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Speculating on online real estate

MySpace's former CEO raises funds to acquire little-used websites.

September 27, 2007|Joseph Menn | Times Staff Writer

A Santa Monica Internet start-up that specializes in buying little-used websites has raised an additional $100 million, boosting to $320 million the amount invested in 16-month-old Demand Media Inc.

Demand is headed by Richard Rosenblatt, the onetime chief executive of MySpace's former parent company, Intermix Media. Rosenblatt sold Intermix to Rupert Murdoch's News Corp. in 2005 for $580 million and later bought back some of its properties for Demand.

Investors include Goldman Sachs Private Equity and Oak Investment Partners, among others. Rosenblatt said Wednesday that the money raised would go toward acquiring Web companies, especially those that publish or distribute user-produced content or serve "passionate verticals" -- topics of interest as diverse as paintball and environmentally friendly cars.

Demand Media projects more than $100 million in revenue this year and is profitable, Rosenblatt said, adding that he hopes to sell shares to the public "in coming years."

The company practices a form of Internet real estate speculation, trying to capitalize on a potential resurgence of interest in empty or near-empty websites with simple names. Those sites can be profitable if filled with advertising on the same topic as the name. Users who stumble upon such sites often click ads on their way out, sending money to the website owner.

Rosenblatt is trying to drive more traffic to the bare-bones sites by adding social networking and other features.

But he has been experimenting with other models as well. Some sites provide advice on thousands of subjects, in writing or on video, at times paying for the submissions. Those sites include Expertvillage.com and EHow.

Elsewhere, Rosenblatt has combined a website-registration service with the ability to post videos and to network with other people at ChannelMe.tv. At some Demand sites, users may collect a share of the money from ads that run alongside the content they contribute.

Rosenblatt also has a series of humor and game sites.

Asked to summarize his company's mission, Rosenblatt said it was about building a network of sites for people to "create content, distribute content and get paid."

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joseph.menn@latimes.com

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