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Leaf Group, formerly Demand Media Inc, is an American content company that operates online brands including
eHow eHow is an online how-to guide with many articles and 170,000 videos offering step-by-step instructions. eHow articles and videos are created by freelancers and cover a wide variety of topics organized into a hierarchy of categories. Any eHow us ...
, livestrong.com, and marketplace brands
Saatchi Art Saatchi Art is an online art gallery and artist network. Saatchi Art is based in Los Angeles, California. History The company was originally known as Saatchi Online. The Saatchi Art marketplace contains original paintings, photography, drawings ...
and Society6. The company also provides social media platforms to existing large company
website A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and Wikipe ...
s and distributes content bundled with social media tools to outlets around the web. Demand Media was created in 2006 by a former
private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a typ ...
investor An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Typ ...
, Shawn Colo, and the former
chairman The chairperson, also chairman, chairwoman or chair, is the presiding officer of an organized group such as a board, committee, or deliberative assembly. The person holding the office, who is typically elected or appointed by members of the gro ...
of MySpace,
Richard Rosenblatt Richard Marc Rosenblatt (born April 6, 1969) is an American serial entrepreneur. He built, operated, and sold over US$3.3 billion of Internet media and content-aggregation companies.Jackson,Ro"His Companies Have Sold for Over $1.3 Billion: Can De ...
. The company employs an algorithm that identifies topics with high advertising potential based on search engine query data and bids on advertising auctions. These topics are typically in the advice and how-to field. It then commissions freelancers to produce corresponding text or video content. The content is posted on a variety of sites, including
YouTube YouTube is a global online video sharing and social media platform headquartered in San Bruno, California. It was launched on February 14, 2005, by Steve Chen, Chad Hurley, and Jawed Karim. It is owned by Google, and is the second most vis ...
and the company's own sites such as
eHow eHow is an online how-to guide with many articles and 170,000 videos offering step-by-step instructions. eHow articles and videos are created by freelancers and cover a wide variety of topics organized into a hierarchy of categories. Any eHow us ...
and livestrong.com. The company was acquired by Graham Holdings in June 2021 for $323 million. It is commonly known for being a
Content farm A content farm (or content mill) is a company that employs large numbers of freelance writers to generate a large amount of textual web content which is specifically designed to satisfy algorithms for maximal retrieval by automated search engi ...
.


Content & Media

Demand Media's Content & Media service offering includes leading owned and operated online properties that publish content in text, video, photography, and designed visual formats. This content is published across several key categories on eHow.com, a how-to reference and do-it-yourself destination, Livestrong.com, a health and healthy living destination, and certain niche properties focused on specific interests. It also owns and operates LEAFtv, a lifestyle resource for women that produces short-form how-to videos covering stylish living, food, and fashion. Additionally, its studioD business develops and executes content marketing strategies, and creates custom content for third-party brands, agencies and publishers.


Marketplaces

Through its Marketplaces service offering, Demand Media operates two art and design marketplaces where large communities of artists can market and sell their original artwork or their original designs printed on a wide variety of products. Society6.com, which it acquired in June 2013, provides artists with an online commerce platform to feature and sell their original images or designs on consumer products such as art prints, phone and tablet cases, T-shirts, mugs, blankets, tapestries, wall clocks, duvet covers, shower curtains and throw pillows. SaatchiArt.com, which it acquired in August 2014, is an online art gallery featuring a wide selection of original paintings, drawings, sculptures and photography that provides a global community of artists a curated environment in which to exhibit and sell their work directly to customers around the world. In 2017, Leaf Group acquired Deny Designs, a modern home furnishings company with original designs based in Colorado.


