After all, the dictionary is just loaded with
words and if the supply of good ones got thin, you could just slap
an “e” or an “i” on the front, string several words
together, separate them with hyphens, mix them up with numbers –
or better yet – all of the above! You were limited only by your
imagination. No heavy lifting involved either, so how could you go
turns out there was one tiny little glitch in the business plan. Oh,
you could buy the words all right...it was the selling them for a
big profit part that proved to be a little tricky.
In fact, five months into my trip down the
road to riches I could still count my sales on one hand without
raising any fingers! That’s right, I had a shutout going. Why, if
I were a major league pitcher, people would think I was great!
However, in the domain business, pitching goose eggs inning after
inning is not such a good thing.
At this point, some people would take the
little bit of money they had left, buy a few rags to stuff in the
exhaust pipe, lower the garage door and slowly drift into a very
long sleep. I wasn’t quite ready for an eternal nap though and
fortunately fate started dealing me a better hand.
Over the next 7 months I sold over 150
domains, completely paying for the 475 I currently own with a
four-figure profit left over - enough to keep me yanking the handle
of that slot machine in the domain game casino.
That’s probably a bad analogy because it
implies that luck was involved in my abrupt turnaround. The fact is
luck had nothing to do with it. What it really took was the very
thing I entered the business to avoid – a lot of HARD WORK.
It’s the domain industry’s dirty little secret. The easy money
is all an illusion. When people find that out (usually about the
time their credit cards max out) most leave the race before ever
reaching the first turn.
For me, the only thing harder than the work I
put in this first year was making the decision on whether or not to
write this story. If I tell it, I might help newcomers to the
business cut months off the time it takes to start making money.
On the other hand, if I give directions to
the route I followed, I could find myself battling a whole new flock
of competitors. No one needs that in a field where people put the
bite on choice domains quicker than Mike Tyson clamps down on his
In the end I decided that if I wanted you to
keep reading Domain Name Journal I would have to keep giving you
good reasons to do so. That means spilling the beans, though I am
going to keep a few in an inside pocket to make sure I can stay out
of the soup line.
Though I only got into domain sales a year
ago, I registered my first domain during the Internet’s Jurassic
period – 1997. I had a real world music retail store and a
flourishing mail order business fueled by national magazine ads. By
I was able to cut my advertising costs by 80% and exponentially
increase my global audience at the same time.
So I had an appreciation of the Internet’s
power and promise early on. Unfortunately, I was too busy running
that business to pay any attention to the domain market at a time
when really serious money was changing hands. You know that old
saying, “A day late and a dollar short”? That was written about
Fast forward to May 2002. In just five short
years, my world had changed dramatically. The Internet (along with
record company greed and stupidity) had decimated the music
business. I was looking around for something else to fill the
widening revenue gap when I saw a NeuStar ad in a computer magazine
touting the new .US extension.
I went online and read a little more about
.US (unfortunately I had missed the land rush and subsequent debut
of the extension just two weeks earlier). However, there were some
really good words and terms still available. Too bad those
weren’t the ones I registered!
In typical newbie fashion the first thing I
did was find a domain that included the extension as an integral
part of the name – HowAbout.US. Why couldn’t there have been a
little voice of reason deep down inside whispering, “how about
I could not believe my good fortune. My very
first domain name for the resale market and I had hand-regged one
that had to be worth an easy 10K!
I had read about GreatDomains.com so I
quickly signed up and proudly listed my new Porsche…I mean my new
domain. It was late, so I figured the sale wouldn’t likely be made
until the next day. When I woke up, I ran to my computer, checked my
email box and was flabbergasted to see…nothing. No offers at all!
I smacked the side of the computer case a few
times. Surely there were still a couple of emails stuck in there
somewhere. No dice. Well, obviously the GreatDomains site had gone
down (that would happen later and permanently of course) but that
wasn’t the source of my problem either. I got a sinking feeling
that this wasn’t going to be so easy after all.
