What keywords are worth more on a domain name?
More hints on what keywords are worth more on a domain name // Black Hat Domainer
In 2007, 3.8 billion searches were conducted on yellow pages sites as well as the local listings they provide to search engines such as Google, Yahoo and others. So what are the most popular things being searched for?1. Restaurants
2. Physicians & Surgeons
3. Hotels
4. Auto Repairing & Service
5. Florists-Retail
6. Auto Dealers-New & Used
7. Dentists
8. Auto Parts & Supplies - New & Used
9. Beauty Salons (tie)
10. Hospitals (tie)This list was put out by the Yellow Pages Association. The data was collected by Knowledge Networks/SRI.
Print article about the book “Mobile, Domains & The Future” (long version)
With mobile phones taking a prime spot on the communications stage, some say that
the future is mobile. That’s one of the messages found in futurist and consultant Javier Marti’s latest book, “Mobile, Domains & The Future.”
The book is packed with information on all things mobile, from the recent history of the medium, to the many different ways in which coming developments will make the mobile phone even more important to daily life, whether the goal is to have fun, find friends, conduct business transactions, or even find a partner.
In a very short period of time, mobile phones have changed everyday lives like no other device has before. Mobile phones today are not only the essential means of communication for more than three billion people worldwide, but are also becoming the one and only electronic device most people cannot live without.
“Our phones allow us to not only keep in touch with one another, but also — thanks to the advance of the mobile web — to play, learn, blog and share in real time what we are doing with the world, much as we already do with the ‘regular’ Internet, using our computers today,” says Marti. “In the near future, mobile phones will become our main computers, wallets, virtual secretaries, music players, and much more. To do all this effectively, they will hold our work information and files, our medical records, our passwords, our photos, emails, social security and bank account numbers, chat and SMS messages, and much more.”
However, not everything is rosy in the future of mobile technology and society, according to Marti. Mobile phone technology poses important threats to our privacy. Marti points out that the same technology that has opened these innovations in communication and sharing also poses dangers, especially invasion of privacy. “Even as our phones help us get a myriad of things done with ease, they can be geographically tracked in real time, giving our coordinates to others,” he says.
Marti also expresses concern about the information trail left by mobile phones. “Service providers can ‘know’ much about our phone, like which other phones signals are nearby at certain hours or days. Could this be our spouse? Our boss? Our lover? Using cutting edge statistical techniques, operators, governments or hackers may learn much about us,” he warns. “Additionally, the information held on mobile phones can be stolen, modified or even deleted by unscrupulous hackers at any time, without our noticing it.”
Another risk of mobile phones is the potential for dependence and addiction. The privacy a mobile phone offers allows its owner to access any kind of information, including addictive material, at almost any place and any time, making rehabilitation much harder or impossible.
“As we are currently witnessing in Asian countries, the addiction to our mobile devices is a very important issue that will sooner or later have to be tackled by all of us as a society, before it becomes a threat of epidemic proportions, particularly for the young,” Marti explains.
“Mobile, Domains & The Future” switches gears in the last few chapters to pull back the curtain to the world of the people behind the mobile websites of the future. Marti takes readers into the world of domain name traders, or “domainers” as they are known. He answers the questions, “Why are domain names essential and increasingly valuable in our world today? How much can a domain name be worth and why? Could I become a developer or domain trader myself?” These and many more questions are answered in a jargon-free manner, allowing readers to dream or take action to become players in a world where an asset bought for less than $10 today could potentially be sold for thousands or even millions, based on published domain name sales figures.
Marti assesses that there are still opportunities to make money. “The intelligent investor and the average person have a lot to gain by learning about the mobile world, content development and domain name trading. There are still great opportunities to be had by providing the services or entertainment that millions of users will consume in the near future, ” he says.
In order to demonstrate this opportunity, “Mobile, Domains & The Future” leads the reader through the recent history of the Internet, and how the Mobile Internet is rapidly being adopted. “The opportunities are just staggering. There are approximately three times more mobile phones than computers in our world already as we speak. Already billions of mobile phone users are eager to consume information, have access to their favourite entertainment and communicate with others in the innovative ways that only mobile phones can provide,” says Marti. “My book shows readers — even those without any experience with technology — what one needs to know in order to make the most of this opportunity right now.”
