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.

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.

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:

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.

BoomTown always enjoys the maiden voyage of a newly public company, so liveblogging Demand Media’s first quarterly earnings seems like a must-do.

It’s also the first public outing for CEO Richard Rosenblatt, who has sold off his previous entrepreneurial efforts.

And it seems like a good start, as the Santa Monica, Calif.-based online content company, which had its IPO in late January, finally out to rest some controversy about how much is actually earns by posting $1 million in net income in the last three months of 2010.

Okay, that is a weensy amount, to be sure, but it beat expectations, as well as for revenue, with sales of $73.6 million for the fourth quarter.

Of course, Demand wants Wall Street to look at “Adjusted OIBDA” results, which was up 88 percent, and which it is a much prettier $20.1 million in earnings.

Also on deck, as MediaMemo’s Peter Kakfa noted today:

“Expect to hear at least one riff on whether or not the company feels threatened by Google and changes the search engine is making to push “content farms” out of its results. CEO Richard Rosenblatt insists that his company is not a content farm, and that Google is just fine with his stuff, but I have a feeling the issue won’t go away just yet.”

We’ll see–here we go:

2:05 pm PT: It took me a bit to get into this conference call, since I could not get the live broadcast from the Web site at all and the teleconference operators were snoozing.

And I tuned in just as Rosenblatt (pictured here) was talking about how Demand was helping people get information about how to ripen avocados.

No, really.

(Memo to self: Curb the snotty journalist tone, especially since I love me a good, ripe avocado.)

Rosenblatt, who seems only a little nervous, pressed on by talking about its massive eHow site, as well as Cracked.com and other major branded sites Demand has.

The latest is TypeF women’s health and beauty site, which is guided by supermodel Tyra Banks.

Rosenblatt then linked it all to advertisers and how much they want to spend on sites like this.

“We are not limited to just a few key verticals,” he said, touting its sales staff, including Rosenblatt’s daring raid of Chief Revenue Officer Joanne Bradford from Yahoo.

“The company is well positioned to capture an increasing share of brand revenue,” said Rosenblatt.

2:18 pm: Rosenblatt then zeroed in on the juicy issues, which center around the quality of the content Demand churns out.

Or, as critics have argued, lack of quality.

“The level of specificity is arcane to some,” noted Rosenblatt, using the example of flying paper lanterns and how to make a roof rake as examples of the kind of niche content Demand produces.

Arcane is right, but it takes all kinds!

Plus, insisted Rosenblatt, it’s good! Accurate! Edited! Useful!

He took the gloves off here, which made me want a Demand piece about taking care of leather gloves (linseed oil?).

“We’re just getting started,” said Rosenblatt, about the company and not the glove care tips.

2:24 pm: The CEO turned it over to the CFO, Charles Hilliard, which meant I was off on my critical Web search about taking care of my gloves.

That’s because he immediately said: “Adjusted OIBDA.”

Which-let’s be honest–sounds like a communicable disease.

Essentially, said Hilliard, it’s up, up, up for Demand, in terms of revenue, earnings, page views and more.

You can read all these gory financial details in the press release here.

For some reason, Hilliard is using the retail term, “same store sales,” as a comparison. I covered retails for years, so it is a surprise for this to be the metaphor, but Demand obviously sees itself as a content store.

2:39 pm: Q&A time and the Google-fights-spam question came first!

Rosenblatt said he welcomed it and appeared unconcerned. His avocado-ripening, roof-rake-making, flying-lantern company needed to make no excuses!

The next question is about expansion, including internationally. Sure, Western Europe.

Then, a sneaky follow-up on content farms.

“We consider ourself very white hat,” declared Rosenblatt.

I wonder what the best way to clean a white hat is?

Voila! It’s right here on eHow:

“1. Wash your white hat in the washing machine if it is made of cotton or polyester. Just add laundry detergent and one cup of bleach. Wash the hat using the hot water setting. Do not put the hat in the dryer. The hat will shrink and then it won’t fit your head.”

Call the Pulitzer Prize committee!

(Wait, snotty again! I also love clean, white hats.)

I was so riveted by the white-hat thing, I completely missed the next question, but tuned in again to one about revenue momentum.