History

Demand Media was co-founded in May 2006 by Richard Rosenblatt and Shawn Colo. Rosenblatt has a long history of building and selling Internet media companies. As
chief executive officer A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...
of
Intermix Media Intermix Media, Inc. ( AMX symbol: MIX; formerly eUniverse) is an American Internet marketing company that owned the MySpace social network. The company is headquartered in Los Angeles, California and is a subsidiary of Fox Interactive Media, In ...
and Chairman of MySpace.com, Rosenblatt was one of the innovators of Internet social networking. Colo is a financial acquisition specialist. He worked for 10 years in the private equity industry as a principal with
Spectrum Equity Investors Spectrum Equity is an American growth equity firm that invests in businesses related to the information economy. The company operates out of offices in Boston, MA and San Francisco, CA. The company was an early investor in Ancestry.com and Grubhub ...
, specializing in media and communications companies. Demand Media raised more than $355 million in
financing Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm uses ...
over its first two years from investors such as
Oak Investment Partners Oak Investment Partners is a private equity firm focusing on venture capital investments in companies developing communications systems, information technology, new Internet media, healthcare services and retail. History The firm, founded in 19 ...
,
Spectrum Equity Investors Spectrum Equity is an American growth equity firm that invests in businesses related to the information economy. The company operates out of offices in Boston, MA and San Francisco, CA. The company was an early investor in Ancestry.com and Grubhub ...
, Generation Partners and
Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, Hong ...
. In June 2007, Demand Media hired Charles Hilliard, a former
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fi ...
investment banker,
NetZero NetZero is an Internet service provider based in Woodland Hills, Los Angeles, California. It is a subsidiary of United Online, which in turn is a subsidiary of investment bank B. Riley Financial. United Online is also the parent of Juno Onlin ...
/
United Online United Online, Inc. was an independent public company formed by the 2001 merger of NetZero and Juno Online Services. It is currently a subsidiary of investment bank B. Riley Financial. The company's range of products and services has evolved si ...
senior executive and initial public offering (IPO) specialist, as its president and
chief financial officer The chief financial officer (CFO) is an officer of a company or organization that is assigned the primary responsibility for managing the company's finances, including financial planning, management of financial risks, record-keeping, and financi ...
and acquired Byron Reese's how-to website, ExpertVillage.com of Austin, TX, for about $20 million. Reese became the company's chief innovation officer and developed the algorithm that the company uses to identify topics with high advertising potential. By 2008, Demand Media had acquired more than 30 domain-name portfolios and owned 65 destination websites. It said that its 2009
revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive revenue ...
was nearly $200 million and that it was making a profit, but it was later reported that the company had never been profitable. In July 2008, it was reported that
Yahoo! Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo! Inc. (2017–present), Yahoo Inc., which is 90% owned by investment funds ma ...
was interested in buying Demand Media for between $1.5 billion and $2 billion.Michael Arrington, Tech Crunch, Yahoo Takes A Gander At Demand Media To Plug Some Holes, July 9, 2008.
/ref> Sources close to both companies said Yahoo! executives were attracted to Demand Media's generation of advertising impressions and its ability to create niche social networks for media sites. Demand Media CEO Richard Rosenblatt later said that the company was not for sale. The deal never got past the talking stage. It was reported that Rosenblatt wanted a price closer to $3 billion for Demand Media. In August, 2014, Demand Media acquired online art-gallery marketplace Saatchi Art and named the startup's top executive, Sean Moriarty, as the new CEO of Demand Media Inc. The company changed its name to Leaf Group in 2016. On June 10, 2021, Leaf announced shareholders had approved an acquisition by
Graham Holdings Graham Holdings Company (formerly The Washington Post Company) is a diversified American conglomerate holding company. Headquartered in Arlington County, Virginia, and incorporated in Delaware, it was formerly the owner of ''The Washington Pos ...
for $8.50 per share in an all-cash transaction valued at approximately $323 million.


Acquisitions and dispositions

Since 2006, Demand Media has acquired a collection of relatively unknown sites and relaunched them with social networking features and video capabilities that serve specific niche interests.Kenneth Li, Reuters, Demand Media buys Pluck Corp, March 4, 2008.
/ref> In the company's first six months it made nine acquisitions, including the purchase of major registrars eNom and BulkRegister. On November 6, 2008, Shawn Colo, head of Demand Media
mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
, said the company would continue to buy niche, well- trafficked sites because the company was profitable and still had "a lot of cash in the bank". In 2008, Demand Media acquired
Pluck Pluck or plucking may refer to: Removal * Plucking (hair removal), the removal of hair, fur, or feathers * Feather-plucking, a behavior in birds * Plucking post, as used by birds of prey to dismember their prey * Plucking (glaciation), a proce ...
, a company providing social networking and commenting solutions to other websites, for a reported $75 million in cash. IndieClick and RSS Graffiti were acquired in August 2011. Name.com, a
domain name registrar A domain name registrar is a company that manages the reservation of Internet domain names. A domain name registrar must be accredited by a generic top-level domain (gTLD) registry or a country code top-level domain (ccTLD) registry. A regist ...
, was acquired on January 7, 2013.Naidu, Taryn. ''Demand Media.'' January 7, 2012. Retrieved on January 9, 2012. Society6 was acquired on June 25, 2013. Saatchi Online was acquired on August 11, 2014. In August 2014, Demand Media announced it had successfully separated from Rightside Group, Ltd. and its brands eNom, Name.com and
online auction An online auction (also electronic auction, e-auction, virtual auction, or eAuction) is an auction held over the internet and accessed by internet connected devices. Similar to in-person auctions, online auctions come in a variety of types, with d ...
site NameJet. As a result of the separation, Demand Media is no longer a provider of domain name services. In April 2016, Demand Media announced the sale of its brand Cracked.com to E.W. Scripps. In May 2016, Demand Media announced the sale of its brand trails.com to LoveToKnow Corp (owned by Howard Love) In February 2017, Demand Media's Airliners.net site was acquired by VerticalScope, majority-owned by
Torstar Torstar Corporation is a Canadian mass media company which primarily publishes daily and community newspapers. In addition to the ''Toronto Star'', its flagship and namesake, Torstar also publishes daily newspapers in Hamilton, Peterborough, N ...
. In 2018, Leaf acquired the website Well+Good. In 2018/19, Leaf acquired the website OnlyInYourState. In 2021, Leaf Group was purchased in an all-cash offer by Graham Holdings.


