Here's a question: without checking, who do you think is the largest supplier of videos to YouTube, by a factor of almost 10? If you said Demand Media, which has over 150K individual videos on YouTube that have generated a total of 442 million views to date, you'd be right. Most of the videos are supplied by Demand Media's knowledge-based Expert Village site, and are produced by Demand Studios, the company's content production arm. (For the record, CBS is a distant second supplier to YouTube with almost 16K videos and approximately 327 million total views.)

I learned this and a lot more in a recent and incredibly interesting discussion I had with Steven Kydd, EVP of Demand Studios. In case you've never heard of Demand Media, it's the latest act of former Intermix CEO and MySpace chairman Richard Rosenblatt (who conceived it as a "thinking person's MySpace" as Steven put it). Since its inception in 2006, the company has raised $355 million, made a string of acquisitions and dramatically built up traffic at its portfolio of web sites.

Most interesting for me though, is how Demand Studios has become a veritable "content factory" (my term), churning out 150K individual videos and 350K articles in 2 1/2 years. How it's done that, and better still, how it is monetizing this mountain of content, is the best example I've seen yet of how to effectively build scale at the intersection of social media, search and broadband video.

At the core of Demand Studios is a network of 10,000 freelance content creators that have passed through a rigorous screening process. Specific content is green-lighted through Demand's analysis of internal data. The potential value of a given piece of content is measured by internal algorithms estimating audience interest, advertiser interest and ability to generate traffic.

Once Demand has decided to produce a piece of content its editors tap into specific producers based on a match of their expertise. The producer follows Demand's guidelines, such as shooting exclusively in HD. But in general, the producer has a relatively free creative hand. If for example, the video involves children's nutrition, the producer can call upon a local health expert to appear (which as Steven notes, experts are often happy to do because the videos help raise their own profiles). Once the video is complete, it is edited for quality and has SEO-optimized metadata created and added.

This process is now refined to the point that 1,000 pieces of content are being created per day (30% video, 70% text), with plans to scale even further. Steven said Demand has paid out over $12M to its producers to date. Each producer's content is tracked over time to see how well it performs and is also peer-rated, allowing the cream of the producer network to rise to the top.

Once complete the content is posted on Demand's sites (e.g. Expert Village, eHow, LiveStrong.com, GolfLink, Trails.com, etc.) and in the case of video, on YouTube as well. As Steven notes, since YouTube has now surpassed Yahoo to be the 2nd largest search site, Demand's knowledge-based videos are a perfect fit for how many people increasingly use YouTube.

The two companies have developed a mutually beneficial relationship. YouTube now drives the majority of Demand's video traffic, and Steven says it is being monetized well through AdSense, overlays and companion ads. Conversely, with Demand now generating 2 million YouTube views per day, it has become an important supplier of quality video to YouTube, helping it bolster its value beyond its UGC roots and build its revenues. As well, YouTube has become a testing ground for new Demand sites, such as a Spanish language version of Expert Village.

Syndication beyond YouTube is a key part of Demand's ongoing success. Through its acquisition of Pluck, a white-label social media platform used by many media brands like USAToday.com, NPR, McGraw-Hill and others, Demand now has an opportunity to also syndicate its content to these publishers, who are increasingly resource-constrained and in need of high-quality third-party suppliers. In short, while Demand's "content factory" has already become a major supplier to YouTube, the world's largest video portal, it is now poised to do the same for lots of other sites as well, further growing its traffic.

There's no question that Demand's strict focus on knowledge-based, Long Tail videos has enabled it to create a unique formula that works well at the intersection of social media, search and broadband video. It's doubtful that all of this could be fully replicated in more creative genres like entertainment. Yet there are elements of Demand's content factory, such as leveraging YouTube's audience base, consistently creating high-quality metadata for SEO and applying rigorous criteria to what content gets produced, that are applicable to all video providers. Given Demand's ambitious plans, I suspect their factory will continue to evolve, providing still further lessons for how to create and monetize content in the broadband era.

What do you think? Post a comment now.

(Note: Steven Kydd will be on a panel I'm moderating at the NABShow on Wed, April 22nd, "How Syndication is Powering the Broadband Video Era." VideoNuze readers can register for complimentary access by using code X104)