DomainFest’s theme was domaining 2.0, where does the industry go from here.
I was honored to speak about the topic. Since the session was a sit down chat, answering questions from a moderator and the audience, I didn’t prepare remarks. Instead I spent a lot of time reflecting on the domain business, where its been and where its going. Unfortunately the session was only a hour and after the moderator’s opening remarks. less than 50 minutes remained.
So let me take the time to deal with this in depth.
Domaining 2.0, I have to disagree.
We just lived that over the past 7 or so years.
Were heading to domaining 3.0 now.
Let me explain.
For me domaining is, as I posted about last week, comprised of three activities, the acquisition of domains, the holding of domains and the sale of domains.
Domaining 1.0 was born in the 1994 or so.
Before my time.
Back in the day when people could just register a great domain for FREE.
This was followed by a $70, two year registration cost, by the one and only registrar Network Solutions.
There was basically no way to monetize non-adult domains.
This was before Google, before GoTo which became Yahoo search.
This was before PPC.
This was before drop auctions.
So when I started lightly in 1997, to register domains, i did so with two criterias.
I registered domains that made sense. Domains that I thought I, or someone else could develop into sites at some point.
I registered adult domains that also made sense, domains that you could make money on.
A couple of years later, once domains that had been registered for free, or for the 2 years for $70, started to expire, I went though the one central list for all domain that would be dropped each day and got up at 5 in the morning, to grab them when the got released by the central registry.
Once again, looking at domains that were either adult domains I could put into an affilate program and make money off of, or non-adult domains that made sense and would be wanted by someone else to build a site around.
In 1999 we started MostWantedDomains.com.
I figured if we had all these good domains, most of which made no money, I had better sell enough to at least cover the cost of all the registrations.
I’ve met this goal, every year since then.
That was Domaining 1.0.
Domaining 2.0 came along when Google started their PPC program. I know Goto.com did it first, but the industry really took off with Google.
Now you could make money with all the domains you owned.
Not only the good domains, that people wanted for their site, but basically any domain that had traffic.
Many registrars sprang up. Network solutions monopoly was gone. Now you could register a domain for one year for $10.
Acquisition strategies changed for many, with a ton of new people coming into the business, from not only buying or registering good domains, but crap domains, domains that made little or no sense but had traffic, or trademark domains.
Shortly thereafter, drop services came along, offering to get drop domains for a premium fee.
Snapnames.com charged $39 and allowed one person, the first person who “backordered a domain” to use their automated script to catch dropping domains. The first day the service came out I, the first name i tried to backorder was fuck.com. It was already backordered (eventually dropped with Snap picking it up).
Other services came along, many domainers had their own scripts and the market exploded as people were getting paid big money though direct contracts with Google or Yahoo or though parking companies that sprang up.
People started “tasting” domains, registering thousands, tens of thousands and in some cases hundreds of thousands of dropping domains, seeing what traffic the domain had and keeping those that had enough to cover the registration fee and then some. 99% of these domains were had crappy traffic related to trademark infringing domains.
As more and more people came into the business, and people started to understand the value of good domains, the good names dropped less and less, and over the last couple of years the quality of dropping domains went down, way down.
This caused domainers to get very active in tradeshow auctions. Great domains were offered and sold for ten’s of thousands, hundreds of thousands and millions of dollars at these auctions. These Auction produced $2M, then $5M, then over $10m in sales.
That was domaining 2.0.
Which leave us in our current situation.
Parking revenues are down 50%.
Crappy domains are dying as Google, Yahoo and parking companies are blocking more and more of them from their systems.
The legal cost of owning such domains is growing.
Trademark holders are getting much more aggressive in going after domain holders, especially those who deal in large amounts of registrations with many variations of their trademarks.
Trademark holders have now organized a trade group just to deal with this problem.
This year they will go to Congress and ask for current trademark laws to be amended to increase the civil penalties for violation and add criminal penalties as well.
From the domainer perspective, crappy domains, including typo’s, trademarks and other bad traffic is a large reason why quality domains are earning less, and why advertisers opt out of the domain channel altogether.
Domain Tasting is dead. ICANN killed it.
VeriSign continues to raise registration fees.
Revenue going down, costs going up.
Domaining 3.0
Domaining is changing, but the world is changing.
The economics of domaining is changing, but the world’s economy has changed.
So what can we say about the future?
More quality domains will drop, we are seeing that already.
