Demand Studios: In Trouble?
@RebeccaScarlett (2532)
Canada
January 6, 2011 1:33pm CST
So, after a hiatus from Demand Studios because all the titles seemed to turn to complete gibberish (as opposed to before, when only 85% of the titles were complete gibberish and another 10% were only partial gibberish that I could translate if I was creative) I have returned to find ... drumroll please... some titles that make sense! So I am happily writing.
I read an interesting thing on a blog that is dedicated to Demand (not the official demand blog, and I can't find the link now) saying that Demand is really in the red.
Apparently, they wanted to become a publicly traded company, and have been showing profits the last few years, but all the profits were due to creative accounting. From the documents that have been released, Demand was 22 MILLION in the red for the year of 2010 by August, 2010.
What they were doing was treating the payments to their contributers like an investment, and spreading the amount over the 5.4 future years to make it look like they were making a profit.
It didn't make much sense to me at first until I dug a little, but here is my understanding:
When a business invests in something big and expensive, like a new building, they are allowed to budget it over that building's "useful life." So if they think they will be in that building for the next 20 years they can divide the cost by 20, and have that number be listed on their "debts" every year for the next 20 years. This avoids having them be majorly in the red for one year. This is NOT normally done with payments you make to employees (demand contributers) for the work they do.
Demand decided that each piece contributed would be making them money for 5.4 years, so that they could spread the debt of paying writers out and appear to be making profits they weren't actually making.
What do you think of this? Are you writing for Demand, and will you continue doing so? Does anyone understand this kind of practice better than I do and can explain it to me better?
2 people like this
5 responses
@AliceWonderly (70)
• United States
8 Jan 11
I think you are talking about amortization and/or depreciation. Both are perfectly legitimate ways of doing accounting in many cases. I guess Demand Studios must have messed up their books though, from what you say. The idea is that you pay for an asset as you get the benefit of it.
The IRS does recognize this kind of accounting, odd as it may sound.
As far as your second question, I sure don't write for Demand Studios anymore. Dealing with those editors was a total time-waster. I ended up virtually writing everything twice, and the pay is just not good enough to compensate for that. For someone who can get past the editor on the first try though, Demand Studios seems like a good place to sell, in spite of titles designed for SEO rather than sense.
@RebeccaScarlett (2532)
• Canada
9 Jan 11
Yes, I couldn't remember the name. From what I read, that is perfectly legitimate in certain businesses, but it has never been normal for publishers to spread out payments to writers in their budget like that -- which is what makes it fishy.
@shattered (1728)
• Philippines
17 Jan 11
I agree publishers don't normally spread out payments to writers, but you have to consider the fact that online articles make money overtime, so its value may be spread out, but it has to fall into a specific category.
If it is true that dream studios are in the red, then they have a messed up business structure, it has nothing to do with their accounting and how they spread out payments to their writers.
It is common sense for a publisher not to pay his writer more money than what the publisher could earn of the writer's article. If this is applied, they won't be in the red, in fact their books would look good.
If the blog is accurate then it could mean that DS is turning scam soon. Bear in mind however, that is could just be black propaganda or a writer's marketing ploy to increase traffic to his site.
@peavey (16936)
• United States
6 Jan 11
I don't understand it any better than you do, but it really is "creative" bookkeeping. I was invited to write for Demand Studios when eHow changed so we had to go through Demand to be published there. Since I hadn't published very many and since the Demand Studios demanded too much to get published, I didn't do it. I hope they're not going under because they pay a lot of people, me included (for pieces still on eHow). Greed will do it every time. 
@RebeccaScarlett (2532)
• Canada
6 Jan 11
It's good that they still give you guys residuals from before they took over eHow. It gets easier to make the requirements the more you do it, but what they pay isn't that great considering how tough they are.
@thedaddym (1731)
• United States
6 Jan 11
It makes sense what you are saying, but if they did that then they were being extremely silly in how they were doing their accounting especially when the writing is ongoing. They should only be paying out a percentage of what article is taking in. 22 Million also sounds like a lot to be in debt for a site like this as well. So I don't know if that blog was completely accurate. I wrote one article for them about a year ago, I do have articles on Ehow.com which has partnered with Demand Studios and Demand Studios pays us every month. But unlike paying up front like Demand Studios does Ehow pays on traffic that your articles gets.
@RebeccaScarlett (2532)
• Canada
6 Jan 11
I agree that the blog could have been inaccurate, but it seemed to be reporting based on info that has to be released (legally) before a company can go public and sell shares.
It's true that they can only survive by paying less than they make with the article, but with their stringent requirements they are actually paying too little for many of the articles. (Compared to freelancing for a magazine or a reputable website.) Websites or zines that publish through the Helium Marketplace will often be offering $80-120 for articles of max 1000 words, and I'm sure Helium takes a cut, so they are really paying more. I think their problem is more that they are putting titles out there that aren't making them any money; there should be fewer titles, and only titles that will make them a stronger income.
@calajane (1003)
• Poland
8 Jan 11
I don't write for Demand Studios. Once upon a time I wanted to, but I don't live in any country that Demand supported. And reading your post, about all the financial problems... I'm kinda happy that I never signed up. I mean, I don't know how you're taking it, but I would be worried big about my income future if the company I wrote for was having problems...
@RebeccaScarlett (2532)
• Canada
9 Jan 11
That's true. But Demand pays every Tues and Friday, so it's not like I build up hundreds of dollars writing for hours to get paid once a month. If I wasn't paid on time I would be suspicious, and I wouldn't waste anymore time writing.
@scheng1 (24650)
• Singapore
8 Jan 11
Hi RebeccaScarlett, it is very sad to hear about the situation in Demand Studios. I think they have good management of the websites, but very bad financial management.
In term of selection of writers, Demand Studios is far better than Associated Content, yet Associated Content can make so much money even before selling to Yahoo.
I just hope that some financial genius will help to save this company.
@RebeccaScarlett (2532)
• Canada
8 Jan 11
I hope so too because I make decent money there. I wish Associated Content paid Canadians.
