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The Lowdown



May 2006 Archive

Here's the The Lowdown from DNJournal.com! Updated daily to fill you in on the latest buzz going around the domain name industry!

Compiled by Ron Jackson (Editor/Publisher)
& Ray Hackney (DN Journal Special Correspondent)

 

Why do domain sales continue to boom? Because advertisers continue to pour online at an amazing clip, rapidly increasing the pool of revenue domain owners can draw from when they monetize their domains through PPC, development or cashing out by selling at a higher price. Online ad revenue soared to a record $3.9 billion in the first quarter of 2006 according to a report issued this week by the Interactive Advertising Bureau and Price Waterhouse Coopers. That's a 38% jump over the same quarter a year ago. Further evidence came from a report in the Financial Times this week which quoted global media company GroupM as projecting that by the end of 2007, the Internet will receive more ad dollars than newspapers in the UK do. The report added that newspapers and TV will both show revenue drops this year, meaning only Internet spending is keeping the advertising sector out of a recession in the UK. In the U.S., Merrill Lynch analysts issued a report on newspapers Friday titled "DEEP Depressing Dive," in which the company's analysts said they are lowering estimates once again for newspaper ad spending. "We remain concerned regarding the newspaper industry's outlook as the dual impact of changing media consumption habits and the migration of highly lucrative classified ads to the Internet are squeezing margins and hampering growth," wrote Merrill Lynch analyst Lauren Rich Fine.
Posted May 31, 2006

Marchex, Inc. acquired certain assets of Open List, Inc. today, including its content aggregation, search technology and user-generated content platform that Marchex plans to deploy to its proprietary network of over 200,000 web sites. Marchex paid approximately $13 million in cash and Marchex common stock (approximately $6 million in cash, $5 million in Marchex common stock and $2 million in restricted Marchex common stock). The restricted stock, granted to employee shareholders of Open List who will join Marchex, is subject to vesting. Marchex believes the Open List assets will allow the company to increase the utility of selected proprietary web sites, through the addition of Open List’s content aggregation, including product/service descriptions, ratings, expert third-party reviews, user-generated reviews, articles, maps and other information. Marchex has already launched 31 local/vertical beta web sites that feature Open List integrations including www.lasvegasvacations.com, www.90210.com and www.frenchrestaurants.com. More details are available here.
Posted May 30, 2006

The 3rd Annual GeoDomain Expo coming up Friday and Saturday (June 2 & 3) at the Hyatt Regency Hotel in Chicago will be the largest gathering of geographical domain name owners to date. Sponsor Associated Cities says that many geo domains have established strong inroads in their respective markets in areas that have been long dominated by local and traditional media. Attendees will include representatives from NewYorkCity.com, LosAngeles.com and Chicago.com, to name just a few. Scheduled speakers include Gordon Borrel (Borrell & Associates), Michael Adelberg (Google), Dan Pulcrano (Boulevards New Media), Ari Bayme (Milbank Roy & Co.), Brian Benko (NoParking.com) and Truman Hedding (InfoSearchMedia). The list of sponsors features DomainSponsor, SuperPages.com, Hotels.com and Local.com among others.
Posted May 29, 2006

Great Britain's .uk country code, the world's 4th largest extension, just hit the 5 million registrations mark. Nominet, the organization in charge of .uk, handles over 144,000 new registrations every month. Nominet CEO Lesley Cowley said, "The UK market for domain names remains incredibly buoyant, with companies increasingly building a web presence and electronic communications into their business strategies." For the record, the 5 millionth name registered was HosePipeBanBuster.co.uk, registered by Watermatics Ltd, an irrigation company based in Hertfordshire.
Posted May 26, 2006

