One of Yahoo’s biggest problems — brain drain — has turned out to be an asset for private equity firms and other players interested in figuring out their best moves related to the Silicon Valley Internet giant.

A plethora of ex-Yahoos, including many former top execs, are getting buttonholed by those who want to know more about the inner workings of the company that might not be obvious from its copious financial data available publicly.

That includes former Americas head Hilary Schneider, who has a longer-term consulting gig with TPG Capital, one of the several PE firms that has recently signed a non-disclosure agreement with Yahoo; former COO and President Sue Decker, who has had a longtime informal relationship with Blackstone, which has not signed the NDA and has been in talks with Yahoo’s Asian partners, China’s Alibaba Group and Japan’s SoftBank; and even former CEO Carol Bartz, who sources say has also been contacted to get her insights.

She is one of many in that regard, in a large pool of former Yahoos, such as: LinkedIn CEO Jeff Weiner, who had run Yahoo’s media efforts; Chegg CEO Dan Rosensweig, former Yahoo COO; SurveyMonkey CEO Dave Goldberg, who ran swathes of Yahoo’s entertainment properties; Criteo CEO Greg Coleman, former Yahoo sales head; former CEO Terry Semel, who is now an investor; former communications exec Brad Garlinghouse, who is now at AOL; and Demand Media Chief Revenue Officer Joanne Bradford, who also was a top Yahoo advertising exec.

Not all are cooperating with the requests for a chitchat about Yahoo, but there is much incoming interest in ex-Yahoos and what they might know.

There’s lots more where that came from, from all parts and all levels of Yahoo, given the breadth of the exes now doing very well — thank you very much — throughout the tech and media industries.

Thus, calls from PE firms, from Silver Lake to Bain Capital to Providence Equity Partners, as well as interest from major and majorly irritated shareholders, such as activist hedge fund investor Dan Loeb.

It’s a smart idea to tap this rich vein of information, as all contemplate possible multi-billion-dollar investments.

While some of these execs have not worked at Yahoo in many years, all have significant knowledge about the challenges and also the culture that cannot be gleaned from spreadsheets.

They also know a lot about the internal politics and personalities of the existing inside players, too. More importantly, several were involved in similar previous major business decisions at Yahoo.

Decker, for example, was a key exec in the Yahoo takeover attempt by Microsoft several years ago; Schneider and Bartz were deeply involved in striking the advertising and search partnership with Microsoft.

“Between everyone, it’s a good way to figure out where all the bodies are buried,” said one person close to the situation. “And there are a lot of bodies.”

Demand Media beat Wall Street expectations in the third quarter, posting a loss of five cents a share. Investors had expected it to lose from four to six cents.

Revenue was up 25 percent to $85.1 million, compared to $65.4 million in the same period a year ago. Minus traffic acquisition costs, sales increased 26 percent to $78.1 million from $62.2 million.

The stock of the Santa Monica, Calif., social content company has suffered in the quarter due to worries about its traffic and growth, but it has recently bounced back after hitting all-time lows.

After losing almost nine percent today, in profit-taking ahead of earnings after a recent price surge, Demand shares rose over 17 percent in after-hours trading to $8.30.

Some more details, according to a Demand statement on the Q3 financial results:

Content & Media Revenue increased 27% to $50.7 million, compared with $39.8 million in Q310.

Traffic acquisition costs (TAC), which represent the portion of Content & Media revenue shared with Demand Media partners, of $3.4 million, or 6.7% of Content & Media revenue, compared with $3.2 million, or 7.9% of Content & Media revenue, in Q310.

Content & Media Revenue ex-TAC grew 29% to $47.4 million, from $36.7 million in Q310.

Registrar Revenue increased 20% to $30.7 million compared with $25.5 million in Q310.

In addition to its more high-profile content business, Demand also has a domain registry unit.

“We reported another strong quarter as we continue to build Demand Media’s foundation for long-term growth,” said Richard Rosenblatt, Chairman and CEO of Demand Media in the statement. “The Company is uniquely positioned to deliver data-driven professional content through its robust content publishing platform. We are now in the process of optimizing that platform while increasing our investment in video content and enhancing the quality, engagement and user experience of our sites.”

There will be a conference call at 2 pm PT today, which I will liveblog (as long as it is lively!).

Until then, enjoy the official Q3 earnings press release:

3Q11 Earnings ReleaseFINAL

Just last week, it seemed as if the dangerous riptide had finally turned for Demand Media, the social content company whose stock for the quarter bottomed out in mid-October, in the $5-a-share range.

It has now rebounded to close Friday at $7.76, with a market valuation of just over $651 million — still a far cry from a high of over $27 a share in the last year, but well below the target price of upward of $14 from Wall Street analysts.

That’s why there will be plenty of questions for CEO Richard Rosenblatt in a conference call scheduled for after the Santa Monica, Calif.-based Demand reports its third-quarter earnings, following the close of markets this afternoon.

Analysts are expecting Demand to lose four to six cents a share. Revenue is expected to be up.

One issue sure to be on the docket will be the traffic problems at its flagship eHow site, which stymied Demand in the quarter. The situation caused it to release a statement about the issue, “which the Company believes is temporary and was the result of an internal technical issue. The technical issue has recently been remediated.”

Assume you will hear more on that and other topics, including updates on the cost of its content and the continued impact on Demand of search-algorithm changes at Google, as well as how it is faring in attracting more lucrative advertising.

I will be covering the earnings and the analyst call, so tune in later today for answers.

But instead of moving movies and TV shows to the world’s biggest Web site, they’re trying something different: Google is handing out more than $100 million to dozens of partners to create new “channels.”

The idea is to make “professional” content that advertisers will pay a premium to be near, instead of the grab bag of videos that dominate the site and that often sell at very low prices.

This isn’t news, of course: YouTube reps have been holding meetings and auditions for most of the year, led by former Netflix executive Robert Kyncl. And we’ve known about the deal terms, and many of the partners, for some time.