This book is also an introduction to the domain extension that could well be the door to our mobile future: dot Mobi. This relatively new domain extension can be to the mobile future what the .com extension has been in the computer past: the best way to access information, particularly when “on the go”. Although Marti is not directly associated with this new extension, he can see a bright future for it, provided the dot Mobi domain name registry is successful promoting this extension to the general public.
Although phones can browse any kind of website today, the experience is far from pleasant. In most cases, conventional .com websites load slowly, if at all, don’t have the exact information necessary for people who are out and about, and require scrolling on phones. These websites were designed for people at home or work, and for screens ten times the size of mobile screens.
The mobile experience, on the other hand, is quite different. For example, a person travelling for business or pleasure away from home may need to make a hotel reservation in a taxi on the way to the airport. It may also be necessary to make a money transfer from the bank at a time when no computer is available, like from the beach or on holidays. During idle times on the bus or while on the train, people may want to be entertained. For all this, websites specifically designed for mobile phones provide a faster, more targeted experience than a more cluttered website like those made for computers.
Today, leading companies like Wachovia, Mercedes-Benz, Sheraton Hotels and many public institutions like the cities of Barcelona, Helsinki, and Frankfurt have their own dot mobi websites. And more corporate dot mobi sites are going live by the day. The reason? The dot mobi extension gives users the guarantee that the website they are about to see will load quickly, contain only information relevant to their mobile situation, and perfectly fit with their needs on the go.
“Mobile, Domains & The Future” is filled with data, pictures and information that give the reader an overview of why the mobile world is important and how one can best seize the opportunity in the early days of the mobile web.
“Many people have told me that they would have loved to have read such a book at the beginning of the dotcom boom, but that opportunity has gone forever. However, the mobile world is comparatively right now where the Internet was twelve years ago. There is a great deal of opportunity for anybody who wants to get involved, at many different levels. All of it is explained in the book,” says the author.
“Mobile, Domains and The Future” is free in its electronic version, and can be downloaded now from the Trendinews.com website or by contacting the author at JavierMarti@Trendirama.com.
Choosing profitable domain names 101 - Stay away from “the giant’s niches”
As domainers, there are two sectors of the market we should not be interested in: the lowest and the top.
You see, when choosing domain names, there are at least more than twenty very important factors to bear in mind. Some of these factors deal with the economics of the name itself and its future re-sale value. Examples are:
- potential (user/visitor) market size if developed
- purchasing power and number of corporations who may be eventually interested in buying that name from us
- potential number of small businesses or sole traders who may eventually be interested in buying that name from us (e.g. plumbersAustin)
Other aspects to bear in mind when choosing a name are those related to the way the public searches for information. At this point we have to get into the public’s mind, and think about the
- uniqueness and sense of the name (collegefun or collegeparties?, date or dating?)
in order to choose a name with the widest appeal, or a name that appropriately targets the market in which we are interested.
…yet others things to bear in mind are a range of more with intrinsic qualities of the domain name itself that can make it easy to spell and remember, ensuring repeat visits:
- sound
- number of letters
- potential and uniqueness of mental associations with that name (whatever name that creates a strong image in your prospect’s mind will be easier to remember. Examples could be woodenCross, and flyingPig)
In any case, the very best domain names not only pass with flying colors the test of the conditions outlined above and many more (singular/plural, neutral term, users’ high purchasing power, wide demographic appeal…) but also have an important meaning in different languages and are generic enough as not to step into anybody’s copyrighted term or brand. Examples could be “amor”, “hotel”, “diamante” and “bar”.
But of all the factors that a domainer should bear in mind when registering names, there is one that is crucial, perhaps as to be the single most important factor on deciding which domain name to buy, and yet often ignored by thousands of domainers time and time again:
The probability of a huge corporation coming soon or buying their way out into exactly the niche that we are trying to target with our name.
You see, if we are to liken domain names to a game, most people would associate it to the roulette. However, I think buying domain names could be more accurately associated with the game of poker. Why poker? because up to a point, more than luck, domaining is a “game” of strategy and probability, a game in which is very important to keep one’s cards hidden, but to know as much as possible about the competition’s cards and next moves. Professional domaining is not a cross-fingers business, or at least, it should not be.
In fact with domain names, much more easily than in roulette, most of the times we can certainly calculate the probabilities of certain events happening, like the coming of a huge player into our market. It only takes being informed about the big picture.
Some of these domains may appear very attractive to the untrained eye: connectwithfriends, meetnewpeople, datingadvice…but yet, what can these names do against Facebook, Match.com and Hotornot.com?
