Unlike many domain investors, I rarely ever submit any of my domain names for live auctions anymore, and there are reasons for this. I don’t like the terms offered by the auction houses, nor do I believe it’s in the best interest for me to sell my names this way. For what it’s worth, I think the commissions are too high for what is offered, I think the exclusivity period is far too long, and the time it takes to be paid appears to be much too long.
First things first – the commission. I have no problem whatsoever paying someone a fair rate for selling my domain names. No, I don’t expect an auction house to contact every potential end user for my name. However, I don’t believe banner advertising on domain-related websites or email advertising to the same crowd is enough. Simply selling my domain names to a group of domain investors at an anticipated auction isn’t enough incentive to pay 50-100% more commission than other outlets.
If I want to sell my domain names to other domain investors, I know many buyers, and I am very happy to try and sell on my own first (no cost). There are also the forums (like Namepros or DNForum) where people are looking to buy domain names (no cost). Additionally, there are some great newsletters (like Rick Latona, Eric Rice and DomainsNewsletter.com) who reach these same potential bidders at a much lower rate (5-10% per name).
My next issue is the long period of exclusivity that’s required and the exclusivity renewal period if you don’t notify the auction house in time. Yes, I understand that they need to protect themselves so others can’t wait until the day after the auction to buy a name that didn’t receive bids. However, I don’t see auction houses (other than Jay’s blog posts before his auction) that really spend time on particular names. IMO, the auction house should get one opportunity to sell a good name at a good price. If they can’t close the deal, they shouldn’t hold exclusive rights on a domain name. If it really is priced fairly, it will sell at auction. If it isn’t, then maybe it shouldn’t have been listed by them in the first place.
As I told one person that has run domain auctions, there are ways to get around the exclusivity even if the domain is tied up (I won’t mention them because I don’t endorse this whatsoever). Although it’s unethical to do and a good reputation is the most important thing in this business, if a good customer of an auction house does this, I highly doubt the auction house will track them down over a few thousand dollars. The legal fees to take action would be high, it would be tough to prove an illegal activity occurred, and the cost of future lost business would be high.
Finally, I think the period of time it takes to be paid can be ridiculous. When I see a domain sale reported in DNJournal from an auction 2 months prior, I think that’s a bit crazy. If a person has a reputation of not paying on time, they should be prohibited from bidding. Also, something should be done to ensure payment is made ASAP. I bought Secaucus.com at the geo auction, and I am ready to pay. As soon as I receive the wire instructions, I will make payment. I wish others did this.
As Rick mentioned yesterday, there are going to be 5 auctions by 5 auction houses at TRAFFIC New York in September. I think this is going to be great for the industry. I have a couple of great domain names I would consider selling – if the terms are fair for me. Once the 5 auction houses have been selected, I will review the terms. If it’s too late to submit, well, I have no problem selling to clients I know or using the less expensive alternatives available now. I think live domain auctions have reached a saturation point and people expect more from them than is realistic, but I do think the 5 auction format is going to change things quite a bit.
I also believe that auction houses should actively seek to find domain names to list at auction. Forget about asking people to submit their names. Most of these are either repeats or just junk. While the auction houses get blamed for listing poor names sometimes, it must be difficult to sift through 100k+ domain names. I’ve learned that most people think their names are more valuable than they really are to other domain investors (I am prone to this, too), so it’s tough to find good names at fair reserves. The auction houses should go after strong domain names that might not be making money (more on this in a future post). They could hand select their names and use past auction results to entice non-domainers to sell.
For what it’s worth, I would love to see the following auction houses in New York: Moniker, Trafficz, Sedo/GreatDomains, Bido, and Afternic/BuyDomains. I think this would make a very successful show in terms of domain sales – although it’s getting very close to the show.