But now the site is finally talking about them publicly and promising that it will start unveiling some of the new programming next month. Some of the channels — each of which will have a couple hours of original programming per week — will feature people you’ve heard of, like Madonna, Jay-Z,  Ashton Kutcher and “Modern Family” star Sofia Vergara.

But the channels aren’t all premised around the idea of celebrities and Hollywood per se — just the idea that someone with some idea of how to make good stuff will start making stuff specifically for the site.

For instance, BedRocket Properties, the video start-up backed by the Huffington Post’s Ken Lerer and run by cable TV veteran Brian Bedol, will do four channels, including a soccer-themed channel in conjunction with Major League Soccer, and an action sports channel produced along with Wasserman Media Group.

Another example: IGN, the videogame Web site being spun off by News Corp., will produce a game-themed channel along with the Shine Group, the TV production house recently purchased by News Corp. (News Corp. also owns this Web site).

It’s worth noting that some of the channels will be run by people who are well-versed in creating Web video — and video for YouTube in particular. Machinima, for instance, which also specializes in game-themed stuff, is already one of YouTube’s most prolific partners, and essentially runs a network within YouTube’s network.

Maker Studios, which is producing three channels, is another outfit that already specializes in YouTube. And Demand Media went public this year, in part because it had figured out the art of cranking out Web videos very, very, quickly, at very, very low prices.

YouTube may not be releasing all of the channels and partners today, perhaps because it doesn’t actually have all of its deals signed yet. And at least one partner told me that some of the mechanics of the deals, like control of ad sales, had yet to be worked out.

That’s hard to imagine, given the amount of time that YouTube has been at this. But it’s also hard to imagine why you’d announce a big consumer-focused deal at the end of a Friday. So, who knows.

We do know the general outlines of the deals, though: Google will advance most of the creators up to $5 million, and in return will get commitments to produce a couple hours of programming a week for the channel. Once the programmers have earned back their advance from YouTube, they’ll split ad revenue with the site. The programming will be exclusive to YouTube for at least the first year of the three-year deals.

What we don’t know is how this stuff will actually work: $5 million won’t go very far if the partners use traditional TV and film budgets, so many of the partners are going to have to supplement that money with investments of their own — and they’re going to have to work on a tighter budget. And just because there’s a bit of Hollywood shine associated with this stuff doesn’t mean that people will actually watch — or, most crucially, that advertisers will pay up.

Google may also try other methods to get high-end video stuff. The company made a stab at Hulu when that video site was on the block. And it has indicated that it’s interested in licensing some content in international markets, where it thinks it can get more bang for its buck.

Gross, who helped create search advertising at GoTo in the late ’90s, has been trying to recreate that magic on the social Web for the past couple of years with the company that’s now named UberMedia. But various products like syndication, monetization and new Twitter clients have all been too close for comfort to Twitter’s own agenda, and Gross has had to twice rename and more times reformulate his business.

Chime.in, which is a division of UberMedia, plans to sell ads on behalf of users’ posts, giving them 50 percent of the revenue, or will allow them to sell their own ads and keep all the revenue.

“I never thought there would be an opportunity as big as keywords,” Gross said in an interview last week. “But social signals are so much stronger than search terms.”

Brands such as E! Entertainment, Universal Pictures, Bravo TV and Disney have agreed to contribute Chime.in pages. All content on the service is public and users aren’t required to use their real names, though they are encouraged to connect to their Facebook and Twitter accounts. The main interface is a personalized social newsfeed of the latest and most popular posts called a “Chimeline.”

Gross planned to debut Chime.in tomorrow at the Web 2.0 Summit in San Francisco, but the iPhone app accidentally launched early, so people are already taking a look. He said the company — which has also built a Web site and Android and BlackBerry apps — is now scrambling to launch today.

Paying for participation in online communities hasn’t historically worked very well. I asked Gross why he thought Chime.in would be any different.

“The biggest example of success is blogs and Google AdSense and Federated Media,” Gross said — where bloggers build up their own audience and then layer on advertising. “Why it hasn’t expanded to communities is because anyone who has tried to build a standalone place missed the social sharing element, so they had to play the SEO game and that doesn’t work.”

Gross argued that the Chime.in community will police itself against gamers and crappy content — the kind of stuff that’s plagued sites like Digg and content farms like Demand Media — because users won’t recommend Chimes they don’t like.

“The breakthrough that’s happened is if you let people have the flexibility to share, they’ll get the message to the right people and do the dirty work for you,” Gross said.

Note that Mahaney isn’t changing his estimates for these companies’ financial performance — just the way he thinks the market will value them, “primarily to global Macro conditions.”

Still, it’s worth noting some of his specific concerns for some companies that go beyond “the world economy has the circle-the-drain-quality to it.”

AOL: Citi drops its target from $18 to $15 (it’s now trading around $12). “In Q2, we witnessed YHOO, WBMD and AOL report lower Display revenue, which could be signs of increased competition from ad networks and social media for premium ad dollars.”

Demand: Target dropped from $10 to $8, which is about where the stock is trading now. “We view the company’s reliance on Google traffic as still a bit of an overhang. And we believe DMD’s quality content strategy is still something of a work-in-progress.”

Google: Target dropped from $690 to $575, currently trading around $504. “The return on GOOG’s prior investments (Mobile, Display) have been very good, but the return on GOOG’s new investments (Social, Commerce, Local, and now, in a BIG way, Mobile) are still uncertain — and the social investments ARE catch-up defensive; 2) cost structure still not ‘under control’; and 3) increasing regulatory risk.”

The firing of Yahoo CEO Carol Bartz leaves open one of the bigger and more difficult jobs in tech — one that has taken its toll on many.

Nonetheless, rapper Snoop Dogg stepped right up to the Twitter plate yesterday, as soon as news broke of the ouster.

Tweeted Snoop Dogg:

“Im takn over as tha CEO of Yahoo. Need sum of tha Snoop Dogg content ya digg. Nuff Said.”

Not nearly nuff!

Thus, while the Yahoo board has yet to begin a search, I have already been hard at work on selecting the next CEO.

(Last time, the company took none of my suggestions, but after the most recent result, the directors might want to pay mind!)

