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Zetetic: Domain Resales Net 377 Percent Gain
Zetetic has studied domains that have been resold more than once since 1996, and finds an average return on investment of 377 percent, with the average name being bought and resold in 12.5 months.
Zetetic, a domain research and appraisal firm, used its database of of more than 8,000 resales, and found 74 domains that had been resold in the secondary market at least twice. The median buy price for a domain name was $891, which was resold within 8.8 months for $1,450, resulting in a 83 percent return on investment. The average sale saw a much higher ROI of 377 percent, and was boosted by the inclusion of men.com, which sold for $1.3 million in 2003. The median represents the mid-point of sales - with half of all names selling for less, and half selling for more - while the average divides the total sale by the number of names, and can be influenced by a small number of high or low sales.
Posted by RichM 
May 31, 2005 | Permalink | Newsletter
May 27, 2005
VC Valuations May Disappoint Domainers
Domain Name Journal is providing updates from this week's industry conferences in Las Vegas and Seattle. Venture capital interest in the domain industry was the hot topic at Traffic West, as keynote speaker Marc Ostrofsky of Internet REIT, LLP confirmed that said his new partnership is putting together a $250-$500 million war chest to acquire top quality domains.
But at what price? While VC funds have big wallets, they're looking for home runs on those investments. In the domain business, that means buying low and selling high. As such, the venture capital funds' valuations of domain portfolios may not align with market hopes. An excerpt from DNJournal's recap of the recap of the domain venture capital panel at Traffic West:
During the standing room only session they told attendees they were looking to acquire portfolios for 5-7 times annual revenues. With Marchex having already paid more than 8 times annual earnings for the Ultimate Search portfolio, (Conference organizers Rick) Schwartz doesn't believe there will be a lot of takers at those price levels. Schwartz told us, "the VC guys sited 'risk' as the key reason for not going higher than those multiples and it was met with skepticism from the domainers who perceive the 'risk' to have been taken by them years ago when they purchased their domains and not now."It sounds as though the panel helped the buy and sell sides of the equation develop a better understanding of the perspectives each will bring to future negotiations. It may also have created a broader context for the Marchex-UltSearch deal and to what extent it represents a benchmark for future sales.
Posted by RichM May 27, 2005 | Permalink | Newsletter
May 25, 2005
Why Domains Are 'Rented' and Renewed
Steven Forrest asks a "dumb question" that's not dumb at all:
Why are domain names rented instead of sold? Why can't a brand-name company own its domain name rather than just rent it year to year? ... why is there an artificial limit on the number of years - 10 - that a domain name user can register a domain name for? Why not 15 years? Or 50? Or 100?Actually, you can register a domain for 100 years, but the larger question about the need for annual renewals is a fair one, and Forrest isn't alone in questioning current practice. "The idea that domain names must be rented is nothing more than an arbitrary and capricious business rule imposed by ICANN," says the CaveBear Blog.
I'm sure many domain owners would agree, and prefer not to renew every year. It'd sure make my life easier. But name owners aren't the only constituents in the domain system. The reason for the current system can probably be summarized in a single word: registrars. Someone has to manage domain registrations, and it's a large and complex enough job that registrars need an economic incentive to invest the resources and staff to do it right. Annual renewals provide the hope of recurring revenue to sustain the registrars' business. It also keeps the cost of entry low enough ($5 to $35 for the first year) that anyone who wants a domain can likely afford one. That's certainly not true of the $999 fee to lock down a name for 100 years at Network Solutions, if not the $69.50 for 10 years at Go Daddy.
Posted by RichM May 25, 2005 | Permalink | Newsletter
May 22, 2005
DropWatch: Is VC Interest A Selling Opportunity?
Sidney Parfait at DropWatch wonders whether the recent surge of venture capital interest in the secondary domain market is an opportunity:
With so many venture capital companies entering the market, is it the right time to sell your portfolio? Part with a few domains? or sit tight for awhile longer?It's a good question, and Sidney is waiting to hear from readers before sharing his thoughts. So here are one reader's thoughts.
Posted by RichM May 22, 2005 | Permalink | Newsletter
May 20, 2005
Cleveland Man Patents WHOIS Integration in Search Results
Ohio "inventor" Eric Schneider was awarded a patent Tuesday for a method of integrating a domain availability check into search engine results. Schneider's application ("A Method and Apparatus for Integrating Resolution Services, Registration Services and Search Services") was submitted June 21, 2000 and approved on May 17.
The patent covers "request types other than that of a registration request or availability request," and thus does not affect WHOIS inquiries. But it appears to have implications for including domain availability recommendations in other types of information searches. Here's Schneider's comment in a press release announcing the patent's approval:
One aspect of the '430 patent specifies receiving keyword input for a search engine and in response providing both search engine results of Web pages, and in addition, providing one or more domain names that may be available for registration relating to those keywords.IANAL, but that statement suggests that search engines can't integrate WHOIS results - or partner with a domain registrar to include keyword-based WHOIS results - without dealing with Schneider, who said he is already taking steps to commercialize the patent.
