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Do such content factories really exist? That's horrible yet intriguing.

AFAIK this is how Demand Media (eHow) works. Hundreds of freelancers at low rates manufacture articles that are needed.

Also of note: textbroker.com : content creation as a service, with an API. Used them for several hundred pages of content for a client. (If an enterprising HNer wants to do same with better API and more upmarket writers, I would use it.)

The wired article c3o links to below (his post is [dead] for some reason though) is a fascinating look at how Demand Media works.

Spamming the internet with millions of articles of marginally useful content... I have to admit it's an audacious idea.

They aren't spamming. The articles are only somewhat useful, but still better than nothing. Also, those articles are actually wanted.

Demand Media fares very well when compared to Mahalo.

Yes, they do. Just a few sites I can think of: elance.com, getafreelancer.com, etc

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