Sources said Yahoo is looking for an experienced Internet type, either from inside or outside the company.

“Yahoo has put its flag in the ground as a digital media company with a technology base,” said one source. “The job requires big buckets of expertise and needs someone who will grow the company.”

Here I go with the outsiders:

Peter Chernin: The former News Corp. exec has been eyeing Yahoo for a possible takeover with other investors. Both Yahoo and I had picked him when co-founder Jerry Yang stepped down as CEO almost three years ago, and he had declined the offer. This time, perhaps a big chunk of the company and total autonomy would work, even if making a hit like “Rise of the Planet of the Apes” is more fun.

Sheryl Sandberg: The COO of Facebook is sort of the anti-Bartz, with a smooth and efficient persona, and she is an experienced tech exec. But the former Google exec is at a place of growth at the social networking site, and is unlikely to want to leave the big show, especially since a blockbuster IPO is looming.

Jason Kilar: The Hulu CEO is in the midst of the process of selling the premium video service, with Yahoo as a bidder. While he has some tense relations with the studios, Kilar is top notch in his dedication to consumer products, and has a lot of experience from his stint at Amazon, too.

Dan Rosensweig: Currently CEO of IPO-headed Chegg textbook rental service, the former Yahoo exec never got a chance to run the company as its top leader. Well-connected and still well-liked by the troops at Yahoo, it still would be pretty hard for him to go home again.

Dave Goldberg: Sure, he’s married to Sandberg (see above), but the savvy CEO of polling phenom SurveyMonkey is one of the sharpest thinkers in Silicon Valley. He sold his music company to Yahoo many years ago and has a strong background in consumer online services.

Jon Miller: The chief digital exec at News Corp. almost got the CEO spot years ago when Carl Icahn was agitating for change at Yahoo, before Time Warner blocked him via a noncompete. With the mishegas at the media giant, and dwindling digital businesses there, it might be a good escape hatch for Miller.

Susan Wojcicki: The accomplished Google exec, who runs all its ad products, has the kind of calm, cool, collected persona that Yahoo could use right about now. The search giant was founded in her garage, and she has been a key part of its success since then. Wojcicki is also an understated class act in hey-look-at-me Silicon Valley.

Todd Bradley: The Hewlett-Packard exec just got blindsided when the company kicked webOS to the curb. While he is in line to run a possible spinoff of the device business, Bradley might also want to jump out of the frying pan into the fire.

Mike McCue: The CEO of Flipboard would certainly energize Yahoo with his intense focus on quality and consumer delight. The news app start-up could be a good addition to Yahoo, and McCue, the former Netscape and Microsoft exec who is well-liked in the Internet scene, would be, too.

Joanne Bradford: The former Yahoo advertising head bolted Bartz’s regime early on to run revenue for Demand Media. Well-liked in the ad business, she also knows where all the bodies are buried at Yahoo. Since ads and media are key at the company, she’d make an interesting choice.

Yusuf Mehdi: The Microsoft online exec would also be a left-field candidate to run Yahoo, given his even-keeled personality and longtime experience in the sector. And, though pricey, Mehdi’s impact on Bing search has been important. But he’s also been involved in the software giant’s lackluster ad and search partnership and still has not turned around the situation at MSN.

Kevin Johnson: The former Microsoft exec and current CEO of Juniper was once slated to be the CEO of Yahoo, had Microsoft managed to win the company in its hostile takeover attempt. In fact, Johnson was the architect of the idea of Yahoo running the media and Microsoft running the tech.

Tim Armstrong: Well, he might have been a good candidate before the downward slide of AOL and a recent series of questionable judgments. If Armstrong can’t keep a loud tech blogger in line, it’s not clear he can wrangle the Yahoo beast.

And here’s the insider scoop:

Ross Levinsohn: The former News Corp. exec is running the Americas for Yahoo, which puts him in charge of the company’s key businesses. But he’s still struggling to turn the ad business around, and how well he does that could be a major determinant of his success. But fantastic hair!

Blake Irving: The former Microsoft exec has an amiable nature and is well-liked at Yahoo, but he still needs to show that the company can ship some innovative products, and quickly. Like Livestand, the news reader, which is muchly late.

David Kenny: The Yahoo board member is now president of Akamai, which might preclude him from the job. But the well-regarded exec — he’s a snazzy dresser, too — ran one of the Internet’s top digital ad agencies and now has tech chops from the content delivery network.

Memo to Yahoo board: I have a million more ideas, from former Viacom exec Tom Freston to former Yahoo board member Eric Hippeau. Or why not bring back a passel of former Yahoos to advise, such as former CEO Terry Semel or former president Sue Decker?

Or Oprah! I hear Winfrey will be in Silicon Valley later this week, and she has a lot more free time now.

Like Snoop Dogg, she would fo shizzle be the bomb to cover.

Related posts

• As Yahoo Continues to Wobble, Investors (And Board) Eye Options
• Exclusive: Carol Bartz Out at Yahoo; CFO Tim Morse Named Interim CEO
• Carol Bartz’s Last F%*& You — Now Aimed at Yahoo Board
• Yahoo’s Statement on Bartz Ouster
• Wall Street Likes Bartz’s Firing — Yahoo Stock Spikes on News
• My Picks for Yahoo’s Next CEO — Maybe Snoop Dogg, Ya Digg?

But compared to some of its peers, Brightcove is almost a throwback: CEO Jeremy Allaire’s company has a clearly defined business, straightforward accounting and a minimum of insider selling in the run-up to its IPO.

A quick glance at the the company’s filing will tell you that:

Brightcove’s business is easy to understand. It generates sales by helping Web publishers put video online. That “software as a service” model has let the company boost sales, along with the Web video boom. In 2006, it posted revenues of $1.4 million. Last year, it pulled in $43.7 million.

The company’s accounting doesn’t require a good imagination. There’s nothing in Brightcove’s S-1 along the lines of Groupon’s now-discarded “ACSOI,” or Demand Media’s novel approach to expensing content costs. And while plenty of established companies use not-strictly-official measures like EBITDA to show off their finances in the best possible light, Brightcove doesn’t bother — there’s not a single reference to “non-GAAP accounting.” Which makes it quite easy to see that the company lost $67.5 million from 2006 through 2010, and another $9.5 million in the first half of this year. It says it doesn’t expect to turn a profit until 2013 at the earliest.