I bought a few more domains that, in
hindsight, were even worse than my first choice. They likewise were
met with resounding silence in the marketplace. I decided it was
time to take drastic measures. If I was going to pick up 10 grand
for 5 minutes of work I was simply going to have to bite the bullet
and actually learn something about the business!
I started searching the Internet and reading
up on domain names. DomainGuru.com was a helpful site, particularly
with its list of 100 top resources. A lot of old-timers still
haven’t forgiven the owner, Britian’s Lee Hodgson, for cluing
the unwashed masses in on a lot of the industry’s secrets. One of
the Guru’s links led me to Domain Name
Forums are probably the best resources on the
net to learn about this business. A lot of people who have already
been there and done that are on the forums and fortunately a lot of
them are willing to share their expertise. DNF spawned several
others, most notably DomainState.com and more recently
There is even a new one devoted primarily to .US, USForum.US.
Just as important as gaining knowledge is
making business contacts through the forums. A great deal of buying
and selling goes on among resellers themselves.
So with a new circle of forum friends
teaching me the ropes, I found that even an intimate knowledge of
the English language will not make you a successful domain dealer.
You have to learn what buyers are looking for
in a domain name. It is rarely something “cute” (see howabout.us
above), a word that you made up (Ebay succeeded because of their
business idea not the domain name) or anything that does not have an
immediately obvious commercial application. While you are “in
school” at the forums or doing research on the Internet, you would
be wise to put off buying domain names.
Having said that, the fact remains that few
beginners are able to resist those flirtatious glances from their
favorite registrar. Besides, making your own registration mistakes
is certainly part of the educational process. Consider it tuition.
Still, it is possible to whittle that tuition
fee down considerably by remembering one thing. You will rarely
make money registering a name that has been available for more than
a few minutes. I wasted several months combing through the daily
list of dropped names at DeletedDomains.com. I just couldn’t
understand why there was never anything good there, but not wanting
to leave the keyboard empty handed, I would register a few anyhow.
The fact is the domain ocean is filled with
ravenous creatures who gobble up every good domain name long before
they hit the deleted list you are looking at. These guys are the
industry’s killer whales and tiger sharks. You are the minnow.
If you are going to look at anything at
DeletedDomains.com, look at the On Hold list of names that have not
dropped yet, then learn about the many drop catching services you
can enlist to go after the best ones for you, because you are not
going to get them on your own.
With private giants like BuyDomains.com and
Ultimate Search in the hunt, you are not even going to get many of
them with the drop services on your side. To have any chance at all,
you will have to know exactly what names are going to be dropping
and when they will drop. Companies like Exody.com
(whom we will be profiling soon) can help there.
You will not only need the lists - you will
have to be quick on the draw. Slots at the most successful drop-catcher, SnapNames.com, are
usually claimed months before a name actually becomes available. If
you learn about a drop late, your only option will be to bid very
high at an auction service like NameWinner.com (where winning bids
often seem to rise well beyond what the domain is worth).
This business is starting to look a little
less attractive isn’t it? Maybe you should consider something
that’s not quite so intimidating, like working as a human
cannonball or as Saddam Hussein’s food taster.
Still if you are determined to plow onward,
my next piece of advice is to find a niche in the market and fill
it. That age-old wisdom applies just as much to the domain business
as any other…probably more so. Finding a niche is what finally
pulled me out of my five-month sales drought and put me on a path
that now yields steady sales, even in a down economy.
Before we discuss niches, let me tell you
about a fork in the domain road that you will encounter early on.
Most people take the lane that leads to high traffic .com domains.
If you can land a few of these, you have your own personal money
printing press. The traffic can be sold to Pay Per Click search
engines that will be happy to send you a monthly check for the
surfers you send them. The less traveled road leads to domains that
you have to sell on the appeal of the name alone, usually without
much established traffic.