Essentially, Bradford–who looks great in a white hat, I might add–is on the case.

Then some internal technical questions and about guidance for Q1. CFO Hilliard said that the company was guiding for growth, despite more public company expenses.

(Needless to say, you can find out about how to run a public company here on eHow.)

The last question was about how much branded advertising will make up total revenue. Between five and 10 percent of 2010, said Hilliard, but it is the fastest category of growth.

And also one about curation of content and use of social networking sites like Facebook and Twitter for feedback.

Rosenblatt said that feedback can even become content, which will be part of new eHow redesign to come.

Want some tips on that? Of course, Demand Media has the answer, at least to this easy question.

Demand Media, which posted its S-1 regulatory filing August, filed an amended version today that is likely to allow it to move quickly to an initial public offering.

The new version for the online content company has updated financial information for the third quarter.

Demand now must now wait for the Securities and Exchange Commission to approve the filing, after which the execs of the Santa Monica, Calif.-based Demand will immediately to go on a road show for several weeks to try to convince investors to jump on board.

Then, if there’s enough interest, the IPO is likely to come before the holidays.

Demand’s initial filing was to raise $125 million at a reported $1.5 billion valuation.

You can read the whole filing here, which shows an improved performance from Demand.

In its latest filing, Demand said it had generated revenue–from advertising and a domain business–of $179.4 million for the first nine months this year and had a net loss of $6.4 million.

In the same period a year ago, revenue was $102.3 with a net loss of $5.6 million.

Losses in the third quarter itself narrowed, to $305,000 from $4.2 million in the previous quarter and $1.9 million a year ago.

But Demand points in its filing to its “Adjusted OIBDA,” using less stringent non-GAAP financial rules, which shows a much improved $41.9 million profit compared to $18.9 million last year.

As MediaMemo’s Peter Kafka wrote:

Some investors may balk at these non-GAAP numbers, but Demand, Goldman Sachs and its other underwriters clearly think there’s a market for them. And there’s certainly a hunger in the tech world for a big, brand-name IPO to break the dry spell. You can feel people willing this thing to work.

If Demand did, say, $55 million in OIBDA this year, it would need a multiple of 18 times trailing 12 months earnings to get to a $1 billion valuation. It would need 27x to get the $1.5 billion number that people are whispering to reporters.

Another way to get to $1.5 billion: Project OIBDA of $100 million for 2011, and ask for 15x on that number.

Demand is definitely growing smartly from $170.3 million in annual revenue in 2008 to $198.5 in 2009 to possibly reaching–based on six months of 2010 results–well above $230 million in 2010.

That’s due to its increasing growth in traffic, largely via Demand’s popular eHow site and a network of others.

Almost all of the money is coming from traffic, and advertising, that it generates from Yahoo and Google–Google in particular.

Demand has done this using $355 million in funding it has raised since its founding in 2006. The company said it has only $29.2 million in cash and cash equivalents left, but there is also a $100 million untouched line of credit.

Hence, the IPO, which will give it both cash and stock to use to grow its content business, either organically or via acquisition, all while keeping the costs of content creation increasingly lower via innovative technology.

From Demand’s filings, it is clear such an effort is slow going, as it seeks to carve out any entirely new business model for content.

Now, it must find Wall Street investors who agree.

In its filing, Demand said it will sell 4.5 million shares in the IPO and current shareholders will sell another three million. It hopes to have DMD as its ticker symbol on the New York Stock Exchange.

But there is no price range yet for the offering, which is being led by Goldman Sachs and Morgan Stanley.

After news of the Demand Media IPO filing came out late last week, I was not that surprised to get an email from someone deeply involved in building an online content business.

“If they are worth over a billion with those financials, I can’t wait to find out what we are worth. What am I missing?”

Well, nothing actually, as Demand’s filing to raise $125 million in an initial public offering at a reported $1.5 billion valuation showed that making it big in the online content business was still slow going.

That said, Demand is surely going and, in fact, growing smartly from $170.3 million in revenue in 2008 to $198.5 in 2009 to possibly reaching–based on six months of 2010 results–well above $230 million in 2010.