Brightcove’s investors and employees are sticking around. Unlike Groupon, Zynga, and a few other highfliers that haven’t filed yet, including Twitter and Facebook, there’s been very little insider selling. Early investor AOL got rid of all of its shares last November, and last year Allaire sold off 1.3 million shares for a gain of $4.8 million; some other employees sold a few more shares. But Allaire still holds another 2.5 million shares — 4.5 percent of the company’s equity — and as far as I can tell, that’s about it for insider selling.

Demand explained the relationship between Blend, its executive vice president for special projects, and its recent acquisition, in an SEC filing today. It also disclosed the sales price: $16.4 million, primarily in cash. The company announced earlier this week that it had also paid $14 million for ad-rep firm IndieClick.

Demand says it bought RSS Graffiti because of a content sharing application it had built for Facebook, and said the deal would “enhance the Company’s social media service offering.” Earlier this year, Demand had struck a deal with RSS Graffiti to “develop a data warehouse and analytics platform.”

This isn’t the first time Demand has purchased one of Blend’s companies. His corporate bio notes that he ended up at Demand in 2006, after the company bought Hotkeys, a start-up he founded and ran. That deal earned Blend two million shares of restricted stock, among other benefits.

In the last month, the stock of AOL has declined just over 50 percent.

But that drop is not just due to the turbulent markets of late. AOL stock had a 50 percent drop over the last six months, a 57 percent decline since the beginning of the year, and a 56 percent plunge since it went public in late 2009.

Which is why some in the industry — at private equity firms and bigger companies — have noted to me that the price of AOL might have gotten low enough for a very cheap takeover.

“You have to look, even with all the problems they have been struggling to fix,” said one person, who also underscored the advertising and other challenges that AOL faces. “But it is so inexpensive, it’s also an interesting idea.”

Said another large investor: “It’s almost free, given its cash on hand.”

Indeed, since in its recent second-quarter earnings report, AOL said that, as of June 30, it has $458.7 million in cash.

That matters, since at $10.22 a share — a far cry from its $28.45 high of all time in late April of 2010 — the market valuation of the New York-based Internet giant is only $1.09 billion.

You do the math.

To give that number perspective, AOL paid out $315 million in cash to buy the Huffington Post in the beginning of this year. And, let us not forget, under different management, AOL forked over $850 million in cash to buy the Bebo social network in 2008, and sold it for a song last year.

Even AOL thinks the price is low, announcing a $250 million stock buyback program this morning, just as shares hit their lowest point ever yesterday.

The stock is up today, though still in the basement.

To be fair, comparable companies’ valuations have also taken a hit recently. Yahoo shares are down 29 percent since the beginning of the year, giving it an affordable $15.3 billion valuation; and Demand Media’s stock has dropped 63 percent in that period, making its current price tag only $703 million.

Calling all shoppers?

Today, Demand Media beat Wall Street expectations in its second-quarter earning, growing revenue and lessening losses.

The Santa Monica, Calif., online content maker also announced that it had re-upped and expanded its advertising partnership with Google and also bought two start-ups in social media and advertising.

Now, it’s time for the inevitable conference call to explain it all to Wall Street analysts and the media.

2:02 pm PT: The call starts off with an unusually jaunty CEO Richard Rosenblatt, who quickly got to the real deal: Exactly how badly did Google’s changes to its search algorithm, under a program code-named Panda, hurt Demand’s content business?

Not much, says Rosenblatt, who reels off a list of things the company has done to improve its offerings, which have been dinged by many as, well, spam.

Rosenblatt was not having any of that, talking about removing 300,000 pieces of crappy content and also “quality improvements” with partners such as cheerily demented cooking goddess Rachael Ray. She might cook with spam — here is a delightful Spam Hawaiian recipe — but she ain’t spam!

2:13 pm: Now it is on to the acquisition of IndieClick. Essentially: It’s for the young people.

Then, international. Latin America Demand editorial via eHow en español! (Actually, the acquisition of Emergincast.com, an Argentine start-up. Coming soon to a blog site near you: ¿Cómo se hierve el agua?

Last, social media. Demand will be doing a lot more of it, like everyone else in the world, including more recommendations. I would really like it if some Internet company said it was going anti-social.

2:18 pm: The finance guy comes on, covering everything already in the press releases. Which is why I am cutting out here and getting a gluten-free doughnut at the Whole Foods store where I am writing this post.

It is as delicious as you might imagine a gluten-free doughnut can be. Which is to say: Not very!

2:32 pm: Q&A time from the Wall Street dudes — and, let it be said, they are all dudes.

The first question is about the “cleansing” of its cruddy content and if it is all flushed out.

It might be baked-on sludge, but Rosenblatt assures that Demand has it all figured out.

Then, a query about international and how the company decides what to pick. Algo, of course! And local content writers.

Back to the spam content: Does the need to have better content mean less of it? Kind of, since there is a lot more video. But still a lot of content churning out of Demand!

A question about Facebook and how to program Demand content into it. Good lord, it’s hyper-poking!

“It’s not clear the best way of how you expand into all these properties,” said Rosenblatt, specifically referring to its acquisition today of both IndieClick and RSS Graffiti.

The next question is how successful Demand is in the display and brand business, and how IndieClick, a premium ad company aimed at niche blogs, will be integrated in.

More on social media advertising’s future. Aaaghh, this is as obvious as a store-bought-crust apple pie baked by Rachael Ray.

Rosenblatt notes that its flagship site, eHow, is but one means of distribution, but Demand content is going all over the place and winging by people when they least expect it.

“Social is more effective … to try to find stuff you didn’t know that you needed,” says Rosenblatt, who also would not dis search as a means of discovery.

That’s important, since Google is a major traffic driver and advertising partner, when it is not terrorizing Demand and others with its search algo version of Defence Against the Dark Arts Professor Snape.

