A comment posted by one of our readers, Koz to another post, got me thinking about today’s announcement of up to 5 live domain auctions at the TRAFFIC.
The question is where are all these names going to come from?
Buyers we got.
As we saw this past weekend in Chicago there are buyers for good, well priced domains.
But for fair or overpriced domains, there is no market.
For a normal TRAFFIC auction Moniker, according to reports, gets somewhere around 100K-125K submissions.
Many of these have been submitted before and rejected. So they are not a fresh 125K each time.
From that they select around 250 live domains.
Despite many questions on the selection process you have to assume that any auction house is going to pick out the best of what they get, taking price into account.
Looking at this weekends Geo auction, Moniker has some very smart guys and have been doing auctions for longer than anyone, so they didn’t pass on say Reno.com with a 10K reserve and decided to put MakeReservations.org in the live auction instead.
They get a ton of crap submissions, overpriced ones and pick the best of what they get.
I know they suggest price changes to owners because I’ve gotten them too, but if the owner won’t reduce the price then the auction house has to either select an overpriced domain or a less quality domain.
Will the usual suspects submit the sames domains to each of the 5 auction houses? If so how will that create a better overall experience?
If were going to have 1,250 live domains now, where are all these well priced, good domains going to come from?
Don’t we have a hard enough problem finding 100 good well priced domains on any live auction list?
How about the 3K-4K domains that have made up the silent auction that takes place the week after the TRAFFIC show?
Won’t the best of what would have gone on that list now be in one of the other live auctions?
If so is the silent auction dead?
I do expect at least one of the auctions will be conducted by a company with their own domain inventory, buydomains.com would be the most lightly candidate.
That would make the most sense.
The would give the auctions a different flavor and add some domains we have not seen before.
A no reserve auction would also be a cool feature.
I know moniker did one at the last 2 shows and it was more interesting and lively.
Finally, the show as best I can tell is a total of 4 days if you count the first day which right now only has a cocktail party scheduled.
So your looking at 5 auctions in 3 days and one night.
I’ve got a headache already.
Andrew says
I think 5 is crazy too. They may as well call TRAFFIC a domain auction rather than conference. Talk about bidder fatigue!
It would sort of make sense for buyDomains to promote their own stuff, but so much of it is priced for end users in the $1k-$5k range. They do have a subset that may make sense for TRAFFIC though.
Tony Lam, DMD says
I think it’s the reverse, Mike.
It’d be nice to have more end user buyers participating in these auctions. Just like the same domains with high reserves are being recycled, most of the buyers if not all at the live auctions are domainers.
If you had more end users, sellers would be willing to lower reserves knowing that their names won’t likely won’t be underbid. And sellers would be more willing to put some of their better names up for auction.
Rick Schwartz says
Mike,
Let me comment on some of this before we get too far off track.
1. Moniker will still be the “Premiere” auction at TRAFFIC.
2. There will not be 1800 domains being auctioned. It will break down more along the lines of Moniker with 200 domains. Auction #2 with 100 domains. Auction #3 with 100 domains. Auction #4 with 30-50 domains and auction #5 with even less than that.
What this will all mean is that if you have CRAP, don’t bring it to the TRAFFIC auctions. Everyone is going to have to step up their game. This may not have worked in a great economy the way it will work in this recession. The reason being that folks “Trolling” for a sale with a high price won’t make it to the final line up because they will be pushed away by those folks with equally good domains that are serious about turning them into cash. We all know it all comes to price and quality. The plan we have will force this dynamic into place.
Moniker has done a great job over the years. They too are forced to step up their game and I know Monte and his crew are up to the challenge. That benefits all of us. This will blow the lid off of the aftermarket because of the competitiveness that will now occur will be a game changer.
We may not do more volume the first time around, but there will be more action, more sales by percentage, more excitement and that will translate to more total volume in 2009 when the fruits of this change will be evident.
MHB says
Rick
I did not say there would be 1800 domains I said 1,250.
Ok now that you clarified that there maybe only 500 live domains, how does Moniker.com become the premier auction, other than just putting that label on their auction.
The auction lists can only be as good as the name submitted.
If the other auction houses receive better domains at better prices than moniker.com does, the other auction would wind up with the better list wouldn’t they?
Rick Schwartz says
Sorry Mike, I misread your number.
