Michael Blend, who had overseen the company’s content and media services, has been promoted to president and COO and will now oversee the domain registration services as well. “Michael’s leadership will be instrumental as we continue to build upon our successful growth in content and media, as well as embark on a new era of internet domain expansion,” said chairman and CEO Richard Rosenblatt, to whom Blend will report.

Separately, Demand Media announced revenues up 17 percent to $93.1 million for the quarter. The company also broke even for the first time, with earnings of $0.00 per share, compared to the net loss of $0.03 that analysts had expected.

Revenue from content and media grew 18 percent over last year, to $55.3 million. Revenues from Demand Media’s registrar services, which includes domain name registration, grew 13 percent to $33.4 million.

Release

In a staff e-mail Monday posted by AllThingsD, Thompson stressed that a board investigation is ongoing, said he was cooperating and added:

In the meantime, I want you to know how deeply I regret how this issue has affected the company and all of you. We have all been working very hard to move the company forward, and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you.

There was no explanation of how he wound up credited with a computer science degree from Stonehill College when it didn’t offer the program until after he graduated. Or why he didn’t correct an interviewer in 2009 when she mentioned the degree.

Thompson’s e-mail went out a few hours after Daniel Loeb, the head of hedge fund Third Point, issued his latest broadside: a demand for Yahoo to turn over documents related to Thompson’s hiring, the appointment of Patti Hart to the board, and the vetting of the director candidates Yahoo chose over Loeb and most of his slate. Hart was the head of the search committee; she also has been accused of misrepresenting her own undergraduate degree.

This came after the board — as expected — ignored Loeb’s Monday deadline for firing Thompson and having Hart resign. Issuing that kind of ultimatum was like double-dog-daring the board not to do anything by then. No doubt, they would prefer not to do anything that comes off as a response to a proxy battle but it’s too late for that now.

Meanwhile, the process has become the message. The longer the board takes to do or say anything concrete, the less there is to recover.

Not about the degree

Let’s get something straight. This isn’t about where Scott Thompson went to school or what degree he earned there. Those things mattered before Thompson had a track record of success and at various points they likely helped him get jobs. That isn’t what gets you a mid-career gig as CEO at a public company.

But a computer science degree provides a kind of street cred, especially when you’re dealing with engineers and developers.

When @jason asked me on his show what I knew about the new Yahoo! CEO, 1st thing I said was “he has a CS degree.” Turns out, not true! wow

— Marshall Kirkpatrick (@marshallk) May 5, 2012

And even if the kind of unearned degree being claimed doesn’t matter, claiming it and letting it stand does. The first e-mail I opened Monday was from a CEO bemused by Thompson’s failure to meet the problem head on. Demand Media CEO Richard Rosenblatt tweeted something similar over the weekend:

@sdkstl @karaswisherI agree Scott Thompson’s biggest issue is how he responded; fess up, apologize and ask for mercy

— Richard Rosenblatt (@demandrichard) May 6, 2012

then followed Monday:

@karaswisher if I was him I would grudgingly resign for the good of the thousands of yahoo employees who can’t handle any more drama

— Richard Rosenblatt (@demandrichard) May 7, 2012

When the subject came up during Warren Buffett’s three-hour stint on CNBC, the oracle of Omaha said:

“If I thought as a director, if I thought that an officer had consistently misstated some fact to me, I think I would probably do something about it. We actually had that one time. If you can’t trust the people you’re working with, you’ve got a problem.”

And that’s the real issue.

What next?

If Thompson resigns, is fired for cause or takes a suspension, Yahoo doesn’t have to reach far for interim leadership. The safest bet: CFO Tim Morse has been part of Thompson’s re-org plans and was interim CEO after Carol Bartz was fired. He could step in again. The board, which is in its own state of transition as four members leave and up to five come on, would face the same question as Jeff Bewkes following the short reign of Jack Griffin as CEO of Time Inc. — go inside or try again with an outside candidate. Ross Levinsohn’s name has been raised a few times as a possible internal successor. Rich Riley, the EMEA head who Thompson picked to head the revenue side of the Americas in the new re-org could get a look.

Doing anything permanent before the new board is fully in place would be repeating a mistake. Lucy Marcus thought it was wrong for the outgoing board to pick a CEO.

Now that Demand Media has successfully gone public and reported its first quarterly earnings, CEO Richard Rosenblatt is on a mission to stand up for the content his company produces. In his first post-IPO interview, Rosenblatt told paidContent why he doesn’t think Google has Demand Media in mind when it talks about “content farms” and how, in any case, the company is becoming less dependent on traffic from the search engine. He was joined by Steven Kydd, EVP-Demand Studios. Read on for edited excerpts from the interview.

paidContent: You were in your quiet period when Google said it wanted to peel out some ‘bad results’ (from content farms). How would you have responded?