Of course we could make some reasonable money on parking payments from them, as long as there are direct navigation visitors, and only until the day parking doesn’t work anymore (how far are we from that? My asnwer may surprise you)
But in a domain market that is slowly maturing and coming to its senses, we should never dream of realistically selling these names for a huge sum of money, let alone developing them to compete with certain companies that can pour a thousand times more money in marketing and PR than we can.
A good strategist must know when to accept defeat, keeping its best resources for future battles, instead of fighting to the last soldier against an army ten times his army’s size.
Examples of sectors in which this can happen are maps, social networking, and payment systems, to name a few. A domainer that tries to be successful in these niches would face the perfect storm, made up of international, mature, cash rich, multilingual, billions-worth companies from different sectors pursuing an active and urgent strategy to enter or improve their presence in the niche.
If we get into maps, we’ll compete with Google, Yahoo, Microsoft and Nokia, to name a few.
If we get into social networking, mySpace and Facebook will be our main competitors.
If we get into payment systems, Paypal, Visa and dozens of powerful financial institutions arond the world will try to stop us.
The time when corporations come into the digital age with full force is slowly but surely arriving ladies and gentlemen, so things have gotten a lot more complex than just having a good, descriptive domain name, and those who are not able to keep up with these changes will perish wondering why there are not having any offers for their “superb” domain name.
If that is your case, wonder no more, for here is the rule you forgot:
Don’t waste your time, money and energy. Stay away from “the giant’s niches”.
More information:
http://valleywag.com/tech/exclusive/screenshots-of-first-googlephone-app-320226.php
http://www.legiontech.net/node/26120
http://news.bbc.co.uk/1/hi/business/7022527.stm
http://news.bbc.co.uk/1/hi/technology/5164350.stm
http://www.download.com/Google-Maps-for-Mobile/3000-2641_4-10528447.html
http://blog.seattletimes.nwsource.com/brierdudley/2007/11/microsoft_buys_toutonghis_seat_1.html
Online payment market is worth around $15 billion
Some highlights on Chinese Internet usage
Less wealthy and educated, with an inclination to IM rather than using email…and huge by the numbers. However, penetration in rural areas still quite slow…
* Mobile Internet will become more and more important, over 44 million users use mobile handsets to access Internet, an increase of 27 million (159%) in last six months.
* Over half of all Internet users(51.2%) are under age 25. The Internet penetration rate for users aged between 18 to 24 is 43.4%. Internet has become their lifestyle, that’s also part of the reasons that QQ and 51.com are so popular in China.
* The percentage of Internet users with high school education or below increased from 48.2% in half year ago to 56.1%. The percentage of users with an income below 1000 yuan increased from 47.6% to 51.7%. You need to understand these group of young users to become leading player in China’s Internet market.
* Over 37% users, increased from 32.3%, access Internet in Internet cafe. It is said that 51.com is very popular among Internet Cafe users
* IM is more important in China than email for communication. More netizens use IM than email (69.8% vs. 55.4%), while over 90% Internet users use email in US. IM usage rate is even higher (74.6%) among users under age 25, while the email usage rate is only 46.6% among them.
* Online entertainment demand is the most important demand among Chinese yougsters(under age 25), with 91.4% of them used online music, 79.6%% used online movies, and 67.1% played online games.
You can read the whole study where these numbers come from here
And this is an interesting comparison between mobile internet penetration in China/Japan:
The story of .mobi and .mobi domainers book FAQ
Thank you for your kind emails and for visiting this page. Here I address some of the questions you have privately asked me. I hope this helps you to decide to be part of the project of the .mobi domainers book.
Can I trust you?
This is up to you. Notice that I said that all the questions I ask are optional. However, if you only give me part of the information, you make it more difficult for me to paint a consistent picture of you to readers.
If you google my name (Javier Marti) you’ll see that I am everywhere, particularly associated to Trendirama and my blog, which is around 4 years old. I am also Trendirama.tv. Basically, I am not going out of the internet anytime soon and have no interest or need to be dishonest with anyone. I am to busy. Not worth my time. If you are in the UK you can also meet me personally. I live in Bristol.
I have domains myself and understand your concerns, but sometimes our concerns make us lose opportunities. In the end of the day, there are only two options about .mobi as we see it today…either the extension makes it big, and in that case you have nothing to worry about since many of you may become very wealthy over time, or the extesion becomes totally irrelevant. Either case, as long as all those domains are registered under your name, you don’t have as much to lose as you think. If you got a few hundred names, you’ve already made your bet. You can hide it if you want, but hey, nobody expects you to be right about .mobi. We are all in the same boat.