And presto, here comes a question about Demand’s Google ad relationship, which Rosenblatt touts nicely.

Of course he does. It’s tastier than spam, after all.

Demand also said it had acquired Los Angeles-based IndieClick, a premium online advertising company and RSS Graffiti, a social media company.

The company also said that it struck a three-year “renewal and expansion of its ongoing advertising partnership with Google to monetize Demand Media’s owned and operated properties and premium content inventory.”

Revenues rose to $79.5 million in the quarter compared to $60.4 million a year ago. Analysts had expected $73.9 million.

Net loss per share on a GAAP basis was three cents, or $2.4 million, compared with a 75 cent loss, or $1.9 million, in the same period last year.

On a non-GAAP basis, which Demand’s investors also take into consideration, revenue minus traffic acquisition costs increased 34 percent to $76.6 million from $57.3 million last year.

Adjusted net income per share, diluted of six cents, grew 50 percent, compared with four cents a year ago.

About IndieClick, which Demand said would help monetize its audience on the Cracked humor site, the company noted in a press release:

“IndieClick represents a curated portfolio of important online destinations in the comedy/humor, entertainment, film, music, lifestyle, and fashion categories that are especially relevant to enthusiasts, with a focus on the 18-34 year-old demographic.”

As for re-upping its longtime advertising deal with Google, Demand said that it would extend its display advertising and premium ad serving arrangements and that its properties “will be included in premium, brand-safe channels within Google Display Network Reserve.”

I will be liveblogging Demand’s earnings at 2 pm PT.

Until then, please peruse all the various press releases from Demand:

2Q11 Results Release FINAL 08 09 11 –

Goog_DMD Release_FINAL 8 9 2011 –

IndieClick Release_FINAL2 – 8 9 2011 –

DM_Acquires_RSS_Graffiti – final clean _2_ –

After the markets close tomorrow, Demand Media will report its second-quarter earnings.

Wall Street is expecting a solid performance from the Santa Monica, Calif.-based online content maker compared to last year.

The consensus of estimates by analysts is for Demand to lose one cent a share, which is much smaller than the 55 cents a share loss from the same period a year ago. It is also an improvement on a previous loss of five cents a share for this quarter that investors had been predicting.

Nonetheless, the company’s stock hit its all-time low yesterday, after a strong IPO in January. Since the summer, it’s been all downhill, with Demand shares off 50.4 percent since early May.

Since it went public, the stock is off 63.1 percent.

When the selling of Myspace winds down in the next week or so, it’ll probably attract a spate of comments about what a failure the whole social networking enterprise turned out to be.

And — especially when you recall what a Web phenom the social networking site was before it got blown out of the water by Facebook — it was.

That is, unless you think of the mob of former execs who have worked at the company over time, many of whom have moved on to some more golden opportunities after leaving the News Corp.-owned property.

That includes, most recently and notably, former sales head Michael Barrett, who is about to score big as CEO of AdMeld, which is reportedly in the process of selling to Google for $400 million.

Also a big winner: Former Myspace CEO Owen Van Natta, who was fired from that job in one of its many putsches and who quickly rebounded to a top job at online gaming powerhouse Zynga.

So, while it is one of the more overused memes of Silicon Valley, the “mafia” analogy — which has been applied to fertile entrepreneurial breeding grounds such as PayPal, before its acquisition by eBay — is useful when thinking about Myspace.

It is also a good thing to keep in mind about any tech company that goes off the rails: There might still be a silver lining, even if the start-up never sees the light of day again.

As proof, herein is a list I created after pinging a bunch of former Myspace folks:

Jason Oberfest: Former SVP of business development. Now, VP Ngmoco, which was sold to Japanese gaming giant DeNA for $400 million last year.

Dmitry Shapiro: Former CTO, Myspace Music. Now, at Facebook competitor Altly.

Adam Bain: While at Fox Interactive Media, he ran the ad platform for Myspace. Now, head of sales at Twitter.

Jeff Berman: Former president of sales and marketing. Now, GM of the NFL’s digital media unit.

Jason Hirschhorn: Former co-president and chief product officer. Now, on MGM board, angel investor, and there are rumors of him working on a curation start-up.

Amit Kapur: Former COO. Now, CEO, Gravity, an information filtering service start-up.

Chris DeWolfe: Co-founder and former CEO. Now, CEO, MindJolt, an online gaming roll-up.

Ross Levinsohn: Former president of FIM, he was integral to buying Myspace. Now, EVP of Americas unit, Yahoo.

Mike Lang: Former News Corp. strategy exec also involved in Myspace purchase. Now, CEO, Miramax.

Aber Whitcomb: Former CTO. Now CTO, MindJolt.

Jim Heckman: Former chief strategy officer of FIM. Now, CEO of 5to1, recently sold to Yahoo for $25 million.

Dani Dudeck: Former communications head. Now, PR head at Zynga.

Travis Katz: SVP of international. Now, CEO of Gogobot, a social travel start-up.

Richard Rosenblatt: Former CEO of Intermix Media and Chairman of Myspace, he sold it to News Corp. Now, CEO of Demand Media.

Angela Courtin: Former SVP of marketing. Now, EVP at Aegis Media.

These folks should be on the call list of whoever ends up buying Myspace. Last week, I wrote that an investor group, including Activision head Bobby Kotick, is now in the lead for the deal.

As an update, according to sources, Kotick has gotten clearance from Activision’s major shareholder Vivendi to do the Myspace transaction as a passive personal investment.

Last week, after he turned in better-than-expected earnings and tried to explain to a worried Wall Street how the search algorithm changes at Google, called Panda, were significant but not devastating to his business, BoomTown had a short phone interview with Demand Media CEO Richard Rosenblatt.

To ask even more questions about Panda! Grrrrr…

Actually, Rosenblatt was as cordial as ever about what is a hair-pullingly critical issue for his newly public company, which has really been under investor and other scrutiny from the get-go about the way it handles content.

Which is to say very much differently than traditional media companies had done in the past, with an eye on how to optimize traffic and advertising revenue by using tech to know exactly how much each piece of content online is actually worth and how much it should cost.

