Domain Investment Fund

Elliot Silver
-
10

I just read an article in the Wall Street Journal about a former UBS banker who recently started a wine fund. According to the article about former Wall St. banker Jorge Mora,

Mora joined with several former friends and clients to buy Italian Wine Merchants, an upscale New York wine retailer. He also is part of a new, four-man group that founded a $50 million investment fund, The Bottled Asset Fund, which will invest in “‘blue chip’ wines in inefficient markets,'” around 75% of which will be in Italy.

To me, the most interesting part of the article was the strategy of investing in inefficient markets. When I was in Italy, I saw first hand these inefficient markets. There are a ton of vineyards with great wines, but for someone (like myself) who likes wine but isn’t familiar with the different vineyards and various differences in the wine production, distinguishing a great wine from a good wine can be extremely difficult. I probably couldn’t tell the difference between a $40 bottle of wine and a $500 bottle.
This is very similar to the domain industry. There isn’t an MLS like in the real estate world, so the market is very inefficient. Unless you know the marketplace, it can be tough to tell the difference between a $5,000 domain name and a $50,000 domain name. Oftentimes, the main difference is how badly the buyer wants the name for a company or specific project. The wiser investor would own the more valuable domain name, while others would own the lesser valued domain name. This takes experience and deep pockets to make smart investments in various verticals.
Other companies have tried to create something like a domain fund, but more often than not, the domain names that were purchased were bought based on revenues that were generated from parking, and as parking decreases, the value of the domains and funds decrease, as there isn’t always value in the domain names beyond the revenue generated. Also, many large purchases have been riddled with domain names that have trademark issues. These are huge liabilities, as trademark holders see a company with deep pockets as a very large target.
If someone decides to start a domain fund like a wine fund, it won’t be based on PPC revenue. Like the wine fund, the value is in the actual assets rather than interest the assets are earning passively. Wines aren’t earning money as they sit unopened. They increase in value as people realize the value in the particular vintage. Domain names increase in value as people realize how important they are to businesses. Wines need to be marketed for people to realize the value, just as domain names need to be marketed or developed so people can see how they would help their business.
I see significant value in domain names, and this inefficient market could really be exploited if someone had the finances and time to wait to capitalize. It’s just a matter of time before an “under the radar” company buys the best domain names in the world for tens of millions of dollars. Perhaps that is already happening 😉

Back to Reality

Elliot Silver
-
12

Karen and I had an amazing honeymoon, and I want to thank many of you for your emails and notes while I was away. Although I did spend a bit of time keeping up with the domain news while Karen was at the gym, I didn’t respond to emails. I now have a few hundred emails to go through, and I hope to be back at full speed by the end of the week.
For our honeymoon, we spent two weeks in Croatia and Italy and an evening in London. I am still recovering from the trip, especially that last night in London (barely made the flight home yesterday!) In the meantime while I recover and catch up on some business and emails, here are a few domain observations from my honeymoon:
Country code domains are MUCH more popular outside of the US   – I would estimate about 40% of the Crotian websites I saw advertised used .hr (Hrvatska) and about 85% of the websites I saw advertised in Italy used .it. I also saw several .gr, .eu, .info websites on billboards, television, trucks, boats…etc.   You don’t see much of that in the US with the .us extension.
Companies reaching out to a more global audience (tourism, international companies, real estate companies) used .com much more than other extensions.
Almost everyone we met spoke at least a bit of English, and most were able to understand what we were saying.
While buying country code domain names might seem to make sense, I think it’s essential to determine the proper spelling/meaning or foreign words before investing – (Yeah, I know… “Thanks, Mr. Obvious.”)
I saw quite a few Internet cafes in passing, but even the very nice places I stayed had limited wireless capabilities. Le Meridian in Split, Croatia had wireless in the lobby, but they didn’t have wireless in the rooms. Villa San Paolo in San Gimignano – Tuscany – (by far the nicest spa hotel I’ve visited) didn’t have any wireless that I found. Even the Copthorne Tara in London didn’t have wireless in the guest rooms.
After seeing many advertisements for villas and villa rentals in Croatia and Italy, I believe the recent sale of Villas.com could be considered a steal. Not only did I see websites advertising villas (DalmatianVillas.com and DalmatianVilla.com), many of them were targeting international travelers and used the .com extension.
I had great Blackberry mobile email service throughout the trip – even in Cinque Terre, Italy and Tuscany.   No, I didn’t do business while away, but I did get Red Sox scores and other news remotely.
The biggest domain surprise of the trip was seeing a billboard advertising a .tv website at the Dubrovnik (Croatia) airport. Not surprisingly, it was the only .tv website I saw advertised for the entire trip 🙂   Sorry, had to mention it.
Well, that’s it for now.   Time to get back home and get caught up with everything.

