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Summary:

Demand Media has been a controversial and high profile company from the start, not just because of its recent status as the biggest “content…

Richard Rosenblatt
photo: Flickr/Rex Hammock

Demand Media has been a controversial and high profile company from the start, not just because of its recent status as the biggest “content farm”, a term the company hates, but whatever (as an aside, I mentioned on a panel I moderated in Feb at our paidContent2010 conference, for them to embrace the term, if only as an organic, free-range one). It is also because of its equally high-profile CEO Richard Rosenblatt, the amount of money it has raised to date (in excess of $350 million), and questions about it business units and revenue model. Here are some of the questions we can expect answered in its S-1 IPO filing with SEC, presumably sometime in late summer:

How much did Goldman Sachs really invest in the company? Keep in mind it is the bank exploring the IPO and likely to be the lead underwriter of this.

What percentage of Demand’s revenues is its domain business eNom after all? (It also owns BulkRegister, parking company Hotkeys and operates the NameJet drop catching site in partnership with Network Solutions.) After starting as a domain media business, the company has moved away from it and focused on its content and services assets, and has repeatedly said over the last two years that domain is a small part of its business, much to industry observers skepticism on the claim. We’ll know now.

How much growth and revenues are there in its social media products business through its Pluck acquisition? While major media companies including *Gannett* and our own parent Guardian News have adopted the social tools platform, almost everyone on the publisher side I have spoken over the years has mixed feelings about the product, in part for being too unwieldy and not up-to-mark on latest social media and tech innovations (their words, not mine).

How much stake does Lance Armstong own in Demand? He took what was then termed a “significant” stake in the company, after the two did a partnership for the health site Livestrong.

What part of its revenues are the content brands that it owns, including Livestrong, eHow, Cracked, Trails.com and others?

In turn, on these content destinations, how much of revenue is generated from *Google* AdSense or whichever contextual search product it is using? More starkly, how much of it business models it at the mercy of *Google*, in more ways than one?

Then Demand Studios, possibly its most controversial part, called by various names such as “content farm”, “content factory”, “McContent” and other pejoratives: how big a part of the business it really is? The studios were most famously profiled last year in a cover story in Wired that generated a lot of heat all around the media/publishing industry.

How much is it paying its army of freelancers, collectively, to generate all this content, both text and video? Related, how much is it spending in health benefits to its freelancers? We probably won’t get a breakdown, but likely a topline number of some sort.

Some more likely disclosures about how it uses *Google* search terms and optimizes its content around them.

Other business questions that you think might be answered in the S-1? Post it in comments below and we’ll add here.

For a larger picture perspective on the mass produced and/or low-cost content players in the market, including Demand, Associated, Seed/AOL (NYSE: AOL), About.com and others, watch the video below from our paidContent2010 conference in Feb. A writeup of the panel, which I moderated, is here.

Watch live streaming video from paidcontent2010 at livestream.com
  1. How much of their revenue comes from porn/adult and typo trademark domains. These are highly lucrative, and well hidden. Will the lawyers make them come clean? Will Goldman really underwrite a company with these kind of liabilities?

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  2. I don’t understand the application of the word “controversial” in this article. When I hear the word “controversial” used, I would like to know the two opposing issues and moral center of the writer to get a better perspective. Most people use the world “controversial” for sensational purposes.

    I don’t know much about Demand Media but the model appears to be the same and is unfortunate. Whenever you try to “centralized” a service, you can be zero-summed by decentralized efforts that can do a better job.

    Encyclopedia Brittancia was “centralized” while Wikipedia was decentralized and has a lower zero sum as a non-profit. This is the first thing that comes to mind when I read about Demand Media.

    Again, investors and the money they throw around does not carry merits or can override the competitive landscape and challenges in this industry…

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  3. Whether you like Demand’s business, it’s still a business that throws off cash. They owe their ‘success’ to AdSense, and if this didn’t exist, neither would Demand. I would just hope that future potential suckers (investors) are smart enough to look past the current numbers and look closely at Rosenblatt’s actual track record of building companies with some staying power.

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