As better domains drop, at wholesale prices, people will be less willing to spend their money at big tradeshow auctions, unless and until those prices reflect the values that you can find at the daily drop auction houses.
With revenue down there is less money to spend on new acquisitions.
On the other hand end users need domains.
Now more than ever.
As the world economy melts down, people are losing their jobs by the hundreds of thousands.
Every week.
There are no new job openings. Companies are looking to survive, cut costs and labor is the first to go.
Many of these people are turning to the net. People need to feed their families, need to make money and no one is hiring.
A Horrible economy, retail stores are closing everyday, in every town.
Peoples equity in their homes are gone
People’s 401k retirement plans are gone.
A guy who could have pulled a couple of hundred grand to open a business off a home equity line a couple of years ago, can’t do it.
He has no equity in his home.
Bank aren’t lending.
On the other hand, the net continues to explode.
Just look at public companies earnings from the last couple of weeks.
Google earnings better than expected.
Yahoo earnings, better than expected.
Amazon, way better than expected.
So the people who now find themselves, unemployed with no job prospects, limited capital to invest and not able to get a loan, are turning to the net.
No they don’t have $100,000 to buy a great domain, but they have $10K to buy a good one.
End user sales are doing well.
Very well.
I talked about it at the show. You want to sell to end user, you have to first develop a sales strategy.
There is no right or wrong answer.
Its what ever your goals are, and what ever your portfolio can support.
Some people like my good friend Rick Schwartz, won’t even talk to you unless you offering six figures for one of his domains.
Rick will sell a couple of domains a year for big money.
Works for him, but he has the quality portfolio to support those sales.
Big companies, with big overhead and hundreds of thousands of domain names, take the opposite approach, and sell domain for hundreds or a few thousand dollars, but do it in mass quantity. Sites like buydomains.com sell hundreds of domains a month.
Works for them.
Fabulous.com sells millions of dollars of lower priced domains through their domain distribution channel, that works for them.
We have always take the middle approach.
We will sell 150 domain or so a year, but we will acquire more than that. We don’t sell domain at hundreds of dollars. Our average sale is in the $10K range. This works for us.
You have to find what works for you.
Domaining 3.0.
Find a sales model, or use someone elses.
But do something.
In Domaining 3.0, you will see more development.
But until someone comes along with a platform that can monetize thousands, tens of thousands and hundreds of thousands of domains, parking is still going to be a big part of the industry.
The future may lie in companies like Sendori who are building their own network of advertisers.
What’s missing in our industry, that’s an easy one.
There’s a total lack on innovation.
In a show touting itself as being about change, innovation, and what’s coming next, parking companies have failed to deliver.
Look at a Domainsponsor landing page. It’s pretty much identical to the same page that was up 6 years ago.
They may tell you the page looks the same but the technology behind it is different, which may or may not be true, but bottom line our revenue continues to decline.
And please do think this is an attack on Oversee. The lack on innovation is true for all parking companies.
It’s basically the same old, same old.
Maybe one companies landing pages look prettier than anothers, but parking companies have failed to innovate. They all still resell and repackage one of two products, a Google feed or a Yahoo feed.
They rely on those companies to provide the advertisers, search results, billing, and collecting and then take whatever money Google or Yahoo gives them, takes there share and payout the rest to the domain holders.
Years later, we still have no accountability from Google or Yahoo.
Ask Google a question as I did at the show, about how they determine smart pricing, or how they determine how much to pay you, or how many advertisers opt out of the domain channel, or how aggressively they try to keep advertisers in the domain channel or ask basically any question and you get the same answer you would have gotten 6 years ago, its propriety information and we aren’t going to tell you.
No accountability.
No change.
Bottom line, Google and Yahoo pay the parking companies what they want.
There is no way of verifying numbers, to see if a parking company has a 70% revenue share, whether they are actually getting 70% of the advertisers dollars or 50% or 30%.
They pay what they pay.
No parking company has set up a large network of their own advertisers. No parking company has gotten any transparency from their upstream partner. None have come out with any revolutionary technology in 6+ years
No innovation in a high tech industry.
Interesting.
Now to the Domainfest show.
You have to hand it to the Oversee. Extremely well organized, well presented, well run show.
The look and feel of the show is highly professional. Behind the scenes, they are very prepared, very organized and on that basis, a whole different level from other shows.
Was it the best ever.
No.