Moniker still has the prime slot and has twice the time allotment as anyone else. But like I said, they have to step up their game as well. Certain things need to be revised. Domains that make it to the auction have to be scrutinized even more. But the big factor is the economy and some domainers are strapped and they need to turn their winners into cash. Good domains at reasonable prices will be plentiful in September.
I don’t think anyone will be leap frogging over Moniker anytime soon. They have years of experience doing this. I think Monte has done a hell of a job targeting the verticals, but at some point, ya got to say that the time and effort would be better spent doing something else. He works way too hard sometimes.
Elliot says
I think more competition at the auction will bring lower commission prices, better technology and shorter exclusivity periods… eventually – all benefitting sellers and ultimately buyers.
Perhaps the auction houses should seek domains rather than accept submissions from domain owners. If you put 10 people in a room to pick 100 auction names out of 10,000 submissions based on quality/price, I doubt you would have the same list twice. They should think more like domainers.
MHB says
Elliot
I agree more competition will eventually be good for domainers.
I think auction houses should aggressively pursue domains from non-domainers in the same way that domainers, buy domains.
I have told Monte that for 2 years now.
We have to remember that some of the best domains are held by people not wanting to sell.
Frank, Marchex just to name 2.
They have some of the best names and there not selling.
So you got to reach guys like the pizza.com guy.
A guy who has one great domain, whose not in the industry, and wouldn’t even know where to begin to sell it.
Then you will start to get some fresh interesting inventory into the auctions
MHB says
Rick
Agree with you about Monte, works way too hard.
These niche shows and auctions he has been doing are tough. In this shows the domain auction is far from the highlight of the show.
The domans that sell at these should would sell at TRAFFIC as well and at better prices and would make for a better overall list and auction.
Rick Schwartz says
One thing I will guarantee…..what will unfold won’t be boring. This is going to create excitement and excitement is what creates sales. You’ll see, everyone will be copying this new model by this time next year. 🙂
MHB says
Rick
I would never bet against you.
Damir says
Interesting post and response.
You people are mentioning overpriced domain names should not be listed for sale at auctions.
To mention ONLY one:
Pizza.com had a reserve prize of around 1.5-2 Million $ at the sedo auction – would you people call that overpriced ?
Rick Schwartz himself listed a domain name for sale on ebay (I think was widgetdotcom) and to the best of my knowledge he did not sell the domain name as it did not reach the reserve / sales price on ebay.
The auction company’s like moniker should sellect a smaller number of domain names for sale at their live auction (up to 50 domain names ONLY) and 200 maximum for their silent auction.
Listing 1000+ domain names at an auction needs to get more domain name buyers into the auction.
One thing is for sure that the domain name owner need to list a reserve price which he or she is willing to sell the domain name for at an auction.
All the domain names which have sold see:
http://dnjournal.com/ytd-sales-charts.htm
Have had a reserve price set by the seller otherwise the $ amount the domain names sold for would NOT be in those $ amounts be it at auctions or private sale (or otherwise).
MHB says
Damir
I think pizza had a reasonable reserve on it at Sedo.com and I think it would have sold at a TRAFFIC auction with that reserve as well.
That domain was not owned by a domainer.
I would say 99% of the domains at a TRAFFIC auction are domainer owned and domainer priced
Israel.com was the only big name not domainer owned at the last auction and would have sold if the reserve was in the range that pizza.com was.
larry fischer says
Michael,
Israel.com is domainer owned.
best regards
larry
MHB says
Larry
Thanks, that explains the price
Empedocles says
I found Moniker to be anything but professional with no duty of care to the client.
Little or no advertising outside is undertaken outside the incestuous domain poacher / gamekeeper club,
Private email correspondence with my auction reserve prices were forwarded by Moniker to the DomainSponsor.com manager prior to the auction taking place,
Clients are not informed if registrations are accepted in auctions
Clients Domains that were not accepted in auctions are still listed on the Master Auction Inventory Catalogue ???? (was my case a one off or is this standard practise)
The Moniker terms and conditions state that Buyer/Seller Agent notifies Seller that a Name has not been selected for auction or private sale, Seller will be permitted to withdraw the Name from submission and therefore not subject to this Agreement (make sure you do)
Clients should ensure that they notify Moniker in writing within the statutory 15 days of expiration that terminating the Agreement undertaken with Moniker for the domain registrations ( I assume that this is for the domains that made the auction )
Duty of care to the client is paramount
Scott Kozlowski (Koz) says
Rick,
With all due respect…
You’ve effectively doubled the the normal 250 premium name auction to 500.
