Content Mill Founder Quits — Will Freelance Writers Follow?

A content mill founder heads off into the sunsetAre content mills going the way of the dinosaurs? There’s a lot of talk that one of the biggest and most successful mills, Demand Studios, may be slowly winding down.

Kicking off the most recent speculation about Demand’s fate is the fact that Richard Rosenblatt — founder and CEO of Demand parent company Demand Media — resigned abruptly last week.

If you write for mills, it may be hard to find a few spare minutes to learn about the behind-the-scenes business moves of one of the leading mills. But my advice is to pay attention.

Because Demand Studios is in trouble. And as goes Demand, so goes the rest of the content mills, including any other mills that you might write for.

Inside a content mill’s disintegration

Rosenblatt’s resignation seemed to take the company by surprise — they’ve hastily appointed a temporary CEO from the executive ranks while they do a search. Which indicates he likely up and left, rather than being forced out. Instigators of a coup would have had a new leader ready to go.

So Rosenblatt has bailed. He’s on a beach with the millions he made in Demand’s $77 million initial public offering (IPO) back in early 2011.

It’s no big mystery why he’d want to move on. Since going public, Demand’s stock has gone nowhere but down, in tandem with the sinking fortunes of its content-mill business, which includes eHow. Traffic at its sites began to sink soon after the IPO, as Google implemented a series of changes aimed at blocking junk-content, SEO-focused sites like Demand’s.

Why should you care if investors are abandoning Demand’s stock? They’re doing that because the mill business model doesn’t work anymore, so they don’t believe the company’s stock will increase in value in future. Lower stock prices mean Demand is worth less and can’t borrow as much money — and likely, that means less available mill work for writers.

Stuffing tons of SEO articles onto a website and making affiliate ad cash off the viewers you drew was a business model that seemed to have great promise, for a brief time around 2009-10. Then Google got wise to how junk-content sites were ruining the usefulness of its search results, and took evasive action.

Now, this business model doesn’t work anymore, and it will never work again. Traffic will continue to sink at mill sites as search engines roll out initiatives to screen them out of results.

Internet users are increasingly hip to avoiding junk-site links they see in search, too. After you read five different eHow posts and none of them clearly or accurately explain how to do the thing you searched about (like I have), you don’t come back.

Demand has responded to its shrinking mill audience by diversifying into other business types. It’s bought e-commerce marketplace Society6 and online-learning site CreativeBug.

They’re taking their IPO money and using it to buy into other businesses that work. They’re not using their cash to expand their content mill empire, because the sun is setting on it.

Follow the money…

Demand Studios has never been a big moneymaker — all the profit was always in the domain-name side of the business. Despite the pittance they paid writers, Demand could never figure out how to make a profit off your back.

In the most recent quarter, they squeaked out just over $1 million in profit on $97 million in revenue. They could get a better profit margin running a grocery store, which is one of the most notoriously low-margin sectors in all of retailing.

Pretty sad for a company that once boasted it would be bigger than the New York Times (and whose stock value, briefly, was larger than the venerable daily).

The company said that despite Rosenblatt’s departure, it is moving forward to split eNom off of its content-farm business and sell it off separately. Why? Because eNom is a valuable, profitable business. Being shackled to a content mill is dragging down its value.

Once eNom is spun out on its own, what will happen to the content farm side? My money is on its getting sold off for a pittance, scaled back dramatically, or shut down.

A key indicator: This week Demand laid off its entire research and development unit. Translation: there are no new twists or products or ideas coming down the pike to save the content mill.

Other surviving mass-content sites are casting about for new business models that might be profitable. A notable example is About.com, where the model is shifting to sponsorship as executives scramble for income.

What’s your game plan?

Given the declining fortunes of content mills, the question is — what will mill writers do?

Here’s hoping you’ll follow the CEO of Demand out the content-mill door. And not to sign up with some other content mill. (Though most other mills are privately held, it’s safe to assume their fortunes are in similar decline.)

If you rely on content mills for revenue, know that this is a shrinking opportunity built on shifting sands. Yes, new mills spring up all the time, but few achieve critical mass and survive. You can expect fewer mill assignments and less pay in the future. Debating whether mill X is better for writers than mill Y, or complaining about mill pay rates is a waste of your time.

Mills were never meant to be anyone’s full-time income, a fact mill owners were always the first to admit. If you’ve made the mistake of counting on them to pay your bills, now’s the time to change course and start marketing your writing to find your own clients.

Do you think content mills will survive? Leave a comment and share your reaction to Demand’s decline.

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