I think back to the first TRAFFIC show held in Delray Beach, meeting people for the first time I had only communicated with via e-mail or just heard about.
The great, simple party Ron Sheridan from DomainSponsor put together. A bunch of domainers, who never met, sitting around in a circle playing bongos together. A few “regular” girls, dancing, playing mingling, adding color to the evening.
Pure enjoyment.
Simple
Perfect.
I remember Chris from Domainsponsor asking me if I would like to meet Frank Schilling.
He took me to a back bar where I meet Frank for the first time. With his incredible long hair and infectious personality, I immediately knew why the guy was so successful. Brilliant, incredibly nice, tremendous outlook on life, and clearly had his head on straight.
I learned that that night that nice guys don’t always finish last, sometimes they rise to the front of the pack.
There have been other excellent shows since.
At each show you learn something, you meet people who will impact your life, you have experiences that will stay with you a lifetime. I’ve never gone to a show and left thinking that was a complete waste of time or money.
The First TRAFFIC show where a live domain auction where over a million dollars traded hands, unheard of in our business. Where would our business be if that didn’t take place?
The First TRAFFIC show in NY where $14 million dollars traded hands in one 4 hour auction.
TRAFFIC Vegas, where I got to go clubbing and bonding with many of you.
Yes there have been many great shows and this years DomainFest added to the body of work.
It moved the industry forward
If you missed it, you missed a lot.
Was it the best show of all time, who cares.
It was a great show, a great experience and if you were lucky enough to attend, you will have great memories, and you will have built at least one relationship that will last a lifetime.
For me DomainFest was my chance to support a good friend.
Unfortunately, DomainFest was the last show Ron Sheridan will be involved in.
Ron left Oversee after the show closed out.
Although he will be consulting with them, it won’t be the same not having Ron around.
Ron told me years ago, he was going to do the Playboy party.
He wouldn’t rest until he did.
I went to Vegas one year and told Ron I spent sometime at a really cool place, the Skybar at the Palms.
The next year he booked the Oversee party there.
He had a vision for his company, for the industry and worked very hard to achieve incredible success.
One of the first domain parking guys I ever encountered, Ron became a very good friend and moved the industry forward in ways few realize.
There are some great people in this business.
I can count on one hand people In the business I’ve met and simply don’t like. There a few guys I just can’t warm up to and no longer care to.
But hell that’s 5 out of hundreds, maybe thousands of people I’ve met.
There is an amazing amount of really smart, outstanding people in the business.
Ron is one and will be missed.
Wow Mike! That was from the heart and very eloquent!
Rob
Great post.
Unfortunately, I missed the shows that you discussed. I am now making up for the lost time.
It’s interesting to witness the change in which we are going through as an industry – both as a participant and as an observer.
Every day poses new challenges for us all, and the industry camaraderie (for the most part) will help us learn and adapt to the challenges ahead.
Great seeing you and Judi (and hope that Bandit heals soon).
Mike,
That was an excellent summation of where we have been. The good, the bad and the ugly.
I agree 100% with everything you said.
I have been screaming about the lack of transparency for 5 yrs. But, falling on deaf ears with the ppc companies. Their hands were tied.
And, Mike Gilmour has also been banging away on the topic.
I had heard the other day that Ron was leaving. That was a shock. He is/was DomainSponsor !!!
I believe they are making a big mistake but that is their decision.
This is the year that domainers have to drastically evolve (if they haven’t already). Otherwise, we will become road kill.
Hope to see you at Traffic – San Jose.
Hi Mike:
It was great to finally meet you and your wife at the Playboy Mansion. It was a fabulous evening, but I knew I had too much to drink when I kept trying to hand the coatcheck girl my Renaissance valet parking ticket.
I agree with you that Domaining 3.0 is all about Development. It is far better to develop one name well than to park 10,000. Believe me, we know.
Was this DomainFest the best domain conference ever? Don’t know, but it was a great one. I’d rank it up there with the Traffic conference with Steve Forbes. On the other hand, this show was the first I’ve attended where the auction took a backseat. No one I met was there for the auction. On the other hand, I nearly fell off my chair on our panel when the audience was asked how many are developing their names and 90% raised their hands. At that moment it was obvious that Domaining 3.0 had arrived and the domaining industry and its sponsors need to adjust accordingly.
At the Mansion, I was shocked when my brother told me that Ron Sheridan was leaving Oversee. I don’t know the facts, but I heard it was not Ron’s decision. If that is true, Oversee made a huge mistake.