"We are currently in discussions to license the technology to a number of companies," said Schneider. "The issuance of the '430 patent provides an opportunity to invite interested search engine providers and domain name registration providers to learn more about how this technology can help their business and their customers."
Posted by RichM May 20, 2005 | Permalink | Newsletter
May 19, 2005
Best Domain Blogs
There are a growing number of informative blogs writing about the domain business. Which are the worthiest? Here's my list of favorites, and why they're useful:
- ICANN Blogs: The clear winner here is the LexText blog from Bret Fausett, a lawyer and tech columnist.Just about any event or discussion of significance in the ICANNosphere gets linked on Bret's blog. Great stuff. Other daily reads include the venerable ICANN Watch blog and Circle ID, which each offer news and insight on Internet governance and the domain name system. Other ICANN watchers of note include Christopher Ambler and Karl Auerbach (CaveBear Blog), while travel blogger Ed Hasbrouck and his Practical Nomad blog provide an example of a non-domain blog getting engaged in ICANN policy debates.
- Registrar Insider Blogs: Several executives of large domain registrars maintain blogs. The most visible these days is Bob Parsons of Go Daddy
, who used his blog to write about the company's recent Super Bowl ads, and to critique the Commerce Department's decision to discontinue private registrations for .us domains. Ross Rader of Tucows maintains Random Bytes, which covers a lot of ground beyond the domain business. Right now Ross is blogging with speech recognition software after breaking his arm in a bicycle accident. There's a determined blogger for you!
- The Domain Resale Market: Sidney Parfait of DropWatch maintains the Expired Domains blog, which provides an insider look at the complex and busy world of the domain aftermarket. The Domain Weblog (Chronicles of the Domainer) has been quiet for about a month or so, but provides excellent explanations of the secondary market and how it works. The Domaining Blog is also worth monitoring.
In upcoming weeks we'll explore the best domain resources in a number of areas. Next up will be domain-related news (which doesn't all fit neatly into the blogs).
Posted by RichM May 19, 2005 | Permalink | Newsletter
May 12, 2005
Will VC Demand Boost Domain Prices?
MSNBC has a story about the emergence of domain speculation as a profitable business (link via DomainingBlog), noting that "a turnaround last year suggests that a legitimate domain market may be booming again."
That's hardly news. A more interesting trend was highlighted late in the story: venture capital interest in the domain name market. This is a natural outcome of the land rush following the Ult-Search-Marchex deal, but it's interesting to see the story fleshed out a bit:
Marc Ostrofsky, the veteran domain speculator behind the record-breaking $7.5 million sale of Business.com in 1999, is forming a $250 million "Internet real estate investment trust." He and his partner, Houston investment banker Bob Martin, have spoken with interested hedge fund managers and venture capital firms in New York, Los Angeles and Silicon Valley. "When the investment community heard what we’re playing with, they liked it," says Ostrofsky. "They liken it to a land rush."The bottom line: more money is likely to flow into the domain name market, boosting demand and pricing. The additional money flowing into the market - whether from investment-fueled outfits like Ostrofsky's or newbie speculators who just read about the business on MSNBC - will probably mean more competive auctions. Unless, of course, domain owners who've been sitting on valuable names decide that now is the time to sell, boosting inventory. Either way, there's plenty of action all ahead.
Posted by RichM May 12, 2005 | Permalink | Newsletter
May 11, 2005
Register.com Delay Endangers NASDAQ Relisting
Register.com says its quarterly SEC 10Q filing and earnings reports for the first quarter of 2005 will be delayed as it grapples with "certain material weaknesses in its internal control over financial reporting." The company said it will be out of compliance with NASDAQ marketplace rules as a result of the late filing.
The announcement comes as NASDAQ was ready to relist Register.com, which has received a delisting notice April 5 because of similar delays filing its annual report. The new delay is likely to postpone any relisting, the company said. Shares of Register.com were down slightly following the announcement.
Posted by RichM May 11, 2005 | Permalink | Newsletter
May 9, 2005
Iron Mountain Gains ICANN Accreditation
Corporate document storage specialist Iron Mountain has become an ICANN accredited registrar, the company said today. While the domain market is not a primary business focus of the company, Iron Mountain works with large corporate clients that typically have between 50 and 15,000 domain names in their inventory, and bulk discounts and renewal management figure to be prominent in the company's registrar status.
Posted by RichM May 9, 2005 | Permalink | Newsletter
Gambling.com Owner Sells for $19.8 Million
The owner of the gambling.com domain and web portal has sold for $19.8 million (10.5 million UK pounds). Newbold Enterprises Ltd. has been bought by the British firm Gaming Corporation, which owns casino.co.uk and findpoker.co.uk. Those sites, like gambling.com, direct Internet searchers seeking online gaming sites in return for referral commissions. Gambling.com currently comes up first in a Google search for "gambling," which combined with the extraordinary growth in Internet gambling helps explain the sale price.
