The head of Clover Holdings, the buyer of the domain name, Sex.com agreed to do an email interview with TheDomains.com
A couple of housekeeping issues.
I’m obviously going to keep the person’s name confidential.
I’m not going to give out hints as to the person’s identity.
I don’t want the comments to this post to turn into a guessing game and therefore I will delete any comment where there is a guess as to that person’s identity.
Sex.com as you know holds the official Guinness World record as the World’s most expensive domain name, when it was purchased by Clover for $13 Million Dollars late last year.
Here is the Interview:
Q: Why Did did you Purchase Sex.com for a record setting $13Million?
“”We have quietly purchased a number of generic, industry specific domain names, that represent the key term/brand for existing revenue generating online industries, or industries that we expect to have significant online revenues in the future. ”
“This domain fits that model.”
“Frankly, twelve months ago I didn’t know a thing about the Adult space. We’ve looked at a number of mainstream options for the domain (which in some cases, would increase our chances for a public offering or exit), but we’ve now zeroed in on opportunities in the Adult space.”
“As opposed to the mainstream options we looked at (mostly health related and product sales projects), my feeling is that we can build traffic at a much higher rate in the Adult space as the content is simply much more engaging to users. The opportunities we have are very similar, but with different potential experienced partners.”
Q: What do you think the value of sex.com is and is there a price you would sell it for?
“When I originally tried to purchase the domain, privately, the combined pricing for the shares of the various owners, was set around $15.5mm USD.”
“The group’s involved couldn’t get on the same page, and it was clear that without an auction process, I wasn’t going to be able to secure the domain. It is unfortunate for them, because we were willing to meet that price.”
“Through the auction process and afterward (and after having spoken with some of the other bidders in the course of doing due diligence), I have learned from them and SEDO that there were multiple significant offers above $10mm USD, including another $13mm USD offer that included a payment schedule.”
“It is doubtful that we would sell the domain. We purchased this piece of real estate to develop. We are eying a business model that should allow for a complete ROI within 20 months.”
Q: What it the plan for the site within the next year and long term?
“We have a plan.”
“We have searched for talented, experienced partners to help execute that plan.”
“We have narrowed down our options to three companies, and while it has taken a little longer than I expected, extensive due diligence is required with such a valuable domain.”
“We have a development schedule that will allow us to have a significant offering live within six months.”
“I have researched the traffic growth of nearly every large website in the Adult space, and I have specific traffic expectations.”
“The trick at that point, and the reason we have sourced some experienced partners, is to properly monetize that traffic — leaving nothing on the table. Things change in that industry so quickly, we will need to be flexible and be able to LEAD new trends.”
Q: How do you plan to make money in the adult space when so may Adult providers are struggling to stay afloat with all the free adult content available on the Net?
“Ad sales and product sales revenue models, with a few add-on services and a few surprises.”
“Our goal is to provide services that are indicative of the brand, being of equal quality to the top offerings in the adult space.”
“We won’t be trying to reinvent the wheel here, just to do it better than many of the existing players in that industry right now. We can afford to spend significantly on development, providing a superior product. There are a number of partnerships I have begun working on, which I can’t really comment on at this time. I think we will be able to differentiate ourselves from from the other operators”
Q: There has been a lot of speculation on how much traffic this domain actually gets, can you disclose any numbers?
“Traffic is sitting around 100,000-125,000 daily since the purchase, with the US being the a top 5 country, but not top 2.”
“While that is quite significant for a parked page, it is a drop in the bucket in terms of our growth expectations.”
“We should allow your users to guess the traffic number for March 1st 2012, for a prize.”
“I think most will be shocked.”
Q: How do you think the coming .xxx extension will effect the value of sex.com, if there is a sex.xxx for example? What about the possible required migration of adult material to a .xxx extension?”
“I have some specific thoughts, and i would like to keep those to myself at this time. I can tell you that current Adult operators are uniformly opposed to any required migration to any new extension.”
Q: Anything else you would like to add?
“We looked at purchasing the portfolios of some significant domain companies, and took a pass. I don’t have enough confidence in that business model to warrant the pricing. The model has been changing, and we are focused on tier one generic, industry specific single domains that we can develop.”
Q: “When You Say You Don’t Have Enough confidence in that business model Of Big Portfolios Are You Talking About Declining PPC Revenue?
“In some cases, the inventory that I have looked at includes declining revenues in a PPC model.”
“I have no doubt that many of the big domain owners are very astute and can make large portfolios work for them, but I don’t have great confidence in the long-term viability of this business model.”
“You need look no further than an article you posted last week, detailing Google plans to eliminate the address bar from its Chrome browser.”
“If your user cannot find your domain via Google Search Results and behaviour shifts away from the address bar, where does that leave you?”
“This is but one of 20 reasons I have concern about the PPC model in the medium-long term.”
“This Chrome issue alone might not mean much, but it reminds each of us that consumer behaviour is ever evolving and can change very quickly (to the detriment of various business models).”