The natural inclination is to go after the
big money high-traffic .com domains. If you want to do that, I would
advise giving it a little time…like a decade or two. This is where
the big boys with deep pockets play. You will need a big bankroll
and several years worth of experience to identify and land these
domains. Though I made my share of mistakes my opening year, I was
wise enough to recognize I was not yet equipped to break into that
part of the business.
So I went the opposite direction and headed
for the outskirts of Domain Town, where the competition was much
lighter. I figured if I was going to get mugged it would be better
to face just a couple of thugs rather than the ruthless gangs
roaming the .com alleys downtown.
The fierce competition for .coms keeps the
prices for the better names at levels that are only affordable to
corporate buyers. I came out of a small business background so I
understood how that market thinks and what they are willing to
budget for a domain name. These are predominantly 3-figure sales
rather than the four to five figure sales at the corporate level.
On the other hand it is very big market (more
than two thirds of the American gross national product is produced
by small businesses). If you can find names that fit those
businesses there is a ready market there and a handful of those
smaller sales is just as good as one of the less frequent sales made
to a large corporate buyer.
Another advantage is that this segment is not
concerned with pre-existing traffic. They just want a name that is
suitable for their business and then they take on the responsibility
of building a site and drawing their own audience. At the present
time, these are mostly .com, .net and .org domains.
I am a believer in the future of .us as well,
but sales for the new extensions (including .info and .biz) will be
weaker than the established extensions until they gain recognition.
There are some signs that could come sooner rather than later. I
have paid for nearly all of my 200 .us domains with the sale of just
3 to unsolicited customers this year – the most recent being
APS.US for a mid 3-figure price.
I currently spend a lot of time on a segment
of the small business market that uses .org domains, because it is
much easier to acquire good .orgs than good .coms and .nets. This is
an area you should enter only if you understand it because .org
(originally intended for non-profit organizations) is not a good
match for most businesses and services. However, there are
for-profit areas, particularly those involved in humanitarian or
public service fields that welcome .orgs with open arms. For my own
good, I don’t want to say anything more specific than that
(remember those beans in the inside pocket I mentioned).
That is just one example of a niche you might
find. Use your own area of expertise to zero in on a field you know
well and service that market. When you build a successful base at
that level – then you can consider targeting the next level of
more prestigious names.
If you are new to the game, you will almost
surely have a rocky start. After 4 months without a sale the only
thing that kept me going was a forum thread that said the average
time it took the posters to make their first sale was 5 months! Hey
what do you know, I was still right on schedule!
When my first sale came at the end of
September, it wasn’t one domain – it was 21 domains at once! It
didn’t matter that they were each priced just a few dollars above
the registration fees - it was a sale. More importantly it allowed
me to unload some of those many early registration mistakes and
reinvest in better domains.
With a portfolio that was finally sporting
some decent names, I made my first 3-figure sale three weeks later,
a 3-letter domain, OYC.ORG to a New England yacht club. Applying
what I had learned the first half of the year, I kept buying better
names and the sales accelerated every month.
My happiest day came on April 27th of this
year when I went into the black with my 142nd sale. It was a low
3-figure sale but at that point I had gotten back all of the several
thousand dollars I had spent and now had 400 domains in my
portfolio. The month since then was my best ever, with several
inquiries coming in every day and at least one three figure sale
every week. My profit has risen to the low four figures and my
inventory is up to 475 domains.
I can now take money out of this business
(rather than my own pocket) and buy the Snaps or make the bids I
need to land higher quality domains and serve a larger market. With
signs that the domain industry has bottomed out and is now on the
upswing, I am extremely excited about what my sophomore year will
I recognize that I still have a great deal to
learn but the knowledge is there if you take the time to look for
it. One of these days I
might even be able to wander back down to that fork in the road and
sneak up on the big boys! You can’t blame a guy for dreaming,
especially when some of those dreams have already started coming
If you would like to comment on Ron Jackson’s article, write firstname.lastname@example.org.
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