As part of his coverage of GoDaddy’s pending acquisition of Dan.com, Andrew Allemann published an interview with Paul Nicks, President of Domains, at GoDaddy. The question and answer that caught my attention the most was regarding commission:
Domain Name Wire: Many people use GoDaddy’s Afternic DLS to get in the registrar registration path, but choose Dan.com landers because they’re cheaper (9% vs. up to 20%). Will this still be an option or should we expect to pay higher prices for landing page sales in the future?
Nicks: We are still in the early stages and do not have a plan around commission alignment. Once we have updates to share, we’ll share proactively.
The thing that jumped out at me was Paul’s comment about “commission alignment.”
GoDaddy and Afternic charge up to 20% commission for domain names sold via its network. The amount can decrease depending on the value of the deal. This, in my opinion, is well-earned when its network produces a sale. By way of example, if a prospect searches for a domain name via Google Domains and ends up buying one of my names listed on Afternic, I think the commission is well-earned. It is largely because of GoDaddy’s network that my domain name sold.
Last year, GoDaddy introduced GoDaddy-branded BIN landing pages. Buyers can visit domain names of interest, and if the seller utilizes the GoDaddy-themed BIN landing page, the buyer can buy the domain name right from the landing page. For this, the company also charges commission starting at 20% and reducing on a sliding scale based on the sale price. In my opinion, this commission is less well-earned since the domain name is what brought the lead and GoDaddy only transacted the deal.
Dan.com also offers BIN landing pages with an automated sale process. The company charges 9% commission for closing sales via its BIN landing page. In addition, Dan.com allows sellers to utilize its Lease To Own (LTO) payment plan option, which is a feature that makes domain buying more affordable. Dan.com also offers owners the ability to transact with buyers they found on their own for a 5% service fee. I believe Dan.com gives sellers more options and a strong sale process at a lower commission rate.
In terms of “commission alignment” post-deal, I think it would make the most sense for GoDaddy and Dan.com to both offer 9% commission on deals closed via BIN landing pages. Dan.com offers more options and a better sale process at a lower rate. GoDaddy has stronger branding. I don’t think the GoDaddy branding is worth the extra commission on BIN landing pages where the buyer is ready to buy. If I thought paying 20% was worthwhile, I would already be using GoDaddy’s BIN landers for all of my inventory.
I do think GoDaddy could increase the Dan.com commission if it were actually brokering domain names. Sellers could opt to let GoDaddy’s brokers negotiate on their behalf, similar to what Dan.com has been doing with Media Options. Having a professional broker negotiate on behalf of the domain name seller is worth paying more in commission on a successful sale.
Possible changes to the Dan.com sales commission seems to be the greatest driver of angst amongst domain investors looking at this deal. Investors gave Dan.com a shot because of its great sale process and lower commission rates, and many are concerned that this could change. It is concerning to me, too.
Nothing has been announced by GoDaddy yet regarding any possible commission changes. GoDaddy may not make any commission changes for the foreseeable future, but a “commission alignment” would only be taken as good news if GoDaddy reduced its own BIN landing page commission to align with Dan.com’s commission rate.