Them’s been fighting words for a while, with accusations by detractors of Demand’s system that it is little more than a “content farm,” producing poor quality fare.

Rosenblatt has battled that charge all the way through a lucrative IPO, but the company definitely got caught in the Panda maelstrom, as Google has tried to cull out bad results (and make itself look better, it must be said).

This has put Demand in an awkward position–trying to minimize the damage, real and perceived, created by the changes, and also making sure Google does not become even more aggressive by tut-tutting those changes.

It’s a delicate dance for Rosenblatt, as you will see from my handful of questions (especially since Demand’s stock has been badly hit):

Q: What were you trying to communicate in the call, especially since investors seemed very focused on Panda?

A: I was trying in the simplest way to explain the way we figure the relationship of how much traffic to ROI (return on investment) and RPM (revenue per 1,000 impressions).

We really need these kind of signals to shake things up.

Explain what you are doing to improve quality–does that mean longer articles or paying more for content to get better stuff?

A: There are some topics that do not deserve more than 500 words, and some deserve more.

We would spend more on a post on “How to Build a Deck,” for example, if Home Depot were interested in sponsoring that content.

Q: Given Google’s shift in its algorithm, are you shifting your distribution, such as toward social and mobile?

A: If you look at where trends are going, that’s where we are going to be.

If you are out there with our data and our assets, you change as the market changes.

Q: How are you changing the continued perception that Demand is a content farm?

A: I don’t think anyone has defined what a content farm is and I am not sure what it means either.

The only way we are going to do that is continued growth in revenue and showing that we are doing this for the longterm.

Today, after Demand Media beat Wall Street expectations, its execs got on the horn with investors to explain how it plans to beat the Panda.

That would be the beastly name for Google’s rejiggering of its search algorithm, in order to rid search results of poor quality content.

Along with many other sites, Demand has gotten smacked by its raging paw.

Still, the Santa Monica, Calif.-based company reported revenue of $79.5 million and six cents a share in adjusted net income.

Wall Street was expecting the company to report about $69.6 million in revenue for the three months, with four cents a share in adjusted profits.

On a GAAP basis, net loss per share was 13 cents compared to 94 cents a year ago.

Here’s the liveblog of the conference call:

2 pm PT: Demand’s investor relations dude came on and I immediately tuned out until CEO Richard Rosenblatt got on the line to talk about the results.

He was as perky as ever, launching right into the meat of the situation–how Demand was going to pretty up its offerings, such as a redesign of its flagship eHow site and its new editorial arrangement with another perky person, food lady Rachael Ray and the also perky fashionista/talk show lady Tyra Banks.

Gone will be user-generated content that Demand used to let people post at will on its eHow site that was, well, less than good.

As in, bad.

Instead, it’s “curation,” “editorial innovation” and feedback cycles.

We old-timers like to call that journalism and copyediting, complete with mean old editors who spiked said copy when it was crappy.

“Let me be clear,” said Rosenblatt, the Google changes did negatively impact Demand’s traffic. But Rosenblatt said the company dug into its content and has been improving it since.

2:17 pm: Now it was CFO Charles Hillard reading the results themselves. I am sorry, Mr. Finance Guy, but I can read it myself, so this is always the time in earnings calls when I check out and spend my time improving my content.

So when I heard words such as “stock-based comp,” I moved on to fixing all the typos that a very nice reader alerted me to, since I was writing too quickly.

Then, I briefly considered writing a high-quality post for eHow on how to write earnings and fix typos at the same time. I am that good.

2:30 pm: The CFO dude finished up and the Q&A with analysts started.

All Panda questions, natch!

Rosenblatt seemed calm, cool and collected.

“We think on this one, they did a very good job,” he said of Google’s search-fixing efforts, trying to soothe the savage beast. “We all continue to evolve.”

Which translated to: Google says jump and we say: “How high?”

Which is then followed by: “Please sir, can I have some more (traffic)?”

More Google algo change questions.

I suspect there is a new tactic afoot by Demand: Bore us into submission about the traffic devastation from Larry Page’s minions with endless questions about algo.

Finally, a question about mobile and international expansion. Apparently, Demand content is going to be translated into five different languages.

Yay! I am readying my version of “How to Boil Water” in French! (“Comment Faire Bouillir L’eau”!)

Mobile is going to be big too for Demand, which it is for everyone.

Then it was onto a question about improving content, including paying its writers more moolah, which would then eat into the Demand cheaper content business model.

I liked that question! I suddenly decided I was going to shift to a lugubrious post on the history of the Maginot Line in 132 parts!

Oops, Rosenblatt said the data has to show that the peeps want those longer pieces.

Back to the boiling water opus!

It’s on to some video questions and then back to search, as in diversifying away from relying on search to get traffic and premium prices for its advertising.

As in, how much are you going to cozy up to Facebook CEO Mark Zuckerberg?

“It’s less about where traffic comes from and more about where they land,” said Rosenblatt, except you just know he sent a lovely floral bouquet plus a hefty selection of citrus to Zuckerberg’s new house in Silicon Valley right after Panda roared.

Rosenblatt deflected a lot of questions in this arena. “We still think that search is a fantastic way” to gain traffic, he said, making sure Google’s Page did not chomp off his hand as he courted his social networking nemesis at Facebook.

But as the old Kikuyu proverb goes: “When elephants fight, it is the grass that suffers.”

More likely, as Mary Chapin Carpenter sings: “Sometimes you’re the windshield. Sometimes you’re the bug.”

We’ll see which is which for Demand in the quarters ahead.

Until then, here’s Carpenter performing her song, “The Bug”:

Demand Media handily beat Wall Street expectations in its first quarter results today, released after the market closed.

The company reported revenue of $79.5 million and six cents a share in adjusted net income.

Investors were expecting the company to report about $69.6 million in revenue for the three months, with four cents a share in adjusted profits.

On a GAAP basis, the net loss per share was 13 cents compared to 94 cents a year ago.

