
Epic Fail: The Rise and Fall of Demand Media - bcn
http://variety.com/2013/biz/news/epic-fail-the-rise-and-fall-of-demand-media-1200914646/
======
jotm
"Under Google’s new algorithm, code-named Panda, companies that produced lots
of content got penalized"

Hahaha! Yeah, let me fix that for you: "companies that produced lots of
_useless, worthless, trash_ content got penalized".

Good for Google, good for everyone, screw Demand media for ad-filled "content
farms" on crappy domains like 3d-blueray-players.com".

Even eHow and Livestrong are borderline spammy, although they do have enough
_good_ content to make them popular (and they are).

Should've focused on quality content while they were a $2 billion company
instead of whining about it now.

~~~
valgaze
Speaking of junky content:
[http://imgur.com/a/zUaPG](http://imgur.com/a/zUaPG)

~~~
jotm
Is that on a tablet?

Anyway, I hate when they do that - Instructables is the first one that comes
to mind (they offer a paid subscription for viewing articles on a single
page).

~~~
pallandt
They're charging for convenience and the ability to download a tutorial in pdf
format, it's not like user experience is sabotaged for everyone. Assuming they
don't get enough revenue from advertising, it's a decent monetization
strategy.

They're not actually impeding anyone from viewing content, say for instance
like Quora blurring posts or similar.

Nothing wrong with that, I wished people were more understanding of how
companies sometimes need to do mildly unpleasant things in order to keep a
product afloat so that everyone can enjoy it. Some of the things on
Instructables are pretty awesome, especially a few years ago I would've had a
very hard time in finding an equivalent for their various technology
tutorials.

~~~
jotm
Nothing wrong with it, it's just mildly unpleasant having to scroll through
multiple pages, and the membership isn't quite worth it if you only view an
article once in a blue moon...

~~~
andrewcooke
i think the problem here is "hate" and "mildly unpleasant" sit oddly
together...

~~~
lambda
People use "hate" to mean "mildly unpleasant" all the time. "I hate it when i
just barely miss the bus" or "I hate it when the package is so hard to open I
spill most of the sauce in the process of opening the package" or the like.

------
lkrubner
This falls into the broader category of stories "Don't build a business that
is wholly dependent on another business" of which we hear variations here on
Hacker News (such as "Don't build your whole business around the API of
another business.") Demand Media was far too reliant on its ability to
manipulate its rankings in Google.

We had a similar opportunity. We built Accumulist in 2006. We wanted stories
posted to Accumulist to do well at Google, but we succeeded way beyond our
expectations. Something about the structure of Accumulist hit the sweet spot
of whatever algorithms that Google was using during 2006. Any article posted
to Accumulist jumped to the front page of Google. Accumulist had an API so
outside bloggers could ping it with their stories, and generally, for any
story posted to Accumulist, the page that got ranked in Google was the page on
Accumulist, rather than the original page on the blog.

For us, at the time, Accumulist was one of many projects we were working on.
It was an unexpected hit. We did think about making it our full time focus. I
was in favor of expanding it. However, my partners were against it. At one
point we were working with an outside consultant whose advice I greatly
respected. He said, "The business plan can not consist soley of 'Accumulist
ranks high with Google.'" And that was a good argument.

For businesses like Demand Media and Accumulist, I think ranking highly with a
search engine can only be the beginning of a process. If that's all you've
got, then quit. There has to be something else you can do, something to add to
the process, something real, that gives your business independence from the
other business that you are initially depending on. Otherwise I think you are
building your business on sand, and its only a matter of time before it washes
away.

~~~
aaronbrethorst
Or you could take away the lesson of 'build something that is of real,
meaningful value to users.'

~~~
larrys
"real, meaningful value to users" only helps with part of the problem.

The other part, depending on the whims of a big player for your traffic which
is a big issue even if there is value.

After all the chance of a site going down in rankings enough to impact profits
is much greater than the chance that anyone is going to complain (as a group)
to get that previous ranking restored. Or certainly the site operator can go
in most cases and pound sand.

So let's say you are "perlanswers.com" (arbitrary for example name not even
registered) and you currently rank near the top. Then all the sudden you don't
rank near the top and you fall to #8 or #15 which greatly hurts traffic. You
can't complain and even if you have a loyal customer base "meaningful value"
they really aren't going to be able to do much either. Right?

Of course if you have a large group of people typing in perlanswers.com that's
a different story. But how many times does that happen as opposed to the
"other" way people tend to get answers?

~~~
wpietri
If you have something that's of real, meaningful value to users, I think big
players are less of a problem. If I'm selling a better mousetrap and suddenly
Walmart won't distribute it, there are a lot of other ways to sell mousetraps.
If I have valuable content, search is _one_ way I can get people to it, but
it's far from the only way.

The mistake Demand Media made was creating a lot of crappy content. They
weren't delivering much user value; their real skill was search-driven eyeball
arbitrage. When Google tuned their search engine to deliver more value to
their users, Demand got squeezed out and had nothing to fall back on.

