7 Comments

Summary:

Demand Media (NYSE: DMD) may have pleased investors with better than expected (or less worse than expected) income losses, but the elements…

Demand Media
photo: Flickr / magerleagues

Demand Media (NYSE: DMD) may have pleased investors with better than expected (or less worse than expected) income losses, but the elements of the business that were once attributes are now the things holding it back: namely, its continued reliance on cheaply produced freelance content and its need for traffic referrals from Google.

Yesterday, Demand Media said that Q3 revenue gained 26 percent, though its losses widened to $3.3 million from $900,000 the year before.

While the company did manage to reduce traffic acquisition costs as a percentage of its revenue, it will simply have to spend more time– and probably money — developing better content. And that means going beyond celebrity deals with the likes of content partners like Tyra Banks and Rachael Ray or recent purchases such as IndieClick, which helps produce independent blogs in areas of fashion and culture.

Demand Media’s best-known business, eHow, has continued to see traffic growth for three straight months. And many believe that Demand needs to move away from what eHow does best — produce low-cost, keyword driven “how-to” articles — in order to establish real credibility. The company has been making some moves to try to address the very uneven quality of its Demand Studios freelance network. At the end of the summer, Demand freelancers received an email telling them that writers with low grammar scores would be placed in the Writer Evaluation Program (WEP).

At the same time, Reuters reported that Demand is in the process of scrapping articles that are deemed to be inferior. That could cost Demand Media $8 million in write-downs, a sign that at the very least, the company is aware of the perception issue and that it is willing to pay to try to fix it.

  1. Demand is taking eHow “high brow,” with feature writers with long lists of credentials and education, and famous people in videos. I see they have hired P. Allen Smith to do YouTube videos, and if the direction the site is moving now is any indication, it will soon be tossing all it’s faithful text contributors — you know, the ones who made it rich in the first place — to the sharks with the “You were contractors. We don’t owe you anything.” excuse. Demand is shooting itself in the foot with the freelance community. Their lack of concern for how they have led on, lied to, and are now destroying the income of thousands of  freelancers who have written millions of articles for them is as unscrupulous as you can get. Every time they make another “exciting announcement,” everyone hunkers down for another bomb blast to the gut. They will soon be in the position where no one will write for them at all.

    Share
  2. David, Demand began their writer evaluation program a long time ago. What happened at the end of the summer is something they call First Look. They’ve cut their available titles to 50 percent (as Rosenblatt mentioned in the conference call) and new titles are available only to those writers with certain grammar scores and expertise in relevant subjects. This effectively closes the studio to most of their freelancers, which is most likely why they did it.

    Amie, Demand can never “shoot itself in the foot with the freelance community.” There will always be a huge pool of freelancers to choose from, as long as Demand is paying. There are many, many writers who will sign up to write for Demand. Especially when they lose the dead weight writer-wannabes and become more credible.

    This is a multi-billion corporation and you’re whining because of its lack of concern for you? Grow up. Oh, and for the record: the writers didn’t make Demand rich, eNom did and continues to do so.

    They haven’t lied to anyone. They came right out and told the entire studio what was going to happen: they are moving into slideshows and video and will be providing less work for writers. What writing they do need, from here on, is from a more specialized group of writers. How much more clear could they have been?

    Share
    1. Oh, Stanley, Stanley, Stanley. I could post screen shots of the Demand Media Studios Forums where even the biggest DMS cheerleaders have been coming out of the woodwork and calling your company out for lying and treating its writers like dog logs. You really don’t want to go there, now, do you? 

      Oh, since you forced my hand, then, here are a few links for your edification: 

      http://www.demandstudiossucks.com/forum/viewtopic.php?f=7&t=5328
      http://www.demandstudiossucks.com/forum/viewtopic.php?f=7&t=5327
      http://www.glassdoor.com/Reviews/Demand-Media-Reviews-E11906.htm

      Dear investors: Sorry, DMS is probably on its last legs. Get out while you can. 

      Share
  3. Victoria Hunter Wednesday, November 9, 2011

    Stanley,

    Demand’s Writer Evaluation Program is recent. Demand previously had a Writer Development Program, which was supposed to improve writers. WEP (vs. WDP) was instituted as one step to weed out writers as it wound down text article production. You are correct about First Look; it was instituted to effectively drive 85 percent of their remaining writers (based on the FL scoring system) out the door.

    Demand is not trying to improve quality, but the appearance of quality. One of their multi-thousand dollar award winning feature writers was roundly mocked on the Demand Studios Sucks forum for her slide show on honeymoons. Slide shows and feature writers will be replacing text articles and regular writers — and DMS is still accepting thin content for this new product.

    Additionally, the people responsible for improving the quality of Demand’s content (Eve Lederman, Richard Lally, Jeremy Reed) are the people who demonstrated they have very little editorial or business skill, driving eHow’s content down into the toilet with every new guideline or gimmick they tried (and often eventually retracted). 

