Domain Sales

DNJournal Weekly Sales Update

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DNJournal.com Weekly Sales Report

Believe it or not, sales from Moniker’s TRAFFIC auction in June are still showing up on the sales list, topped by Cardiology.com at $550,000.

I also notice a ton of sales made by the Afternic/BuyDomains combo. With the exception of a few sales, most of these domain names would seem to be “brandable” rather than generic keywords, which leads me to believe most of these were picked up by “end-users.” This is great for both NameMedia properties, as it shows they are targeting their end-user audience quite well. It’s nice to see them publicizing their sales to help propel the market forward.

Pharmacy.com – A $50 Million Domain Name?

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According to Red Herring, Pharmacy.com is for sale. This is prime real estate just waiting to be developed into a business. According to Joshua Bourne, co-founder of FairWinds Partners (and also the President of the Coalition Against Domain Name Abuse), the domain name is worth “way over $50 million.”

While this asking price is fairly unprecedented, a domain name of this caliber could be worth it. I believe sales based on revenue multiples alone are fairly short-sited, and it would appear that the owner’s models take this into consideration. It would be a boon to the industry if they get their asking price, although we probably won’t know the sales price unless it is purchased by a public company such as Wal-mart, who probably has the money to make this happen.

According to the Domaintools Blog, a rumored buyer could be CVS pharmacy, who would consider re-branding the company.

Snapnames Seller Program Test Two

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Back in June, I wrote about my first test with the Snapnames Seller Program. Because of the success I had in the first test, I decided to transfer 62 additional names for auction. The difference between this test and the first test was that I did not have any “premium” names listed. All of the names I submitted were generic names that I hand registered within the past couple of years and hadn’t developed.

Out of the 62 names I submitted, 42% of them sold. Although my first test had a sales rate of 63%, I would argue that there were better names in that lot. The only negative this time was that only 3 names went to auction with more than one bidder. One of the names sold for over $450 – not bad for a name that I hand registered about 6 months before.

Because I’ve realized that Snapnames can be a good revenue channel if the right names are auctioned, I have been registering many domain names with the intention of listing them after the mandatory 60 day registry hold period for new names. I have been evaluating the type of names that sold – especially the ones that went to auction during my two tests, and I’ve been registering similar names. Since many people search Snapnames using common high value keywords, I have been searching for these types of names.

Using the Snapnames service, the minimum sales price if only one bidder bids is $60, less 20% commission, yielding a total of $48 for the name. The cost of registering a name is $7 and the cost of transfering the name to Snapnames is an additional $7. The net profit for each name sold is $34. Based on that, I would need just a 38% sales rate to break even, and every one of those sales higher than the $60 minimum lowers the sales rate even more.

The new dashboard created by Snapnames is also very helpful. I can see if a domain name has bids, the date it ends, and who is bidding on the name when it goes to auction. I do have a couple of recommendations to improve the dashboard:
1) When a name is in auction, I would like to see the amount of time remaining rather than the end date. This would be similar to what is seen in the buyer’s dashboard.

2) Also, when names are scheduled, it would be nice to see how many bidders there are for the names that have bids. This could give me advance warning of whether a name is likely to sell for just $60 or if there are multiple bidders that will allow it to goto auction.

If you would like more information about the program, let me know and I will put you in touch with the director of the program.

Private Auction Service

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I have an idea for a private auction service that can combine the efforts of a well-respected company like Moniker with the service of an exclusive domain broker such as Kevin or Alan. My idea is that a company creates a private auction for a single domain name on behalf of a client. The company would reach out to potential end users who would be most interested in purchasing the domain name. For example, if Candy.com was on the block, the company would reach out to Mars, Inc., Hershey’s, or Cadbury.

Similar to Scott Boras’, infamous blue satin binder he creates for every player he represents, the company would put together a formal presentation highlighting the attributes of the domain name and why it is of significant value. This presentation would be mailed to the C-Suite and Marketing Department of interested companies, and it would be followed-up with a call. The more highly the domain name is touted, the greater the interest.

Bidding on the domain name would be similar to the posting system in place for Major Leage Baseball teams to bid on Japanese baseball players. After a specified period of time, the executives would be required to submit a sealed bid for the domain name. On a set date, the auction company would provide the domain owner with the anonymous bids and allow him to review the bids. After 48 hours, the domain owner would decide whether to accept the highest bid or not.

Although there is more risk for the auction company than a standard auction, personally reaching out to end users is a much more lucrative audience than a domain investor conference. This service is also different than a broker’s service as the broker may not have the contacts in his rolodex, and this would be much more formal.