~~~
benologist
The mistake Demand Media made was not creating their shitty content under a
veil of legitimacy - AOL calls their giant content farm "news" and their cheap
writers "journalists".

~~~
wpietri
I don't disagree about AOL, but I think Demand Media's mistake goes deeper.
Most purveyors of shitty news know that they have to build an audience. Thus,
we have long-lived tripe like the Daily Mail or the National Enquirer. Demand
Media's plan was to force one via search engine ranking.

~~~
larrys
"shitty news" is definitely different than shitty content (of the type that
Demand produced).

"shitty news" has entertainment value. People read shitty news because it's
entertaining. If it's not accurate that is not the same problem as crappy
instructions on how to fix a leaky roof (where the goal is to solve a problem
not be entertained.)

------
tomasien
"The freefall of Demand serves as a cautionary tale for hype in the Internet
age: No company burns so hot that it can’t cool off."

What a crock - what cautionary tale? A company that grew really fast, is still
producing lots of cash, and is already public? Companies rise and fall and are
dependent on lots of other forces. Airbnb could crash any time if cities
decided they don't want it (I doubt it will), same with Uber, and TONS of
companies are in some way dependent on Google not shutting them out.

Seems like this was a pretty crappy business with extremely low value added to
the world, but it's so obnoxious to hear every single company that starts to
decline or doesn't grow the way we thought it would as a "cautionary tale".
Companies grow, companies die.

~~~
adventured
How do you figure Demand Media is producing lots of cash?

Their business is struggling just to break even on an operational basis, and
has been for years.

~~~
tomasien
Because it says in the article that several of their businesses are producing
lots of cash, just not growing.

This is not to defend the business, I have no interest in doing so, but the
ONLY thing about this that is even reasonably a cautionary tale is building a
business that has no intrinsic value to anyone. Those businesses have little
chance, but that's the point they're making when they declare it a cautionary
tale.

~~~
DoggettCK
I do have an interest in defending the business, because I work for DM,
specifically engineering an analytics platform for Pluck.

DM has a reputation on here as some sort of shitty content farm, but that's
just a fraction of what we do. Maybe that's just the only part of the business
the markets care about.

At least for my group, sales rings the dinner bell announcing a new contract
frequently enough that it's driving engineering insane. They need to move that
damn thing over by marketing.

~~~
platz
Install a new build siren/lightbar

~~~
DoggettCK
That's why I asked my wife for an Arduino starter kit and foghorn for
Christmas.

------
001sky
'Content Farming' was a cynical, manipulative business model. Frankly, we
should all be glad that Google found a way to kill it. Some 'innovation' needs
to be culled from an ecosystem occasionally to allow higher forms of life to
not be starved. Pruning the deadwood is the proper method of 'farming' content
when you are intent on producing high-quality, IMHO.

------
wpietri
And I couldn't be happier to hear it.

Demand Media is a business that was about making money, not creating user
value. They were essentially a parasite on the attention economy. It's no
shock to me that the chairman of MySpace went on to create another business
that turned out problematic.

I can only hope that GoDaddy is next to falter, but it appears to be run by a
more cunning set of predators.

------
danso
There is something a bit ironic about Variety, a legendary media giant of more
than 100 years that was sold in a fire sale in 2012 to an entertainment blog
network, writing about the downfall of another online media outlet.

[http://mediadecoder.blogs.nytimes.com/2012/10/09/in-a-
fire-s...](http://mediadecoder.blogs.nytimes.com/2012/10/09/in-a-fire-sale-
penske-media-buys-variety/?_r=0)

------
JacobJans
I recently read an article at the Harvard Business review that very much
proves why Demand Media didn't last.

It's called "Three Rules for Making a Company Great."

The first rule is:

1\. Better before cheaper

Demand Media severely violated rule number 1. They were all about cheaper
before better. Their entire business model seemed to be about producing as
much low quality content as possible. No wonder Google wanted to penalize
them.

Think about this: If Demand has built their empire on producing super-high-
quality articles, they would have had Google as an ally, instead of a threat.
Google would have done what it takes to make sure they stuck around. Because
Google wants high quality content. Instead, they abused Google's search
engine, generating as much content as they could -- with very little focus on
quality.

It is fortunate that many companies today are focusing on quality first. The
fate of Demand Media is a good lesson for us all.

If we want to build something that lasts, we'll have a much easier time if
we're building something that people actually want to stick around.

Who thinks the "content" produced by Demand Media is worth fighting for?

Their investors. Anyone else? I highly doubt it.

[http://hbr.org/2013/04/three-rules-for-making-a-company-
trul...](http://hbr.org/2013/04/three-rules-for-making-a-company-truly-great/)

~~~
driverdan
Except that rule is often bullshit. There are many successful companies that
have been built upon cheaper rather than better, eg Walmart.

~~~
defen
Walmart did (does?) logistics and supplier negotiations better than anyone in
the business. That is their advantage, not that their merchandise is sometimes
low-quality.

