I first became aware of Demand Media by reading this feature by Daniel Roth in the November 2009 issue of Wired [Ed: ReadWriteWeb wrote an article about it in August]. In fact, Roth alerted me by email that his piece was about to come online, because he thought I would find it interesting. He was dead on. I found it fascinating, and also scary.

Since then the discussion of these “content farms” (what ReadWriteWeb editor Richard MacManus called them recently) has picked up a lot intensity online. For a good round-up, see Jason Fry’s recent post The Furor Over Content Farms. In the following interview with Demand Media founder and CEO Richard Rosenblatt, I explore this new online phenomenon.

Jay Rosen teaches journalism at NYU and blogs at PressThink, which won the Reporters Without Borders 2005 Freedom Blog award. He is also the director of NewAssignment.Net and blogs at the Huffington Post.

I’ve been discussing Demand Media a bit on Twitter, always referring to it as… (the demonic) Demand Media. This got the attention of someone from the company because I heard from Richard Rosenblatt, the founder and CEO, who said that I didn’t understand the firm’s mission. I asked him if he would do an interview with me to clarify what that mission was. He graciously agreed. Today I caught up with him by IM and we had the following exchange.

Rosen: In the November 2009 Wired article by Daniel Roth, this was the part I thought most important:

“Most media companies are trying hard to… boost the value of their online content until it matches the amount of money it costs to produce. But Rosenblatt thinks they have it exactly backward. Instead of trying to raise the market value of online content to match the cost of producing it — perhaps an impossible proposition — the secret is to cut costs until they match the market value.”

Now, when you wrote to me, you said I didn’t get the mission of Demand Media. As I understand it, the mission is to make a ton of money on the Web by using data mining to understand demand and then cutting costs in this way Roth described. Do I have it wrong?

Rosenblatt: It’s not all about cost cutting but about building a sustainable media model that allows us to achieve our mission to build an engine for what the world wants to know and share. We do this by connecting consumers with content that meets their specific interests and [offers] connections to people that share their passion. To do this well, and at scale, has required significant innovation and investment.

Rosen: Here’s what I think Demand Media has right. It’s important to know what people are interested in. It’s good to have tools that tell us what they wish to know. Using that knowledge to guide production is innovation, too, which we need– precisely because production is so easy and cheap and the tools are so good.

But here’s what I think bothers a lot of people, and leads to a description of your firm as a “content farm” or “factory.” I read about the 11 people – and 15 different roles – involved in the production of articles and video in Demand Studios. I get your idea that “quality is based on relevance.” But if you’re trying to match costs to the available revenue for a given piece of content, what happens when editorial quality requires costs greater that what’s available in search revenue? And who’s watching out for that point?

Rosenblatt: I like the way you describe and characterize our business; maybe we have a lot more in common that you think. We are building content that is evergreen and solving a different type of problem. We are focused on creating content that solves problems, answers questions, saves money, saves time, makes you laugh – content that improves people’s lives in big and small ways. It’s relevant and impactful to millions and millions of people every day. It must generally fit within the economic framework the Internet provides today. As those economics change so will we.

Rosen: Okay I got that but I am not sure it answers this part of my question: …if you’re trying to match costs to the available revenue for a given piece of content, what happens when editorial quality requires costs greater that what’s available in search revenue? And who’s watching out for that point?

Rosenblatt: We only make content that we think can be done responsibly and within our cost structure.

Rosen: As you know, there’s a conversation going on out there about Demand Media, and I want to show you a bit of it. The premise, as Jeff Jarvis puts it, is that companies like yours (and Associated Content, to name another) “produce crap that’s just good enough to fool algorithms,” especially Google’s. This is said to be a problem for Google.

So Jarvis writes, “I think we may see search fall as the sole or even key means of discovery and filtering of quality content. I see three rings of discovery today: search (Google); algorithms (see: Google News, Daylife); and humans (see: Twitter). Note again that Bit.ly alone causes as many clicks a month — one billion — as Google News. Human power rises again. That’s what Fred Wilson says today when he argues that social beats search, because “it’s a lot harder to spam yourself into a social graph.” What do to you think of Wilson’s idea, “social beats search” because it cannot be gamed as easily? If he’s right, isn’t that a threat to Demand Media’s profits?

