Demand Media IPO Set for This Week on the Heels of Google Notice

By Demand Studios Review Editorial

Posted On 1/25/11:

This has been one heck of a week for Demand Media. They are on the road pitching their company to investors, promoting the quality of their business model and their content. Then, the worst happens: Google publishes a blog claiming they plan to go after “content farms.”

Now, content farm is a loose term with a somewhat disputed definition. Essentially, though, it’s a company that produces a lot of content from a pool of freelancers who may make a decent hourly wage but aren’t getting much per word.

If you search “content farm” the company named again and again is Demand Media. No doubt this is at least in part due to the fact that Demand Media is larger than a lot of their competitors, like Yahoo’s Associated Content and AOL’s Seed.

Both Seed and Associated Content have grown in recent months, however, and Demand Media websites, especially eHow, continue to dominate searches. Add to this the fact that the traditional old guard of media doesn’t take kindly to content websites cutting into their Google rankings and potential advertising earnings.

Whether or not Demand Media’s content passes the quality sniff test is open for debate. Everyone has an opinion. Personally, I think much of it fits a need in giving quick, easy to digest answers to common questions not answered elsewhere. Some of it, on the other hand, could use some more editorial oversight.

The flagship website, eHow, still has much of the user submitted content from before the switch over to Demand Studios only work. Not to mention, when you pay lower wages you’re going to get what you pay for. Some articles only require quick research and writing, with little fact checking. Others require more attention, but they are likely not going to get the time they need to be fully formed unless the writer and editor are willing to work for really lower hourly wages.

Leaving that aside, many are asking what this may mean for Demand Media. Will their IPO go through successfully or will investors back down under this new threat from Google?

My prediction is that it will go through, but not as successfully as it might have otherwise. Google may have its eye set on knocking content sites off the first page of results, but just how they will manage this remains unseen. Their main plan at this point seems to be crowd sourcing, where anyone using Google Chrome can click a button indicating that the website’s offering isn’t based in quality.

That has a number of potential problems. I’m not the first to bring up the comparison to Digg, who found themselves having to take a more hands on approach when it was discovered that right leaning users were burying anything with a non Conservative message.

Others have questioned if competitors wouldn’t purposely organize in a similar way against one another to knock sites down into oblivion.

It should be noted that Demand Media makes money from more than just content. They have their domain business (eNom), a social media platform called Pluck (now offering a product review function), and have even gotten into developing smart phone apps lately.

Without high search engine rankings for their websites, however, the profits - already disputed - will take a hit.

To quote Bob Dylan, “Things should start to get interesting right about now.”

< Previous Post: An Open Letter To Traditional Journalism

Next Post: Demand Media Removing eHow Revenue Share Articles>

Demand Studios Review Home

Tweet