Business model

Demand Media executives say their websites are content-driven to attract visitors by showing up in multiword search-engine queries. The more words that are typed into a search engine, the more specific the search will be. This is called "
the long tail In statistics and business, a long tail of some distributions of numbers is the portion of the distribution having many occurrences far from the "head" or central part of the distribution. The distribution could involve popularities, random nu ...
"Los Angeles Times. July 16, 2008.
/ref> search. Demand Media attempts to get visitors to its websites with these long-tail searches. It then tries to retain visitors with related content and social media tools. Its social media platforms get 3 billion interactions per month for clients with already well-established
brands A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create a ...
. Demand Media commissions specific website content that it then distributes to its own websites and others where it has
advertising Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
revenue sharing Revenue sharing is the distribution of revenue, the total amount of income generated by the sale of goods and services among the stakeholders or contributors. It should not be confused with profit shares, in which scheme only the profit is shar ...
agreements. , Demand Media owned 135,000
video Video is an electronic medium for the recording, copying, playback, broadcasting, and display of moving visual media. Video was first developed for mechanical television systems, which were quickly replaced by cathode-ray tube (CRT) syste ...
s and 340,000 articles. It was claimed to be one of the largest contributors to
YouTube YouTube is a global online video sharing and social media platform headquartered in San Bruno, California. It was launched on February 14, 2005, by Steve Chen, Chad Hurley, and Jawed Karim. It is owned by Google, and is the second most vis ...
, uploading between 10,000 and 20,000 new videos per month, and gets about 1.5 million page views per day on YouTube.Bambi Francisco, Vator News, Demand Media is largest provider to YouTube, Interview with Steven Kydd, EVP of Demand Studios, October 30, 2008.
/ref> Content is generated via a process in which Demand Media uses algorithms to generate titles, then posts the titles to a screened pool of freelance writers or video creators. The list of available titles used to be over 100,000 but was severely curtailed in the second half of 2011. Typically, writers can claim up to ten titles and then have a week to submit the articles. Format and length are dictated by guidelines. Submitted articles go to an editor (also a freelancer) who can either clean them up or request a rewrite. After writers submit a revised article it is either accepted or rejected. Payment via
PayPal PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper ...
is twice a week. Demand Media's acquisition of Pluck.com in 2008 gave it the means to provide specialized content and social media platforms to any website. The content comes with advertising attached. The website owners get free content for their sites and split the advertising revenue with Demand Media.


Stock offer

In April 2010, ''
Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
'' reported that Demand Media was planning an
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
of shares (IPO), which would mean any acquisitions would be out of the question. IPO filing was completed in August of that year. Shares were at first expected to be offered in December 2010, in a tender that would give Demand Media a value of some $1.5 billion. However, as a result of a
Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agencies of the United States government, independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary pu ...
investigation regarding the company's novel accounting for "long-lived content", the pricing was delayed. On January 12, 2011, the company announced it would price its shares between $14 and $16 each, giving it a valuation of approximately $1.3 billion. Questions were raised about Demand Media's claim to be profitable, given that its IPO filings that had reported losses for the past several years. On December 14, 2020 the company announced the closing of its underwritten public offering of 8,216,750 shares of its common stock, including full exercise of the underwriter’s option to purchase additional shares of common stock, at a public offering price of $4.20 per share, receiving an aggregate net proceeds from the offering of approximately $32.0 million.


Criticism

Demand Media has attracted criticism from Internet watchdogs for being one of the largest buyers of articles and videos, often commissioning low-quality articles to cut costs in an effort to mass-produce articles and videos to appear highly in Google search results, purchasing thousands of search-engine-driven content from low-paid freelancers to use on its websites to attract advertisers, such as Israeli startup (now owned by Google's
AdSense Google AdSense is a program run by Google through which website publishers in the Google Network of content sites serve text, images, video, or interactive media advertisements that are targeted to the site content and audience. These advert ...
) Simpli. Demand Media has also been criticized for its methods of accounting, such as capitalizing the costs of content and amortizing them over five years, giving them the appearance of profitability.


References


External links

* {{authority control Companies listed on the New York Stock Exchange Mass media companies established in 2006 Online mass media companies of the United States Web service providers Companies based in Santa Monica, California 2011 initial public offerings