Wired on Demand Media

I've covered some of the financial background of Demand Media and its writer mill, Demand Studios, but I'd strong suggest that people also read this article in Wired. It looks at the operational model of the company, which is essentially a virtual factory making money off piecework by writers, videographers, and, soon, photographers.

The process is automatic, random, and endless, a Stirling engine fueled by the world’s unceasing desire to know how to grow avocado trees from pits or how to throw an Atlanta Braves-themed birthday party. It is a database of human needs, and if you haven’t stumbled on a Demand video or article yet, you soon will. By next summer, according to founder and CEO Richard Rosenblatt, Demand will be publishing 1 million items a month, the equivalent of four English-language Wikipedias a year. Demand is already one of the largest suppliers of content to YouTube, where its 170,000 videos make up more than twice the content of CBS, the Associated Press, Al Jazeera English, Universal Music Group, CollegeHumor, and Soulja Boy combined. Demand also posts its material to its network of 45 B-list sites — ranging from eHow and Livestrong.com to the little-known doggy-photo site TheDailyPuppy.com — that manage to pull in more traffic than ESPN, NBC Universal, and Time Warner’s online properties (excluding AOL) put together. To appreciate the impact Demand is poised to have on the Web, imagine a classroom where one kid raises his hand after every question and screams out the answer. He may not be smart or even right, but he makes it difficult to hear anybody else.

The result is a factory stamping out moneymaking content. “I call them the Henry Ford of online video,” says Jordan Hoffner, director of content partnerships at YouTube. Media companies like The Atlanta Journal-Constitution, AOL, and USA Today have either hired Demand or studied its innovations. This year, the privately held Demand is expected to bring in about $200 million in revenue; its most recent round of financing by blue-chip investors valued the company at $1 billion.

Using sophisticated automation, computers decide on the topics and issue story assignments based on what does well in web searches and advertising terms. Equally automated analysis predicts how much revenue in search advertising the piece can bring in. Those that offer enough revenue are given the nod.

It's essentially a service article machine, turning out what might as well be front-of-book pieces at a cheap rate. Will it compete with all writing markets? No, because they can't get the research and work that many who hire writers need. However, does it undercut certain types of content? Absolutely. If you're used to writing quick how-tos or other service-type material, then as things move to the web, you are basically out of business. And can it affect all markets? I suspect it could, as the greatly lowered prices begin to affect perception of value.

Writer Mills Making Big $: Demand Studios

Warning, there will be ranting, foul language, crankiness, and gloves-off head-slapping here. I'm angry, and by the time you finish reading this, you'll be angry as well, if you're a freelance writer. Either that, or you're either dead from the shock or enjoying the life of a masochist.

Anyone who follows this blog knows that I've been taking shots at what I've come to call writer mills: companies that grind writers bones to make their dough. But I realized that there's one aspect I haven't covered: what the companies themselves are making off the cheap content. Maybe it's my own twisted perception, but these sites seem to exude a sense of "we're all in this together" bonhomie. Better change the last word to baloney.

So here's the first of a series, because I find it to be the most egregious case of a company making literally hundreds of millions of dollars -- a year -- off writers who will spend more time researching a story than a company offering peanuts for time, the one irreplaceable resource.

I've written before about Demand Studios and had the company respond, and in various comments had many people agree that you'd have to be nuts to work for that kind of money as well as had one person claim in the comments to be making something like $3K a month.

So what does Demand Studios make? I did some pretty easy snooping around various sources of information independent of the company. First, stop thinking of it as Demand Studios and use the real name of the corporation: Demand Media. "Studios" gives it a homey feel, as though you're working with a small group of people also trying to make a living in a tough world. Think again.

First, the CEO of Demand Media is Richard Rosenblatt. In case the name doesn't sound familiar, this is the now 40-year-old who sold MySpace.com and its parent company to Rupert Murdoch for $600 million. Certainly he didn't get all of that; venture capital backers would have taken a huge slice. But this is far from someone who is living paycheck to paycheck.