The decent results could boost Demand’s stock, which has been hit hard since Google launched “Panda,” an overhaul of its search algorithm to improve results and remove poor quality content.

In a conference call at 2 pm PT today, which BoomTown will be liveblogging, most will be paying more mind to what the online content company’s top execs–especially CEO Richard Rosenblatt–have to say about the impact of the updates from Google to Demand’s various Web offerings.

As a first strike, some of Demand’s execs briefed the media earlier today on efforts to improve the quality of its content–you can read the official press releases here on that and also here.

In them, Demand said it will remove some online posts that were substandard and created under a now-suspended writers’ compensation system. It said it is also improving reader feedback tools and adding more substantive stories to its sites.

Those are all good ideas, since Google’s tweaks have been chewing away at a range of Web sites–such as those owned by Demand–which rely heavily on search engine optimization to bring in huge traffic.

One big hit for Demand, due to Panda, has been to its flagship eHow site.

All the mishegas has hurt the Santa Monica, Calif., company’s stock. It’s down just over 30 percent since Demand’s IPO in late January, as bearish investors fret over the implications of Panda.

Still, in its report, Demand said its content and media revenue was up 72 percent to $51.9 million, compared to $30.2 million last year.

Later today, Demand Media will report its first-quarter earnings, its second outing after its IPO earlier this year.

Wall Street is expecting the company to report about $69.6 million in revenue for the three months, with 4 cents a share in profits.

But what most will be paying more mind to will be what the online content company’s top execs–especially CEO Richard Rosenblatt–have to say about the impact of search algorithm updates at Google to its various Web offerings.

Codenamed “Panda,” the effort by the Silicon Valley search giant is aimed at improving results by getting rid of poorly conceived content.

And, indeed, the tweaks have been chewing away at a range of Web sites–such as those owned by Demand–which rely heavily on search engine optimization to bring in huge traffic.

One big hit for Demand, due to Panda, has been to its flagship eHow site.

All the mishegas has hurt the Santa Monica, Calif., company’s stock. It’s down just over 30 percent since its public offering in late January, as bearish investors fret over the implications of Panda.

That said, Demand shares were up more than six percent yesterday, to close at $15.75. And some think the recent stock fall has been overblown.

However the winds blow, Rosenblatt must play it cool, since he cannot spook Wall Street, but also does not want to indicate to Google that its efforts are not effective either.

Tune in after 1 pm PT today to get the first-quarter results, and even more at Demand’s 2 pm conference call with analysts, where BoomTown will translate it all for you.

Until then, please enjoy the movie trailer for “Kung Fu Panda 2,” which opens May 26:

How big a toll? That one’s up for debate: Richard Rosenblatt’s company says the changes, which affect the traffic that Demand’s sites get from Google, aren’t significant enough for the company to change its guidance.

Most of Wall Street disagrees, and has been hammering Demand shares for the last couple of weeks. DMD is now trading around $16.70, down from a peak of more than $27 earlier this year.

In a note published today, Stifel Nicolaus analyst Jordan Rohan argues that investors are overreacting (Stifel helped take Demand public in January), and keeps his “buy” rating intact. A worst-case scenario, he says, is that the Google changes will clip Demand revenues by 10 percent and EBITDA by 20 percent–but Wall Street has pummeled Demand much more than that.

Rohan (and many others) are very interested to see what Demand says on its May 5 earnings call:

EHow and Demand Media had a great deal of momentum all the way through the first quarter and into the second quarter. But there is now this new variable with which to contend–it is hard to forecast traffic if there is volatility in index rank. How does that all balance out? To the extent that is possible to broaden the range of possible outcomes for the year, without abandoning the guidance altogether, we believe that would be incrementally positive, at least compared to current levels of fear. Maintaining guidance for full year revenue and EBITDA would be even sweeter, if possible. The “what can be done” part of this is key, in our view–own up to the weaknesses, identify the steps required to address those weaknesses, and correct course. Quickly.

Which sounds great. The problem for Demand (and many other publishers, including the New York Times, which said that its About.com had been beaten up by algorithm changes, too) is that it’s entirely possible that Google isn’t done adjusting its search formulas.

And what if it’s just beginning to overhaul search?

If so, every Google-dependent publisher is going to have a very hard time responding to each and every change the search giant makes. Which means that Demand Media’s fortunes will be in flux for some time. And it will be very hard to make Wall Street feel good about that.

April showers bring…well, a bad month for the still-young stock of online content maker Demand Media.

After a successful IPO in January, shares of the Santa Monica, Calif., company had stayed largely in the mid-$20 range, including a high of $27.38.

That is, until this month, when gloom in the form of algorithm changes at Google–with the seemingly dulcet code name of “Panda” and designed to weed out poorly made content–appeared to hit SEO-heavy Demand hard.

At first, the updates by the search giant seemed not to effect Demand as much as other sites. But more recent tweaks have caused traffic to its flagship site, eHow.com, to be much more negatively impacted.

And–presumably due to its search advertising-heavy business model–that worry then caused the stock to plummet from above $24 in the beginning of April to yesterday’s close of just above $15.

Since Demand went public, its shares are now down almost 34 percent.

You can see the situation pretty clearly in this Demand stock chart below (click on the image to make it larger):

Of course, this might all be needless panic on the part of Wall Street investors, but the drop has been all too real.

Not surprisingly, Demand acknowledged the dip, but also countered some third-party reports that were more dire.

It tried to staunch that worry on April 18, with a press release and blog post by its Media and Operations EVP Larry Fitzgibbon, which read in part:

…Google recently made significant search algorithm changes in an update dubbed Panda that has rolled out in various capacities from late February thru mid-April. With respect to Panda’s mid-April update, some of our properties saw Google search referrals move up while other properties, including our largest property eHow.com, saw these referrals go down.

As I said in my prior post, we generally do not comment or speculate on changes by major search engines, as these changes can happen nearly daily. However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment. As discussed in our press release issued today, we currently expect that in Q2 2011 our owned and operated Content & Media properties will generate year-over-year page view growth comparable to or greater than the year-over-year page view growth reported for Q2 2010. We have also reaffirmed our calendar year 2011 financial guidance in this press release.