That’s due to its increasing growth in traffic, largely via Demand’s popular eHow site and a network of others. According to the most recent numbers from comScore (SCOR), Demand’s properties make it the 17th-largest in the U.S., with 54.6 million unique monthly visitors.

But the media business at Demand is still small, relatively speaking to other big content companies, with the content and media part of the revenue representing almost 60 percent of the business (a domain registrar business makes up for the rest).

And, most importantly, it is still unprofitable.

The Santa Monica, Calif.-based start-up said that, for the six months ended June 30, the company posted a loss of $22.3 million on revenue of $114 million. It was an improvement over a loss of $28.9 million on revenue of $91.3 million in the same period of 2009.

Using less strict accounting, on an operating basis, the picture is better, with the company’s loss cut to $4.7 million from $12.3 million in the same six months.

And using even less stringent non-GAAP financial rules, called, “Adjusted OIBDA,” Demand said in its regulatory filing with the Securities and Exchange Commission Friday that it made $25.6 million in profits.

As MediaMemo’s Peter Kafka wrote over the weekend:

Some investors may balk at these non-GAAP numbers, but Demand, Goldman Sachs (GS) and its other underwriters clearly think there’s a market for them. And there’s certainly a hunger in the tech world for a big, brand-name IPO to break the dry spell. You can feel people willing this thing to work.

If Demand did, say, $55 million in OIBDA this year, it would need a multiple of 18 times trailing 12 months earnings to get to a $1 billion valuation. It would need 27x to get the $1.5 billion number that people are whispering to reporters.

Another way to get to $1.5 billion: Project OIBDA of $100 million for 2011, and ask for 15x on that number.

That’s a good thing since Demand, which has raised $355 million in funding since its founding in 2006, has only $33.6 million in cash left in its kitty–probably plenty to keep going–but it’s likely to need more investment to crossover to where it would not need any more money. (There is a $100 million untouched line of credit, but Demand is unlikely to want to dip into that right now.)

Hence, the IPO, which will give it both cash and stock to use to grow itself, either organically or via acquisition, all while keeping the costs of content creation lower and lower via innovative technology.

For Demand CEO Richard Rosenblatt–who has a series of notable financial wins so far, selling such Internet properties such as iMall and MySpace for big windfalls–it will be interesting to see if he can build the business for the long term, which he has said is his intent.

He might want to pay attention to the travails of AOL (AOL) CEO Tim Armstrong, who has plotted a very similar course in the content arena in order to turn around the long-suffering Internet icon.

The former Google (GOOG) exec is facing strong headwinds in doing so, with his legacy subscription access business dying faster than expected, while his advertising revenue remains frustratingly flat.

Armstrong has his hands full building up that content business while also fixing all the various maladies of AOL’s past.

Last week, in AOL’s most recent quarterly report, that was eminently clear, with revenue and earnings below already low Wall Street expectations.

“Nobody likes to show up to these calls and report down numbers in an up market,” said Armstrong in the investor call after the results were released, noting that AOL was in the midst of a long turnaround and “eventually” investors would be able to see results.

Eventually is a good way to put it.

What’s the future of the media business? Demand Media, the Google-savvy “content farm” that generates thousands of computer-assigned, low-cost Web items a day? Or ProPublica, a nonprofit that produces deep-dive investigative pieces and publishes them on its own site and in the pages of high-profile partners?

Good guess: Some of both. But let’s allow both parties to make their own case.

Brief background: Demand Media is Richard Rosenblatt’s follow-up to MySpace, which he sold to News Corp. (NWS); Paul Steiger founded ProPublica after a long career at The Wall Street Journal.

Below is the full video of the interview, followed by the liveblog:

Liveblog

9:41 am: Kara asks Paul Steiger to explain what he’s up to.

Steiger: Stories are aimed at abuse of power and empowering people to make change. I started there because when I was leaving the Journal in 2007, the traditional news business was collapsing. We had $10 million in funding and that wasn’t something I could turn down in that environment. I didn’t have time to be worried–I had to leave the Journal because of mandatory retirement age, and my wife said I couldn’t wear sweatpants during the weekday.