Speaking of venture funding, Demand Media has received it to the tune of $355 million since its founding in 2006. No, I'm not misplacing a decimal point. The company has received huge amounts of capital from such investors as Oak Investment Partners, Spectrum Equity Investors, and Goldman Fucking Sachs and, as a result, has shown about a $1 billion market valuation. According to a BusinessWeek article in July 2009, Demand Media was pulling in more than $200 million a year. The company hasn't confirmed that, but Rosenblatt says that it is profitable.

Are you starting to get a clearer picture yet?

Let's dig in more and look at some of its business activities:

• It owns eNum, which is one of the top sellers in the world of Internet domains.


• It supplies content to, among others, Reuters and USA Today.


• Via Pluck, a social network software developer it bought for a reputed $75 million in cash according to TechCrunch, it provides software to the likes of Gannett/USA TODAY, Guardian Unlimited, Hearst Corporation, Fox, The Washington Post, Scotts, Circuit City, and Kraft.


• According to ReadWriteWeb, another reliable source of tech info, Demand Media has a network of sites that is the 24th most visited in the US, as reported by comScore. These are page views driven by massive amounts of content, most of which is generated by freelance writers. To put that into perspective, that's more popular than NBC Universal, ESPN, and Expedia, as BusinessWeek notes. And the traffic brings such advertisers as Ace Hardware and Target.


• It's cut a deal with Sony to put self-help videos onto the former's Bravia television sets.


• Demand Media claims to have delivered a huge number of video streams to consumers, whether directly from its own sites or through YouTube. In fact, it says the number is over a billion.

This isn't some cobbled together attempt by a small group of would-be entrepreneurs to make a little money, paying writers a pittance because there isn't cash to spare. This is a calculated, conniving, cynical corporate hyena that knows volume of content drives search results, and that shakes down the money tree. Only, that money gets vacuumed up as fast as it forms by the corporation, which manages to pay $15 for an article and $3.50 for editing. For the writers who claim to make $3K in a month, that's 200 articles, or roughly 7 articles a day, seven days a week.

Demand Media rakes in the dough, depending on the power of content, and is happy to have writers and editors slaving away at sub-burger-slinging wages. And there are thousands and thousands of writers who get taken in. Those who do aren't going to like what I'm about to say: You are all a bunch of sad dupes and Rosenburstwithbucks is undoubtedly laughing his ass off, or at least shaking his head in wonder, at the amount of time people will sell their souls and lives for less than what it would take to buy them and their significant others a cheap meal out just to get their heads patted and have the occasional compliment tossed their way. If you've been writing for Demand Studios, or any of these other writer mills, do yourself and the rest of us a favor and watch this clip of Harlan Ellison talking about getting paid as a writer.

They want everything for nothing. They wouldn't go for five seconds without being paid, and they'll bitch about how much they're paid and want more. I should do a freebie for Warner Brothers?

Or for Demand Media or any of the writer mills? This makes me so angry that I want to grab writers by the collar and slap them repeatedly until the dazed look leaves their eyes and they get mad. Get mad at me first if that helps, but then get mad at those big corporations that are conning you and get mad at yourselves for letting them. That's all this is, a giant con job from the companies that writers are actually doing something valuable. And they are -- something valuable to the companies and to the rich people that start them and invested in them.

For those who feel the need to write something, anything, start a blog. Create a newsletter. Put together a fanzine. Just do something that belongs to you, so that should something come of it, you're the one benefiting. Let the big time investors do their own work for a change.

Demand Studios Responds

Yesterday, I posted a criticism of pay rates at Demand Studios, calling them "nothing more than intellectual sweat shop piece work." I received a comment from Jeremy Reed, senior vice president for content at Demand. Because I didn't want this to be buried, and also wanted to directly address his points, I decided to treat it in a separate post. Here is the entirety of his response; my points will follow:

I want you to consider this argument.

I freelanced for too many years in my twenties. As a writer just out of college and with no (or few) clips, I hustled to get as much writing experience as possible and as many bylines on different topics in multiple publications. I did not make a lot of money, but it did lead to a good career in publishing.

Looking back, I came across a number of parasites and just generally bad people along the way in the freelance world. There were many publications that paid nothing. There were many publications who checks arrived months late or never. There were many publications I pitched tirelessly for years w/o ever having any article see the light of day. There were many publications with untrained or tired copy editors who butchered my content and sometimes even added wrong facts - but kept my name on the article. Those are just some of the bad experiences - there are plenty more.

