, or how ICANN will be able to ensure a potential registry remains compliant with its aspirations and mandate as it defined in its summary of its proposed operations in the TLD application. Prior to PICs, there was no clear way of defining operating procedures when moving from the long form essays in the TLD application to the Registry Agreement.

Their PICs provide for: open registration policies; geographic names protections; periodic Whois database audits; establishment of a Domains Protected Marks List (DPML); clearly defined parameters of abusive behavior, enforced by a compliance team; limitations on domain proxy and privacy services.

History

Leaf Group was founded in 2006 in Santa Monica by Richard Rosenblatt, formerly the head of Intermix Media and chairman of MySpace, and Shawn Colo, a private equity specialist. In its first two years, Demand raised $355 million in funding from private investors, including $239 million in investment from Spectrum Equity Investors.

In June 2007, Leaf Group hired Charles Hilliard, formerly a Morgan Stanley investment banker and United Online senior executive, as its President and CFO. Around the same time, Demand also acquired ExpertVillage.com, a how-to site, for roughly $20 million. Byron Reese, founder of ExpertVillage, became Demand's Chief Innovation Officer and went on to develop the company's content-generating algorithms.

In October 2013, the company released a statement announcing that Founder and CEO Richard Rosenblatt had resigned and Co-founder Shawn Colo would replace him as CEO. The statement did not give a reason for Rosenblatt's departure.

In 2013 Leaf Group split off its Internet Names section of its business into a newly created subsidiary, Rightside. The move was made to keep the content and domain names sections of the business separate.

Name.com

The prominent registrar, Name.com was acquired by Leaf Group in January, 2013. The reasons for the acquisition were noted as adding a new outlet to sell as many new gTLDs as possible, and bolster Leaf Group's line-up by adding a "retail registrar", given that its current eNom service is a "reseller registrar". Name.com frequently positions itself as a fun and safe alternative to GoDaddy, the world's largest registrar. As Taryn Naidu summarized in a blog post, "[Leaf Group ] now includes 15 million names under management, the most widely used domain name reseller platform, nearly 9,000 business partners, the leading domain name auction service, an interest in 133 new TLD applications and, now, an award-winning retail registrar. In March 2013, it was reported that the acquisition cost a total of $18 million USD.

Business Model

Leaf Group employs freelance writers, copyeditors, and filmmakers through its Demand Studios business to create content for its websites.

In order to generate content topics, Leaf Group employs a set of algorithms. The first algorithm analyzes bulk data purchased from search engines and other sources to determine what terms are being searched for. Then it crunches keyword rates to calculate how much advertisers might pay to appear on pages that include those terms. Then it counts how many pages already include those terms, ignoring the ones with the most established content.

Then another algorithm, called the Knowledge Engine, goes back through the data and analyzes what it was about the terms uncovered by the first algorithm that people wanted to know. It also looks at how profitable titles using similar key words have been in the past in terms of ad revenue. At the end of the process, the algorithm reveals the lifetime value (in dollars) expected to be generated from any resulting content.

Next, a team of freelancing "title proofers" will take the often nonsensical content generated from the algorithms and turn it into legitimate article titles. Approved headlines are posted to the Demand Studios site, where freelance writers and filmmakers can claim them. These freelance workers rush to load their assignment queue with titles they feel they can produce quickly and easily, as pay for individual articles is low.