~~~
driverdan
Using that logic you could say that Demand Media did better SEO than everyone
else until Google changed their algos.

~~~
defen
AFAIK Walmart's advantage in those areas could not be completely nullified by
a single upstream provider's changes.

~~~
ddebernardy
China?

------
lotharbot
I treat complaints from content farms that produce low-quality content kind of
like I treat complaints from real farms that produce low-quality food. People
will stop buying your stuff because they know it's worse than competing
offerings, so don't blame Google for giving you less prominent placement on
the homepage, and don't blame the grocery store for giving you less prominent
placement on the shelf.

------
larrys
"These “domain parking” pages were immensely profitable, generating north of
$100,000 per day, according to a former Demand exec who requested anonymity.
“That’s $35 million-$40 million per year without doing any work,” the exec
said."

Separate point domain parking pages (have much experience here) have fallen
greatly over the years. Portfolios of pages used to sell for multiples of
future earnings as people didn't realize how mercurial that situation was.
Once again your destiny is determined by a few big players who have very
little transparency (and in all honesty their own issues with fraud to deal
with).

I have seen parked domains that earn perhaps 1/5 to 1/10th of what they did in
the last decade. (As one example a domain related to mortgages used to earn
perhaps $500 per month back during the boom and now I'd be lucky to get $50).

Not only that but both yahoo and google can ban a domain parked page if they
feel there are fraud clicks. You don't get a reason and there is practically
no accountability or appeal process.

~~~
rohin
Hey, not sure if you'll see this, but we'd love to write about the decline of
the domain parking business at Priceonomics (or feature a guest post on the
topic if you're interested).

If you have any interest, you can email me at rohin@priceonomics.com

------
dpcheng2003
As someone that produces content, I am pleased that Hummingbird is moving into
the direction of higher-quality content, with appreciation for long-form
content.

I am not pleased with all the stuff we have to do with Google+ such as
authorship.

So yes, SEO is changing for the better but I don't think anyone believes
Google is doing it solely for user experience.

------
CalRobert
Funny that this completely fails to mention that in addition to being a
registrar (eNom), they've spent tons of cash on new TLD's and are operating a
registry with around 20 or so TLD"s.

------
ewharton
Two clear flaws with this business:

(1) They were built on another business - see Michael Porter's supplier power.
If you need one company too much, you face a lot of tail risk. Of course,
there's nothing wrong with starting this way. In fact, being focused can be
the best way to prove an in idea, get money (revenue or risk capital) and
scale to other platforms.

(2) They did not add value. In effect, Demand Media was an arbitrage of
digital adspace. Arbitrages get spotted and, eventually, disappear or
diminish.

The dependency on another business & the lack of value add makes me wonder how
they got as big as they got and just why they did not fail sooner. Of course,
I hate to see any companies fail, given the risks of entrepreneurship &
positive economic benefits (it makes the economy antifragile).

------
wpietri
Free plan for anybody looking for something to do: start an open-culture
content farm. Demand Media's major strength is a way to match underserved
searches with cheaply written content.

They (and other content farms) could be crushed by a Wikipedia-like project
that fills the same user needs. It's hard to compete with free labor,
especially when that free labor uses the lack of time constraint to produce
high-quality content.

The main trick is to figure out how they're finding underserved searches, so
you can establish a good feedback loop between readers and contributors.

------
marknutter
Funny, all the sites they mention in the article are listed in my Personal
Blocklist extension. Garbage, all of them, and good riddance.

------
curiouslurker
To counter many of the points made here, nothing lasts forever. Some
businesses are built for the ages, others are not. There's nothing wrong with
doing something that makes money for a while if you provided same value in the
process. I am sure the founders and early investers did well and they still
have a business valued at a quarter billion!

~~~
kevinchen
> if you provided same value in the process. I am sure the founders and early
> investers did well and they still have a business valued at a quarter
> billion!

Because that is the only reason to start a company

------
chasing
Epic Fail?

I didn't see it in the article, but how much did the founders/investors walk
away with? If they walked away with a tidy fortune of cash (which I suspect
they did), then no: Not an epic fail. An epic win!

------
droob
Wired article from three years back:
[http://www.wired.com/magazine/2009/10/ff_demandmedia](http://www.wired.com/magazine/2009/10/ff_demandmedia)