We can argue whether or not we are paying a fair wage at Demand. It is a valid point. But, consider all the other time sucks and hurdles Demand cuts down or removes: 1) You don't have to pitch, if you remain qualified you can grab work at any time, any hour; 2) you get constructive feedback on every article you write. We invest in making the writer better because it also makes good business sense; 3) we pay every single Friday for all work done through the Wednesday of that week -- yes, that means you can get paid as early as two days after turning in work; 4) we've offered the chance to get your original work - video and text - published on LIVESTRONG.com, Trails.com, GolfLink.com, and eHow.com -- both also third parties like the Atlanta Journal-Constitution; and 5) we are smart about how we've built this so you can expect more work (and have) as opposed to less work from week to week.

I do agree it is not for every writer or even for certain ones at different points in their careers. But, it does fill a need for a writer who wants a steady paycheck, who wants to get better at their craft, and who wants unlimited amounts of work at any hour of the day.

Thanks for considering my thoughts. I only took the time to write because I respect the points you made.

Best,
Jeremy Reed
SVP, Content at Demand Studios

Now I'll address the various points in his post:

I freelanced for too many years in my twenties. As a writer just out of college and with no (or few) clips, I hustled to get as much writing experience as possible and as many bylines on different topics in multiple publications. I did not make a lot of money, but it did lead to a good career in publishing.

Certainly when you have no experience, you need to get some, and I understand that you see yourself as having a background in freelancing. But to assume that a new freelancer cannot make money is an invalid assumption. Yes, you need a few clips to get started, but as those in the business know, you can almost immediately start moving up the value chain, to use some business-speak. Each piece you do goes to leveraging your knowledge, talent, skill, and craft into better markets. To that end, low-paying and low-prestige markets have to go to the wayside quickly. These are the simple mathematics of the business.

Looking back, I came across a number of parasites and just generally bad people along the way in the freelance world. There were many publications that paid nothing. There were many publications who checks arrived months late or never. There were many publications I pitched tirelessly for years w/o ever having any article see the light of day. There were many publications with untrained or tired copy editors who butchered my content and sometimes even added wrong facts - but kept my name on the article. Those are just some of the bad experiences - there are plenty more.

Yes, there are many bad, incompetent, insensitive, and untalented people in the business. One of the best ways out of such experiences is to generally move up the value chain as quickly as possible. The more people are paying you, the more they value you and, paradoxically, the better they tend to feel like they need to treat you. Markets that require more capable reporting and writing cannot afford to develop a bad name, or they risk alienating the writers they need to create the content that will attract the proper reader demographic and advertising that follows.

We can argue whether or not we are paying a fair wage at Demand. It is a valid point. But, consider all the other time sucks and hurdles Demand cuts down or removes: 1) You don't have to pitch, if you remain qualified you can grab work at any time, any hour; 2) you get constructive feedback on every article you write. We invest in making the writer better because it also makes good business sense; 3) we pay every single Friday for all work done through the Wednesday of that week -- yes, that means you can get paid as early as two days after turning in work; 4) we've offered the chance to get your original work - video and text - published on LIVESTRONG.com, Trails.com, GolfLink.com, and eHow.com -- both also third parties like the Atlanta Journal-Constitution; and 5) we are smart about how we've built this so you can expect more work (and have) as opposed to less work from week to week.

I am glad that you acknowledge the criticism of low pay. However, your arguments as to the benefits of Demand Studios are actually incorrect, for the following reasons:

