What The Economist doesn't mention here, but should, is that content farms negatively impact both the experience of anyone who wants to buy something online and that of anyone who wants to sell online.
Lots of small businesses succeed by creating "long-tail" content, and using it to get organic traffic. A ceramic mug company, for example, could have a blog that also told readers how to paint ceramic mugs.
The Demand Media model is to outrank that content (of course), and then to monetize the ranking with contextual ads. So the article's content must be meaningful to search engines--but it can't be a complete answer to whatever the visitor was searching for. If it is, they'll bounce; if not, they'll keep clicking, ideally on an ad.
Someone who controls the ad (and captures the profit from transactions) can have a more relevant and useful call to action. The article, for example, can end with "Ready to paint your ceramic mug? Order a mug painting kit now, and get 10% off!"
Instead, the mug company will notice that their traffic is dropping since they can't rank for the same long-tail content. Instead, they'll start paying for traffic. And when they do, Demand Media gets the money for their next article.
A man is lost in a balloon in fog; a building looms up out of the fog and another man looks out the window. The man in the balloon says, "Excuse me, but can you tell me where I am?" The man in the building says, "You're in a balloon." The man in the balloon thanks him, because he answered the question perfectly correctly, yet in such a way that he was given no new information, thus allowing the man in the balloon to conclude that the building was Microsoft Customer Service and he was therefore in Redmond, Washington.
Seriously? Either assume that thinking people who have an interest in business already know what AOL is (instead of implying that there is mysteriously an adult businessperson who has never heard of AOL), or in your definition of "AOL", give a concise summary of its history with a time horizon greater than three years. The sentence that was actually included was jarring in its isolation from reality, and that's not really what you expect from the Economist.
AOL was the Internet giant that bought Time Warner. The new conglomerate then shed the AOL properties in Dec 2009. The quote makes it sound like Time Warner was the 'big dog', but in truth, AOL was. For a time.
I'm aware of the history, and I'm sure the writer of that Economist article is as well. The quote isn't misleading: AOL was spun out of the conglomerate, not Time Warner. It's not really necessary for an article only tangentially about either of these companies to go into their history to mention that, in the past, one was worth a lot more. It's just not very important for the story. If the story had been about Time Warner and AOL, then that would be relevant background, but the story wasn't about that.
Demand Media (DM) only covers the surface of a topic. Never a deep dive. Thus by nature, they are a lead generator. That's why they have descent ad rates and can pay real wages for content. But IMHO, they haven't begun to really profit from this position.
In content farming, whoever pays the most to their writers ultimately wins. The best writers are attracted to the best paychecks. Because DM invested hundreds of millions in established domains, they bought traffic and offer better cash versus just posting on your own blog.
DM will ultimately crash directly into the way of traditional media outlets. And it will be the aggregators like google news and huffington post who win. Like many businesses, it's the distributors who make the lions share of profits.
Lots of small businesses succeed by creating "long-tail" content, and using it to get organic traffic. A ceramic mug company, for example, could have a blog that also told readers how to paint ceramic mugs.
The Demand Media model is to outrank that content (of course), and then to monetize the ranking with contextual ads. So the article's content must be meaningful to search engines--but it can't be a complete answer to whatever the visitor was searching for. If it is, they'll bounce; if not, they'll keep clicking, ideally on an ad.
Someone who controls the ad (and captures the profit from transactions) can have a more relevant and useful call to action. The article, for example, can end with "Ready to paint your ceramic mug? Order a mug painting kit now, and get 10% off!"
Instead, the mug company will notice that their traffic is dropping since they can't rank for the same long-tail content. Instead, they'll start paying for traffic. And when they do, Demand Media gets the money for their next article.