How will you handle confidential information?
I shall keep any information you CLEARLY ask me to keep confidential, away from public eyes, until the date you tell me I can release this information.
If you are not comfortable releasing a piece of data, just don’t do it, and we’ll all sleep well tonight. It is not my intention to steal anyone’s information. I am not into that business I am afraid. I am in the business of learning, and sharing what I learn. That’s it.
If you trust me, you trust me. If you don’t, you don’t. It is up to you.
But I understand perfectly the value and concerns you guys may have about this and you can rest assured that as long as you CLEARLY tell me what is confidential…that won’t be included in the book until you say so.
There is a risk though, that you release information too late, the book is almost finished and your info changes things dramatically. In that case you will complicate my life enourmously and I wish you wouldn’t do it. But there is nothing I can do about it.
When will you release the book?
I don’t know even if I’ll release it guys. This depends very much of your participation. So far, I received a few positive emails and replies to the thread, but need a lot more.
You see, in order to write a good book, I need enough background information about you and the whole .mobi scene. I can get information about .mobi’s history, but I can’t get to know you guys if you don’t tell me about you. The human side of the story would be missing.
Then, the more I know, it is “just” a matter of spreading all that information in a big “table” and carefully put all the pieces together to build something that makes sense, flows naturally, and is interesting and informative. (not easy to do, I can assure you)
My original idea is to start making these interviews now, so you can send me your notes and replies, and perhaps release the book a few months after we all have confirmation that .mobi has either a) made it, or b) not made it. I think only then the book will make sense. I am sure you know what I mean…the book should show a contrast, an outcome…in order to be interesting. Something like “these people believed, and this is what happened”. The .mobi story may be ongoing for many years to come, but I need some big events to make the book interesting. And I don’t know when these will happen.
The events will in turn dictate the release date of the book. Suppose that there is a .mobi default from Google in 6 months and we see a huge marketing campaign from the mltd at the same time. People start to talk about .mobi a lot and 6 months later registrations have increased at a rate of XX%. That woul be a good moment to release the book.
Get my drift? But in order to do that, I need you guys to send me info as soon as possible.
(Update 8/07 - Third question: how long will it take?
As I said in the FAQs or the other thread about the book, the book may take anything between 8 months to a year to be released, depending on the events and how busy I am (I am not paid for this and the book may well be free)
However, sudden events that confirm the fate of .mobi in one way or another could well accelerate the release of the book
I am trying to make a good job and I won’t release it until I am satisfied with it. There is a lot of mediocre writing already on the internet, and a lot of misinformation regarding domain names. I don’t want to be part of that.
Suffice to say that I wouldn’t like it to take more than 8 months from now, but it is not a promise.
Regarding how the project is going, I can tell you that I just finished the table of contents (not as simple a task as it seems if you want to make a good book on this subject) and have started a draft to document all the information that I am receiving from different sources and scraps that I have seen in many websites, for later polishing of the text. Let’s say that 20% is done up to now.)
How do you plan on handling royalty distribution among the participants?
It is too early to think about this. First we bake the cake, then we cut the pieces. If there is no book, there is nothing to share. If you guys don’t send me the info, there is nothing to write about. If you do, there are many things we can do. We can do some kind of wiki to document the advance of .mobi even after the book. We can make a second updated edition of the book. We can make the book for free just to spread the word about .mobi. Some of you can co-write a second version with me…who knows?
Nobody knows today. too early to tell. Let’s start by writing the book, and then I think things naturally will develop from there, since I would like to have your opinion guys during the whole writing process.
Will the participants have any editorial controls and or capabilities regarding their own information and contributions to the book?
Not at this point. I am the writer and editor. For confidentiality reasons, it all starts and finishes in my head.
For the moment, many people tell me about themselves, I get a good picture of .mobi domainers, and write about them. Participants will only have the control of what’s printed and what is not, by telling me exactly not to published a certain bit of information. We all assume that you are comfortable with making public all and any other information you send me.
Can I send you new pieces of information as I get to them?
Yes. In order to make a good book, it is important that I know very well what’s going on in the .mobi scene. I am not sure how this will happen, but I am sure you guys will help me with this sending me tips and things I should pay attention to. I’ll do my best but can’t cover absolutely every angle!
When do you want the answers to your questions?
