Demand Media's Inside-Out Path to Clicks

Nearly every print media company is struggling to find the right business model in a world where ad revenue is rapidly evaporating and readers are flocking to the Web at an alarming rate. (Full disclosure: Our parent company, McGraw-Hill (MHP), is evaluating "strategic options" for BusinessWeek.) But one serial entrepreneur seems to have found a successful model in an industry badly in need of one. Unfortunately for a lot of hardcore journalists, it may not be the one they envisioned when they were starting out as cub reporters.Demand Media is a three-year-old company started by Richard Rosenblatt, who launched the e-commerce site iMall in 1999 and is most famous for his stint as CEO of MySpace's parent company—and for priming the social network for sale to News Corp. (NWS) in 2005. As the name of his new company implies, Rosenblatt has turned the traditional journalism model inside out. Instead of editors telling the reader what's important, Rosenblatt has created a media company that produces only what consumers want—articles on such mundane topics as how to stop a runny nose, or videos on how to skateboard, that are then posted on Web sites his company has created. To make it all work, Rosenblatt uses proprietary software that culls search engines to determine the information people are most often requesting—say, on how to make a great margarita (an article Rosenblatt wrote himself).

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