Register.com has been named one of five finalists in the Best Customer Service Organization category for the 2006 American Business Awards. The New York Post has called the awards (known as the "Stevies") the business world's version of the Oscars. Winners will be announced during a ceremony June 12 at the Marriott Marquis Hotel in New York City. The ceremonies will be videocast on the Internet and broadcast on radio and more than 800 executives from across the U.S. are expected to attend. More than 1,500 entries from companies of all sizes in a variety of industries were submitted for consideration in multiple categories, including Best Overall Company, Best Executive and Best New Product or Service, to name just a few. 
Posted May 25, 2006

Was it really just 6 months ago that the first major mainstream media articles on the domain business appeared? Hard to believe when we now see the industry featured in major publications on a weekly (sometimes daily) basis. Forbes.com just got on board with an in-depth article by Rachel Rosmarin featuring Marc Ostrofsky and Bob Martin of iREIT.com. While some mainstream outlets have had trouble getting their facts straight, Rosmarin's piece is on the money and plays the ball right down the middle of the fairway, with none of the prejudices that some writers who do not understand the business have allowed to color their stories. It's a prime example of why publications like Forbes are universally respected while those that go for short term readership gains with sensationalism and inaccurate reporting always end up losing in the end. In the news business, credibility is your most important product. We continue to be amazed by how many media outlets fail to understand that.
Posted May 24, 2006

Here's another mainstream media take on the domain business, a Puget Sound Business Journal (Seattle) article picked up by MSNBC.com. Writer Eric Engleman has his facts straight but his work was severely diminished by an incredibly misleading headline - "Online 'Squatters' Might Yield Big Revenue." Generic domain names, which the story is about, have nothing to do with cybersquatting, a term that relates to registering trademarked domains. Cybersquatting is briefly alluded to once near the end of the story but has nothing to do with the gist of the article which is about monetization of generic domain names. Someone other than the writer almost certainly wrote the dishonest headline (in a weak attempt to sensationalize an otherwise solid article). This serves only to mislead the public and perpetuate a stereotype that has little to do with today's domain industry.
Posted May 23, 2006

Melbourne IT announced today that they have entered into an agreement to buy WebCentral, Australia's largest hosting provider. Melbourne IT provides domain registration services for Yahoo! Small Business and Microsoft Office Live, among others. According to a report from IPWalk.com, the merged company would have approximately 400 employees worldwide and combined annual sales of over $130 million. Both companies are traded on the Australian Stock Exchange. WebCentral shareholders will vote on the acquisition at a meeting expected to be held in August 2006. "The proposed acquisition will bring together two of Australia's leading web-services businesses, generating significant benefits for customers, shareholders and staff of both companies," said Theo Hnarakis, CEO and Managing Director of Melbourne IT. 
Posted May 22, 2006

The roll out of the new .mobi extension for mobile devices officially begins tomorrow (May 22) with a one-week industry sunrise period limited to companies that are members of recognized mobile industry associations. A second sunrise period for trademark holders will follow June 12-August 21. Starting August 28, .mobi domains will be open for anyone to register.
Posted May 21, 2006

 

Internet REIT (iREIT) today announced its acquisition of the Netster.com web portal and major portions of the Netster domain name portfolio. Netster is the latest in a series of acquisitions for iREIT, including such high-value domains as Bands.com, OfficeSupply.com and AfricanAmericans.com. The company says the addition of the Netster portfolio gives iREIT more than 400,000 domains under management and brings the company’s total portfolio of traffic up to 50 million visitors per month. iREIT CEO Bob Martin said the company is "working in partnership with top domain name portfolio owners to build the world’s largest, most profitable and highest-quality portfolio of Internet domain names that have traffic on par with the world’s leading media properties.” Blake Bookstaff, co-founder of Netster.com, said, “Netster was looking for a larger platform to take the portal to the next level. Joining forces with iREIT gives Netster the additional resources to enhance functionality, expand the site, and add value across the entire portfolio.” See item below for another major announcement from iREIT.