David
Was great meeting you and your wife as well.
I’m not sure you can have too much to drink when you are lucky enough to visit the Mansion.
I agree, the auction which is normally the highlight of any show had little energy or interest.
On the same day the DomainFest auction floundered, over at namejet.com, flashcards.com sold for over $40K.
So I think the lack of buying at the auction was more a reflection of that group of domains in the auction, than any referendum on the value of, or interest in domains.
Hi Mike:
You wrote: “So I think the lack of buying at the auction was more a reflection of that group of domains in the auction, than any referendum on the value of, or interest in domains.”
I don’t think the auction’s failure was because of the quality of names for sale, etc, etc.
I think the lack of buying at the DomainFest auction was because of an attendee evolution. The vast majority no longer attend these events to buy names. In 2006, many of the domainers I met were extremely interested in the auctions and buying names. At TRAFFIC East 2006, the Moniker auction was the Main Event. There was lots of pre-auction chat along the lines of “What do you think this or that will sell for?”
I heard none of that at DomainFest 2009. Most attendees there already had their domain names secured and they were much more interested in learning how to develop them.
In 2006, most panels concerned parking and flipping domains because that’s what the majority of domainers did. In 2009 it’s all about development (we negotiated two co-development deals at DomainFest). The 3.0 Domainer is attending these conferences for entirely different reasons.
David
You maybe right.
As always thanks for your insight.
All of your post was from the heart and a great read on the industry and a walk down memory lane for me.
Ron Sheridan leaving Oversee is a huge loss for not only Oversee but all of us. He truly cares. His contributions to the industry are underplayed and not known by many. Ron has that big teddybear of a body because he needs it to carry his huge heart.
Ron was the living, breathing connection to all of us domainers and the industry will miss him!
Mike, cheer up. Everything is going to be just fine. I am sure of it.
JP
Thanks for the concern, but I just spent a night at the Playboy Mansion drinking with some of my favorite people, and some beautiful women (I have the pics to prove it) then the next night at a club in LA sitting in the booth next to Leonardo DiCaprio.
I’m not sad.
“I just spent a night at the Playboy Mansion drinking with some of my favorite people, and some beautiful women (I have the pics to prove it) then the next night at a club in LA sitting in the booth next to Leonardo DiCaprio.”
Mike,
Don’t forget about sitting next to Mary Carey at Mr. Chow’s.
Mike:
Great observations. I just wanted to touch on a couple points. Like you, I think the two shows that stand out for me are the first Delray TRAFFIC show .. was like finally meeting people from your own planet… and the first NewYork show and it’s landmark $14M in sales … WOW! I think both were wateershed momemts for the industry.
In terms of Ron Sheridan, he is a total class act and I count him as a friend.
Domaing 3.0 – I feel that development is where the big money is going to be made in the next few years. Take a good name and turn it into a great business.
Mike, I’m getting hooked on your blog.
It’s refreshing to see someone articulate
all the things that I have been saying for years.
You hit it on the head with the past, present and future of domaining.
How could it be that the major parking companies
became so lackadaiscal when it came to innovation?
Especially considering the revenue they were receiving on our domains.
People say that it’s hard to create a new domain traffic ad channel much like adbrite.com operates.
I say that is BS!
With millions of dollars to play with , how is it possible these companies failed to keep up with the times?
I don’t have the answer to why but like you said, just look at the old tired landing pages that are identical to those of years past.
The parking industry has let us down but we have to blame ourselves for being complacent as well.
Receiving big fat checks for doing nothing is pretty
intoxicating indeed, screw innovation.
Well, times have changed and your destiny and financial future should be in your hands, not the parking companies.
Think outside the parking box.
I am so happy to hear that you have confidence
in the value of our names in the retail market.
Before the advent of PPC, we bought names because of the reasons you stated here.
Individuals and companies will always need a memorable brand to market with.
I’m in the process of changing my SiteTrader.com
website to sell my portfolio of names.
It should be ready in a couple of weeks.
I’m going to price them right and make sales to the retail crowd. Wish me luck 🙂
@Mike
Just making sure, you seemed a bit down. Glad to hear it.
Harvey
Best of Luck
Elliot
After a while you get immune to seeing all those breasts.
Never mind, I’m lying.
“With millions of dollars to play with , how is it possible these companies failed to keep up with the times?”
Could it be they were taking those millions and buying names for themselves perhaps?