    There is only one way for Demand Media Studios to improve the quality of its content — improve the quality of its content overseers. They need to clean-sweep their editorial offices, or they will spend another three years trying to “guess” what good content is. The fix is so simple, but the investors aren’t aware of the problem (or they’d demand the change).

    Share
  4. DMS would have to make an entire sea change in order to wean itself from poor content. 

    First, it would need not only to show, but to have much more respect for readers and viewers. An eHow reader may want a quick answer, but that doesn’t make the reader stupid. No one wants to find out after spending money and time building the backyard deck that it collapsed the following spring because they didn’t know about footers. And they didn’t know about footers because either a hamstrung or lazy writer or a hamstrung or myopic content editor (whose primary mission is obedience, not editing well) decided that footers were outside the scope of the article. 

    Second, they would have to let go of the layers and layers of guidelines that are designed to set up the appearance of quality, not to produce quality. It is always true at DMS that adhering to the guidelines is more important than writing good content — 100% of the time, guaranteed. In its efforts to produce better content, the DMS knee-jerk reaction is always to change a guideline or add a new one. Never to reassess its methodologies.

    Does using quality references really need to be spelled out in the guidelines if you’re dealing with competent editors and writers? Does it need to be spelled out in such detail that it leads to a writer providing not one, but at least three scholarly or otherwise solid references on how to teach your child to pull up his training pants after going to the potty? How about “How to Ride A Sawhorse”? 

    Keep in mind that it is DMS, not the writers or the editors who come up with these topics. Do you know what happens to writers who write those idiotic titles? Their scores get slammed because even though DMS asks the contractor to write these titles, the editors give silly or amazingly simple topics low grades. Just because. No matter how well the writers write them.

    Which brings me to the third part of the sea-change: The DMS algorithm and the layers (yes, layers) of hamstrung title editors aren’t working. The first is really about coming up with ideas for articles that will get people to click on ads. It has nothing to do with making a valued contribution to the Web, which is what people — not just Google — want. The latter is about, again, the appearance of quality, not quality.

    The various writer improvement programs? A farce. I voluntarily went through the first improvement program. I was given a mediocre assessment at the outset, written by a staff editor who used poor grammar. I listened to the first “class” on my computer. A) It took about twenty minutes just for the various presenters (all staff) to get through discussing their (ahem) credentials. B) The skills training was completely ungrounded in any kind of  scholarship or best practice. In fact, it was nebulous. “I like this lead because I like it” stuff. From then on, for each class, I tuned in, signed in and turned the volume down to zero. After the “course” was over, my exit review was stellar — I had learned so much! I’m tellin’ ya, folks. It’s all about appearances.

    After that, along came the Writer Development Program. Weak writers (who shouldn’t have been hired in the first place) were “bubbled up,” as if from a primordial swamp. If you were bubbled, you would receive training and coaching to improve your writing. In reality, almost no one ever received any coaching. It was only a “three strikes and you’re out” program. (There’s one good example of a lie they told to writers.)

    Then along came WEP, the Writer Evaluation (or Exit) Program. DMS staff admitted it was same thing as WDP — they had simply renamed it because, they admitted, it wasn’t and isn’t about coaching and developing writers. 

    Why do they bother with these undertakings, especially given that they are dealing with independent contractors? Appearances, I’m sure. They are “exciting” new initiatives designed to make DMS writers professional writers. Ain’t gonna happen. 

    So finally, the fourth part of the necessary sea-change: DMS needs to get over its brilliant methods. Yes, those methods brought in billions, but their time has come and is now rapidly leaving. Elvis has left the building. Hiring the cheapest possible contractors, artificial training, layering on rule after rule and micro-rmanaging don’t work for the long term.

    Share
  5. If Demand paid enough for writers to take the time to fact check their content, and the editors did what editors do at real media outlets, the quality would rise. I’m a PR prof’l representing a travel destination. I got so tired of inaccurate features (suggesting a restaurant 45 minutes away from the highlighted attraction, no sense of place in the article) that I attempted to contact the editors several times to offer ourselves as a resource and suggest their writers use HARO, which would have made the writers’ research so much easier.  Of course, no reply. That would have taken too much time.

    Share
  6. “Stanley” sounds like he’s maybe a PR flak for Demand Media, doing damage control, which is what Demand is best at these days. Look, Demand doesn’t owe free lancers a living. When you free lance, you accept the risk that the workload could drop off at any time.
    But Demand does have an obligation to be as honest and upfront about the workload as possible. For months Demand kept hemming and hawing and saying basically nothing about it besides there were some “technical” glitches. Well, that’s BS, as we all know. It could have just said, “Due to changes in the market we are in the process of tweaking our business model and we cannot guarantee the high number of articles anymore.”
    That would have been an honest explanation, and one that didn’t give away too much of its strategy. But no. Demand chose to take the low road, and now it’s stuck in a pile of dung.

    Share

Comments have been disabled for this post