9:44 am: Kara to Rosenblatt–Please explain the controversy regarding Demand.

[WARNING: Rosenblatt speaks very quickly. It's unlikely that I'll be able to get more than impressionistic stabs at what he's saying.]

“We only write content that people want….We’re not journalists, all right? The only people that call us journalists are journalists.” That said, what we do is “more like service journalism….There’s no piece of content made that we think is good” because we only make content that people tell us they think is good.

9:46 am: Rosenblatt–We do no marketing. All traffic comes from organic search.

I don’t know why people call this “dreck.” When you do something 6,000 times a day, it always looks like it’s of low-quality. We’re okay with that; we’re continually trying to prove to people that we’re doing good stuff.

We have a deal with USA Today and others that we’ll be announcing.

9:47 am: Kara to Steiger–What do you think of all this?

Steiger: I see this as a reordering of the environment that we’re all going to have to live in. You [Demand] make stuff people want; you control costs, and it’s working. Another model is the Politico model, with a combination of tightly controlled print plus a big Web site. We do the most expensive, the most important journalism for democracy.

Kara: Example?

Steiger: A story we did with the Los Angeles Times about nurses getting bogus licenses. A story about police in New Orleans killing people. There are five or six things like that in the past year where we can point to changes that have taken place because of our stories. These things can cost tens of thousands or hundreds of thousands to produce.

In the old days, that could be a loss leader for for-profit newspapers. Can’t do that anymore, so we need philanthropy. “Silicon Valley, come on in!”

9:50 am: Kara to Rosenblatt–Will you do “Top 10 nurses that beat people up”?

Rosenblatt: No

Kara: Wait a minute! People may want it!

Rosenblatt: I think journalism is important, and the problem is trying to pay for it. We can help publications like USA Today, where we generate content and revenue for them, and they can take that money to fund other reporting. We’re not going to save journalism, but we can help it.

Kara to Rosenblatt: You employ a lot of journalists.

Rosenblatt: Not journalists.

Kara: Former journalists?

Rosenblatt: They may have been former journalists, and they may do journalism somewhere else. We call them freelancers, content creators.

9:53 am: Kara asks Rosenblatt to explain editing/oversight.

Rosenblatt: Eleven people touch this stuff before it gets published, etc. Anyway, let’s say we do 7,000 pieces of content a day. That’s 77,000 individual touches per day, with 10,000 freelancers around the Web. That’s amazing. That’s what the Web is made for.

9:54 am: Kara–How do they get paid?

Rosenblatt: They can get paid by piece or by revenue-share. But most of them prefer to get paid by content, because it’s guaranteed.

9:55 am: Kara–at The Wall Street Journal, we had people who worked for months on a single story. Is that done?

Steiger: The Journal, the New York Times and Washington Post are still vertically integrated and have powerful enough brands and talent that I think they can make it into the next generation.

Kara: Two of those are in dicey shape.

Steiger: Remember that there are two things going on right now. There is a secular shift, with the business model being destroyed. But there’s also a recession. So as that eases, we’ll have a better sense of who can survive.

9:58 am: Steiger–I’d love to go back to 10 years ago, or longer, to the golden age of journalism. But not even Silicon Valley can produce a time machine.

Kara: So do you think even the big newspapers that survive will switch to audience-driven content creation? That’s not what journalism is about.

Steiger: No matter what you’re doing, you’re still making stuff with an idea of what the people who are reading you want. It’s a broader way of thinking about it than Demand, but there’s a common thread.

9:59 am: Kara to Rosenblatt–Where is your actual business? Is it domains?

Rosenblatt: We have two main businesses: Registrar/domains. It’s steady, recurring revenue, and it generates a lot of data. Almost 10 percent of the Web hits our servers via these domains. It’s an exciting source of data.

Then we have the media business. That’s 50 percent bigger, in revenue, than other business and growing fast.

Of that business, less than 10 percent is domain advertising business. Google (GOOG) and Yahoo (YHOO) stick ads on tenniselbow.com, etc. We think that’s a great business also.

Kara: Is your media business profitable?

Rosenblatt: Can’t talk about that.

Kara: Does that mean it’s not profitable?

Rosenblatt: Can’t talk about that.

