Demand Media Filed its S-1, notice to the Securities and Exchange Commission,  which is basically their prospectus to go public.

For the domain industry it would be far better for the IPO to go well than not.

However, in 2009,  Demand reported $22 million in losses on $198 million in revenues.

In the first six months of 2010,Demand’s net loss was only $6 million, on revenues of $108 million.

44% of its revenues in the first half of 2010 ($47.7 million) came from its domain registration business, eNom.com (which isn’t necessarily great for the market as witnessed by the stock price of Tucows)

45% of revenues are from advertising

More from the filing:

More from the filing:

“”We are a leader in a new Internet-based model for the professional creation of high-quality, commercially valuable content at scale.

“Our business is comprised of two distinct and complementary service offerings: Content & Media and Registrar.

Our Content & Media service offering includes the following components”

“Content creation studio that identifies, creates and distributes online text articles and videos, utilizing our proprietary algorithms, editorial processes and community of freelance content creators;”

“Enterprise-class social media applications that enable websites to offer features such as user profiles, comments, forums, reviews, blogs and photo and video sharing”

“A system of monetization tools that are designed to match targeted advertisements with content in a manner that optimizes advertising revenue and end-user experiene”

“We deploy our proprietary Content & Media platform both to our owned and operated websites, such as eHow.com, and to websites operated by our customers, such as USATODAY.com. As a result, our platform serves a large and growing audience. According to comScore, for the month ended June 30, 2010, our owned and operated websites comprised the 17th largest web property in the United States and we attracted over 86 million unique visitors with over 550 million page views globally. Our reach is further extended through over 350 websites operated by our customers where we deploy one or more features of our platform. These customer websites generated over 800 million page views to our platform during the month ended June 30, 2010, according to our internal data. As of June 30, 2010, our content studio had over 10,000 freelance content creators, who generated a daily average of over 5,700 text articles and videos during the quarter ended June 30, 2010. We believe the output from our content studio makes us one of the world’s most prolific producers of professional online content”

“Our Registrar, (enom) with over 10 million Internet domain names under management, is the world’s largest wholesale registrar and the world’s second largest registrar overall””

“As a wholesaler, we provide domain name registration services and offer value-added services to over 7,000 active resellers, including small businesses, large e-commerce websites, Internet service providers and web-hosting”

“Our solution is based on the following key elements:

Content. We create highly relevant and specific online text and video content that we believe will have commercial value over a long useful life. We employ a rigorous process to select the subject matter of our content, including the use of automated algorithms with third-party and proprietary data along with several levels of editorial input. The objective of this process is to determine what content consumers are seeking, if it is likely to be valuable to advertisers and whether it can be cost-effectively produced. To produce professional content at scale, we engage our robust community of over 10,000 highly-qualified freelance content creators. Our technology and innovative processes allow us to produce articles and videos in a cost-effective manner while ensuring high quality output.”

Social Media. Our enterprise-class social media tools allow websites to add feature-rich applications, such as user profiles, comments, forums, reviews, blogs and photo and video sharing. These social media applications facilitate social media interactions and allow websites to better engage their users, as well as ensure interoperability with popular social destinations such as Facebook and Twitt

Monetization. The system of monetization tools in our platform includes contextual matching algorithms that place advertisements based on website content, yield optimization systems that continuously evaluate the performance of online advertisements to maximize revenue, and ad management infrastructures to manage multiple ad formats and control ad inventory

Distribution. We deploy some or all of the components of our platform to our owned and operated websites, such as eHow and LIVESTRONG.com, as well as to over 350 websites operated by our customers, such as the online version of the San Francisco Chronicle and the National Football League website. We also deploy the monetization features of our platform by placing advertising on a portfolio of over 500,000 undeveloped websites that we own. We have also begun to expand the distribution of our content by offering our Registrar customers the ability to add contextually relevant content from our extensive wholly-owned content library to their site

Through our platform, we are able to deliver significant value to consumers, advertisers, customers and freelance content creators. We make the Internet a more useful resource to the millions of users searching for information online by analyzing consumer demand to create and deliver commercially valuable, high-quality content. Our advertisers benefit from gaining access to targeted audiences by matching their advertisements with our highly specific content delivered to both our owned and operated websites and our network of customer websites. Our customers benefit from the more engaging experience they are able to provide to their visitors by using our platform. Our freelance content creators benefit from the ready supply of work assignments available to them which allow them to earn income that is paid twice-weekly and to gain recognition by creating valuable content that reaches an audience of millions.

Our Competitive Advantages

Proprietary Technologies and Processes. We have well-developed proprietary technologies and processes that underlie our Content & Media and Registrar service offerings. We continue to refine our algorithms and processes, incorporating the substantial data we are able to collect as a result of the significant scale of our operations.