Educating & Selling to End Users

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The goal of the Domain Distribution Network created and managed by Fabulous is to encourage end-users to purchase higher value domain names than they ordinarily would have considered. When a potential domain buyer searches for an unregistered domain name (at Godaddy for example), a list of Premium Domains appears, giving the searcher an opportunity to buy a better domain name than what they intended to find with their search. According to the DDN site:

There are approximately 6 million domains available for resale in the general market. Initially the DDN feed will offer over 500,000 of the highest quality domains available for resale. The average resale price of these domains is over 100 times the price of a new registration, and registrars typically average over $150 net revenue per domain sale.

Although this is a great opportunity to upsell an interested and presumably educated buyer, I think much more can be done to inform and educate end users about, and encourage end users to purchase generic domain names.

I think it would be in the best interest of the domain investment community and a company like Fabulous, BuyDomains.com, or an otherwise motivated company to sponsor workshops or seminars focused on teaching end users about domain names at industry specific tradeshows. I frequently see advertising agencies and consultants sponsoring lunch seminars at tradeshows to show how their particular company can help maximize advertising dollars. I believe if a company like Fabulous sent Dan Warner to teach a group of entrepreneurial business people how a generic domain name can help their business, it would be beneficial to the company and to the domain business at large. Let’s take the New York International Gift Fair as an example. If there was a Domain Distribution Network sponsored luncheon showing the advantages of owning a name like CheapPresents.com over SallysBirthdayPresents.com, the end users would “get it.”. Heck, this luncheon/seminar could be followed with a sale of targeted, well-priced domain names that could offset the cost of sponsorship and attendance. I bet there would be a residual impact as well when attendees return home after the conference to see what other names they can find using the DDN.

Small business owners are accustomed to dealing face-to-face with account representatives from the companies with whom they do business. Much of their business is done with a handshake in person at a tradeshow – especially when opening a new account with a supplier. For the most part, this is impossible to do on the Internet. To many small businesses, learning how to successfully operate with the help of the Internet is a daunting challenge. Why not meet with these business owners in person, make them feel comfortable and win their business? All of this can be accomplished by attending industry specific tradeshows.

A second idea I have to sell domain names to small business end users is to advertise industry specific domain names in industry specific publications. Kevin of BigTicketDomains.com did this on a broader scale in the Wall Street Journal. While this was a good idea and a nice starting point, I believe more success could be had if we target specific publications. If a group of domain owners with names in a specific industry got together and paid for a quarter page listing in that industry’s trade publication, I believe the results could be much different. I have been compiling a list of publications in various industries. I would be willing to share this with any interested parties – just drop me a line.

Ultimately, the more domain names that are developed into brands and websites, the better for the entire domain investment business. A few months ago, I noticed a Hermes store was opening on Wall Street across from the New York Stock Exchange. A few weeks later, I noticed a Tiffany’s was opening down the block, and two weeks ago I saw a Thomas Pink shop was opening very close as well. These were all preceded by the development of upscale condominiums in the Financial District. The point is that the more small businesses that develop generic domain names, the more others will want to emulate them and do the same. This will certainly increase the value of our premium generic domain names.

Small business owners are much more likely to develop domain names if they understand more about how a domain name works. I believe if we educate them, they will be much more inclined to buy our names. The platform has been created – now we must reach out and let the end users know where and why they need to be looking.

Silent Auction Thoughts

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After viewing the Moniker silent auction results, I found quite a few surprises:

In my opinion, there were a few good deals to be had. I believe the following domain purchase was an absolute steal for the price at which it sold:
Illustrate.com

I was surprised nobody picked up the following names, as I thought the reserve prices were more than fair:
Finances.com – $500,000
Whiskey.com – $470,600
Handhelds.com – $58,830

Another surprise to me was how much stock in numerics seems to have dropped. There were many NNN.com numeric names that seemed to have reasonable reserves ($5,890) but didn’t sell – 634.com , 547.com, 481.com, 643.com, 493.com, 342.com, 441.com…etc. There were also a few NN.com names that had higher reserves but didn’t sell. It isn’t very often that pure numeric .com names come onto the market, and I was surprised a speculator didn’t grab them.

I was also somewhat surprised that more .mobi names didn’t sell. I am not a big believer in this extension, but after reading how vigorously this extension has been defended by its supporters, I am surprised there wasn’t more action on them. Quite a few people have been posting that they made xxx% profit so far and still have quite a few .mobi names in their portfolios. If these people felt strongly about the extension, I would have thought they would be willing to reinvest and buy some of the names. One would think that reinvesting in a few of these names could have led to a round of “aftershocks” that followed when Rick Schwartz paid $200,000 for Flowers.mobi.

I believe many of these names will move now that the auctions have ended. Domain investors know the owners are interested in selling, owners know the domain investors at TRAFFIC thought their prices were too high, and I bet some compromises will be made to close some deals once.

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