General Domain Information

The beginning of January is the most difficult time of the year for my business. Each January 1, my P&L turns to $0, and I get an anxious feeling, no matter how exceptional the prior year was. I am usually on vacation until early January, making it a bit more challenging to get off to a fast start.

Coupled with the anxiety is a feeling of excitement. When I start the year, I have no idea how much income I am going to earn. The sky is the limit. For this reason, I have no interest in setting theoretical goals I could smash by the middle of the year with a few deals or struggle to meet if business sucks. Having no income ceiling is one of the greatest things about this business and is what motivates me to keep on making deals in an effort to smash personal income records.

Luckily, with advertising revenue, lease payments, and three deals that were just struck, the $0 on my P&L will quickly turn into a crooked number, but it’s always exciting when I set up the P&L for the new year.

Here’s hoping you have a lucrative 2013. I am motivated to make things happen this year starting right now.

There are many great things about investing in domain names, and there are great people involved in the business. There are also plenty of things that are completely frustrating and seem to happen all too often, most frequently at the worst times.

Here are my top ten frustrating things that happen in the domain business.

• Someone backs out of a deal – buyer or seller
• Recently acquired domain name starts earning less PPC or Adsense revenue shortly after acquisition
• Potential buyer or seller stops communicating in the middle of a negotiation
• Last second backorders by several people at NameJet on a domain name that had no bids
• Forum know it alls who only post when they can put down someone else
• $60 offers on Sedo
• Private negotiations that are sent to auction on Sedo
• Domain brokers who appear to imply they have a buyer lined up for your domain name but are only looking for domain names to secure exclusivity
• Transfers and transactions that take forever to complete
• Dozens of spam emails from Alex / Alexander about crappy domain names

What other occurrences in the domain industry do you find frustrating?

When you hear the name UShip, I would imagine you probably think the company is called “You Ship” or maybe “YouShip” without the space. It’s actually called UShip, and it can be found at UShip.com.

The company appears to be doing very well. So well, in fact, that TechCrunch just reported that UShip “raised $18 million in Series C funding from Kleiner Perkins Caufield & Byers.”

One problem for UShip is its confusing name and the fact that it does not own the correctly spelled YouShip.com. That domain name is owned by Maersk, one of the largest shipping companies in the world. The YouShip.com domain name forwards to one of Maersk’s websites, and as a result, tracking typo traffic would be difficult unless that information was provided by the domain owner.

Luckily for UShip, it seems that although these two companies both are in the shipping business, they have different business models and operate in different areas of the shipping industry.

I would assume UShip has already tried to acquire the YouShip.com domain name, but if it hasn’t, it probably should make an attempt as it seems to be on an upward trajectory. The downside is that Maersk now knows about its huge funding round, and if anything, the price would go up.

It’s always great when a company sees significant growth, but it can be a problem if the brand its building may confuse customers into thinking it’s operated by a different company.

On your Facebook user interface, there are recommended pages for you to like. Facebook displays these based on what they believe your interests are as well as the interests of your friends. Facebook often displays a message that says “Friend likes XYZ Product” and it gives you a link to click to like that as well.

Advertisers pay Facebook to get others to click and like their product or service, and you could unknowingly (now you know) be used to “endorse” a product or service to your friends if you like something and that company spends money on advertising. This is generally no big deal, as I don’t really care that people know I am a New England Patriots fan or that I like Torah.com.

There are many gTLD extensions that are special interests, such as .Democrat and .Republican. Many of us know people and companies who are vying for these extensions, and we might think it’s a friendly gesture to “like” our friends’ TLDs. I might think Frank Schilling’s a good dude so I’ll “like” his Facebook pages without really thinking about what they are.

If I saw that a domain industry friend “likes” the .Democrat and/or .Republican TLD page, I wouldn’t think twice about it. I’d probably assume they are doing a friend a solid by supporting a page (plenty of my friends “like” the Lowell.com Facebook page despite not ever visiting Lowell). However, people outside of the industry may not think about the TLD but would think about the special interest.

While most gTLDs are fairly innocuous, there are some that are hot button issues. For example, it might lead to some  embarrassment  if someone “liked” the .HIV page and they were being used by Facebook to “endorse” the page to their friends. Even pages like .Democrat might cause issues for someone with strong political views.

I have no idea when gTLD registries will begin creating Facebook pages to promote their TLD. I also don’t know if they will be advertising. You should know that when you “like” a page and the admin of that page advertises, you might be used in  advertisements, and that could be  embarrassing.

“A few events over the last few months, however, provide solid evidence that the domain investment party is officially over.” – Andrew Knibbe of Flippa, December 2011, on JohnChow.com

Almost one year ago, entrepreneur and blogger John Chow posted a guest article entitled, “Why Domain Investing is Dead.” I have quite a bit of respect for John Chow, but over the last year, I think it has become quite clear that domain investing is certainly alive and arguably well.

There are probably a few hundred people who invest in domain names full time. There are most likely several thousand people who invest in domain names as a hobby, and even more people who casually buy domain names they think are cool after seeing a Go Daddy or 1&1 commercial encouraging people to register domain names matching their ideas. Hundreds of millions of dollars continue to be spent on domain names, both at the registrar level and via the aftermarket.

Like just about everything else, domain investing certainly took a financial hit during the last few years. Sedo’s most recent market reports have reflected the aftermarket slump. Thankfully, 2012 was good for me.  For whatever reason, companies of varying sizes acquired high value domain names from my company, and I continued to reinvest in other domain assets.

While some areas of domain investing (like domain parking) are down from the “good old days,” market disrupters like Internet Traffic, Voodoo, and Rook Media have helped stabilize that area and there has even been some growth there in the last couple of years. I don’t do much parking, but from what I understand, PPC earnings are up from 2009-10.

Recently, companies have spent tens of millions of dollars to bid on gTLDs. The winners will most likely spend hundreds of millions of dollars marketing and operating these new TLDs. Domain investors and others will pour millions of dollars into domain registrations with the hopes of developing profitable businesses, monetizing, or re-selling these domain names. Yes, there is life in the domain investment space.

I believe making money exclusively from domain names has probably become more difficult, but I can’t really think of many areas where that has become easier over the last few years. If I first learned about domain investing today, I think I would be hard pressed to see significant opportunity if I didn’t have a huge capital reserve to make big investments, although I would probably be excited about the potential with gTLD domain names.

It’s been a year since domain investing was declared dead, but I think it’s clear that this business is alive and well.