Kara: But you’re going public, right?

Rosenblatt: Can’t talk about that.

10:03 am: Kara–you’re dependent on Google, right?

Rosenblatt: In the way that everyone is dependent on Google. Or that the iPhone is dependent on AT&T (T). But everyone searches on the Web. So some of our sites, like eHow, are getting traffic from Google. But others aren’t.

If Google changes their algorithm, we think about that. But we spend a lot of care on what we do, and we think there’s a move to quality long-tail content that Google values.

10:05 am: Kara to Rosenblatt–AOL is doing what you’re doing. Yahoo just bought Associated Content. It has more distribution than you do. What does that mean for you?

Rosenblatt: We love that AOL (AOL) and Yahoo are validating what we’re doing. “In a market this big, that’s in the first inning, there’s plenty of room for all of us.”

10:05 am: Kara to Steiger–How do you feel about the kind of journalism you do becoming nonprofit work? Does that depress you?

Steiger: “I’m the opposite of disheartened. I’m very excited.” Yes, the business is shrinking and people are losing jobs, and I don’t want to make light of that. But we’re attracting great people; we’ve won a Pulitzer Prize. The work will get done. The work is crucial to our society, and it needs philanthropic support. But so do orchestras and clinics and universities.

10:07 am: Kara–Is there a way to actually make money doing this?

Steiger: “Conceivably, but I can’t think of what it is.” If you’re focused entirely on this, “at this stage, you need philanthropic help.”

Kara to Rosenblatt: Can you think of how to do this?

Rosenblatt: You can hold a conference and charge people $5,000 a head. [Applause in conference room and in D8 cave.]

Q&A

For Rosenblatt: Why won’t you call your people “journalists”? Steve Jobs was full of venom for “bloggers,” too. Why not call people who write for money “journalists”?

Rosenblatt: If our writers want to call themselves journalists, great. But they’re not doing reporting from Afghanistan. We’re content creators, making things that people want.

Steiger: I just think that the labels get in the way.

Q: Who are those 11 people that touch Demand Media’s content? What do they do?

Rosenblatt: Some people are involved in “titling.” For SEO or social media purposes. Three people are involved in checking each title. Then people involved in each property select stories, depending on the voice. Then copy editors, copy chiefs, writers. We’re actually going to be adding more. We can make it so efficient, that we can add more roles, and everyone can keep making the same amount of money.

Q: What about rolling out content on the domains you run?

A: Not yet. Maybe in coming years. It’s not a focus right now. We do think the assets that you own and we own, we think those assets “have great optionality later” to put content on.

Q for Steiger: Do you share Steve Jobs’s distaste for bloggers?

Steiger: I sleep with a blogger! My wife blogs from 11 pm to 2 am. I’m an enthusiastic supporter of blogging. They bring a lot of audience to ProPublica’s Web site. I think what Steve was getting at is that there’s a danger of too many people commenting and not enough people finding out what’s going on. [I don't think that's entirely what Jobs was complaining about, btw.]

This content-creation session is now over.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one.

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]]> http://allthingsd.com/20100603/richard-rosenblatt-paul-steiger-session/feed/ 0 http://allthingsd.com/20100315/exclusive-yahoos-top-ad-money-maker-bradford-leaving-for-new-job-at-demand-media/ http://allthingsd.com/20100315/exclusive-yahoos-top-ad-money-maker-bradford-leaving-for-new-job-at-demand-media/#comments Mon, 15 Mar 2010 16:15:01 +0000 Kara Swisher http://kara.allthingsd.com/?p=25581

According to several sources, Yahoo’s SVP of U.S. Revenue and Market Development Joanne Bradford (pictured here) is planning on leaving the Internet giant to take a new position as chief revenue officer of online content upstart Demand Media.

The surprise move is sure to have reverberations throughout the online advertising arena, but more so at Yahoo (YHOO), where Bradford’s job encompasses a wide range of key revenue-generating duties.

She has also been tapped as one of the execs to play a key role in the recently approved search and online ad partnership with Microsoft (MSFT).

Yahoo declined to comment. BoomTown has also contacted Demand and is awaiting comment.