FYI:
DoomainSponsor and Fabulous, two of the top leading parking companies in the world both have their own “advertising networks” and can monetize the traffic.
If they tried to monetize their own domains, which would be million+ combined, with their own affiliate networks…there would be a lot of other domainers who would take notice of this and do so as well.
Unfortunately, domain traffic (type ins) doesn’t convert so well, as you mentioned, a lot of it is pure crap, from typos and backlinks, etc.
Two of the biggest companies aren’t monetizing their traffic directly with their owned affiliate networks…and they have been running the networks for years.
Speaks volumes, doesn’t it?
I think so..
Need to snap out of this little bubble domainers have created…
“all is well in the domain industry” <— not really
Google and Yahoo are taking everybody for a ride… but who cares anyways?
As long as there is money coming in today, nobody is concerned about tomorrow 😉
Right on 🙂
Real smart 😉
Fabulous: http://www.darkblue.com
Domainsponsor: http://www.revenue.net
Best,
Mike
http://www.wannadevelop.com
Tim
No doubt that most of the parking companies have acquired a large amount of domains for themselves, but I believe there are still a few with relatively no domains of their own
One of the most important, and valuable, posts you’ve ever written, Mike.
Thanks for caring enough to take the time and make the effort.
We’re all the wiser–and better–for it.
ps Please give a Happy Birthday to Judi from me.
Domaining.com has now a new “Add to favorites” feature.
I just used it for the first time!
Definitively a post to bookmark.
I must admit I had a great time at DomainFest. It was one of the best shows my brother and I have attended. I was disappointed when I heard Ron was leaving Oversee. I told Lawrence that he was making a mistake in letting one of his “visual brands” go.
I like Ron. He is rough around the edges like the rest of us and he is a fun guy. Oversee may be adjusting to the current economy but they have to remember to keep this business creative, colorful and fun. Ron is that and more.
BTW, love those black pearls you got for your wife.
I have been also buying domains since 1997, and I totally agree with Mike’s Domaining 1.0/2.0/3.0 comments.
… and the very bongos, for posterity’s sake 🙂
http://www.wadnd.us/images/DSC03406.jpg
Great post Mike – in fact I would say it is the blog post of the year. Thanks for taking the time to write and it and share your insight from more than a decade in the domain business.
Ron
Thanks for your kinds words.
Coming from anyone it would mean a lot, coming from you, I’m truly honored
I really appreciate your post and agree with all of you, even though I am actually working for a parking company 🙂
Having been in the industry for only a couple of years, I am considerably green behind the ears compared to most of you. But I must say that when I started a couple of years ago it was that passion and innovation that fueled my interest to learn more and actually make me passionate about this industry. I realize that my point of view comes from the opposite side of your view (an insider of a parking company). However, I do agree that the industry has changed from passionate and innovative to being a bit stagnant.
That said, I think parking companies are trying different things to make more money for themselves and their publishers. Maybe their thinking just needs to shift in a completely new direction like you mentioned due to the dominance of the two biggies G + Y, which seems to rise day by day and by which we PPC providers are completely dependant on. I am sure, if I would have that next great idea taking a parking company to the next step, my boss would pay me much more :). I think everybody is trying though; the question is whether we are going to make it in time for the transition? But who knows, maybe the same thing will happen as with PPC: the biggest and best companies out there weren’t necessarily the ones that came out with the idea at first. They just really knew how to perfect that idea and make it a hundred percent better. So I am confident that the change will also happen in this case, but that it will also come with many great opportunities (even though it might weed out some of the involved people).
And regarding Ron S. – I had the great pleasure to work with him and learn from him! An opportunity that I am still taking advantage of and that I am very thankful for! I have missed him already in the new company, so I will continue to do so! You’re the best Ron!! Vielen Dank!
J-
Great blog post.
Your thoughts are appreciated and
well articulated.
Like you, I enjoyed DomainFest greatly.
Very well done and a good excitement in the air.
The auction was lacking, which was sad.
Again, great post. Good read 🙂
Like many I spoke with, buying domain names was not my priority in attending DomainFest. I attended primarily to learn, share and network. Oversee did a great job in putting on a confernece to make this happen.
Michael, it was very nice to meet you and your wife (I’m the Bucs fan from Tampa who sat behind you on the bus ride to the mansion).
Great post. Very forward-thinking and truth-telling. Thanks for sharing 🙂