While traditional media stalwart Playboy is looking to go private, new media darling Demand Media is looking to be the first IPO of 2011, filing with the SEC yesterday to go public on Jan. 25. Demand is looking to sell up to 8.6 million shares and raise $138 million.

If the shares sell at the $14 to $16 range Demand is seeking, the company’s total valuation will be about $1.3 billion. Demand is going on a two-week road show with underwriters Morgan Stanley and Goldman Sachs to build interest.

Questions About Model: Too Much Google?

Demand Media has generated a stir at a time when traditional media models are suffering, creating a content model in which a network of 13,000 freelancers generates thousands of articles for sites such as eHow, earning about $10 to $20 apiece. 

However, some observers aren’t as sold on the company. The SEC paid close attention to Demand Media’s accounting practices (which include recognizing content costs over a five-year period, rather than when the costs occur like most media companies), while others may see an over-reliance on Google, particularly Google’s cost-per-click ads ("Google" is mentioned 61 times in the prospectus, according to CNBC).

Scout Analytics, a firm working with publishers to determine the revenue potential of their audience, has doubts about the long-term viability of the Demand model. "If you take what they say about uniques–86 million–and break down revenue per user, that’s $1.60 per user," Scout Analytics senior vice president of strategy Matt Shanahan told FOLIO: last year. "Look at how many page views they have over a year and how many users they have to accumulate over time. All it takes is an SEO engine to change their algorithm and they lose their traffic."