Bradford had actually once been a Microsoft exec, serving as VP and chief media officer of MSN Media Network. She had worked at BusinessWeek before that.

Bradford came to Yahoo in the fall of 2008, at the tail end of the tenure of Co-founder Jerry Yang, who stepped in as CEO after the previous CEO Terry Semel departed.

Immediately previous to her job at Yahoo, she had been helming national ad sales at then-trendy Los Angeles-based ad services company Spot Runner.

Demand will be her second time going from a large company to more of a start-up.

But–unlike the troubled Spot Runner where Bradford worked for only six months–Demand has been on a growth tear of late with a social media strategy that is also being pursued by AOL (AOL) and others.

It owns heavily trafficked sites, such as how-to juggernaut eHow and the health- and fitness-focused Livestrong.com, putting Demand in the list of the top 20 Web properties.

It reportedly has about $200 million in annual revenue–mostly from advertising, but also from a domain registration business–and is profitable with several hundred employees.

The Santa Monica, Calif.-based company is headed by serial entrepreneur Richard Rosenblatt (pictured here), former chairman of Intermix Media. Intermix was the parent company of MySpace, which was sold to News Corp. (NWS).

Armed with an astonishing $355 million in funding from a range of prominent investors, he has been trying to fight some mainstream media depictions of his social media content company, especially one report that called Demand a “content mill.”

Via its Demand Studios, the company uses an army of freelancers to produce all kinds of content for its sites and others, using a complex automated system, but which also includes vetting and editing.

In fact, irked at the characterization of Demand as a content spammer, Rosenblatt even issued a manifesto for Demand in January.

“There has been so much misinformation about our model and what we actually do, that I thought it was a good idea for our company and those who work for us to lay out our principles,” said Rosenblatt in an interview with me at the time. “We are so different from traditional journalism, which I have nothing but admiration for, so it was time to make people understand that.”

The role of Demand Media, said Rosenblatt, was to help readers solve problems, laugh and get good advice, while figuring out how to create a profitable media business in the digital age.

(Walt Mossberg and I have invited Rosenblatt to share the stage at the eighth D: All Things Digital conference this June, along with former Wall Street Journal editor Paul Steiger, who is trying to save investigative journalism at a nonprofit called ProPublica, to talk about it all.)

If Rosenblatt is successful, Demand appears to be aiming for an IPO or merger with another company. Ironically, Demand has also been eyed by Yahoo in the past, as a possible acquisition.

Nabbing a top Web exec like Bradford from Yahoo is obviously a definite step in raising the stakes for Demand with big, established advertisers.

That’s because Bradford is well-regarded in the industry and is a prominent player. She recently signed a high-profile deal with Hollywood producer Ben Silverman to create premium content for Yahoo.

Bradford’s departure will be seen, both internally and externally, as a definite blow to turnaround efforts by CEO Carol Bartz. Bradford currently reports to Hilary Schneider, EVP of Yahoo’s U.S unit.

My reporting does not indicate that Yahoo’s top brass know about Bradford’s expected move, so it is not clear who would replace her at the Silicon Valley icon, which has been hard hit by an exodus of talent over the last two years.

Internal candidates could include 11-year Yahoo veteran Mitch Spolan, VP of North American sales, or Seth Dallaire, a former Microsoft exec whom Bradford brought to the company last fall as VP of mid-market sales, a newly-created role responsible for all mid-market sales efforts across search and display advertising.

More to come, obviously…

]]> http://allthingsd.com/20100315/exclusive-yahoos-top-ad-money-maker-bradford-leaving-for-new-job-at-demand-media/feed/ 8 http://allthingsd.com/20090409/if-yahoos-going-social-is-demand-media-back-on-its-dance-list/ http://allthingsd.com/20090409/if-yahoos-going-social-is-demand-media-back-on-its-dance-list/#comments Thu, 09 Apr 2009 10:10:31 +0000 Kara Swisher http://kara.allthingsd.com/?p=11999

Last year, Yahoo EVP Hilary Schneider and then-Media Group head Scott Moore had a summery seaside dinner with Demand Media co-founder and CEO Richard Rosenblatt (pictured here) in Santa Monica, Calif., right around the corner from the online publishing company’s HQ.