We thank the new owner of Sex.com for his time and sharing thoughts and of course which him the much success with the site.
If you would like take up the owner on his challenge to place a guess on the monthly traffic levels for Sex.com will have on as of March 1, 2012 we will keep track and get you your “prize”.
“complete ROI within 20 months”
With 1 million visitors a day that sounds like $25 CPM, curious to see how this will be achieved on mainstream traffic.
“We are eying a business model that should allow for a complete ROI within 20 months.”
I caught this as well, to tell the truth once you read a statement like this, for me any way, I lose respect, my heart sinks a bit and I write a comment about it. 🙁
If the prize is sex.com, then here is my guess:
1 March 2012: 220,000
Appreciate the frank interview. Lofty goals and I wish them luck. A great success can invigorate an industry and break down some barriers. Many others have tried and we’ll see if his predictions pan out.
I’ll be interested to see how consumers react to Chrome eliminating the browser bar. The parallel to me would be like GM removing the steering wheel from the car. Good luck with that.
Great interview, great responses. It’s all out on the table and that is pretty cool no matter the out come.
Never been in the adult space cannot be good. Most adult programs have closed and the owners have been in the adult vertical for 10 plus years. Still, they couldnt make it work.
Great interview!
My March 1st traffic guess is 234k
“Ad sales and product sales revenue models, with a few add-on services and a few surprises.”
Why Josh?
The Sex Toy industry alone is worth somewhere around $15 billion a year worldwide, $2 billion a year just in China, then you have paid subscriptions, paid Adult Live Cams, Chat, Dating, Magazines, Lingerie, Videos/Cd’s/Books
Sex.com could potentially get exposure to a huge chunk of the market by teaming up with the right people and having the right suppliers.
Whether that will happen in 20 months or not I’m really looking forward to seeing what it becomes.
Good luck
Thanks Mike.
The most interesting takeaway from this is the statement that traffic from the US is not in the top 2.
Yes, that’s right, ‘sex’ means the same thing in many languages.
Being an all cash deal, I suspect the new owners have global plan and the deep enough pockets to execute it.
The traffic is not buyers, its surfers looking for free content. The last website had a store on it and iam sure the revenue was very little. Anyone from adult industry can chime in here and back me up 🙂
Yep! Free content is it ….
there’s no going back, free is what they want
that is why xxx will be a joke (if ever) another Pump n Dump.
no pun intended 🙂
Ask anyone in the adult industry and they’ll all tell you the domain doesn’t matter.
There are guys in that space doing 10 to 30 times the daily traffic of sex.com with hand reg’d $7 dollar domains, and even they struggle to make money off millions of visitors per day in the current “we want our porn for free” market.
20 months ROI on $13 Mil in adult right now???? Maybe way back in the early days. I seriously doubt that is possible with the traffic base at hand or that will come from the millions more plowed into future marketing. The adult operators who made the most money started affiliate programs early on and shaved all their affiliates earnings like crazy. The perpetual rebills have kept some money coming in, but nothing like it used to be. In the current credit and financial crisis, you can’t even find banks that will handle adult transactions. Last I heard most everyone had to go to offshore Israeli banks to get processing.
With $13 Mil to invest it would have been wiser to buy thirteen incredible $1 Million domains to develop.
Sex.com is indeed a great domain, but it’s had quite of history of astute deep pocket owners who despite having an unlimited supply of capital to develop it any way possible, they couldn’t get it to achieve their grand objectives.
It will be fascinating to see how it goes with this domain. Sometimes miracles happen regardless of all the doubters.
it’s not clear why he paid so much money only to break a record while there are many good domains that he can buy to (both) break records AND make lots of money using or reselling them
My guess is 687,312
No clue on the roi prospects of the biz, but I imagine if they keep it 10 years they will do fine
Great domain name. It’s interesting they could have picked up $15m if they would have taken the first offer. Appears that “saying” rings true in industries other than conventional real estate. “The first offer is usually the best”.
Anything can happen with a name like that. A partnership with the right sex industry leader and some extra zing from a great ad company, viagra sales, etc……
Maybe they would like the Chinese version???? 🙂
Cheers!!
@Kevin
They also say the “domain doesn’t matter” in the Geo space. And then we blow the competition out of the water. Yes, you can make money in any verticle if you know SEO and sales/marketing, but if you add a great name you can really hit the ball out of the park. I was told “the name doesn’t matter” when I began monetizing PalmSprings.com and, after generating millions of dollars, we are still told the same thing today. Believe me, the name matters. Always did and always will – especially if you choose a path that will exponentially amplify it’s natural traffic and brand power.
Videos.com gets more than 200,000 uniques per day (according to compete). They should have bought this nice generic domain including it’s website.
my guess is 501,000
Prediction: Cam affiliate.
Opposition to .xxx from adult webmasters comes from potential laws that would mandate adult content be hosted on .xxx domains so filtering becomes trivially easy. It would be the most enormously disruptive factor in any online industry we’ve ever seen.
do you have a link or the email of Clover Holdings?