• When you are paid little, you must do much more work to try to keep afloat. This keeps you from putting proper attention into marketing that can help you move up the value chain. So, effectively, you become an indentured servant or a worker who must live in company housing and shop at the company store, because you don't make enough to walk away.
• Pitching ideas is one of the key ways to establish additional value to publications. Yes, it's nice if someone hands you a story topic, but it's far better to create your own and develop your own market. That way you are less dependent on the kindness of strange editing. Or something like that.
• The best feedback generally comes from the best publications. Given the rates you pay to copy editors, you aren't paying enough to get the amount of attention required for really solid insight into copy. And given the volume of articles in which you traffic, your in house people cannot have the time, either, to provide really useful feedback on any kind of a consistent basis. Either your entire operation is based on massive volume, or you're marking up the work of writers to an unconscionable degree. Given the markets on which you seem to focus, I strongly suspect the former. And so the entire operation is trapped by the need to churn out copy. In effect, it also lives in company housing and shops at the company store. There are no resources to improve things.
• You say you invest in making the writer better, but that is also contradictory, because you only survive through writers getting starvation wages - and given the rates I've been hearing, and you seem to acknowledge them - I'm not indulging in hyperbole. You can't afford for the writers to improve to the extent that they can make a living elsewhere.
• Quick payment is nice, but given that you lose maybe 2.5 percent value for each month delay, even a three month wait, which would be 7.5 percent, still leaves you far ahead if the assignment is paying at least 10 times more than Demand Studios will pay. That would still leave the writer making 9.25 times as much, including the time value lost.
• When you talk about the chance to have work on a number of sites that apparently are your own as well as third party sites, that's a variation on the "do it for the exposure" argument. As I've demonstrated in the past, working for exposure is foolish. You need exposure to the right markets (that is, editors who might pay), and that comes in the greatest degree from the highest prestige publications in your given niche. Exposure value is roughly directly proportional to pay, and the better paying markets don't have to mention the exposure value because it is an added benefit.
• Of course you are smart in how you've done this, because you're getting copy at dirt cheap rates and presumably selling it at a good mark-up. But smart for you isn't smart for writers.
• To say that this fills a need for writers who want a steady paycheck is disingenuous. It's not a steady paycheck, which would mean guaranteed work, like a job. It's a steady flow of absurdly priced work that leaves you stuck where you are. In business and marketing classes I've taught to writers, I've seen people get stuck in this way at even 25 cents a word, and that would be a huge step up from your rates.
• Unlimited work doesn't exist, because people have limited time. Better to do one piece well than to rush through and do crap jobs on ten pieces for the same amount. You have more time to think, to market, to live. And, to avoid the anticipated argument, getting $300 for a single article is still chicken feed.

I do appreciate Mr. Reed for having written, but I simply could not allow it up as an unchallenged comment. Such arguments need to be clearly deconstructed so writers can see what it is they are being asked to do.

No Demand for Demand Studios

You've probably seen the Demand Studios ads on such places as JournalismJobs.com and Mediabistro. They want experience, they want productivity, they want ... trust fund babies. A thread on Mediabistro's forum is worth reading for comments like this:

I had the same experience when Demand launched the Livestrong site. They asked for cycling and/or medical experts. I was offered work: 10 articles, $300. I wrote back asking if that was a typo and nope, it was not. Not worth it, and at least to me, the low pay puts into question the quality of the site.

A thought that might proceed through the mind of a skeptical journalist could be as follows: "I don't know the poster, so how do I know the observation is accurate?" Good question. I did a quick search on JournalismJobs and found a copy editing ad that mentioned rates. Although I can't guarantee that it will be up indefinitely, I can quote some of what I found:

We are looking for dedicated editors who can deliver quality work in a timely manner and are comfortable occasionally communicating with writers. Some fact checking is also required.

We will only accept candidates with 5 years of demonstrated editing or copyediting experience with a newspaper, magazine or book publisher.

This is a part-time freelance position and all work is done online. While your schedule is flexible, we do require our editors to commit to working a minimum of 12 hours per week, every week.

We pay a flat fee of $3.50 per article, with most editors averaging $20-$25 per hour, paid on a weekly basis via PayPal.

The copy editor must have five years experience, do some fact checking, and receive $3.50 per article. To make even $20 an hour, you'd need to do between five and six articles an hour. That's ten minutes per ... what, maybe 300 to 500 words I'm guessing? From times I've edited and had to hire copy editors, the going freelance rate I found was between $45 and $55 an hour. If the writing rates are equally bad -- and why wouldn't they be? -- the editing must be painful and far closer to mass rewriting.

This type of rate is nothing more than intellectual sweat shop piece work. I'd be surprised if the business owners don't laugh over after hour drinks at the gullibility of those who actually agree to such terms. The scary thing is, this is still better than what you might get at a place like Helium.

[Note: Demand Studios responded.