While many speculated that Yahoo (YHOO) could be doing some friendly kibitzing to get a sense of where the eclectic network of general- and special-interest sites was headed, for a possible acquisition, nothing came of it.

That’s because at the time, Rosenblatt insisted that he was aiming to eventually take his company public and Yahoo was in the midst of ongoing corporate turmoil.

“There is a lot of potential here and I want to build a big company for the long-term,” said Rosenblatt in an interview with BoomTown last July (see video below).

But, as my post noted: “Still, at some point when Yahoo is not in the free fall it is currently in, Demand might make a great purchase for Yahoo.”

And now, a year later, as new Yahoo CEO Carol Bartz works to stop that slide, several sources close to the company tell me another look-see at Demand is likelier than ever.

That’s underscored with recent indications that a major strategy will finally follow through on making Yahoo’s massive but disparate service more social, especially its content offerings.

But would Bartz go as far as making a big buy now or would she be more likely to strike a massive partnership with Demand, from which Yahoo could learn a lot?

Such an acquisition could cost anywhere from $1.5 billion to–as was floated last year in better times–$3 billion. In addition, if Demand was to engage in more serious talks with Yahoo, there would likely be other suitors.

As costly as that is, some sort of link-up with Demand is an interesting idea, especially since Yahoo could use a bold and definitive move to signal social goals that play to its strengths and are not a copycat of more powerful social-networking sites now in place.

At a Morgan Stanley (MS) conference last month, Bartz said, for example, that “I do not believe we can invent the next Facebook,” while noting Yahoo still needed to be more social throughout the service, especially in its content.

And, just yesterday, a Reuters article about that focus was titled: “Yahoo’s Plan: Create Community from Isolated Sites.”

Said the article: “If [Yahoo co-founder David] Filo and new CEO Carol Bartz have their way, the kinds of social networking features available on Facebook will become part of many Yahoo websites and allow their users to network with each other without using Facebook. The company hopes the strategy will help link its disparate properties, bringing more advertising dollars and growth.”

And that’s just at the heart of Demand Media, which dubs itself the “leader in social media.”

Demand was founded in 2006 by Rosenblatt and Shawn Colo, who raised a giant pool of funding–$355 million–from gold-plated investors like Goldman Sachs (GS), Oak Investment Partners and even a private investment from major Yahoo investor Gordon Crawford.

Getting that kind of backing was due to Rosenblatt’s entrepreneurial track record.

As founder, chairman and CEO, he sold iMALL to Excite@Home for $425 million in a 1999 stock swap.

And, perhaps most famously, as CEO of Intermix Media, Rosenblatt sold it with the company’s crown jewel, MySpace, to News Corp. (NWS) for $580 million in cash.

Then, Rosenblatt started Demand, which takes user-generated content of all kinds and on all kinds of topics–especially via video–from an army of freelancers and leverages it into massive traffic that it monetizes.

Demand is also the one of the bigger suppliers of video to YouTube, which it also monetizes.

And, through the acquisition of Pluck, the company also laces social-networking tools throughout the sites, as well as for many well-known third parties.

All this has given Demand upward of 70 million unique visitors per month, at sites like eHow and GolfLink.com, with about $150 million in annual revenue.

And–drum roll please–it is reportedly profitable, although how much is not clear.

While he has long maintained a public offering was on the horizon, despite the weak economy, Rosenblatt has also been interested in the idea of how to revive major players like Yahoo and Time Warner (TWX) online unit AOL.

Both have been struggling, but still have massive traffic and brand recognition, along with large advertising businesses.

And in many ways, the energetic Rosenblatt is just the kind of product-centric and visionary exec Yahoo lacks, despite Bartz’s clear ability to get the company’s management ducks in order.

What could be even more interesting, said one source, would be to marry Yahoo and Demand with a lot of what is going on with the publishing of niche sites at AOL’s MediaGlow content unit, in a giant publishing network.

Ironically, AOL was another acquisition target of Yahoo, in yet another deal that did not pan out last year.

Here’s the interview with Rosenblatt at Demand Media HQ last year:

[ See post to watch video ]

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