Domain Auctions

Exclusive Domain Conference Being Held at The Palms on March 22-23

Did you know there’s an exclusive domain conference being held at The Palms resort in Las Vegas on March 22-23? The Domain Madness 2 conference is being run by DomainConsultant.com, and it sold out within a few days. Most of the attendees are domain investors who attended last year, and a few others received personal invitations.

Last year, the conference was held in a private suite at The Palms, and I heard it was a great event. Like last year’s conference, there’s going to be a live domain auction held at the event. Bidders can bid on site or they can bid online using a platform that will be announced soon.

You are welcome to submit domain names for review, but they are looking for great domain names only. Visit the Domain Consultant website for more details on domain submissions.

You Can Still Win a Snapnames Auction if You Are Bidder #2

I sometimes place bids on Snapnames auctions that have other bids, even if I am not interested in buying the domain name. Generally, if a domain name has a bid already and you place a bid, you are considered the losing bidder when it goes to auction, as the person who places the first bid takes the lead.

I recently found out that this isn’t always the case. I placed a bid on a domain name shortly before it was scheduled to go to auction after I saw it in a list of names with bids. I was curious to see how the name would perform in auction, but I wasn’t sure entirely sure I wanted the name. I was surprised when it went to auction and it showed me as the high bidder (of 2 bidders).

Apparently, someone had placed a back order on the domain name a long time ago, and their credit card on file had lapsed or something else happened to their account between the time they placed the back order and the time it went to auction. As a result, I was the top bidder, and I ended up winning the auction without placing an additional bid.

I am not upset that I won because I like the name, but it’s something to be mindful about if you place bids on auctions that already have bids thinking you aren’t going.

Sex.com For Sale in Foreclosure Auction

Sex.com

In exactly one month from today, we may see a new record set for the price of a domain sale. I just received an email from a friend with a link to a notice stating that SEX.com will be up for auction. The foreclosure auction will be held at the offices of Windels Marx Lane & Mittendorf, LLP, 156 West 56th Street, New York, New York on March 18, 2010 at 11 am.

In order to bid on the auction, you must come prepared with a certified bank check in the amount of $1,000,000, made payable to “Windels Marx Lane & Mittendorf, LLP, as escrow agent.” The auction may be open to the public.

The auction description is as follows:

All of Borrower’s interest in and to all right, title and interest in an undivided 100% interest in the internet domain name and related INERNIC registration of the URL www.sex.com, and 100% of all cash proceeds, accounts receivable, licensing rights and intellectual property rights directly associated with or derived from the ownership of such URL.

The tale of Sex.com is actually very interesting, and a book was written about it a few years ago. The Cliff’s Notes version is that Match.com founder Gary Kremen originally registered the domain name, but it was then stolen by Stephen Cohen, and a 10 year legal battle ensued. A company called ESCOM, LLC acquired Sex.com in January of 2006, although terms of the deal were not disclosed. There was an article that pegged the sale at $14 million, but there was no confirmation that this number is accurate.

More information about the auction can be found on the David R. Maltz & Co website, and you can also download the auction notice pdf for more information. One interesting note from the auction notice is that it comes from a Dom Partners, LLC at 2050 Center Avenue (Suite 600) in Fort Lee, NJ – the same address as Domain Capital, who reportedly provided part of the financing.

Domain Auctions: Problems & Solutions – Part 1

Most domain investors would probably agree that the results of live domain auctions have been pretty weak recently. Aside from a few strong sales that have taken place, most auctions haven’t produced the results people hoped to see. I’d like to discuss problems I see in part one and give my advice to improve live auctions going forward.

In no particular order, here are some of the reasons I believe domain auctions haven’t been successful recently.

  • Lower PPC payouts and poor economy affecting domain investors’ spending ability

For a few years, live domain auctions were dominated by some of the wealthiest domain investors. Many of these people and companies were spending money that they earned from PPC revenue. With payouts down across the board, there is less money to reinvest.

Likewise, with the economy in the tank, there is less financing available for domain buyers. People can’t refinance their homes or other property as easily, and ultimately it means less money to spend on domain names. In addition, people are more reluctant to spend money on domain investments, favoring a stronger liquid position to stay protected.

  • The same domain names continue to be offered for sale.

There are a limited amount of top quality domain names that are openly available for sale. Many domain investors don’t wish to list their names for sale in a public venue and/or don’t want to set a price for their prized assets. Domain names are on the market longer, and consequently, even good domain names are allowed to be placed in different live auctions with the hopes that someone bids. Oftentimes, these domain names don’t have lower reserves, and they just sit on the shelf like day old milk. At one time their inclusion made a splash. Now it’s just embarrassing to see the same names at the same prices being auctioned in different venues.

  • People have ridiculous sales expectations.

Let’s face it. Everyone thinks their names are hot shit. No matter how many times Monte or Rick will hammer their sellers asking for reserve price reductions, many people are reluctant to do so. Gone are the days when a bidding war will ensure a domain name sells for what it’s worth or more. People don’t want to lower their price to a point where one bid will lead to a very bad sale.

Domain owners have lost faith that buyers will show up, and they are unwilling to drop their reserve prices. Auction houses are either desperate to keep certain names in auction with the hopes of drawing some interest (while locking down exclusivity) or they are praying that the needy end user just happens to show up, with all senses lost after being hit in the head with a bag of money.

  • Long exclusivity periods.

People like myself like to sell domain names quickly. I buy as low as possible and sell as high as possible, as quickly as possible. If I have a $20,000 domain name, I can’t/won’t take a chance and lock it up for 60 days because I need to move my inventory to generate much of my income. If the name doesn’t sell, I can sell it on my own, but I am obligated to pay a 10-20% commission. Some people may opt to not honor an agreement, but that’s certainly a reputation killer if not a legal problem. With lower sales rates, it’s not a guarantee that a domain name will sell at auction and it’s more difficult to justify a long period of exclusivity.