Rosenblatt: First of all, we’re not filling up search engines. We’re creating content that lives on some of the most engaging websites in the world. These sites have really amazing tools that truly help people – whether it’s managing your diabetes, motivating yourself to stop smoking, helping you drop your golf handicap, or determining what hike to take the kids on this weekend.

And I wouldn’t say we are even “search-led” any more. We are led by consumer demand. We are maniacally focused on giving users exactly what they want, where they want it. We have algorithms that tell us what search visitors want. And algorithms that tell us what YouTube visitors prefer. And we’re working on new algorithms that tell us what social network users desire. And we’re pretty sure the needs of mobile users will be different than all of the above – so we’ll tune our approach for them too.

Search is just where we started, because that’s where most consumers started their information seeking experiences. But the world has changed a lot since we started Demand Media four years ago – and we’re changing with it.

Rosen: So you’re getting social too and moving away from just search?

Rosenblatt: Absolutely and have been planning this for years; we consider this a core part of our business and social has been at the center of our business since we started

Rosen: Does the description of your company as a “content farm,” content mill, factory (or even digital sweatshop) seem to you inaccurate or point missing in some way? I mean I know these are not nice terms or polite descriptions but are they wrong headed?

Rosenblatt: Completely missing the point. We have significant editorial processes. Let me explain. How do we do this? We hire qualified professional writers, film-makers and copyeditors. Set clear editorial objectives and style guidelines for every piece. Require external sources with every submission. Copy edit what’s been turned in. Fact-check it. Check it for plagiarism. Rate each piece so that writers get feedback. Provide education to improve the team members. Perform quality audits and take down content that doesn’t meet current standards (thousands per month). Weed out content creators who aren’t performing well or improving fast enough (we let go more than 100 creators per month). What’s more like a sweatshop: someone’s living room working their own hours or a typical newsroom?

Rosen: When you’re trying to build trust in an editorial brand, you pay those costs when they exceed available revenues, which I talked about. But it seems to me that Demand isn’t trying to build trust in that way, it’s trying to create content that meets demand, stays relevant and grabs the available search revenue. Why doesn’t Demand Media create the bulk of its content under the Demand brand, like Reuters, say?

Rosenblatt: We believe that the Internet continues to fragment and passionate audiences want their own community and brand. The brands we are focused on: our Web sites such as eHOW, Livestrong and our other properties. This is where we focus our branding energy.

Rosen: As you know, journalism is in a good deal of peril today because of a collapsing economic model. I’ve read that Demand does not want to go anywhere near news, which is interesting, but do you feel you have discovered anything that would be useful to journalists as they try to survive

Rosenblatt: We respect journalists very much. We think they need to use technology to help them figure out what audiences want and how to get value from their content more effectively. And there are big opportunities for them to increase quality by removing inefficiencies in the process of content creation. We would love to partner with as many publishers and media outlets as we can

Rosen: You seem to know how to make money on the Web, why not get into news?

Rosenblatt: Because we haven’t figure out how to do it responsibly and profitably also, its completely saturated and highly competitive. Consumers already have more sources than they need.

Rosen: Someone who follows my work and knew I was interviewing you told me to ask you this: Do you love the Web? The implied question there is: if you love the Web, then why are you doing this, running these content farms… ?

Rosenblatt: OMG. My entire career and life has been about the Web. Trying to innovate and create value where open spaces exist. We do not have a content mill as we discussed but an efficient method to get people the information they need when they want it. That is improving the Internet and I am proud of it

Rosen: Open spaces? What does that phrase mean?

Rosenblatt: Where there is a lot of room for opportunity for not only our company but for other entrepreneurs.

Rosen: I know you have a meeting to run to… thanks very much… anything you wish to add?

Rosenblatt: I hope to see you in NY in the future to continue our dialogue. All my best and happy holidays.

Check out ReadWriteWeb’s entire coverage of Demand Media and content farms:

Farm photo by Randen Pederson.
Jay Rosen photo by Joi Ito.