In the early days of the automobile, cars were made one at a time. Then Henry Ford came along and invented the assembly line. Soon, dozens of cars could be assembled in the same time as a single hand-crafted automobile, which drove down costs and made cars widely available to consumers.
Ford famously said you could have any color Model T you wanted as long as it was black. Still, the consumer was the winner.
Last week, Demand Media announced the pricing for its upcoming IPO weeks after a regulatory filing revealing its particular business practices and unique accounting methods resulted in a firestorm of mostly negative reporting.
Demand Media is the Ford of its time. It has created an assembly line for content creation that, when combined with some clever algorithmic machinations and the right domain, result in some excellent SEO. Demand Media's algorithms determine what all the hot or most promising long-tail searches are and then alert its assembly line of writers, videographers and editors about those keywords, who then crank out a few hundreds words of copy or three minutes of video for immediate publication.
While it has its own stable of domains that use the content produced in its assembly lines, it also makes that content (and a few other social media-oriented services) available to marketers and publishers to use on their own sites. Because the content is stuffed with all the right keywords, the sites deploying it often end up ranked high for those topics and / or keywords.
For its own sites, Demand Media says it has been able to drive down the cost of publishing so that the cheap advertising it runs against its assembly-line content nevertheless delivers a profit (though, as pointed out above, that profitability is widely disputed). The company promise similar results for third-party sites.
The best news is, you can have any sort of content you like (as long as it's black).
Said differently, the content is usually more about the SEO it can generate and less about the subject it is supposed to illuminate. The independent contractors who churn out the content are paid small amounts for what they produce, so they have an incentive to produce as many individual pieces of content as they can -- all with the express goal of getting each piece ranked as high in search results as possible.
Several critics of the company and its business prospects have pointed out that Demand Media's business model is overly reliant on Google Search, AdSense and SEO manipulation. Those interested in the quality of search result pages point out that the content is rarely authoritative, often of dubious quality, and usually results in an unsatisfying experience for searchers.
In other words, the consumer is the loser.
For its part, the company points out the ends justify the means: nearly $200 million in revenue and, depending upon which accounting tricks you use, it has been profitable or almost profitable since the beginning. Moreover, the company notes that legions of content producers earn real money for doing the kind of work they love to do.
A big unknown is what Google will do with all this information. Another content factory, Associated Content, which was bought by Yahoo last year, operates similarly, and there are several other up-and-coming content assembly lines. Vivek Wadhwa, director of research at the Center for Entrepreneurship and Research Commercialization at Duke University, says Associated Content produces more than 10,000 new articles a month, while Demand Media has more than 8,000 writers who produce roughly ten times that number every month.
If, in fact, the content these assembly lines churn out has limited or no value other than for SEO itself, it seems to run counter to Google's mantra of delivering the best results for the searcher's query.
Unlike manufactured products that spring from an assembly line, good story-telling relies on hand-crafting. Whether hard news, opinion, criticism, recipes, how-tos or pure infotainment, those who tell a story should actually care about it and bring to it a certain fidelity to truth. It is these sorts of content producers who are able to reach out and truly engage an audience -- who actually earn that audience and keep them coming back for more.
As for the Demand Media IPO, I recommend you think carefully about that investment, especially because one never knows what Google might do with its search algorithm.