The sooner you reply, the more chances to be featured in the book.
How many domains do I have to have to be featured in the book?
I’d say minimum 200 .mobi domains. That shows that you start to be serious about it and believe in the extension. Also, I may give priority to people who send me their info now, since what’s the point of learning that someone has 10000 domains when I am about to finish the book? They should have talked before.
I know such and such domainer that should be featured in the book, what should I do about it?
I am not going to be chasing people around…I have no time for people playing hard to get. So if they want to be featured, please refer them to the threads in the forum (or copy and paste the original thread message to them) or ask them to contact me. Thank you!
Do you realize Javier, that there are people that will speak badly about your book and yourself?
Yes. It is human nature. People hate losers and hate winners the same. If you have visibility, people will attack you. I count on it and don’t care about it. All my life has been so.
But I don’t have time for negative people, sorry! Those of you who choose to participate…welcome to the club!
Are you doing this to get rich?
No. Intellectual works are a rich subject that I wrote about in the past…
As you may know, the editorial and record industry and distribution systems are changing very rapidly right now, and nobody knows what’s next. I have the impression that anything that can be digitalized, will be pirated, so I may well choose to release the book for FREE. We’ll see about that at the time of release.
I do this mainly because I like to learn (as you can see in my Trendirama.com project), because it’s an interesting challenge for me as a writer, and because I think it will be a really interesting story to tell, and nobody is paying attention to it.
Why exactly are you doing the .mobi book?
Well, there are many reasons:
1) promote .mobi?
2) help to take away the “stigma” associated with domaining in general (domaining = cybersquatting)
3) show the human side of domaining
4) help people tell their little stories (we all have them)
5) create debate around the extension and its future, in which we all learn, respectfully hearing each other’s opinion
6) express my opinion, or rather, my analysis of the situation. I believe some people will find it interesting
7) help increase sales and prices of our domains by showing this world to people, who will in turn become domainers
helping to promote .mobi forums (I am a little biased on this one as you may have noticed, as long as people treat me well)
Why do you write this book now?
Because now is the moment. You see, now is when things are happening, now is the time to gather the information. My thinking is that there will be in the next 8 months some events that will either confirm or dethrone completely .mobi, and I would like to tell that story. What would be the point of making a book when everything happened already? I am not into historical books. I study the future, and .mobi seems to be quite part of that future. So I am betting my time and tallent on a project associated with it.
I hope this answers yours and everyone’s questions for the moment. THank you for your interest!
Ok. I read this FAQs but haven’t read the questions…what should I do to participate?
Send me an email to info@trendirama.com telling me a little bit about yourself and I’ll send you the questions.
What’s better for your brand: a good domain name, or a celebrity?
What would you say is better for your brand: hiring a “star” for two years at a cost of $50 mm or buying a domain name for the same price? this is my comment to this post
Domain names are, in my opinion, much more valubable, stable, and pose less risks as an investment, for a brand, small business, or individual that want to promote any kind of product or service. But why do I think so?
**A star endorsement won’t last in time, a domain will**
A good domain name is a more solid investment, that only has to be renewed at a negligible annual cost. Renewing a domain name may cost you 10/15 dollars of today. Renewing a contract with Tiger Woods “may” cost you a little bit more…
**A start endorsement contract needs to be re-negotiated** If the “star” is now more popular, you’ll have to pay more for their services, and probably make a new campaign according to take advantage of new events surrounding the star
**A star is tied to you only for the lenght of the contract** Nothing stops them from advertising your competitor’s product next year, unless this fact is included in the contract. And that limiting clause will necessarily make the transaction more expensive for the brand.
**A star endorsement puts your brand’s image at the mercy of the star’s actions**
Imagine that you make a deal with a certain model/actor/boxer that is at the top of his game right now. What happens if he does something really stupid, as it has happened in the past? (cocaine, wife beating…) what happens if the boxer gets publicly and badly beaten?
Your brand loses the whole campaign, that has to be taken off the air immediately. And back to square one. Look for a new star, spend millions again, do everything in a hurry…and still you won’t catch up with your competitors for a couple of years maybe. A star making you look good is a real and costly issue.
In a world of tightly calculated campaign launches, if you get out of the game this year, by the time you re-organize with a new star, months, not weeks, will have passed. Can your brand afford such slip?