I read somewhere that TRAFFIC Orlando (or Las Vegas) had approx 600 buyers. So, you either now need to have 1,200 buyers or those 600 buyers need to double their spending budgets or some combination, thereof.
Do you really think those auction co’s can effectively market to get, lets say, an additional 300 new buyers?
Then factor in that only recently did this market start to slow down with pricing trending downward.
I think your going to find out that the people that make up this market won’t be willing to lower their reserves much lower than by 10% -15%
We are very early on into this trend. Most sellers won’t react quickly to adjust their pricing downward.
This is the hardest pschycological barrier, most won’t understand that it’s necessary. This will take time to happen, eventually they will realize and relent.
This isn’t enough of a discount to stimulate buyers to increase their normal purchasing budgets by an avg. of 50%
Unless, of course, pricing in this market has collapsed and values have declined by 50%
Then back up the truck & load them in!
Of the 250 Premium names auctioned at TRAFFIC Las Vegas approx 33% of the names sold.
Of the 250 Premium names auctioned at the Orlando show approx 42% sold.
You stated you’d get “more sales by percentage”
Do you really think you can get that number up near 50% ?
Maybe you know some big players that think the current pricing in this market is near the bottom and are, combined, willing to spend 10k/name x 100 names = 1M that would definately skew my argument on the percentage side.
You said :
“folks “Trolling” for a sale with a high price won’t make it to the final line up because they will be pushed away by those folks with equally good domains that are serious about turning them into cash”
I think you’re right, eventually!
But, right now you are working against a very large crowd dynamic that will take time to change.
Of course there will be a small percentage that need to sell now because of cash flow constraints that weren’t there last year.
You’ll benefit from this alot more in the future than now.
This lag period where the average domain seller is trying to figure out what’s happening in the market will probably last for a year.
So, IMO next summers event in Silicon Valley will be the turning point. I think you could push that sales percentage up.
Right now I think the New York event at best gets 42%. If you can hold the line in this market I think it’s a great success.
In reality, I think that number goes down to the mid 35% range.
As far as dollar volume goes. You have a net decline for NY.
Next year you might see avg. prices decline by 25%
So, anything you gain in sales volume will be offset by this.
So, Rick, long term I’m not betting against you.
But, short term I’m betting against you for the NY event.
Koz
C_Sivertsen says
The issue for me is liquidity — bringing new buyers to bear on the domain market.
Domain auctions are taking a step back because we’ve exhausted domainer-to-domainer sales and everyone is waiting to make their end-user big kill. Domains get priced (by their owners) for an end user and that person isn’t a realistic buyer yet. Auction lists get panned at almost every show when ironically the auction producer is the one pounding the owners to get reserves down. Everyone thinks everyone else’s domains are over-priced, but when it comes time to set their own reserves….
Mike’s original post called this situation a “zero sum game” and I agree with him. Now instead of one auction and the overhead involved with it, the overhead will also increase by 5X. Instead of paying one auctioneer, one competent support staff, one company’s software development costs etc. Now there are 5 companies who have to recoup their investment from smaller slices of the pie.
Marketing is typically done as a percentage of sales, so the same auction volume will generate the same level of marketing support, albeit now split across 5 providers. Will a separate marketing message from 5 competing providers be more or less effective at bringing in new buyers than one unified message? I guess that’s what we’ll find out.
Bottom line: The domain market needs more non-domainer buyers, and that’s an industry wide challenge not properly addressed by adding auctioneers at a trade show.
MHB says
Chris
Good post.
The profitably of the domain houses is another issue that I did not get into because i don’t think domainers care if they make money or not. Actually I think domainers only see the revenue, the percentage of sales the auction house gets, and not the expenses and costs.
At some point, and this maybe it, the auction house is not going to make enough for it to spend the time and effort to do the auction.
MHB says
Scott
Think the timing of this is bad. In the short run no benefit to the domain industry.
The problem maybe that some of the big auction houses are going to find what they make on a divided auction maynot be worth the time and work involved in doing the auction and may pull out.
So the long term effect is very much up in the air