Solid State UX

4:14am,  Brooklyn

Demand Media is Profiled in the November Wired: "Fast, Disposable, and Profitable as Hell"

Last week, I tossed and turned over the successful online publishing formula of Smashing Magazine.  Simple sounding in principle, Smashing’s approach is to develop enduring, high-quality content and to cultivate an audience with it.   Each post is packed with value and is published to a hungry base of Tweeps and RSS subscribers, becoming  instantly SEO’d upon publication.  If this was easy to do, then Smashing wouldn’t be such an outlier (see table below), and I would be sleeping soundly in a villa on Bequia instead of up right now writing this.    Tonight, my insomniac ramblings are focused in another direction, on a profitable online publisher who takes the exact opposite approach: cranking out low-quality content and spending as little as possible on it’s production.  Reading the new issue of Wired (November), I was fascinated and disturbed by the story of Richard Rosenblatt and his Demand Media.  Quoting Daniel Roth, the author, “Here is the thing that Rosenblatt has discovered.  Online content is not worth very much.”  The art, therefore, is in cost control – which is done in two ways.  1) Demand channels The Algorithm to tell them precisely what consumers are searching for, where gaps in the existing online content exist, and what advertisers might be willing to pay for.   2) Demand hires a new breed of freelancer who is expert at cranking out passionless, utilitarian content at wages that would make your average Hyderabad call center rep storm out in protest.

If eHow posts on paper nurses hats, you can bet someone was searching for it in Google

Looking at one of Demand’s key properties, eHow, tells the story of how this game is even more profitable than the Smashing formula.   Snooping around the Google index will reveal that  eHow has over 750,000 articles – and clocks in at a 27 on my CVPP scale (CVPP = Compete.com Visits per Page of content*)  27 is the lowest number by far of any of the sites I have looked at in the how-to or media space, but with so much content, their overall traffic is astounding.  If you accept that the CVPP number maps roughly to the levels of content quality and/or audience loyalty, you’ll see that eHow has neither.   And I don’t think they would even argue that point.  It’s clearly not their business model.  If you factor in their average production costs of $20 per article, and not much more for videos – with that kind of traffic – you will conclude that eHow must be fabulously profitable, especially if you buy their claim that they are also good at maximizing the ad rates they get for the content they choose to develop.  Now throw in their 170,000 YouTube entries and the content they produce for the other sites in their network, and you get a sense of the scale of this thing – at least 50% bigger than About.com, a first-mover and stalwart who has been building up content online since 1996.   And what’s really scary is that Demand’s goal is to get to one Million pieces of content a month.

Compete.com Visits Per Page of content (CVPP) - Sep.09

This leads me to a broader point about algorithmic content generation.   This is clearly going to be a problem for Google if this trend continues.   You can catch a glimpse of this dystopian future of robo-content in the world of online wine information.  The Wall Street Journal called out the miserable state for wine consumers online back in April in What’s Wrong With Wine on The Web? While complaining broadly about a number of bad shopping experiences from online wine retailers, they cited the number one problem as being “phantom” inventory.  If you try and Google a specific wine online, you’re odds of getting a useless result from the likes of Cork’d or Snooth is amazingly high.   Both of these sites automatically generate a blank review page for every wine in their database, whether or not they have anything to say about the wines and whether or not they can link to someone who actually sells the wine.  Sometimes they have a single generic  50 word review, a page of stale comments, or even nothing at all, and get surprisingly good SEO in Google.   All the insightful commentary about the wine is either with the bloggers or the wineries themselves (who are much less well SEO’d), or locked behind the paying subscriber wall at WineSpectator.com.     But thanks to the likes of Demand media, there is a thriving online market for generic how-to information on such topics as How To Open a Bottle of Wine.  C’mon now, really?  This is where The Algorithm tells us where to invest our energies as publishers?  Just how uninspiring will the learning experience of the future be if one chooses Google as their entry point?

eHow's How to Open a Bottle of Wine tutorial.

But Demand has one thing in common with Smashing – they both take the guesswork out of online publishing success.   They are both forward-looking and focus on audience needs.  One does so with mathematical precision and a cynical emphasis on profitably answering the little questions of daily life (every last one of them); the other does so the old-fashioned way, by cultivating an audience, asking them what they want to read about, and publishing great, timely content.   And together, they’ve managed to overturn some conventional thinking in the world of online publishing.  The main insight for traditional publishers:  repositories of existing content aren’t nearly as valuable as you think they are if you are not publishing to an online audience who is waiting for that content.  That’s a scary thought, of course.  Because that means a publisher’s true assets are what it does in the future online, not monetizing what it has done in the past.    How are  traditional publishers, the great and worthy stewards of our culture, going to rise to meet this challenge?

Related Posts on SolidStateUX:

Things I Lose Sleep Over – Smashing Magazine.com
*see this post for more information on the CVPP measure

Related Posts from Around the Web:

The Answer Factory: Demand Media and the Fast, Disposable, and Profitable as Hell Media Model – Wired

The Age of Mega Content Sites:  Answers.com & Demand Media - ReadWriteWeb

Tim Armstrong’s Secret Project Is To Turn AOL Into A Low-Cost Content Machine – TechCrunch