Posted May 19, 2006

 

Internet REIT (iREIT) announced today that it has raised a new round of equity and debt financing led by Maveron LLC, the venture firm co-founded by Dan Levitan and Starbucks Chairman Howard Schultz. The round of funding also includes significant investments by existing investor Jacobson Family Investments (JFI), as well as Perot Investments, the investment firm founded by H. Ross Perot. With this round of funding,  Levitan, Managing Partner, Maveron LLC and Steve Blasnik, President of Perot Investments, join the Board of Directors. Mark Britto, CEO of Ingenio, has also joined iREIT’s board. Prior to Ingenio, Britto was Amazon.com’s Senior Vice President, Worldwide Services, Sales and Business Development. Since opening their doors just 15 months ago, iREIT, a leading supplier of high-value Internet traffic to advertisers, has completed over 50 portfolio transactions, including today's acquisition of the Netster.com web portal (see item above). 

Posted May 19, 2006

 

Another note on booming domain registrations; According to a Chinese government report released Tuesday (May 16), that country's .cn extension now ranks 6th in the world in total registrations with more than 2.6 million domains taken (that figure includes 3rd level sub-domains like .com.cn that registrants were limited to until the 2nd level .cn was opened to the public last year). That is a 40% jump over the previous year and if you look at the 2nd level .cn only (which now has 1.1 millon registrations, making it the larest TLD in Asia), the increase is 154% year over year.

Posted May 18, 2006 

 

The explosion in domain registrations is reaching all corners of the globe. The IE Domain Registry, operator of Ireland's .ie extension, reported this week that total registrations in that ccTLD had soared 36.8% over last year's figures. However IEDR reported that their after tax profit of €865,000 for the past year was down slightly from the previous year because of increased spending on infrastructure and customer service improvements. Even so, IEDR said its performance enabled it to cut registration and renewal rates for customers by 20%.

Posted May 17, 2006 

 

GoDaddy.com Founder and CEO Bob Parsons has lashed out at "domain tasting" again, this time rechristening the practice as "domain kiting" in the latest entry at his popular blog site, BobParsons.com. By coining a new term, Parsons is trying to cast domain tasting in the same light as check kiting, though the latter is illegal.  Domain tasting is not, but Parson thinks it should be and is calling on ICANN to make it so. Domain tasting has become a widespread practice under which several registrars try to grab every dropping domain, test the ones they get for traffic, then cancel all those without traffic within their five day grace period so it costs them nothing to mine for domains that have traffic-based value.

Posted May 16, 2006

 

Statistics continue to pile up confirming the continuing migration of eyeballs (and advertisers) from traditional media like to TV to the Internet. In an article by Sarah McBride in today's Wall Street Journal, this quote stood out: "These days, people are spending as much time in front of a computer as a television - in some cases, even more. Adults spend about 14 hours a week watching TV and 14 online, compared with 11 watching TV and 10 online two years ago, according to Jupiter Research. Young adults, ages 18 to 24, spend about 10 hours a week online, two hours more than they spend watching TV. Many don't even own TVs but have laptops.”

Posted May 15, 2006

 

GoDaddy filed its initial public offering Friday (May 12) with the Securities Exchange Commission, seeking as much as $200 million in Class A common stock. The number of shares to be offered and the price range for the offering have not yet been determined, according to company officials. GoDaddy is the world's largest domain-name registrar, with about 13.6 million domain names under management as of April 30, and North America's largest shared Web site hosting provider. 

Posted May 13, 2006

In one of the biggest domain sales of all time, online diamond and jewelry retailer Ice.com has purchased Diamond.com for $7.5 million from Odimo Inc. Ice.com will continue to operate the Diamond.com brand and the company paid an additional $2 million for inventory. The two parties said the $7.5 million was for the domain name only. Details are available here
Posted May 12, 2006

 