Extensive Freelance Content Creator Community. Our freelance content creator community consists of more than 10,000 individuals who have satisfied our rigorous qualification standards. A significant majority of our community has had prior journalism experience, and including Associated Press and Society of Professional Journalists award-winning authors and Emmy award-winning filmmakers.

Google

We have an extensive relationship with Google and a significant portion of our revenue is derived from cost-per-click performance-based advertising provided by Google.

For the year ended December 31, 2009 and the six months ended June 30, 2010, we derived approximately 18% and 26%, respectively, of our total revenue from our various advertising arrangements with Google.

We use Google for cost-per-click advertising and search results on our owned and operated websites and on our network of customer websites, and receive a portion of the revenue generated by advertisements provided by Google on those websites.

Our Google cost-per-click agreement for our developed websites, such as eHow, expires in the second quarter of 2012 and our Google cost-per-click agreement for our undeveloped websites expires in the first quarter of 2011.

In addition, we also engage Google’s DoubleClick ad-serving platform to deliver advertisements to our developed websites and have another revenue-sharing agreement with respect to revenue generated by our content posted on Google’s Youtube.com, both of which are currently on year to year terms that expire in the fourth quarter of 2010.

We generated 41% and 45% of our revenue for the year ended December 31, 2009 and six months ended June 30, 2010 from advertising.

Shares issued:

26,112,537 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2010 to purchase our common stock at a weighted average exercise price of $2.74 per share;

11,901,000 shares of common stock issuable upon the exercise of options granted after June 30, 2010 at a weighted average exercise price of $12.41 per share;

				Nine Months ended December 31,			Year ended December 31,						Six Months ended June 30,
				2007			2008			2009			2009			2010
				(in thousands, except per share data)
Consolidated Statements of Operations:
Revenue				$	102,295		$	170,250		$	198,452		$	91,273		$	114,002
Operating expenses(1)(2)
	Service costs (exclusive of amortization of intangible assets)				57,833			98,238			114,482			53,309			61,735
	Sales and marketing				3,601			15,360			19,994			9,181			10,396
	Product development				10,965			14,407			21,502			9,775			12,514
	General and administrative				19,584			28,191			28,358			13,994			17,440
	Amortization of intangible assets				17,393			33,204			32,152			16,429			16,173
		Total operating expenses			109,376			189,400			216,488			102,688			118,258
Loss from operations					(7,081	)		(19,150	)		(18,036	)		(11,415	)		(4,256	)
Other income (expense)
	Interest income				1,415			1,636			494			223			11
	Interest expense				(1,245	)		(2,131	)		(1,759	)		(1,139	)		(349	)
	Other income (expense), net				(999	)		(250	)		(19	)		—			(128	)
		Total other expense			(829	)		(745	)		(1,284	)		(916	)		(466	)
Loss before income taxes					(7,910	)		(19,895	)		(19,320	)		(12,331	)		(4,722	)
Income tax (benefit) provision					(2,293	)		(5,736	)		2,663			1,596			1,327
Net loss					(5,617	)		(14,159	)		(21,983	)		(13,927	)		(6,049	)
Cumulative preferred stock dividends					(14,059	)		(28,209	)		(30,848	)		(15,015	)		(16,206	)
Net loss attributable to common stockholders				$	(19,676	)	$	(42,368	)	$	(52,831	)	$	(28,942	)	$	(22,255	)
Net loss per share: Basic and diluted(3)				$	(2.12	)	$	(2.59	)	$	(2.37	)	$	(1.38	)	$	(0.84	)
Weighted average number of shares					9,262			16,367			22,318			20,961			26,347
Pro forma net loss per share Basic and diluted(4)										$	(0.15	)				$	(0.04	)
Weighted average number of shares used in computing pro forma net loss per share Basic and diluted(4)											145,662						149,691

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(1)      Depreciation expense included in the above line items:
Service costs		$	2,581		$	8,158		$	11,882		$	5,391		$	6,826
Sales and marketing			42			94			184			90			82
Product development			509			1,094			1,434			675			659
General and administrative			458			1,160			1,463			668			921
Total depreciation expense		$	3,590		$	10,506		$	14,963		$	6,824		$	8,488

(2)      Stock-based compensation included in the above line
items:
Service costs		$	52		$	586		$	473		$	202		$	428
Sales and marketing			241			1,576			1,561			613			968
Product development			504			1,030			1,349			463			775
General and administrative			2,873			3,158			3,973			1,923			2,600
Total stock-based compensation		$	3,670		$	6,350		$	7,356		$	3,201		$	4,771

(3)

Basic loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Net loss attributable to common stockholders is increased for