The Problem With Domain Auctions

Ask almost anyone what the biggest impact on the domain aftermarket in 2007 has been, and chances are they will tell you its the emergence of live domain auctions everywhere. Moniker, Snapnames, Godaddy,, DomainTools…etc all have announced or held live auctions recently. While this is good news for the most part, I’ve personally noticed it has caused some problems in the aftermarket.

The first problem is that many domain investors aren’t willing to sell their top quality generic domain names other than at auction. They know that top dollar is often found at auction, and they aren’t usually willing to compromise, unless an offer blows them out of the water. While this isn’t unreasonable, it has hampered buying opportunities outside of auctions.

Another problem with domain auctions is that many buyers aren’t buying domain names other than at auctions. Many buyers know that many great names will be up for auction, and they would prefer to make a big splash at auction rather than through a private sale, unless it is a great deal. Buyers may be reluctant to buy a name privately in the event that they need the cash for an auction.

The sheer amount of domain auctions that are going on within the industry is also causing an issue. It is difficult to get all buyers to focus on all auctions. As a result, there may be less competition among bidders, and names may sell for less than they would have if more buyers were present. The auction houses want the market to determine the prices, so they encourage sellers to set reserves as low as possible, but this becomes a difficult task, when the market for certain domain names may not be bidding at a particular auction.

Some owners are struggling to determine the best venue in which to sell their names, as the different auction companies hold auctions at various industry conferences and on their own. Also, listing domain names in an auction often requires exclusivity (before and after the auction), removing names from the market whether or not they sell at auction. Finally, if a name doesn’t sell at auction, an artificial price ceiling is created for that name, even though it might not have sold simply because the right bidders weren’t in attendance.

I know this may sound crazy, but while domain auctions are having a positive impact on the industry as a whole, they are also impacting the industry in other ways. I think the most important things auction houses need to do to grow the industry is to encourage end users to attend the auctions to acquire the best names for their business.

Elliot Silver
Elliot Silver
About The Author: Elliot Silver is an Internet entrepreneur and publisher of Elliot is also the founder and President of Top Notch Domains, LLC, a company that has closed eight figures in deals. Please read the Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn


  1. I was thinking about this exact thing the other day. Auctions are good for the industry as a whole as far as PR, awareness etc – but my gut is that with so many auctions right now it is actually driving some prices down.

  2. My feeling is that the “silent” auctions are just that.. Silent. In some cases, you must register in advance and pay a fee to bid. This possibly shuts out potential buyers who hear about it late or change their mind and decide last minute to participate.
    A silent auction also encourages only last minute bids… who wants to indicate their interest in a domain a week or even a day in advance? After 6 days of checking on a silent auction and seeing no action you lose a lot of momentum.
    On auctions that are online for all to see at any time – Sedo, for example, you have a huge viewing audience for the domains. Another benefit of that auction style is that the seller is able to write up their own listing about the domain.
    In many cases, this can add sizzle to the steak.
    I own a number of domains in emerging trends that may not at the moment show up in any given “value algorithm”. However, if I was given the opportunity to point out research or market reports that show the potential of my domain, I know that I would have a slew of bidders.
    Speculative domain name buyers looking for the next
    “mesothelioma”, may not know about the risks associated with nanotechnology for instance. When advised, they may be very ready to bid. So, I think it is important that the seller’s have an opportunity to enhance their domain listing- obviously within parameters set by the auction house. More press releases geared towards new markets couldn’t hurt either. If there isn’t enough time for marketing and advertising then what is the point? Everyone is always complaining that Madison Avenue doesn’t “get domains”, but maybe we don’t get the marketing aspects…
    A final thought, it doesn’t really help any auction to purposely schedule their own auction on top of someone else’s. It just dilutes the bidders for all of them.
    Just some random thoughts… Kelly

  3. Here’s what I have to say about .mobi: I have a few decent keyword .mobis, which are parked. You know what?

    They get lousy traffic. My .us and .biz TLDs get better numbers. Not one lousy .mobi gets more than 4-5 clicks a month.

    Surfers don’t know about the TLD.

    In addition, domainers are starting to feel hinky about the lack of transparency in the auctions, especially that last debacle. Does anyone smell “lawsuit”?

    IMHO, .mobi is a hot potato, tossed back and forth among domainers who are jacking up prices on a bunch of nothing except hype.

