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Domain Sale to an End User

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End user sales, that is sales to people or companies who plan to use the domain name to enhance their businesses, can be the most profitable (and satisfying) domain sales.   Since most domain owners monetize their domain names using methods that are financed by advertisers, these advertisers may prefer to outlay a lump sum to acquire the referring domain name rather than paying per click daily. I recently sold a domain name to a company that intends to use it for their corporate website, and I wanted to share how I went about selling it and provide other tips to people who might wish to sell a domain name to an end user.
The first thing I did was a Google search for the term that made up the domain name.   While most of the paying advertisers were large companies, I opted to contact several companies who had organic positions in the results page, but were fairly low.   In my experience, most companies who have decent rankings (but still lower than top 10) would like to do what they can to improve their rankings, and they have the knowledge to do this.   Having a top 5 ranking can boost traffic tremendously, as I have seen with my own websites, and many of these companies need just a bit of an edge to get there.
I figured that most of the small companies I contacted had some good inbound links to achieve the decent ranking, but many of their current domain names were poor. With some redirecting of the old domain to the new one I wanted to sell them, rankings could be lifted due to a more relevant domain name.   I didn’t mention this in my pitch, as it isn’t a guarantee that this would happen, but at the very least, customer awareness of the new domain name would be impacted.
The reason I reached out to the SMB audience (small to medium sized businesses) is that there is less hierarchy involved in decision making.   Previously, I contacted a fairly large company for the domain name, and the mid-level manager told me the name was fantastic and the price was good, but he would still have to get authorization of the CEO for the expenditure.   Well, it’s been over a month and I still haven’t heard back.   SMBs tend to make decisions quickly, which is something I like, and there isn’t a whole lot of red tape to cut a check or send a wire.
In my email to the businesses, I told them that I own the domain name for their field, and I wanted to sell it since I don’t have plans to develop the name. I mentioned that I thought the domain name would be perfect for their company, and I listed the sales price. My pitch was quick, as I have found that if you need to extensively explain why a domain name has value, it is very difficult to convince someone to spend the money on it.   The company either gets it or doesn’t, and if they don’t get it, their competitor will.   Companies that do get it, will end up getting it – if you know what I mean.
I quickly received a response from one SMB and after a short conversation it was a done deal.   There was a bit of negotiating on the price, but we worked out a fair deal. I’ve found that it’s easier to negotiate a better price than have to spend more time pitching the name to other people.   The fact that my opening price was reasonable was also something of note, as a SMB isn’t usually going to blow through their marketing budget (if they even have one) on a domain name that was pitched to them out of the blue.
There are a few things to keep in mind when contacting end users.   Sometimes they don’t like that a person outside of their industry owns a domain name from their industry. Some don’t understand that it is a free market and that you have just as much right to the domain name as anyone else.   There really isn’t much of a reason to engage in a pissing contest over this issue.   I have never dealt with this although I know of people who have, but if the potential buyer isn’t receptive, there is no reason to continue the conversation.
Also, don’t ever pitch a potential trademark infringing domain name to a company. I’ve seen many UDRP decisions which cite the owner’s contacting the business as a sign of bad faith.   Unless you plan to give the domain name to the company for free, do not do this.   Do not contact a company’s competitor either. Even acronyms (3 & 4 letter .com names) aren’t immune to UDRP or other legal troubles.
After writing this in my head at the gym this morning, I saw that Rob Sequin also posted a guide to end user sales.   I think there are some very good suggestions there, and I urge you to check his site out when you get a chance.
Incidentally, pitching a domain name to an end user is far different than negotiating with an end user who has approached you. When someone approaches you to buy a domain name you may or may not want to sell, you are in the driver’s seat.   IMO, someone with experience negotiating end user sales should build a business around their skill.   If you receive an inquiry from a potential buyer, the negotiation company would take over for you and would close the deal.

Yahoo and Intel to Bring Widgets to Television

Here are two excerpts from a hot off the press news bulletin in the Atlanta Business Chronicle:

Intel Corp. and Yahoo Inc. on Wednesday announced plans for the Widget Channel, a television application framework optimized for TV and related consumer electronics devices.

and furthermore…

Yahoo-branded TV widgets “will enable consumers to engage in a variety of experiences such as watching videos, tracking their favorite stocks or sports teams, interacting with friends, or staying current on news and information,” the companies said.

