Demand sent an email to its Demand Studios contributors, explaining the upcoming deal and asking them to keep the names the two papers and the web sites, Chron.com and SFGate.com, confidential until it formally revealed the details. Here's a section of the email:
We have entered into a partnership with Hearst Newspapers to produce articles for two of their premium publications, San Francisco Chronicle and the Houston Chronicle. Specifically, we are creating articles and videos for the Real Estate section of SFGate.com and the Small Business section of Chron.com.A source leaked the email to me late today. So much for knowing how reporters would likely act.
We're currently accepting applications for writers and editors. These articles come at a higher fee and your byline will be featured on these premium publications. Qualified applicants will not only be topical experts in their field, but also have relevant writing or editing experience in the subject. To apply, please email [email address omitted] with the subject line "Real Estate" or "Small Business." Include a summary of your experience and attach any relevant clips. All interested CEs, please cc your copy chief with your application, and unfortunately we cannot consider your application if you have not yet had a review.
We are not currently able to disclose the partners publically and we ask that you keep their names confidential until further notice.
The emphasis on topic expertise and experience is necessary to help overcome the association that Demand and its competitors have with lower-end material. Such companies pay poor rates to freelance writers, editors, and videographers to get all rights to massive amounts of inexpensive content.
For its normal web pieces, a typical Demand Media rate for an article of a few hundred words is $7.50, with copy editing paying about $3.50 an article, according to many freelancers I've communicated with who work for Demand. To make a reasonable amount of money per hour, writers have to research and compose multiple articles an hour, setting a difficult pace.
Demand is expert in algorithmic analysis of consumer search patters. It commissions freelance material that will attract traffic from Google and other search engines to drive ad revenue. Part of gaining better placement in Web searches is having millions of pieces of content on sites. However, the cost of doing so would be prohibitive at normal freelance writing and videography rates, hence the strategy of working with people willing to take low payments for all rights to their work.
Much of Demand's revenue has come from its own Web sites and others that obtain content from the company. Originally focused on articles, Demand moved into video and has become a business partner of Google on YouTube, producing how-to and other service video.
Most newspapers have been in terrible financial shape for years, and many have looked for new ways to lower their costs. The opportunity to obtain articles and video for far less than they are accustomed to paying is tempting.
Yahoo (YHOO) recently announced that it would buy Associated Content, a competitor of Demand Media, for somewhere between $90 million and $100 million. Given that Demand has claimed annual revenue of $200 million and has reputed venture investment of $355 million, a similar deal would likely cost much more.