Demand Media at a Loss!

They filed for an IPO in August 2010 however; it has come to light that has of August 2010 they were $6million in the red. Does this spell trouble for Demand Media? Or is this is just normal for a new business? Well a few financial pundits have said that their business model is not a a realistic one. Demand Media’s CEO Richard Rosenblatt states that their business model is perfectly realistic. Due to the fact the fee they pay their freelancers to write content for their network of sites such as eHow is a capital investment. Just like you would invest in a house. They are investing in content, they say that they will profit from the advertising and affiliate revenue over a period of five years. 

Although some financial pundits have said this does not make sense. Others have said this is perfectly realistic, many businesses take on a five year profit plan. One thing that should also be pointed out is that content is not the only business area that Demand focus on. They also have a domain name registration business, which is their main money spinner for the moment. 

Therefore, although Demand Media is in the red at the moment, they should see profit in the next three years, well so they say. For now the army of freelance content  writers on Demand Media Studios can rest assured that they still have an income. One thing I would like to add is, if you write for Demand Media, do not make it your sole income. Write for other clients as well and build a business. Do not rely on Demand Studios because you never know what could happen. 

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