That’s why it will be interesting to see what Demand execs will say on its first-quarter earnings call next Thursday, May 5, to explain how it will cope with Panda and–more importantly–what it plans to do to minimize the skadoosh impact on its business and share price.

Tonight, Demand Media–in reaction to a new study showing that its flagship eHow site had now gotten much more negatively impacted by Google’s rejiggering of its search algorithm than previously–released a statement and blog post about the tempest.

In it, the Santa Monica, Calif.-based company reaffirmed its outlook for fiscal year 2011, noting, in part:

“Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company’s owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company’s directly measured internal data.”

The company, though, declined to give specific details about the impact of Google’s attempt to clean up its search results by tweaking its algorithms to cut out poorly made material from so-called “content farms.”

While others had apparently been initially impacted by Google’s first foray, such as Yahoo’s Associated Content unit, Demand had not been.

That is, until a recent Sistrix poll (see chart below), showing eHow has now been hurt badly by even more Google search changes, codenamed Panda.

While acknowledging a decline in search traffic on eHow from the Google changes, Demand said the Sistrix data was way off.

In a blog post, Larry Fitzgibbon, Demand’s EVP of Media and Operations, wrote, in part:

“However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment.”

When Google began making changes to its search formula, Demand CEO Richard Rosenblatt told MediaMemo’s Peter Kafka in an interview that its relationship with Google was all sunshine and roses.

When asked how its relationship with Google was, Rosenblatt said:

“This is why our partnership with Google makes sense. 1) We help them fill the gaps in their index, where they don’t have quality content. 2) We’re the largest supplier of all video to YouTube, over two billion views and 3) we’re a large AdSense partner. So our relationship is synergistic, and it’s a great partnership. And it’s a partnership that we’re excited to continue to expand.”

It will be interesting to see how he feels now.

Here are both Demand’s official press release and blog below:

Demand Media Reaffirms Outlook for Fiscal Year 2011

SANTA MONICA, Calif., Apr 18, 2011 (BUSINESS WIRE)

Demand Media, Inc. (NYSE: DMD), a leading content and social media company, announced today that it is reaffirming its financial outlook for fiscal year 2011 that it previously provided on February 22, 2011.

Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company’s owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company’s directly measured internal data. Recent search engine algorithm changes have negatively impacted search driven traffic to some of our websites, including eHow.com, resulting in moderately lower year-to-date page view growth for the Company’s owned and operated Content & Media properties compared to page view growth rates before the algorithm changes. Nevertheless, the Company currently expects that its year-over-year page view growth across its owned and operated Content & Media properties in the second quarter of 2011 will be comparable to, or greater than, the year-over-year page view growth achieved in the second quarter of 2010.

As previously announced, the Company will report its first quarter 2011 financial results on May 5, 2011. The Company will host a conference call to discuss the results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be available and can be accessed within the investor relations section of Demand Media’s corporate website at ir.demandmedia.com.

Another Statement About Search Engine Algorithm Changes

Posted by larry fitzgibbon at 4/17/2011 10:05 PM PDT

It’s hard to imagine a company more focused on the connection between consumers and content than Demand Media. That point of connection gives us the opportunity to inform, engage and serve the consumer. And it’s where trusted relationships start. So, how our content reaches the consumer–whether it’s through direct visits, social media referrals, apps or search–continues to be top of mind with everyone at the company. Consumers are connecting with more content than ever before as social media and mobile access have emerged to play huge roles that didn’t even exist just a few years ago. And search engines, of course, continue to play an integral part in content discovery and have been hard at work improving their products to create the best consumer experiences possible.

As I discussed on my last blog post, Google recently made significant search algorithm changes in an update dubbed Panda that has rolled out in various capacities from late February thru mid-April. With respect to Panda’s mid-April update, some of our properties saw Google search referrals move up while other properties, including our largest property eHow.com, saw these referrals go down.

As I said in my prior post, we generally do not comment or speculate on changes by major search engines, as these changes can happen nearly daily. However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment. As discussed in our press release issued today, we currently expect that in Q2 2011 our owned and operated Content & Media properties will generate year-over-year page view growth comparable to or greater than the year-over-year page view growth reported for Q2 2010. We have also reaffirmed our calendar year 2011 financial guidance in this press release.

Demand Media has a myriad of impactful sites and many sources of traffic. We are encouraged that the investments we’ve been making in site experience and content quality are making an impact with our consumers. Organic growth in visits from non-search sources to eHow continue to grow rapidly and Cracked.com is now the most visited humor site on the Internet with the majority of its page views coming from direct visits. Improvements have been registered from eHow’s recent redesign and the introduction of new video series leading to significant growth in Facebook likes. Our brand advertisers have also reported encouraging results with their intent-targeted campaigns. Rest assured, just as we have been innovators in building one of the largest online audiences, we are applying that same rigor and intensity to delivering a quality experience for consumers and advertisers.

As a disruptive digital media and technology company, we have been operating in a fast moving environment since the company’s founding five years ago. While change is frequent, one thing is certain–Demand Media is steadfast in our commitment to produce great outcomes for our consumers, advertisers and community of creative professionals. We’re in the trenches listening, learning, adapting and innovating–and we are very excited about the opportunity in front of us. We look forward to providing details on all of these topics and more in our previously announced conference call at 5:00pm (Eastern) May 5th, 2011 to discuss first quarter 2011 financial results.

Larry Fitzgibbon is Demand Media’s EVP of Media and Operations, and manages the company’s rapidly growing network of consumer properties.

The challenge, which has stumped creators since the dawn of Web video, is getting more urgent as many producers shift their attention from creating one-off viral hits to online video franchises. Media companies and advertisers say they have money to invest, but loyal audiences, while growing, remain elusive.

Sites including Hulu LLC, IAC/InterActiveCorp’s CollegeHumor, Blip.tv and Demand Media’s Cracked.com are trying to draw recurring viewership by enticing users to tune in at a certain day of the week, running TV-like promos for Web shows or cross-promoting series against similar content.

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