In another strong sign of an ongoing boom in the domain business, InterSearch Group, Inc. (OTC:IGPN) showed huge gains in nearly all metrics in their first quarter earnings report issued May 11. Revenue doubled from the same quarter a year ago, gross margins rose from 48% to 69% and operating income was up 400%. In commenting on the results InterSearch President and CEO, Dan O'Donnell, said, "revenue nearly doubled year-over-year, driven by a combination of organic growth and contribution from irs.com, which we acquired in September of 2005. Dramatically increasing irs.com revenues in the first full quarter after the acquisition reinforces our confidence in our ability to replicate this success with other domains." 
Posted May 12, 2006

 

Large corporations are waking up to the power country code domains can give them in the increasingly important area of local search. Canada's Yellow Pages Income Fund just plunked down $2.5 million to buy a prime portfolio of .ca (Canadian ccTLD) domains from Emall.ca Inc.  Nearly 400 names were involved in the transaction including such prime keywords as Autos.ca, Debts.ca and Doctors.ca. Yellow Pages chief financial officer Christian Paupe said "the acquired domains will become a very precious inventory. Online is the future. We don't exactly know how this space is going to evolve,  but I'm convinced this was a no-brainer for $2.5-million. Their worth over time will be very significant." We agree and expect many more major companies to come to this realization in the months ahead. 
Posted May 11, 2006

 

No sooner had we written the item below than another major domain article came out in USA Today. This is the second domain piece written by Jon Swartz  for America's newspaper in the past 30 days. That exposure is going a long way toward waking up Main Street to the value of high quality domains. Top notch reporters like Swartz who get their facts straight and provide unbiased coverage are a credit to their profession and are vitally important to ours in helping to dispel false stereotypes of what domain investing is all about. 
Posted May 10, 2006

 

While we detailed a case of dishonest reporting in a recent newspaper article about the domain industry (see our May newsletter), by and large mainstream media is producing fair coverage of the current boom in the domain business. So many outlets are writing about this industry that some noteworthy articles have slipped under the radar. A reader just called our attention to a piece that appeared in the prestigious Financial Times a few weeks ago. The article details the experience of one UK domain investor and credits him for his foresight in recognizing the domain opportunity a decade ago. Domain investors are no different that investors in stocks, bonds, real estate or any other asset and it is encouraging to see that fact finally being recognized by the world at large.

Posted May 9, 2006

 

Subscribers to our free monthly newsletter got a sneak peak at our T.R.A.F.F.I.C. West conference coverage when our May newsletter was emailed to them tonight. Our complete conference wrap up has now been published here. The May newsletter also tells you why you can't always believe everything you read in mainstream media, especially when the topic is domains. The current market boom is reaching all corners of the globe. A domainer from Brazil closes our latest letter with an account of what is happening in South America's biggest country.

Posted May 8, 2006

 

The largest live domain auction ever was held at the T.R.A.F.F.I.C. West domain conference Thursday (May 4) in Las Vegas. Dozens of domains totaling more than $2 million were sold during the packed event including three blockbusters; Sex.net at $450,000, CD.com at $275,000 and POS.com at $250,000. Payments and domain transfers will take a few days to complete and if no hitches develop, Sex.net will rank as the highest .net sale ever reported. The conference ended Friday morning. DNJournal was at the Venetian Hotel to cover the event and our complete wrap up is no available here.

 

Some big news broke while I was flying across the country May 1 to reach the T.R.A.F.F.I.C. West conference that will be held in Las Vegas this week. It was announced that former MySpace.com Chairman Richard Rosenblatt has led formation of a new company, Demand Media, Inc., that has raised $120 million dollars to purchase generic domain names like FlashGames.com. Other press outlets are reporting that Demand Media also bought eNom.com, the world's #3 registrar and eHow Inc., a San Francisco based content company. However, information we have from an associate of Mr. Rosenblatt's quotes him as saying the venture is a merger between his group, eNom and eHow. Enom issued a press release saying they were acquired but Paul Stahura (eNom founder and CEO) becomes President and Chief Operating Officer of Demand Media, the kind of key position that often comes with a merger of equals. Whatever the structure of the deal, there's a new heavyweight contender in town. (Post from Ron Jackson)


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