The company has also faced criticism of its unorthodox accounting methods. Demand doesn’t expense the cost of paying its writers upfront, as content companies typically do. Instead, it spreads those costs over five years, which boosts its bottom line.
Demand’s rationale is that the writers’ content will generate revenue for the company revenue for multiple years, so it shouldn’t have to recognize the costs upfront.
Demand Media shares soar in IPO - Jan. 26, 2011
Um, excuse me? This ain’t capex.
This is a shame because unlike the haters, I am truly impressed by the creativity of this business. I’m sure they do publish some relatively weak or unuseful content…but no one ever said everything that the NYT, Universal Music, or NBC produced was top-notch, either.