A domain name will never “do” something stupid or make you look bad in public. It may lose some of its value for external reasons that could be worked around, but it won’t damage your brand’s reputation. The worst thing that can happen to a domain name is to become irrelevant and/or worthless. But even in that case, you write off the cost of the domain, not the cost of your whole marketing campaign plus the extra marketing efforts that have to be made to make a brand fashionable/respectable again when a celebrity has damaged its image.
**A star is forgotten, a good domain name is always remembered**
A good domain name will retain its value as a common expression that people search for. Would you prefer to pay 25 million dollars for having “[insert famous star here]” advertise your product today or would you rather spend 25 million buying the “sweets” or “wine” or “cheapholidays” domain names?
Generation after generation, domain names will continue to hold its value as long as we speak the same money and we want the same things. I don’t think the word “wine” is going away anytime soon in our common human psyche.
**Entering into star endorsements campaings is a dangerous never ending vicious circle for the brand**
Once you hired a star, you need to hire another one next year, and another one the year after that…in order to keep your brand fresh. You need to keep updating your stars with whoever is in fashion. Today it may be Penelope Cruz. Yesterday was Claudia Shiffer. But certainly tomorrow’s stars won’t be the ones of today.
And every year, the celebrities will charge you more for their services. Consider, for example, the value of endorsement contracts paid to David Beckham in the last few years.
In a celebrity-oriented world, the cost of hiring anyone, even small “stars” has skyrocketed in recent years. Singers, footballers, actors…no matter their trade, the market pays millions of dollars today for their mere appearance at an event. This was unthinkable 20 years ago, and keeps on going up.
…
Of course there are uncertainties regarding the future value of domain names, like there are uncertainties in every other active and cutting edge industry.
But no matter what the future holds for domains, at present, in my opinion, there is absolutely no comparison possible between hiring a star for a finite period of time or buying a domain name for a much longer period of time, for the same money.
It makes more financial sense even if we have to pay more upfront for it.
A doman mame is a much better investment, since the brand is associated forever in the mind of the consumer with something stable, that doesn’t get old, and that is not prone to make your company look bad anytime soon.
Simplicity, beauty, and money. That’s what a good domain name brings to your brand.
Can a star bring the same thing? How long for? At what cost?
Is the .com extension really so valuable?
My response to Mark, the author of Domain Aftermarket Overdue…
“”There are things I saw in the comments to that article that didn’t make much sense. One domainer said that your theory about “all it takes is browsers placing a search box in the navigation bar” is impossible and will never happen. This is typical, and I see that in my domainer friends as well. For the information of your commenters, what you say is already hapenning in Firefox since a long time ago now, and it stays like that update after update (which means that people don’t’ mind, or that even if it is so, Google or anyone has the power to force the browser into it without the browser losing significant market share). Another point I see they’re wrong, is that they act as if the .com extension is untouchable, or they play in a finite market. For me it is not so, for example when a UK company buys a .co.uk, the .com extension loses a potential buyer. And many people will follow.
Domainers believe that prices will always go up because people will pay anything for their domains. I don’t see this happening. If a small business can’t have the .com, it won’t stop doing business, it will just buy the extension they can afford. Would it have been better the .com? most probably. Is it essential to survive or do business, thus pushing prices of .com’s to the stratosphere? No. Or not for much longer.
Another thing domains don’t want to see, is that as there are .co.uk and other extensions that didn’t exist before, I don’t see why new extensions couldn’t be brought in in the future, thus eroding even more tha value of .com.
Another reason is that countries usually push more or less openly their own extension. I lived in Spain, and the “de facto” there is “.es” The .com is the weird one. Users don’t care who has the .com, because they would never visit it or type it in the first place.
In China the government wants to “force” into the population the .cn extension, I heard, and domains in their own language.
In india, they want to do the same about their own language.
So maybe I am very wrong, but I cannot see such high value as domainers are trying to make us believe in .com’s (just in case, I own a few domains myself, you never know!)
I don’t think what they say is not true, what I just think is that it is being exaggerated 1000 times, there definitely is a bubble about the .com extension, and that the basic assumptions of domainers about .com and the future is flawed. As an “apprentice Futurist” ;), my job is to see the big picture, and many of these guys seem to be too emotionally involved in the matter as to see the big picture anymore…
Domain Aftermarket Overdue for an “Asset Repricingâ€
Written by Mark Jeftovic.
For the last couple years the domain aftermarket has been hot again, we’re seeing valuations not seen since bubble1.0, which saw valuations like 7 million dollars for business.com and 800.000 dollars for drugs.com. The TechWreck was induced by the NASDAQ crash of 2000 and the fun was over for awhile.
