Demand Media IPO: Is Demand Media ( DMD ) Really Worth $1.3 Billion?

No.

Oh, I should probably write more than that.  Once it has its IPO, which is being led by Goldman Sachs and Morgan Stanley, Demand will trade as DMD on the New York Stock Exchange.  If the offering is successful with investors, Demand Media could sell up to 8,625,000 shares for up to  $1.3 billion and raise $138M word rechtschreibprüfung herunterladen.

Is it worth that much?  Not by any metric that makes sense.  Demand Media is the world’s weirdest Ponzi scheme, and eventually it will fail.  I mean that in the nicest possible, not illegal sense.  But Demand Media Only works if it stops creating content herunterladen.

Demand Media got to the size it is today by writing the content that is the low hanging fruit.  Every post they write makes the next post harder to find a market for.  You see Demand Media makes its money by filling the need for content on the web that isn’t being filled harry potter games for free. “If you give a mouse a Cookie” as it were it may demand more, but the cost of creating that content goes up, and the over all demand for it diminishes as you find more and more niche content that is harder to find authors for, and smaller, and smaller audiences seeking it folder from google drive ipad.

Demand Media is trying to be too big.  There is a right size for profitability, and $1.3B is bigger than that.  Demand Media only works if it picks the right size to make certain all the content it creates monetizes quickly and at a price that ensures profitability, but also prevents others from just out doing them by writing the same content, better, cheaper, and with more SEO foliendesign powerpoint download kostenlos.Demand Media IPO: Is Demand Media ( DMD ) Really Worth $1.3 Billion?

This is of course not the kind of thing that Demand wants you to think about.  They want you to believe in the long tail, that all content is good for 7+ years and that content will make money for that length of time.  This isn’t the case with much of Demand Media’s content, which covers Tech, How To, and Gossip.  While “How To” content for around the house certainly has a near infinite shelf-life, my content on how to tie knots is based on books written 200 years ago, and is still relevant, “How to do anything on the iPhone 3GS” doesn’t have a 7 year lifespan, and any news about the dating of celebs in Hollywood is lucky to have a 7 day lifespan unitymedia wifispot zertifikat herunterladen.

For these reasons I think the $1.3B valuation that Demand Media is looking for at IPO is overly optimistic, especially considering how reliant Demand is on Google, and others for it’s continued sustainability cooking fever to download.

Demand will net $58.1 million, if the IPO price is $15.00 per share, which it said it will use for “investments in content, international expansion, working capital, product development, sales and marketing activities, general and administrative matters and capital expenditures.”