On the other side of the business, auction houses need to lock down these domain names. They can’t afford to spend time and effort selling a domain name if the name isn’t committed to them. I know for a fact that the auction houses work hard to sell domain names before and after auctions, so it’s not fair to not commit.

  • Too many auctions and lists not revealed until just before the auction.

There are so many auctions these days that people wait until the last minute to decide where to submit their domain names. This causes domain auction houses to scramble at the last minute to find buyers. Domain buyers have very little time to review their lists. I know the first live auction happened when people simply put names up on a white board, but times have changed and more money goes into buying a domain name.

  • End user buyers aren’t showing up.

Perhaps this is due to the above issue where lists aren’t finalized until the last minute, but it doesn’t appear that end users are showing up as much as they should (has always been an issue). I know that the domain auctioneers spend time contacting potential buyers, especially when it comes to high ticket names, but as any domain investor knows, it’s tough to get end users to buy. They have to want a specific domain name at the offered price at the time that it’s auctioned.

In addition, end users may not trust domain auctioneers as much as they would trust other auction companies who are more well-known. This industry is still young, and end users may not be   familiar or comfortable bidding at a domain auction held by a company whom they’ve never heard about. The registration process (and maybe previously a fee at Traffic I think) could also be a deterrent. Further, Snapnames still doesn’t allow remote bidding from a Mac (unless it has Windows).

  • Cronyism and friendships can impact auctions

In the domain industry, there aren’t thousands of active investors. There might not even be several hundred – I really don’t know. Compared to other industries, this one is pretty small and there are a lot of people who are well acquainted with each other. Many auction participants are both buyers and sellers. Auction companies want to accommodate their best clients, and sometimes that means accepting domain names that shouldn’t be in auction – or should be priced lower.

  • Too many domain names in auctions.

There are far too many domain names accepted in the live auction, and even more in the silent auction. I know a 4 hour auction isn’t unusual in the car world, but with sales down, it seems to drag on forever. Likewise, it’s difficult for buyers to wade through thousands of silent/extended auction domain names. People don’t want to put low reserves on domain names that might get a couple of looks and maybe one bid.

  • Automatic entrance into silent/extended auction.

It seems that most domain names that are submitted to the live auction but don’t make it are relegated to the silent/extended auction. IMO, these auctions are stuffed with bad domain names, and it makes it difficult to find good ones at good prices. Truthfully, I barely even look at the extended/silent auctions, and I am sure others feel the same way. As a result, domain owners are reluctant to put low prices on domain names that might end up seen by just a few people.

====

Ultimately, I think people really lack confidence in live domain auctions right now. As a result, there are lower quality domain names with higher than acceptable reserve prices. In an effort to stem the bleeding, more (lower quality) domain names are being auctioned in the hopes of a sale, and buyers and sellers are frustrated. I don’t think most of these issues are new, but they are exacerbated by other factors.

Tomorrow, I will post some of my suggestions for how to improve domain auctions, but I would like to hear what you think about the current problems with domain auctions.

Super Bowl Sunday Quickie – Go Saints!

Just a few quick bullets on this super Super Bowl Sunday:

  • I have two lengthy articles about the current state of live domain auctions that I will post beginning tomorrow. The first part dissects what I believe are problems with auctions lately, and the second part offers some suggestions to improve them. Hopefully other domain investors can contribute some valuable feedback.
  • I’ve heard from a couple people that Domain Roundtable will be happening this year, despite the fact that the DRT website still shows information about the 2009 conference. I expect to hear where and when it will be held soon, assuming those two people were correct. Once I hear, I will share with you.
  • A couple of people emailed me this week asking if I know anything about the GeoDomain Expo. As far as I know, it is still scheduled for New Orleans at the end of April (during Jazz Fest). I really hope the schedule is set ASAP because the price of flights seems to continue to increase and people need to make reservations soon.
  • If you live in the New York City area (or New Jersey), don’t forget that the Castello Brothers will be having drinks with us at the Campbell Apartment in Grand Central on Tuesday at 6pm. You can RSVP via comment or email. So far, about 25 people have confirmed.
  • I’m excited for tonight’s Super Bowl, and without a doubt, I am rooting for the New Orleans Saints. Next week’s Domainer Mardi Gras in NOLA will be even better if the Saints win and the city is celebrating.   As a Patriots fan, I generally root against the Colts, and New Orleans is one of my favorite cities, so it’s a no brainer for me.

When Using Ebay to Sell Domain Names is a Smart Move

7

Ebay LogoI was once an active Ebay domain seller. This was before I knew about domain forums, and I knew relatively little about other domain sales venues such as Snapnames. I did fairly well selling inexpensive domain names on Ebay, although I haven’t done so in quite some time. I want to share one example of when using Ebay to sell domain names can be very smart.

I frequently hear about domain owners’ attempts to reach out to potential end user buyers to let them know a domain name is for sale at auction. Most of the time, the auctions are run on proprietary auction platforms managed by auction companies. In my opinion, this can be a big barrier for companies that aren’t familiar with domain auctions or the auction houses.

With tens of millions of accounts, Ebay is the most well known, and arguably most reliable online auction platform. They are trusted by buyers and sellers, and if a person hasn’t opened an account on Ebay, you can probably be sure they’ve heard of the company.

In lieu of listing a domain name for sale on a live auction, you might consider listing it on Ebay before contacting potential buyers. Buyers might trust Ebay more, and they will have more time to make a decision. I have not tried this method out yet, but I will do so and let you know how it goes.

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