Santa Monica’s Demand Media files initial public offering
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Demand Media Inc., an emerging media company whose editors and freelancers create online stories and videos based on the information people are searching for, filed an initial public offering Friday.
The document does not indicate how much the 4-year-old Santa Monica company hopes to raise from investors. A spokeswoman and attorneys for the company declined comment.
Demand Media has been among a clutch of online companies -- including About.com, Answers.com and Mahalo -- seeking to corner the how-to market. It employs its own software secret sauce to analyze search terms and draw from a pool of 10,000 freelancers to write about topics as varied as how to make small talk or how to select a multi-function printer, or create videos illustrating, say, the best exercises to remove cellulite. They churn out about 5,700 articles and videos on a typical day, according to the company’s regulatory filing.
The new media company seeks to identify relevant subjects that will not only catapult it to the top of Google’s search rankings, but also lure advertisers. Demand Media said it derived about 45% of its revenue for the first half of the year from advertising.
Indeed, ad revenue has grown steadily since 2007, and for the first six months of the year brought in $114 million, according to its prospectus. However, Demand Media has yet to turn a profit. For the first half of the year, it reported a loss of $6 million.
Demand Media provides content to its own websites, such as eHow.com, Livestrong.com and Cracked.com. Its videos, which are also distributed on YouTube, have generated more than a billion views. According to comScore, its collection of websites attracted more than 86 million visitors in June, ranking it as the17th largest Web property in the United States.
Mainstream media companies, including Gannett Inc.’s USA Today, hired Demand Media to create and maintain a new travel section for the newspaper’s website called Travel Tips.
The company also runs an Internet domain name registration service.
Demand Media’s co-founder and chief executive, Richard Rosenblatt, is a veteran Internet entrepreneur. He served as chief executive officer of Intermix Media Inc., parent company of the social network MySpace, which he helped grow to one of the most popular hangouts on the Web -- and subsequently sold in 2005 to News Corp. for $580 million.
Rosenblatt also founded iMall, a site that allowed consumers to create their stores and conduct business online. It was sold in 1999 to the now-defunct Excite@Home.
Demand Media’s current stock offering is led by Goldman Sachs and Morgan Stanley, with underwriting from UBS Investment Bank, Allen & Co., Jefferies & Co., Stifel Nicolaus Weisel, RBC Capital Markets and Pacific Crest Securities.
-- Dawn C. Chmielewski