Just a few months ago, Widgets.com was listed for sale by Rick Schwartz on Ebay. If Yahoo employed forward thinking like Rick Schwartz, they would own the perfect domain right now. Well, I guess if Yahoo really thought like that, they would be owned by Microsoft now, but that’s another story.
Now, with dropping PPC payouts, Rick has begun to develop Widgets.com. While Widgets.com certainly wouldn’t have come cheap months ago, the value of this great generic domain name continues to climb.

LastWillAndTestament.com

I decided to sell my two legal domain names so I don’t lose focus on my main projects. I blogged about them to get opinions about which to develop, although I am going to sell rather than spend the time/resources developing.
LastWillAndTestament.com
1,120,000 Google results for “last will and testament”
Many top and side advertisers several pages deep
Aaron Wall’s Keyword Tool – 340 daily count
LegalZoom has a great affiliate program for these legal agreements
BIN price is $20,000.
UPDATE:
PrenuptialAgreement.com has been sold.

Domain Investment Fund

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 😉

YouTube.mobi…

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…doesn’t have videos because Google doesn’t own it. If you want to visit YouTube on your mobile browser, you need to visit m.YouTube.com. I don’t understand why a major registry like .mobi (or any other new registry) would sell a clear trademark domain name to a private domain investor. In my opinion, a registry needs the leading companies (like Google/YouTube) to market their websites using these new extension in order for people to adopt, which would lead to the growth of the registry.
YouTube.mobi would have been the perfect way to show that Google had confidence in .mobi. Now, if a savvy web browser tries to visit YouTube on his browser using .mobi, he will be left with a website with no videos. Why haven’t they filed a UDRP or an injunction to stop the owner from using their trademark to get this important domain name? One reason can be seen in this article found in the Yahoo Tech Ticker. For comparison purposes, Google owns the rights to YouTube.tv, YouTube.asia, YouTube.me, YouTube.eu and many other newer TLD.
The point of this is to basically say that while I do believe that relevant domain names in alternative extensions are good if they make sense, I also think you need to consider exactly which extension to purchase. You need to see whether consumers are really adopting the extension, which would add value to your brand and domain investment. Also,
Likewise, the registries need to do all they can to make sure consumers adopt their brands. Consumer adoption will lead to investor adoption, and more domain names will be sold if people use them. When speculators own and don’t develop the prime domain names of a particular extension, consumers can’t adopt. If consumers can’t or won’t adopt, the domain names aren’t really worth much. The only sales will be to other investors, and eventually the bubble bursts when new money isn’t invested.

Domain Recognition – Buying Domains Smartly

After spending two weeks in Europe and the UK, and now thinking about the industry with a new “set of glasses,” I really think that relevance is more important than the extension – when it comes to developed domain names. With the current domain parking and monetization options, domain names that receive traffic will typically have some value, but as PPC revenue continues to decline, the safest and smartest domain acquisitions are those that are usable and recognizable by Internet users.
With few exceptions, no matter what the extension is, I think domain usability and visitor recognition are two of the most important things to consider when making a purchase. If you or someone else would be willing to spend thousands of dollars building a website on a particular domain name, it might be one in which you would want to invest at the right price. Intuitive names like Enoteca.it (wine bar in Italian), Mapas.es (maps in Spanish), Homes.tv, Burbank.com…etc are all great domain names on which to develop a website as people will presumably type them in searching for something familiar. People know the words, and if they are familiar with an extension, they will have no problem visiting a website on that domain name.
Sure, a domain name that receives traffic may be good, but a usable domain name with little traffic may be much more valuable. While some may argue that a name with inherent traffic is the most valuable, I would argue that a usable domain could be more valuable. If PPC continues to drop as it has, direct to business advertising and/or domain sales to end users will be the best way to make money on a domain name in the future. While names that receive traffic for unknown reasons may have value now, down the road, when they are more difficult to monetize, they may be worth less.
I always think it is smart to buy non-trademark, product-related, service-related, geographical, descriptive and other similar generic domain names. People will always want to build on these domain names (if you don’t), and they will always be salable. In tough economic times, it is important to make wise investment decisions. The deals you make now will allow you to be successful in the future.
I am still recovering from the trip, so please excuse typos or if this doesn’t make complete sense 🙂