Demand Media Inc., an Internet upstart pumped with $350 million in venture funds, has made its most expensive acquisition to date.
Last week, the Santa Monica company bought Pluck Corp., which has developed social media tools and technologies for more than 200 media Web sites, including USAToday.com, WashingtonPost.com and Fox.com.
The acquisition is valued at between $50 million to $70 million, said Richard Rosenblatt, chief executive of Demand Media and former MySpace chairman.
“It’s a watershed moment,” Rosenblatt said. “We’re taking everything we’ve built over the past two years and taking it outside our network.”
Since Demand Media was launched in 2006, the company has quietly acquired 60 well-traveled enthusiast Web sites and updated them with social networking features and video capabilities. Traffic has swelled on each site, attracting a captive audience with user-generated content advertisers like. Ad revenue is a huge portion of the about $150 million the company generates annually.
This network of Web sites, including AnswerBag.com and ExpertVillage.com, attracts 64 million monthly unique visitors.
The new acquisition will allow Demand Media to place its content on Pluck’s partner media Web sites, which combined reach more than 100 million users a month.
For example, content on AnswerBag, a forum where users ask questions and share answers, can be quickly integrated into the sites as a Q & A; widget, similar to Yahoo Answers.
“We wanted to take our secret sauce off network, beyond sites we own,” Rosenblatt said. “You can only grow so much in your own network. The key is to take your assets and scale outside your network.”
ExpertVillage alone, for example, gets 600,000 additional views a day through users who arrive via Google’s YouTube. Instead of buying a Web site with that much traffic and pouring in resources to build the right content, it makes more economic sense for Demand Media to spread what content it owns across popular portals.
Web Works
Tony Uphoff, former publisher and president of Hollywood Reporter and VNU Entertainment Group, has taken the helm of a leading technology trade publishing operation.
Uphoff, based in Palos Verdes, is the chief executive of TechWeb, a new division of British parent company United Business Media.
TechWeb, which has offices in Irvine and San Francisco, boasts more than 10 million in readership across print and online tech trade content, from Information Week magazine to bMighty.com and IntelligentEnterprise.com, and organizes international conferences such as Interop and Web 2.0.
United Business Media bought CMP, a traditional publishing company, in 1999. Part of CMP became TechWeb, which owns more than 75 online and print titles, and puts on nearly 200 tech conferences and seminars every year.
TechWeb has become a separate entity to focus on fusing technology and media.
“We feel we’re on the cutting edge of media and online is where it’s at,” Uphoff said. “We’re here to turbocharge that process.”
This means focusing on developing its online brands separately from the print product. For example, Information Week’s print edition is dramatically different from its online counterpart, which includes digital diaries, blogs and video features.
That doesn’t mean it will abandon its print products, Uphoff said. The trade magazines are lucrative because they provide “have-to-have” industry content vs. “nice-to-have” information.
TechWeb also hopes to expand its presence globally. This year, it will hold tech conferences Interop and Web 2.0 Expo in India for the first time.
Consumer Cornucopia
An Internet startup is usually relatively inexpensive to launch, in part, because it lives on virtual real estate.
Not for Mike Bell.
He had to pay millions of dollars for his company’s place on the Web: Software.com.
It was an investment he was willing to make to build an online catalog of 100,000 downloadable software titles for everything from tax filings to video-editing.
“People have a hard time remembering a nonsensical Web address. Once they go to Software.com, they’re not going to forget the domain name,” said Bell, a serial entrepreneur who sold his previous venture Encore Software to Navarre Corp. last year.
“From a brand standpoint, I believed the domain name would be worth millions of dollars over time.”
It’s a straight e-commerce site, where revenues are based upon sales, not page views. That means the site is not loaded with contextual or banner ads that advertise to the traffic.
The Web site offers a cornucopia of consumer software, from anti-virus protection and animation tools to the latest version of TurboTax.
“As Software.com, we felt beholden to cast a wide net,” Bell said.
Based in El Segundo, the company is bootstrapped and has a handful of employees. The Web site went live in September.
Staff reporter Booyeon Lee can be reached at (323) 549-5225, ext. 230, or at
[email protected]
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