What differentiates this bubble in the domain aftermarket from Bubble 1.0 is domain parking and monetization. While it existed in 2000, it was a weirdism on the fringe. Yun Ye was quietly building his Ultsearch empire and cleaning up.
When he sold out to Marchex, for 165 million cash, the masses “woke up†to parking and PPC. Now we have Internet REITs, domainer conferences and, the second last sign of an overheated market dropping in to place: VC funds are tripping over themselves to invest into PPC and the monetization game. (The last sign of an overheated aftermarket are the sales letters I get from places like domainprofiteer.com offering me courses in how to get rich buying and flipping expired domain names)
Now individual domains and portfolios sell for multiples of their revenues plus a premium for the name itself in the case of generics and other “type-in†names. These multiples have gone vertical over the last twelve to eighteen months. During the nadir of the tech wreck, actual web businesses were going for about 1 year’s revenues and that was the departure point for domain sales.
The interesting thing is since then, the multiples on domain names have outstripped the multiples on developed websites. To me, this is the equivalent of the “inverted yield curve†that portends economic recessions.
The logic, apparently, is that “developed websites†require actual work to keep them current and maintain the userbase. As such they often sell along typical business valuations: 1 to 2 times revenues or 3 to 5 times earnings. Often less.
PPC domains, type-in, generics, et al are going for minimum 5-7 years revenues and that was before things were heating up. Among domainer circles 12 and 15 year multiples are becoming more common, more sellers are looking for 20 years.
I’ve heard domainers talk in terms 40 or 60 year multiples or more. Really.
Valuations of this magnitude are financially unsound. We should all be familiar with the Rule of 72 (if you are not then you shouldn’t be “investing†in anything, stop daytrading or whatever you’re doing right now and go read Benjamin Graham’s Intelligent Investor or something).
This handy rule of thumb instructs us to divide the rate of interest on an asset into 72 and you’re left with the number of years it takes to double (or recoup) your money. With valuation multiples, do the opposite, divide the multiple into 72 to find out what your actual rate of return is:
Multiple Rate of Return Snide comment
7 years 10.2% not bad
12 years 6% GMAC territory, if you sell yours before GM goes bankrupt and buy a domain at this multiple you may actually be better off for it
15 years 4.8% we’re getting into 10 year T-bill territory here
20 years 3.6% we’re below the nominal inflation rate here
60 years 1.2% here we’d be better off hoarding empty aluminum cans
As one “domain flipper†on a closed domainer board gloats,
“In the domain aftermarket returns of 30-50% a year are commonplace. It’s almost a certainty that $65k [for domain_deleted] will turn into a $100k within six months from my experience. This is what I term “long term†as I tend to flip within days…â€
Evidence of tulipmania in the modern age.
“All my short term flips have made me 50%-200%â€
“I agree [that it is] madness of people paying 10-20 years on ppc domains, but if you buy at even 8 years and sell asap to someone higher up the food chain, you don’t have to agree with their madness, do you? :)â€
At the time I started writing this article, John Gotts had recently paid 3 million dollars for the wiki.com domain name because he thinks “wikis are going to be hot†and from that premise, a lot of people are going to type “wiki.com†into their browser location bar.
Then “after he makes his money back on the 3 million he paid for the name, the rest will be pure profitâ€. No, that isn’t a line from a Simpson’s episode, it’s a real strategy, and according to Gotts there were two VCs interested in funding it. Big surprise. (Recent speculation is that the deal hasn’t fully consummated and that Gotts left himself a large escape hatch if it didn’t work out. The whois record doesn’t seem to reflect a completed transaction.)
Type-in traffic is always nice, but anybody building a long-term business strategy or “investing†large quantities of cold hard cash on the premise that it will continue forever (or even escalate) will, I think, be disappointed. The underlying premise is that internet users will grow less sophisticated over time and that there will be no further or meaningful user interface changes from here on in, that net neutrality will prevail and ISPs, access providers, network carriers, web browsers and even root or recursive nameserver operators are going to stay out of the realm of “errant or exploratory internet traffic†and leave it all to the domainers.
Type-in traffic is the realm of grandmothers and the not-so-tech-savy. As people get more knowledgeable about the internet, their type-in usage declines. They stop “typing into†the browser’s location bar and start using the browser’s search tab.