    Fandango Buys Movies.com from Disney

    Elliot Silver
    -
    0

    The Washington Post is reporting that Fandango recently purchased from Disney for an undisclosed sum. Fandango is a subsidiary of Comcast, a company that unsuccessfully tried to acquire Disney a few years ago. The article cites Disney’s desire to remain focused on its core brands (ABC, ESPN, and Disney) as the reason for selling Movies.com.
    I understand that one needs to remain focused on its core competency, but doesn’t Disney make movies still? Doesn’t Disney have more than enough talent to be able to continue operating Movies.com without impacting its other businesses? I think this is a big buy for Comcast. I wouldn’t be surprised to see Fandango become rebranded as Movies.com, giving it more of a presence in the full movie market, rather than being a movie preview and movie ticket facilitator.
    While the price may be undisclosed at the moment, the purchase price may be revealed at a later date, as both Comcast and Disney are publicly traded companies, and the price for the domain name and accompanying business could have an impact on earnings, albeit minimal.

    Podcast with Ed Keay-Smith (Oz Domainer)

    Elliot Silver
    -
    0

    Last night I had the opportunity to speak with a new friend across the world, Ed Keay-Smith from OzDomainer.com. It’s amazing how people can connect on the Internet. Ed sounded like he was next door, and we had a conversation like we’ve known each other for years. When you have a chance, please check out the podcast. I discussed how I started in the industry, how I think the Snowe legislation could impact all domain owners (and how people can help), and I discussed my new experience in developing my domain names.
    If you have any questions after you listen, feel free to post them here or on Ed’s blog, and I will be happy to respond. BTW, I hate how my voice sounds on answering machines, on microphone, and now on podcast 🙂
    Podcast with Ed Keay-Smith

    "Burndown Value" of Generic Domain Name

    Elliot Silver
    -
    0

    When buying a domain name intended for development, you should determine the “burndown value” of the domain name. In the general sense, the “burndown value” is what the name is be worth once the previously developed website was/is removed. Although a developed website generally increases the burndown value, there are some instances where the burndown value may be affected by the website that existed before, or what the previous owner did with the domain name.

    Read More

    New Registration: Diamond in the Rough

    Elliot Silver
    -
    0

    I dont register many new domain names. I prefer to focus on strategic aftermarket acquisitions when I buy, as I believe the payoff can be greater. However, just like almost every other domain investor, I like to register new domain names every once in a while. Hunting for domain names is fun, and it feels great to find a gem in the rough – although one person’s gem may be someone else’s waste. I think everyone would agree that a gem of a new registration is a name that earns its annual registration fee and more, without any marketing effort.
    In March, after doing some keyword research related to the outdoors and hunting, I registered MountedHeads.com (no link to avoid violating TOS). Although the Overture wasn’t strong, I felt the name was unique and in an interesting niche. Of course, “mounted heads” is related to taxonomy, where hunters pay to have their animal heads mounted. There are currently over 18,000 Google results for the term, “mounted heads,” and although it isn’t typical that a parked page is ranked so high, this one ranks #5 out of 18,000.
    From the time I bought the name, I have had it parked on Fabulous. Between March and September, I received almost no visitors at all. I started receiving traffic in October, and I have been averaging about 20-25 visits per month, not too bad for a newly registered domain name. The name is also seeing a 40% CTR and rising, now that I made some minor keyword adjustments and used the Fabulous+ program to customize the layout based on landing page testing.
    The name has made more than twice the registration fee, and it has earned 9o% of that revenue since it started receiving more traffic in October. While this wouldn’t be considered a great name for the biggest portfolios, it’s a gem of a new registration. Based on just a 10 year revenue multiple (using $4/month), this is close to a $500 domain name. Not bad for paying $6.95 for it less than a year ago.

    1...148149150...154Page 149 of 154