While the URL and its considerable Googlejuice is clearly a major factor in the value of the deal, the transaction isn't a pure-play domain sale, and thus doesn't top the all-time priciest domain sale, the 1999 sale of business.com for $7.5 million. Casinomeister reports that the deal will result in a sizable profit for Newbold.
"This acquisition is a major step in the evolution of Gaming Corporation," said Justin Drummond, Gaming Corporation Chief Executive, "Gambling.com is the leading global online gaming search brand and a very profitable and fast growing business. This acquisition forms part of Gaming Corporation's strategy of building a portfolio of gaming brands that attract a worldwide audience."
Posted by RichM May 9, 2005 | Permalink | Newsletter
E-Commerce Times summarizes the booming activity in the domain resale market, including some aggregated numbers of sales volume and pricing:
The volume of domain name transactions in 2004 was up 300 percent from 2003. Consolidated data from DNJournal, Domain-Spiegel.de and Sedo.com, three leading independent companies tracking the domain name marketplace, shows the average sale price of dot-com domains is more than US$9,700.That includes a noticeable pickup in sales in .TLDs beyond .com and .net. The number of .info sales soared from 27 reported sales and a total volume of $68,571 in 2003, to 149 reported sales and a total volume of $367,045 in 2004, while transactions for .biz and .us also grew.
Posted by RichM May 9, 2005 | Permalink | Newsletter
May 8, 2005
Report: Google Pays $1 Million for google.cn.com
There are reports via the Search Engine Watch message boards and SEO Roundtable that Google has paid a whopping $1 million to acquire google.com.cn and google.cn. A whois search shows that Google indeed owns both google.cn and google.com.cn, but the listings don't provide any information on when the registrant of record was last changed. There reportedly is widespread coverage of this in China, but not in any English-language media as yet.
Posted by RichM May 8, 2005 | Permalink | Newsletter
May 6, 2005
OLT.com Sells for $93,000
The weekly sales list at Domain Name Journal is a great way to stay on top of trends in domain name sales on the secondary market. For the week ending May 1, the big winner was OLT.com, which showed the value of three-letter names as it sold for $93,000, with the buyer apparently planning to use the domain for a site about online taxes. Meanwhile, MyShopping.com sold for $47,000. See the full list at Domain Name Journal.
Posted by RichM May 6, 2005 | Permalink | Newsletter
May 4, 2005
NetSol Blamed for Hushmail Hijack
Lapses at Network Solutions are being blamed in the temporary hijacking of the domain name for Hushmail's email service. It sounds like the hijacker used social engineering techniques to gain access to Hushmail's DNS nameserver settings, and redirected the site to another server. "We are aware that a hacker temporarily altered this customer's [DNS records]," said Network Solutions spokeswoman Susan Wade told eWeek. "Our security team promptly rectified the situation."
Posted by RichM May 4, 2005 | Permalink | Newsletter
Go Daddy Launches Domain Auction Service
Go Daddy has launched The Domain Name Aftermarket, a new auction service that will provide buyers with access to the giant registrars' expiring domains. Seeking to leverage Go Daddy
's inventory and visibility, the service has $4.95 membership fee, and commissions are 7.5 percent of the sale price, with a $10 minimum and escrow service from Escrow.com. This continues the trend of big registrars staking out territory in the domain name aftermarket. Go Daddy
is now the Internet's largest registrar, with more than 6.5 million names under management.
Posted by RichM May 4, 2005 | Permalink | Newsletter
May 3, 2005
Register: ICANN .Net Bidding Was Stacked
After an in-depth review, the UK tech news site The Register is asserting that the rebidding of the .net registry was stacked in favor of VeriSign, the incumbent operator. The Register's Kieran McCarthy alleges that the judging criteria were manipulated to favor VeriSign's chances, while the selection of Telcordia as the "independent" evaluator also favored VeriSign, which has historic ties to Telcordia. The summary:
The bias for VeriSign written into the .net process by ICANN is remarkable. VeriSign and ICANN have been at loggerheads ever since ICANN's formation in 1998. VeriSign has consistently stymied ICANN attempts to open up the Internet market, and through a range of lawsuits has tied the organisation up fighting legal battles. We have always suspected that VeriSign's lawsuits would be used as a bargaining chip further down the line and maybe with the .net reallocation, that moment has come.The difficulty is the lack of smoking gun. There are lots of issues that, when taken collectively, suggest a bias in favor of VeriSign. McCarthy does a good job weaving these together, but it would be surprising indeed if ICANN decided to postpone the closure of the .net deal with VeriSign to further examine the process.
Posted by RichM May 3, 2005 | Permalink | Newsletter