There has been big news recently of Demand Media starting to trade publicly on the stock exchange as of last week. This has come at the same time as Google announcing that it is to crack down on the spammy content farms such as, the Demand Media owned, eHow.com. Does this spell an uncertain future for the company and its shareholders, or will Demand Media win the fight against Google?
Well it would seem that many are actually in support of sites like eHow.com, and backing may even come in the unlikely form of the NHS, as I found out from a trip to the doctors! Bear with me and I shall explain all…
Demand Media, who trade under the ticker symbol “DMD”, saw shares rocket 47% in the first few minutes of trading on the New York Stock Exchange on Wednesday morning, generating more than $66 million in the IPO that values the company in excess of $1 billion. Crazy when you consider they operate at a $6.4 million annual loss!
Demand Media has said they expect to generate around $67 million from share sales, after the deduction of the IPO costs, of which they plan to push back into the business to fund “international expansion.”
However, investors in Demand Media are very brave given the recent announcement from Matt Cutts, Head of Web Spam at Google, who has come out and revealed that the search engine giants are soon to extensively change their algorithm. This will be to combat the increasing problem of spammy sites and improve search result quality.
For those of you unaware of who Demand Media are and how this algorithm change will/may impact the company, if you are sitting comfortably I shall begin:
Demand Media, to quote Wikipedia, “…is an online media company that operates online brands such as eHow, and is known for creating online content based on a combination of measured consumer demand and predicted ROI.”
Roughly translated: Demand Media pay content writers very little to churn out low quality 100-200 word articles on topics that they feel people will be searching for in search engines. People in turn then arrive at these articles on such sites as eHow.com, of which Demand Media plaster with advertising, and then reap the rewards from.
A combination of the low pay-per-article and the sheer amount of article requests on any given day (never less than 100,000) means the content that is generated is generally of very low quality and often inaccurate.
This is exactly the sort of content that, according to Matt Cutts, is clogging up Google search results and that they are aiming to get rid of. Should Google decide to release an algorithm that negatively impacts Demand Media and their network of sites, it is estimated that they will lose more than 50% of their gross annual income.
So how are the NHS supporting Demand Media?
“Come on Paul, get on with it”…
Okay, okay. So there I was, sat with a doctor at an NHS Walk-In Centre in Leeds last week, with what can only be described as what felt like a really furry cat with its claws out lodged down my throat.
After the doctor had diagnosed me with what she thought was the problem, she turned to her computer to double check the symptoms and for a list of possible remedies. She unbelievably Google’d it, and visited the first result for the answer… eHow.com!
Baffled, but pleased she had a cure for my oral-angry-feline disorder, I thought I’d get her opinion on a rash I also had (I sound contagious, but I’d like to point out that I’m honestly usually a very healthy person!).
She knew what it was instantly and told me that she’d print off some info about it and some creams to use. The more astute amongst you may have probably already deduced where this is going… she swivelled back around on her chair to face her computer. She proceeded to, as before, Google the condition and visit eHow for the information!
I came away from the NHS Walk-in Centre with treatments for both my ailments suggested to me by eHow.com, along with a bewildering sense of unease as to whether NHS doctors are actually trained in medicine at all!?
It would seem that people have a lot of blind faith in search engines, such as Google, to deliver them the correct information instantly. It would seem that this belief even extends into the NHS.
So given that eHow articles, and all of the other information on the Demand Media network, are generated by hungover students for the price of a kebab, do Google have a responsibility to remove eHow results from their search results?
I mean, if that student was really hungover that day, it may have been suggested that my ailments were treated with a pint of beer and a greasy fry-up!
[Original image credit: choicehow.com]