We really want to let Google speak for themselves. Whatever Matt Cutts and Google want to (say) about quality we totally support that because again that’s their corporate interest. What we said and would have said is we applaud Google removing duplicate content … removing shallow, low quality content because it clogs the search results. Both we and Google are 100 percent focused on making the consumer happy. It’s the right thing to do and it’s good for our business.

So when Google was referring to ‘”content farms” in their message it wasn’t referring to companies like yours?

I think content farms have become such a general term that everyone is just throwing around. You know content farms could be automatic, non-human content that scrapes other people’s articles like ours, steals them, and publishes them. So, I mean, I don’t know what they define content farms as. We don’t see ourselves as one.

Have you gone to them and asked them to make sure they’re not referring to you?

If you talk to Google and we talk to Google all the time you will see that Google, if they have a problem with somebody like JC Penney they’re pretty obvious about it. They specifically say it. If they have a problem, they come out and talk about it.

Some of the screenshots of content farm-like results in their most recent blog post on the subject did seem to be targeting articles you find on eHow, for instance.

If you look at the data, after they had that big announcement, which happened during the IPO and then they made the changes, our traffic, as you saw from recent results, went up. I don’t know what they were referring to. What we create is created by consumer demand and touched by 14 humans. I don’t know how we would be a content farm if Wikipedia is not, About.com is not. Humans make our content.

What happens if the company you’re most synergistic with turns you off? Is that something you think about? Do you have to make sure you have other revenue that isn’t reliant on this synergy with Google?

That could happen but it would be against their best interest and the consumer’s best interest. It’s kind of like Zynga just got a $9 billion valuation. Facebook could turn them off at any time. The iPhone could have been turned off by Verizon or AT&T (NYSE: T). There are a lot of synergistic partnerships that make sense for both parties that last a very long time.

We are diversifying our traffic because the internet is moving that way. We’re aggressively focusing on diversifying traffic. We had 100,000 individual eHow articles receive traffic in December alone just from Facebook. We receive traffic from Twitter. We receive traffic from Digg. We receive traffic from all across the web. We receive direct traffic and traffic from apps like Livestrong. We are naturally diversifying our revenues — not because we’re afraid of Google but because that’s where people are spending their time.

Is mobile a next frontier for you or are you already deep in it?

Mobile, international, video we think those are a lot of frontiers. We’re going to move to where the consumers are moving and the consumers are moving to mobile. I thought it was a pretty neat statistic that (Livestrong’s calorie-tracking mobile application) was now the number one health and fitness app on the iPhone. We’re definitely moving into mobile. No question. We’re bringing on a senior person relatively soon to focus on mobile and we’ll start to really build and expand our strategy.

You recently announced a partnership with Tyra Banks to launch a beauty and fashion site. How many celebrity-brand centric channels do you want to ultimately have?

We believe in fashion and beauty. There is a big opportunity there. We can become one of the top players in that category. The data told us that. As the data tells us there are other verticals we should tie celebrities to we will get into it. I don’t know how many. It could be as many as dozens or just few it just depends on what the data tells us.

You mentioned on the call that you’re about to introduce a new ‘curation layer’ on your sites. Can you elaborate?

It is the idea of using (something like) Facebook … as a way to give a feedback loop on whether consumers like our content or not. We’re going to test it out. (An) example is the new eHow will have a helpful or not helpful very simple feedback loop. So, if we see that a lot of consumers see a piece of content is helpful, great. If we see a lot of consumers don’t see it’s helpful that will allow us to send it back to the studio and fix that piece of content.

You once led MySpace and sold it to News Corp (NSDQ: NWS). You look at where you are right now and you look at where they are now. What’s your reaction to the idea that basically News Corp. doesn’t see a value in it now?

That’s obviously sad. You know all of us that were involved in MySpace put a lot of pride in that and when we did sell it there was nobody even close. You remember it was top of its game. Facebook was just getting started. I left, I consulted for six months, and then started this company. And, you know, whatever went wrong there went wrong. I’m not going to be an armchair general and second guess the decisions we made, but it’s sad to see. What is different here is we are not selling Demand Media. We took it public, we’re getting to scale, and we want to really go after this market because we think the opportunity is that big.

Rosenblatt also said that Demand Media’s quality-checks exceeded those of many traditional media organizations. “Like all fast-growing companies we won’t be able to catch everything but we promise to get better,” he said. Rosenblatt added that the company was working on a new “curation layer” it would be adding to its sites that would allow visitors to provide feedback on the content of articles and make suggestions for improving them.

