19 Mar 10

World's Biggest Content Machine

By Andrew Niven, MediaCom Beyond Advertising

Anyone who was in any doubt about the value of relevant content as an attractor of audiences and revenue would do well to look at the inexorable rise of Demand media (http://www.demandmedia.com/). This content-provider start-up is described by Time (http://www.time.com/time/) as a ‘massive content farm’ which has come up with a ‘ruthlessly efficient way to churn out stories and videos it knows will be profitable online.’
 
The company runs a number of popular internet portals in the US, including eHow.com Cracked.com and Livestrong.com that receive 100 million hits a month, more traffic than any of the digital properties of Disney, NBC, ESPN or even Time Inc itself. The company, based in Santa Monica, Calif., is also directing an army of freelancers to write stories that appear in traditional media outlets, most notably in the Atlanta Journal-Constitution's weekly travel section and a Demand executive says more deals with large off-line brands will be announced soon.

According to Time, Demand's co-founder Richard Rosenblatt says he learned from his experience with social networks that there were plenty of people producing reams of content online. "But only 1% of that was relevant to more than just people's friends," he says. "What if we could find a way to find those content creators, tell them what to write and create a broader audience?"

It's a business model that starts with mountains of user-behaviour data, culled from search engines, YouTube and Demand's websites. To make money, the company also needed to factor in advertising data and figure out which keywords are the most lucrative to create content around. All this gets fed into an algorithm that spits out only the most-in-demand story ideas, no human guesswork required.

However Demand still needs humans, namely writers, editors and video producers, to produce its content. That's where its horde of more than 7,000 freelancers comes in. The result is a company that's able to produce profitable content on a scale that traditional organisations can only envy. Demand estimates that it took in $200 million in revenue in 2009. Time further reports that the company envisions its material running alongside stories in more traditional media, sharing revenue and reducing the need for news outlets to produce certain types of service-oriented content. "We're not saying we're going to save traditional media. That's arrogant," Rosenblatt says. "But we're definitely not going to kill it."
That's only part of the company's vision. The other is to keep ramping up its production: more writers, more sites and a lot more stories. One of the tenets in the company's manifesto is "Never rest." With audiences around the world consuming content voraciously 24/7 that’s probably not a bad business model.

Sourced from; Time.com (Spotted by Peter Sanchez, MediaCom Edinburgh).