Will be surprised if this works out, especially since it sounds like they don’t have experience in the adult space.
The only email address has is the owner direct one.
sorry
@ Michael
The biggest adult entertainment site on the planet has a meaningless non-adult domain and serves Billions of nude pics daily.
Google.com
🙂
@Kevin
true
also, I doubt that sex.com will have so much traffic without offer a competitive sex contents
Guys come on-20 months is not a long time offline. If you buy a franchise it usually takes 1 to 3 years before breaking even. I kind of get what he is talking about and of-late I realize that you cannot bulldoze your way into people’s hearts.
You have to be patient and caring and slowly the income will come. I hate patience as much as anyone but it does save me from fool hardy moves. Deep pockets may be a handicap because of the massive wastage of resources, massive corporations = massive red tape.
I am also curious about their approach to sex.com and what they will do with it.
Thoriso
The long awaited interview with the owner sex.to. Great deal and great interview!
The sale put a little movement in the world of domains.
I wish the new owner of good ideas, big money and wait for my “sex ” part in a thousand will
be sold for this price!
The long awaited interview with the owner sex.to. Great deal and great interview!
The sale put a little movement in the world of domains.
I wish the new owner of good ideas, big money and wait for my “sex ” part in a thousand will
be sold for this price!
@Domain 6 Star Ltd
Definitely the domain that keeps on giving!!!
😉
Hello Mike,
“Deep pockets may be a handicap because of the massive wastage of resources, massive corporations = massive red tape.”
This can be ultimately true but your Business Model calls the shots when it comes to Deep Pockets.
As long as your foundation is solid and backed up by Internal Marketing Strategiies, A deep pocket or two comes in handy.
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)
Domain 6 Star: sex.to? What are you on about? “big money and wait for my “sex ” part in a thousand will” WTF???
Looking forward to seeing how they monetize this great domain! The new owner has a lot of faith and conviction in their plans and deep pockets help but what worries me is their lack of experience in such a complicated and already exhausted industry. Very interesting months ahead to say the least!
iD
All comments aside. I am definitely jealous of the deep pockets. Let’s be honest, atleast me. I wouldn’t mind having his dilemma. I am tired of having Google or someone call the shots.
I would like to say I would like to congratulate the new owners on a great purchase. I hope to learn from your efforts. I told my wife about what you did and she asked me why not learn from him/her and one day I will be making a similar investment.
Smart lady, that’s why I married her.
I will be watching and learning as much as I can.
Platinum Rings: Are you sure she doesnt just want free adult toys? ;P
@IrishDomainer
Dude…she wants Platinum rings…why do you think I own the site?
However… I would like to have recorded the look on his family’s faces when he told his wife that he just spent $13 million on thee sex domain, broke the world record AND he has nothing to show for it, yet.
His male relatives are definitely giving him High fives.
Atleast my site is up and every item on sale looks pretty. I will be observing sex.com VERY closely…everyday…to see his…ehm..business plan in full action. Just to get the swing of things 😉
lol platinum rings and adult toys… she knows what she wants!
I agree mate, say it was funny when he tried to explain spending 13 million on a domain about sex to his missus alright!
Cheers,
iD
thanks for sharing this post…these interviews gives us some new ideas about domain name and business ..great post looking for some more interviews like that
LOL
I stopped taking it seriously when I read “complete ROI within 20 months”
One thing is certain for sex.com in recent years:
Deep pockets —-> Shallow Pockets
This one’s no different.
1 March 2012: 243,000
I think sex.com is worth that money but it’s going to take
3 years until it starts converting well!! It’s going to convert
a lot better than years ago because the world is changing
and you will find out what I mean in years to come. This is the
internet and things can change and they will for this domain.
very interesting,
in regards to google being a $7 domain name leading the industry, people often say this in opposition to generic domain names
when they dont really understand how the internet works and later have a chuckle with their friends who also dont know anything hehe
(im not trieing to be mean, im just saying it like it is, and it doesnt matter if the person has made millions in their own niche or not,
they still dont understand how the internet works saying stuff like this
the first place to start your learning curve is.. why were domain names created? A/ to make ip addresses easier to remember, and work you way from there
b.t.w its ironic a non generic domain name like google is the biggest internet company in the world running off the back of keywords
imo business can be compared to a game of poker where people win all of the time with 3 of a kind etc, but what if your competiton has a straight, a full house, heck imagine if someones got a royal flush??? (note: only 1 person can have the royal flush for their industry/country because it must include “the pure name/domain name” of the industry Eg hotels.com, realestate.com.au, sex.com)
Hey,
Does anyone know how I can sell “Lesbian.com”? Any suggestions would be greatly appreciated. Thanks, Dean
Dean
Sure I’ll buy it from you for $1,000
By the way, we don’t allow “for sales” posts on the blog
Generic domains are great for branding, and so easy to remember. That is lots of money though. That in itself is marketing.