In January, Demand Media looked like the "future of journalism," as CJR put it. Flush after a soaring IPO, the content farm planned an acquisition spree. Now, thanks to some Google tweaks, Demand Media's stock is plunging.
Google's search engine changes began in February and have been ongoing since. Demand's flagship site eHow.com saw its visibility on Google drop 66 percent last week, search engine consultancy Sistrix estimated, citing a new round of Google tweaks designed to improve results quality. A Demand Media called that estimate "significantly overstated" in a blog post, but the stock market has rendered a brutal judgment against the company today; shares have been trading down 10 percent today.
The ramifications go beyond Demand. How many Google tweaks would it take, for example, to pummel the stock of AOL, which is reshaping itself around Google friendly content? Newly installed AOL editorial czar Arianna Huffington is proclaiming a new focus on quality, but she built up her Huffington Post through masterful and spammy Google optimizations that continue to this day. Maybe Demand's example will convince her and AOL boss Tim Armstrong to invest less in SEO tricks and more in actual reporting—although it's hard to argue that the latter has been any more reliable in generating consistent profits than the former.
[Chart via Yahoo Finance]