I think these facts will work against any assumptions about type-in traffic, especially those who hope it will increase into the future. In Gotts’ case, anybody clueful enough to know what a wiki is, knows better than to stumble their way around the internet typing what they want into the location bar. He’d have been better off buying wiki.org, which at least comes up near the top of the organic search engine results for “wikiâ€, while his wiki.com doesn’t even list on the first page.
Further, all it takes is one major browser (IE, for instance) to make a shift in the out-of-box layout of the browser dashboard: say putting a search input field right where the current location input bar is and type-in revenues will begin to decline in earnest.
Whatever type-in domains are doing now, I don’t think there won’t be as much of it in 10 years. So paying 10 years revenue on a type-in domain or portfolio seems highly speculative to me. Paying 20 borders on insanity.
One of the reasons I take this view is because I disagree with the wider sentiment that domains have an innate underlying value like a piece of real estate.
The argument goes that if you pay, say $100,000 for a name, then it has an underlying value of that amount, and the revenues earned by parking the name is a return on investment over and above the initial outlay.
I disagree with this. I think the domain has an underlying innate value of zero. If you pay 100K for a name, you are out 100K until the name earns it back for you, at which point you’ve broken even (aside from the loss of purchasing power of the currency via inflation in the intervening time).
You haven’t turned a profit on the name until it earns back your initial investment plus an amount greater than inflation, at which point you’re finally in the black on your “investmentâ€. If you do sell the domain for some amount afterwards, either recouping your funds or turning a profit, it’s because you got lucky and you’ve succeeded in speculating, not investing.
Repeat after me: What makes a domain name valuable? It’s what you do with it. If there’s one thing the whole “Web2.0†phenomenon has proven, it’s that for the most part domain names don’t matter. Pick a word, any word. Is the domain name taken? No. Great. Reg it, and get back to business, building the website and advancing the business plan.
While nobody really knows what “web 2.0†means, the naming styles that emerged from it were a direct result of unfunded, agile start-ups working within the gaps left by domain hoarding and an overheated aftermarket.
So what will trigger “asset repricing†in the domain aftermarket? Basically aftermarket domains will be another casualty of the current liquidity bubble bursting, which will happen any day now. The talking heads on CNBC are already “upbeat†after yesterday’s 400+ point selloff on th DOW. Downplaying the extreme imbalances in the financial markets. But I have maintained for years that the entire 2003-2005 run-up in the equities markets is just one big-ass bear market rally and I stick by my assertion that we will see new lows on the NASDAQ a lot sooner than we will see new highs.
Yes, the DOW hit a series of new highs which technically violate a bear market rally scenario. The DOW has hit new highs due to credit expansion and excess liquidity, pure and simple, and will unwind soon if it hasn’t started already.
Yes, I am one of those nutjob quacks who is convinced there is a global recession bearing toward us like a freight train. Many early indicators already show successive months of contraction. In it, housing values, equities and corporate bonds are all going to take a dump.
The domain aftermarket isn’t gold bullion or a t-bill. It isn’t by any stretch a safe haven. There is no reason to think for a second that aftermarket domain pricing will move inversely to the wider asset classes which are going to spend the next few years clattering.
We’re in a secular bear market, they tend to last 12 to 20 years. It started in 2000. Do the math.
My advice to anybody sitting on some monster domains or portfolios is to either sell them fast or develop them into something useful that can produce an income stream that doesn’t depend on blind type-in traffic or pre-existing link-pop from an expired domain’s previous incarnation.
The domain parking services are going to have to get a whole lot more creative if they want to survive the TechWreck2.0. Marchex may be headed there with their much anticipated openlist initiative, other operations like communicate.com are developing their properties into verticals.
Lots of people are working on a better, smarter, parked platform. The problem in this space is that there is a fine line between dynamically generating “contextual content†and an automated scraper splog.
At the end of the day, I don’t see a lot of long term upside for domains on their own, there has to be a viable website on them, there has to be something original, innovative and useful. There is real work involved.
The pink cloud days of easy PPC money from type-in traffic are numbered, get used to it.
Written by Mark Jeftovic. Mark’s blog
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About Javier Marti
As an independent strategy consultant, futurist, speaker and founder of Trendirama.com Consulting, Javier is dedicated to help organizations, small businesses and individuals to optimize systems, increase profits and make better choices in business and in life. He is the author of the book "Mobile, Domains & The Future"
When not consulting for clients, Javier shares his knowledge and experience through information-packed, yet entertaining presentations in a wide range of subjects in English and Spanish.
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