Demand Media's Inside-Out Path to Clicks

Rather than using editors to tell readers what's important, Richard Rosenblatt's latest social media venture finds out what consumers want and gives it to them

By Ronald Grover

Nearly every print media company is struggling to find the right business model in a world where ad revenue is rapidly evaporating and readers are flocking to the Web at an alarming rate. (Full disclosure: Our parent company, McGraw-Hill (MHP), is evaluating "strategic options" for BusinessWeek.) But one serial entrepreneur seems to have found a successful model in an industry badly in need of one. Unfortunately for a lot of hardcore journalists, it may not be the one they envisioned when they were starting out as cub reporters.

Demand Media is a three-year-old company started by Richard Rosenblatt, who launched the e-commerce site iMall in 1999 and is most famous for his stint as CEO of MySpace's parent company—and for priming the social network for sale to News Corp. (NWS) in 2005. As the name of his new company implies, Rosenblatt has turned the traditional journalism model inside out. Instead of editors telling the reader what's important, Rosenblatt has created a media company that produces only what consumers want—articles on such mundane topics as how to stop a runny nose, or videos on how to skateboard, that are then posted on Web sites his company has created. To make it all work, Rosenblatt uses proprietary software that culls search engines to determine the information people are most often requesting—say, on how to make a great margarita (an article Rosenblatt wrote himself).

This isn't The New York Times or The Wall Street Journal. Rather, Demand Media competes with the crush of specialized magazines that cater to those interested in articles on healthy living, lifestyle, humor, and sports. The company has a handful of topic-specific sites, such as those on how to improve your golf game or camp in the wild. It also owns how-to Web site eHow.com and science fiction site Mania. The sites are designed for the Internet user who typically bypasses traditional print media to get information through Web searches. Each site also offers social communities. This is Media 2.0 for readers raised on search and social media.

High Search Rankings

What is unique is the way Rosenblatt defines his editorial mission. After mining for popular terms on search engines like Google (GOOG), Demand Media assigns freelance writers and editors the chore of creating the content. The aim is to deliver articles that have a high likelihood of garnering lots of Web traffic, since users are already eager to learn about the topics. The next time a consumer searches for that subject, the results will include a link directing them to a site where Demand Media has placed the article. For example, an article on how to program a remote for satellite TV's Dish Network (DISH) has generated more than 47,000 page views for eHow.com, the company says. That made it the top-ranked search for "how to program a dish network remote" on Google. Another, on how to find pressure points on the body, was also Google's top-ranked article when the term "muscle knots" was used.

The theory, which appears to be working, is that advertisers will pay to reach readers with specific interests. Think of it as part Google, part Home and Garden.

"I started with my background in social networking, and this is the next iteration of that," says Rosenblatt. "The users tell us the content they want us to provide."

What's so impressive about Rosenblatt's model (or scary, if you're a traditional journalist) is that it costs just about nothing to capture those readers.

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