Richard Rosenblatt on demand in an interview with Bambi

Demand Media's Richard Rosenblatt has solidified his position as an Internet visionary, with what could arguably be history’s boldest strategy for monetizing shoeboxes full of content. One might even say that Rosenblatt’s Demand is not only clearing out shoeboxes, but attics and bottom drawers of their long-held secret recipes and scribblings on scrap paper about how to accomplish various tasks. 

The vision is as ambitious as its logic is simple. Demand Media is giving people tools and incentives to create content around their various and sundry passions. The mission isn't all that different from the one he had at MySpace. The difference this time around is that Demand isn't providing the tools to the users of one community in a closed environment. Rather, Demand - which is already profitable on revenue that exceeds $100 million -- is providing the tools to a broader community made up of decentralized, free-agent writers across thematic Web sites, ranging from trails.com, gardening.com, to map.com.

In my video interview (which has Richard sporting a "This is my costume" shirt because it was Halloween day), Richard essentially elaborates on his strategy to change the traditional economic model of production. 

(Editor's note: Richard is an investor in Vator. And, here's an article I wrote on Demand Media while at MarketWatch. Click here for "Media Biz Hungry for Aquisitions."   )

Whereas companies like Marchex and Oversee.net aggregate domains largely for advertising arbitrage opportunities, Demand plans to turn its domain portolio into a multi-million channel TV network whose legions of independent content creators can play programming exec, writer and anchor. 

"We're a registrar that is just using domains as a way to distribute content," he said to me. "There's no competitor right on point. We're much more like a Scripps, Yahoo or Discovery. We're a media company that uses domains as a way to build our company." 

Starting in the second quarter of 2008, Demand plans to roll out a process in which user content will fill those empty sites. Today, a person can already go to Demandstudios.com, where they can sign up as a writer or filmmaker. A person will then be given topics that will be distributed through the domains. This is phase two of Richard’s big plan.

Resource center of 'how to's'

Demand has already been actively in the process of collecting hundreds of “how to” articles and videos through its popular sites eHow and ExpertVillage. Such sites are popular research tools that are fast attracting an audience. The No. 1 research tool site is Wikipedia, with 50 million unique visitor generating 920 million monthly pageviews, according to Nielsen Online. Yahoo Answers, Answers.com, Dictionary.com and Intelius round out the top five. But eHow, with 5.5 million unique visitors ranks in the top 10 as measured by visits. It's also growing the fastest, having grown its visitor base by 51% in October.  

On Demand's resource sites, writers and videographers are given topics to write about or produce. While there is money to be earned, realistically, one person has to be extremely prolific to make a living off this.

One article written by Richard, titled "How to make a great Margarita," generates about $200 a year on advertising. The author of "How to slice an onion" makes about $30 a month on advertising on this timeless piece. The beauty about how-to stories is the long shelf life and high potential for an annuity stream. Search engines are also natural distributors of these reference pages to long-tail questions, such as "How to pack a suitcase?" Demand also has over 40,000 videos on YouTube on every how-to topic, such as "how to change your oil" to "How to belly dance."

At some point, Demand plans to distribute this niche content on its domains, including the sites it's been snapping up in the past year. Demand Media, as many have read, has about 50 vertical media properties that range from airliners.net, trails.com. Demand has already snapped up dozens of startups, such as ExpertVillage, HillClimb Media, Answerbag, eHow.com, Airliners.net and more.

In parallel with this strategy of sprinkling user-generated content across thematic sites, Demand is also selling .tv domains for $25 a year. For that price, a person can get social networking tools and an advertising network. The idea is a bit like Ning, a service founded by software entrepreneur Marc Andreessen that lets people create their own social networks for free. While Richard didn't touch on this, you can see how the .tv properties - should Demand start amassing their own thematic ones -- are consistent with Demand's overall strategy of building out niche user-generated channels.   

In closing... 

I still recall the first time I met Richard back in 2004. It was a time when MySpace was part of Intermix, a publicly-traded company with a measly valuation I found to be a really attractive investment at the time. (Click here for that story: MySpace is the newest hot spot). Back then, MySpace was quickly gaining traction over then reigning social network Friendster. Richard came into the studios for an interview with me to explain exactly why traffic was ramping up. "We're giving the audience tools to express themselves," he said. It was that simple.

MySpace was eventually sold to Rupert Murdoch’s News Corp for more than $600 million. Today, Richard’s new media empire is worth nearly twice that - $1 billion, as valued by the last $100 million financing round. But it's highly probable that that valuation will look about as cheap as MySpace's purchase price looks today. We're just in the early innings of what new media will look like in the future, and what will entertain us. If knowing who broke up with whom and who befriended whom on Facebook is riveting content that draws a crowd, imagine the audience for all those how-to secrets buried in your shoebox?