    I say: run like the wind, and (in addition to .com) concentrate on good solid .orgs amd .nets. I have one .org (bought at GD’s fire sale) that is getting about 300 clicks a month, and it isn’t even that great of a term. In fact, it sat in the fire sale for days before I bought it up because I wasn’t sure about it.

    Ms Domainer

  4. You touched on it in your article but it’s VERY important. The auctioneers need to do a much better job at marketing. This is what that 15% is supposedly paying for. . . if they are out there beating the streets and drumming up bidders like some claim to be, they need to talk about specifically what it is they are doing to earn that commission.


    I completely agree. It’s great that many have now added super interactive capabilities, but they need to take the next step and make sure buyers show up ready to bid for names that are important to their businesses. It’s sad that it’s almost 2008, but education about the importance of domain names is essential. Most people can determine how much they can afford to spend on rent/property, but they have no clue about the interactive component of their business.

    Unless one of the major auctioneers gives people a compelling reason to pay a large commission (like bringing the buyers), there is going to be a problem as the market seems to be saturated. If one player drops the commission to 5%, others will have to follow suit, lest they not get the best listings. Unless there is a vital reason why someone would be willing to pay the extra commission, domain owners won’t and will go with the best value.

  5. 1 of ‘the problems is that : :::::
    even up2now ,
    there’s still
    not enough competitions among houses of auctions ,
    1 proof : :
    for Moniker-held auctions ,
    you must register in advance and pay a fee to bid.
    there’s also fee for the absentee’s bidding
    >> Kelly Lieberman Says:
    >> December 15th, 2007 at 8:18 pm
    >> In some cases,
    >> you must register in advance and pay a fee to bid.
    >> This possibly shuts out potential buyers
    >> who hear about it late or change their mind
    >> and decide last minute to participate.

    please ,
    please ask My Dear Sir Monte Cahn e.t.c. to remove ‘these kinds of fees

    please cheers ThANKye 2w

  6. an other question : :::::
    i’m still scratching my heads over
    why up2now AfterNic//BuyDomains still not make their auction
    live online+offline ,
    as those of DomainTools or DomainFest e.t.c.

    please ask them directly , i have asked ,
    but , up2now , no answer

    ThANKye 2w

  7. >> ***UPDATED BT ELLIOT***
    >> Unless one of the major auctioneers gives people
    >> a compelling reason to pay a large commission
    >> (like bringing the buyers),
    >> there is going to be a problem
    >> as the market seems to be saturated.

    we have been prepared well to pay well over 20.00 % e.t.c.
    to any auction’s house
    who could prove themselves out
    they could really bring in more buyers e.t.c.

    we have been prepared well to pay well over 20.00 % e.t.c.
    to Moniker ,
    should they remove the requirement to pay some fees to bid

    cheers please ThANKye 2w

  8. I’m with Adam and Elliot on this one. But here’s my twist.

    I think the emergence of auctions is great — they’re just not fully-evolved yet. My guess is that 2008 (or 2009 at the latest) will see one or more of the auction-houses moving towards a Sothebys-style arrangement where they make sure that there are several qualified bidders for a premium domain in the audience *before* they allow the domain to go on auction.

    At that moment, I want them to be able to command great commissions. In fact, I would propose the following enhancement to commission structures. Start with a non-refundable base fee that’s paid by the seller (sorts the wheat from the chaff and cashflows up-front marketing costs). Make that fee apply against commission. Lay on that a 1st-tier commission (10-15%) if the domain sells between the reserve price and some multiple (maybe 1.5x reserve for sake of argument). But then have the commission go *up* if the domain sells for more than that — maybe to 20%.

    Now we’ve got incentives for the auction-house to get the right people in the room, and drive for higher prices.

    My hope is that somebody does something like this next year, or the year after at the latest.

  9. Elliott

    suggestion – why not do an update on your fine 2007 post The Problem with Domain auctions.

    In the 2-3 years that have passed the industry hasn’t ironed out many / any of the problems you mentioned.

    For a seller, the auction houses do absolutely nothing effective to interest potential end user interest. It’s just domainer money going round and round.

    There is a massive opportunity for an auction house / broker to become good at targeting domains at end users and creating a multiple bidder auction as a result.

    It’s incredible that with all those smart entrepreneurial people out there no-one has been able to make this work.

    It’s also incredible the patchy and unreliable “statistics” that are fed to potential buyers have not been improved.


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