Domain Auctions

I know it’s a holiday weekend, but I think everyone needs to take a few minutes to read Ron Jackson’s interview of Rick Schwartz. In the domain space, Rick has been something like a soothsayer, and when he speaks, I listen. While we don’t all own the same quality domain names as Rick, the things he is saying does affect all domain investors.

If or when Google decides to pull the plug and PPC as we know it drastically changes, there is going to be a lot of tumult in the industry. While quickly and efficiently monetizing domain names will be difficult and domain values will be impacted, domain owners need to keep the following things in mind:

  • Businesses who want to be online need a domain name
  • Advertisers will still want to advertise on relevant domain names
  • People will continue typing-in domain names looking for products or services
  • Easy to remember and relevant domain names are the most desired
  • Consumers typically have certain web browsing patterns, and many type in their keyword and .com as a starting point

The point is that while making easy money from domain names won’t be possible, there are still going to be plenty of opportunities in the domain space. Some people will have to sell more than they have in the past in order to maintain the same revenue levels, so some deals may be had.  I recommend buying domain names that would make sense to be developed. Just because a domain name did well parked, doesn’t mean that it would be good to develop.

I still believe the greatest ongoing revenue generating opportunity is selling advertising space directly to advertisers on developed websites. I believe websites are the newspapers of decades ago. Websites get the eyeballs that newspapers once received, and advertisers want to reach them. Motivated consumers are untapped leads that businesses would like to acquire.

I also believe that as companies continue to migrate their business online, more will get it, and more will want (or even need) the domain name that describes their business or industry. Generic and category defining domain names are rare, and they hold considerable value. Selling domain names to end users that get it will be the driving force behind the future growth of domain values.

Changing times call for changing strategies.  Those who adapt and adopt will survive, and those who sit back will not. Who knows when all of this will happen, but I think it’s important to be prepared for the worst. Read Rick’s interview and judge for yourself.

Why I Don't Sell at Live Auctions

Unlike many domain investors, I rarely ever submit any of my domain names for live auctions anymore, and there are reasons for this. I don’t like the terms offered by the auction houses, nor do I believe it’s in the best interest for me to sell my names this way. For what it’s worth, I think the commissions are too high for what is offered, I think the exclusivity period is far too long, and the time it takes to be paid appears to be much too long.
First things first – the commission. I have no problem whatsoever paying someone a fair rate for selling my domain names. No, I don’t expect an auction house to contact every potential end user for my name. However, I don’t believe banner advertising on domain-related websites or email advertising to the same crowd is enough. Simply selling my domain names to a group of domain investors at an anticipated auction isn’t enough incentive to pay 50-100% more commission than other outlets.
If I want to sell my domain names to other domain investors, I know many buyers, and I am very happy to try and sell on my own first (no cost). There are also the forums (like Namepros or DNForum) where people are looking to buy domain names (no cost). Additionally, there are some great newsletters (like Rick Latona, Eric Rice and DomainsNewsletter.com) who reach these same potential bidders at a much lower rate (5-10% per name).
My next issue is the long period of exclusivity that’s required and the exclusivity renewal period if you don’t notify the auction house in time. Yes, I understand that they need to protect themselves so others can’t wait until the day after the auction to buy a name that didn’t receive bids. However, I don’t see auction houses (other than Jay’s blog posts before his auction) that really spend time on particular names. IMO, the auction house should get one opportunity to sell a good name at a good price. If they can’t close the deal, they shouldn’t hold exclusive rights on a domain name. If it really is priced fairly, it will sell at auction. If it isn’t, then maybe it shouldn’t have been listed by them in the first place.
As I told one person that has run domain auctions, there are ways to get around the exclusivity even if the domain is tied up (I won’t mention them because I don’t endorse this whatsoever). Although it’s unethical to do and a good reputation is the most important thing in this business, if a good customer of an auction house does this, I highly doubt the auction house will track them down over a few thousand dollars. The legal fees to take action would be high, it would be tough to prove an illegal activity occurred, and the cost of future lost business would be high.
Finally, I think the period of time it takes to be paid can be ridiculous. When I see a domain sale reported in DNJournal from an auction 2 months prior, I think that’s a bit crazy. If a person has a reputation of not paying on time, they should be prohibited from bidding. Also, something should be done to ensure payment is made ASAP. I bought Secaucus.com at the geo auction, and I am ready to pay. As soon as I receive the wire instructions, I will make payment. I wish others did this.
As Rick mentioned yesterday, there are going to be 5 auctions by 5 auction houses at TRAFFIC New York in September. I think this is going to be great for the industry. I have a couple of great domain names I would consider selling – if the terms are fair for me. Once the 5 auction houses have been selected, I will review the terms. If it’s too late to submit, well, I have no problem selling to clients I know or using the less expensive alternatives available now. I think live domain auctions have reached a saturation point and people expect more from them than is realistic, but I do think the 5 auction format is going to change things quite a bit.
I also believe that auction houses should actively seek to find domain names to list at auction. Forget about asking people to submit their names. Most of these are either repeats or just junk. While the auction houses get blamed for listing poor names sometimes, it must be difficult to sift through 100k+ domain names. I’ve learned that most people think their names are more valuable than they really are to other domain investors (I am prone to this, too), so it’s tough to find good names at fair reserves. The auction houses should go after strong domain names that might not be making money (more on this in a future post). They could hand select their names and use past auction results to entice non-domainers to sell.
For what it’s worth, I would love to see the following auction houses in New York: Moniker, Trafficz, Sedo/GreatDomains, Bido, and Afternic/BuyDomains. I think this would make a very successful show in terms of domain sales – although it’s getting very close to the show.

