A screen shot of Demand Media's website
(WEB HOST INDUSTRY REVIEW) — Social media company Demand Media (www.demandmedia.com) announced on Wednesday it has set the terms for a $112.5 million initial public offering.
The move follows the company’s announcement in August that it would offer an IPO of up to $125 million.
Demand Media says it plans to sell 4.5 million shares while the company’s stockholders will sell an additional 3 million shares.
Founded in April 2006 by former MySpace chairman Richard Rosenblatt, Demand Media acquired “how-to” website eHow.com, and domain name registrar eNom.
The company offers a more affordable alternative to producing content than hiring staff writers, which could potentially affect the business model of media outlets.
Its revenues stem from the sale of advertising through its content and media services, as well as its domain name registration subscriptions.
Demand media ammended its filing last month to refine the way it expenses the cost of generating videos and text.
The foundation of its business model is in spreading the cost of its expenses over five years in with the understanding that it will continue to generate revenue over that period.
Demand Media’s revenue increased by 25.5 percent from its previous year to $179.4 million in the nine months that ended September 30, 2010. Meanwhile, its net loss decreased by 25.1 percent to $31 million in the same period.
Other companies are beginning to catch on to Demand Media’s approach to content and media services. Yahoo recently acquired Demand Media rival Associated Content, while AOL is currently in the process of offering a combination of professional and contributor-generated content.
Demand Media says it plans to list on the New York Stock Exchange under the symbol “DMD.”
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