Outside Santa Monica's dot-com circuit, the name Richard Rosenblatt doesn't mean much. He's one of those guys who buys and sells empty websites. Some industry insiders also know him as the accused spyware baron who sold MySpace to News Corp.
But the excitable 39-year-old USC law school graduate has a plan for the future of Internet media, and $355 million from private investors says he can pull it off.
With blinding speed and little notice, Rosenblatt's 2-year-old Demand Media Inc. has become one of the largest buyers of articles and video clips for the Web. It expects revenue of nearly $200 million this year and, more surprisingly, a healthy profit.
"This is fascinating," said Michael McGuire, a Gartner analyst who has followed Web media companies for eight years. "Is this a potential out-of-nowhere media titan? This would seem to be, yeah."
Demand Media is the kind of company that, if headquartered in Silicon Valley, would generate major buzz. Based instead a few blocks from Santa Monica Pier, it's been largely ignored.
Yet Rosenblatt, Demand Media's chief executive, has quietly amassed a network of thousands of websites such as EHow, Expert Village and a slew of special-interest sites including GolfLink, Trails.com and Daily Puppy. The most recent: LiveStrong.com, a health site developed with cyclist and recent Demand Media investor Lance Armstrong.
Although none are huge hits, together they rank among the Internet's 50 most visited Web networks, according to rating service ComScore Inc. Demand is doing so well that some Yahoo executives have expressed interest in buying it; Rosenblatt said the company isn't for sale.
Unsatisfied with its current library of 100,000 online videos and more than 250,000 articles, the company is adding thousands more daily from freelancers and pumping them across the network.
Demand Media combines the draw of specialized, semiprofessional content with the well-documented "stickiness" of social networking sites -- the tendency of people to hang around when there is a community of like-minded individuals. Low-cost tools that enable users to comment, rank stories and find other users help keep them there.
At a more basic level, the 470-employee company is mastering the new Google economy. In the same way that EBay Inc. turned homebound merchants into millionaire "power sellers," Google can assemble niche audiences and bring them to previously undiscoverable destinations, which the search kingpin's advertising programs then can make profitable.