TRAFFIC to Feature Multiple Live Domain Auctions

An industry first is going to happen at the TRAFFIC New York show in September. For the first time in domain industry history, there are going to be multiple auctions presented by multiple auction houses. Although I don’t know who the auction houses will be, I would anticipate this will create more competition, leading to more favorable domain sales agreements.
I look forward to shorter exclusivity periods, quicker domain transfers, quicker payments for sales, and lower commission rates.

Evaluating the Geo Domain Auction

I was just checking out Moniker’s tentative Geo Domain auction list on Mike’s Blog, and I think there are a few good domain names for sale at reasonable prices. Chances are good that I’ll be bidding on one or more of these domain names, but I wanted to post what I believe are the best values in the auction.
ColoradoRiver.com $25,001 – $50,000
NewRochelle.com $50,001 – $100,000
OysterBay.com $25,001 – $50,000
SanJuan.com $250,001 – $500,000
SantaClara.com $50,001 – $100,000
Secaucus.com $1 – $5,000
Versailles.com $50,001 – $100,000
My best piece of advice for anyone who is thinking about bidding is to do your due diligence and research prior to the auction. Don’t just focus on the domain name, but research the actual geographic area. Try to envision what you would build on the domain name should you win it, and determine if you will be able to turn a profit. As most geodomain owners will tell you, a geodomain needs to be developed to unlock its full value. Have a plan, and be ready to implement it if you are going to bid.
I may be bidding on one of these names, but it really depends on whether or not I think I will be able to manage another project at the moment. Once I return from my honeymoon, I will begin selling ad space in Lowell and Burbank.

.Mobi Meltdown

Jeff at DomainBits has an insightful post on his blog today.

“Here are some other interesting comparisons: mortgage.net sold in 2006 for $149K versus mortgage.mobi for $18K now. Sales.us sold in 2006 for $8K versus sales.mobi for $10.5K – yes, that’s right – .mobi is only doing slightly better than the anemic .us market was doing two years ago. Films.tv sold last year for $8,600 versus films.mobi for 10K now. Boats.org sold two years ago for $50,249 versus boats.mobi for $6K now. Forsale.org sold last year for $12K, forsale.biz sold in 2006 for $3,550, forsale.co.uk sold two years ago for $14,692 versus forsale.mobi for $5K. Show.org recently sold for $13K versus show.mobi for $5K.”

I can’t say that I disagree with him at all. Surely a warning sign to investors in alternative extensions. Personally, I would hate the be the guy who speculated on average or poor names in the $x,xxx to $xx,xxx range, because those are surely suffering in value. Check out the rest of his post when you get a chance.

Moniker Live Auction Recap

I spent this afternoon doing some work while listening to the Moniker Live auction. While I am not surprised at the results ($2.56 million in sales), I am a bit disappointed in them. I was hoping to see somewhere in the ballpark of $4-5 million in sales, assuming Israel.com didn’t sell. I realize there might be more bids in the silent auction that continues for the next several days, but I don’t think the final tally will increase substantially.
Here are a few of my opinions for the auction:

  1. Sellers still have very high expectations for their names and fairly unreasonable reserves. I think domain owners need to understand that in today’s market, buyers aren’t going to spend a ton of money on a domain name simply because it’s a great domain name. Unless a buyer has a plan for the name, chances are good that they won’t pay a premium for it.
  2. Many decent/good one worders that would have sold in the $15-30k range at past auctions didn’t sell today or sold for less today.
  3. From what I heard from a couple people in attendance, the house crowd was smaller during this auction.
  4. Non-.com extensions saw much weaker results than before. I believe names like 20.net, Garden.info, and all the .mobi names would have sold for much more a year ago.
  5. If you have a good name and set a good reserve, bidders will bid it up and set the price – just what happened in the case of PostalCodes.com.

I was expecting a weak auction, and that’s what we saw today.

Recent Posts

Vehicle.com Sold for $121,675

10
Monte Cahn emailed me to let me know his company, Right of the Dot, brokered the sale of Vehicle.com for $121,675. A week ago,...

Nobody Will Request an “Appraisal Certificate”

6
Domain industry attorney Jason Schaeffer reported today that three of his clients received $60,000 offers to buy domain names, and the supposed prospective buyer...

Brandsight Job Opening: Account Executive

0
Brandsight is looking to hire someone in an Account Executive role, according to a job opening posted recently on LinkedIn. Because GoDaddy acquired Brandsight...

Differing Opinions on Ramifications of SCOTUS Decision

16
Earlier this week, the United States Supreme Court ruled that Booking.com can be trademarked. The 8-1 decision was a good read, and there was...

Network Solutions Should Ditch Registrar-Transfers.com

8
Network Solutions uses an unbranded domain name for at least a few important confirmation functions. When I need to confirm my email address at...