Leaf Group

Type:	Public
Industry:	Internet, Social Media
Founded:	Santa Monica, 2006
Founder(s):	Richard Rosenblatt
Headquarters:	1299 Ocean Ave., Ste. 500 Santa Monica, CA 90401
Country:	USA
Businesses:	eNom
Employees:	550 (2009)
Revenue:	$198.50 million (2009)
Website:	demandmedia.com
Twitter:	@DemandMedia
Key People
Richard Rosenblatt, CEO and Founder Shawn Colo, Co-Founder, Head of Mergers & Acquisitions Charles Hilliard, President and CFO Byron Reese, Chief Innovation Officer

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.

Demand 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.

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

New gTLD Application

On May 8, 2012, During a conference call, Kristen Moore, Demand Media'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 is still on-going. Domain Name Wire reported that Demand Media selected two back-end registry service providers as partners.

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

History

Demand Media 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, Demand Media 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.

Business Model

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

In order to generate content topics, Demand Media 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.