For a story on how to earn extra money, I recently interviewed Steven Kydd, executive vice president of Demand Media, which owns eHow.com and other sites. EHow.com pays contributing writers based partly on how much ad revenue their articles generate. To some people, this might sound like the scary future of journalism. To others, it sounds too good to be true, especially since some contributors earn over $1,000 a month.
I recently spoke with Kydd about his business model. Excerpts:
Can you explain your business model?
When we started the company two and a half years ago, the economy was doing fine. The vision we had was based around social networking -- building a platform to allow people to express themselves, to create a thinking person's MySpace. Our publishing platform allows people to share interests, passions, and get real distribution for that content. Most importantly, they get paid.
We said, 'There's thousands of people who graduate with a degree in creative writing, literature, English, and from film school, and they never get to do that on a daily basis.' There's a large and untapped resource in the marketplace. If we could give them an easy-to-use publishing platform, we could share money back with them. We thought of a powerful way to build a new and scalable publishing business.
At the same time, there are headlines about traditional media companies struggling. We didn't want to replicate that.
Where does your revenue come from?
It's all from advertising, from banner ads, Google links, video ads. We pay writers a percentage of ad dollars, and we pay some people a flat fee to create content for us in areas that we need.
Doesn't your revenue come from the same sources as traditional media websites? What's the difference?
The monetizing is the same, but the difference is in how the content is created. The creator can create a high-quality piece of content without the expectation of a large annual salary and full-time benefits that someone in traditional media expects.
How do you control quality?
We have an editorial team with a background in traditional publishing. We use them to help us build a publishing platform -- it goes through a plagiarism check, copy editing. We replicate many of the same steps [in traditional publishing], but we do it at scale and with technology to help us operate more efficiently.
How big is Demand Media?
We have about 450 employees and have raised around $355 million. We're profitable and growing. We've paid out $11 million to creators.
Is this the future of journalism?
I don't know. Maybe not for news reporting, but there are qualified creators eager to contribute content in every small, medium and large market in the country. It's not that dissimilar to the Associated Press.
Have you contributed content to eHow.com? Please share your experiences below.