The comments come as many have complained loudly about the type of content being produced by Demand Media properties, such as eHow, and Google (NSDQ: GOOG) has said in response that it is examining ways to ensure its search results are not overridden with content from so-called content farms. Asked about Google’s statements, Rosenblatt said Demand Media was “very careful” about following all of Google’s guidelines. “Since day one, we realized (Google) was a very important partner to us and we consider ourselves very white hat,” he said.

One other highlight from the call: Rosenblatt said the company was winning over brand advertisers to its sites, saying that a number of big companies including American Express, Home Depot, L’Oreal, Dole and Samsung were now buying ads from Demand Media and were happy with the results. He said the company was continuing to open new sales offices and hire sales people to attract more ad dollars from brand advertisers.

With his own stock worth more than $88 million (today at least) and options that could be worth much more, how does CEO Richard Rosenblatt pitch it?

Rosenblatt insisted to MediaMemo’s Peter Kafka that the changes not only aren’t aimed at Demand, the shifts Google engineer Matt Cutts wrote about so far have helped the company by going after scrapers and spammers: “He’s talking about duplicate, non-original content. Every single piece of ours is original. Written by somebody. And I understand how that could confuse some people, because of that stupid “content farm” label, which we got tagged with.” More from the interview.

But the Google overhang continues: Demand’s content revenues rely heavily on Google (NSDQ: GOOG). As the company admitted repeatedly in its SEC filings, Google has the power to disrupt that business. Investors knew that going in; anyone who sticks past the initial IPO boost will have to live with it.

Will Demand sustain its current stock high? Probably not. The stock opened down slightly but it’s early in the day — and early days.

Chart: MySpace: From Hot To Not [PNG]
Chart: MySpace: From Hot To Not [PDF with embedded links]

– How much did Goldman Sachs really invest in the company? Keep in mind it is the bank exploring the IPO and likely to be the lead underwriter of this.

– What percentage of Demand’s revenues is its domain business eNom after all? (It also owns BulkRegister, parking company Hotkeys and operates the NameJet drop catching site in partnership with Network Solutions.) After starting as a domain media business, the company has moved away from it and focused on its content and services assets, and has repeatedly said over the last two years that domain is a small part of its business, much to industry observers skepticism on the claim. We’ll know now.

– How much growth and revenues are there in its social media products business through its Pluck acquisition? While major media companies including *Gannett* and our own parent Guardian News have adopted the social tools platform, almost everyone on the publisher side I have spoken over the years has mixed feelings about the product, in part for being too unwieldy and not up-to-mark on latest social media and tech innovations (their words, not mine).

– How much stake does Lance Armstong own in Demand? He took what was then termed a “significant” stake in the company, after the two did a partnership for the health site Livestrong.

– What part of its revenues are the content brands that it owns, including Livestrong, eHow, Cracked, Trails.com and others?

– In turn, on these content destinations, how much of revenue is generated from *Google* AdSense or whichever contextual search product it is using? More starkly, how much of it business models it at the mercy of *Google*, in more ways than one?

– Then Demand Studios, possibly its most controversial part, called by various names such as “content farm”, “content factory”, “McContent” and other pejoratives: how big a part of the business it really is? The studios were most famously profiled last year in a cover story in Wired that generated a lot of heat all around the media/publishing industry.

– How much is it paying its army of freelancers, collectively, to generate all this content, both text and video? Related, how much is it spending in health benefits to its freelancers? We probably won’t get a breakdown, but likely a topline number of some sort.

– Some more likely disclosures about how it uses *Google* search terms and optimizes its content around them.

– Other business questions that you think might be answered in the S-1? Post it in comments below and we’ll add here.

For a larger picture perspective on the mass produced and/or low-cost content players in the market, including Demand, Associated, Seed/AOL (NYSE: AOL), About.com and others, watch the video below from our paidContent2010 conference in Feb. A writeup of the panel, which I moderated, is here.

»  Demand Media Raises $120 Million For Domain-Names Based Media Company; Buys Two Companies

»  Demand Media Buys Hillclimb Media

»  Demand Media Raises Another $100 Million For Domain-Names Media

» 

Here’s what Rosenblatt had to say about IPO possibilities during our interview at Demand Media’s Austin offices in mid-March when I asked if an IPO was on the horizon: “At this point, we’re completely focused on growing the business. I’m not just saying that. That’s all we think about. Whatever it is, whether it’s an IPO or something else, we’re just not addressing that right now. Whenever the timing’s right, we’ll go, but not til we’re sure the business is ready for it. That’s my #1 priority: build a scalable, repeatable, growing business and if an IPO’s the right way to go, then that’s how we’ll go. But our investors aren