-
Domains
sales have increased in both volume and value but have
largely been funded by individuals within the industry
rather than external entrants. Debt as an instrument of
funding domain acquisitions has entered the marketplace in a
meaningful structured manner and this has assisted in a
continued increase in the value of domains. This debt
funding combined with the proliferation of both online and
offline auctions has continued to place an upward pressure
on the average domain sale value.
-
One
of the most under-rated and often misunderstood events
occurred with the introduction of the direct channel to
market by both BuyDomains and Fabulous. Reaching the market
has always been a huge problem for domain owners who have
been wanting multiples based upon "generic value"
rather than multiples based upon PPC income. This year both
BuyDomains and Fabulous have built systems and partnered
with registrars (most notably Godaddy) to access this
market. Suddenly the domain portfolio "long-tail"
has a potential value even if the domains are not
receiving traffic.
-
Standards
and transparency was first placed on the table in a serious
manner. This has been a huge issue with me as I believe that
the industry needs to take steps to reassuring both domain
owners and advertisers that value is being created and can
be proved to being created. The reason why this is important
is that when industries have adopted standards and
transparency the value of the assets in the industry and the
flow of money into the industry has typically increased.
-
The
rise of the registration price of a .com domain was to be
expected and the increase has particularly impacted the
bottom line of the some of the larger portfolio owners. Even
a small increase in price multiplied by hundreds of thousands
of domains can mean that the more speculative domains are
dropped rather than renewed.
| Looking
ahead to 2008, Gilmour again painted his picture by the numbers: |
|
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Standards
and transparency will become the number one issue for the
industry this year. The first T.R.A.F.F.I.C. conference in Las
Vegas this year is themed around "standards &
transparency". Once standards are uniformly adopted I
believe that the industry will begin to see some serious
external money enter the industry as the domain asset class
is legitimized to the financial community. This is great
news for domainers if it can be pulled off!
-
There
will be an increased number of support companies for the
industry that assist domainers in managing their portfolios
of domains. This is similar to the gold rush spawning shovel
and pick manufactures. Many of these companies will become
very lucrative and go on to become very successful
businesses but I believe that a lot of them will soon
disappear.
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I
wouldn't be surprised if a number of the parking companies
merge or begin merger talks by the end of the year leaving
only a few major traffic aggregators and a host of smaller
options for domainers. The main driving force behind this
will be the need to aggregate more traffic so that
"mega-parking" companies can put increased
pressure on the margins of the advertising aggregators (Google
and Yahoo) and also domainers.
-
There
will continue to be an increasingly greater number of domain
auctions both on and offline. At the moment we have a huge
supply of domains wanting to receive exposure in the
auctions and millions of dollars swapping hands within the
industry. I wouldn't be surprised if the auctions begin
charging to have a domain submitted for consideration to the
auction process. This will cull the number of domains, limit
the work of sorting through the domains by the auction
companies and guarantee only high quality domains
are up for auction. Not to mention the fact that this will
make the auction side of the business even more lucrative
than it already is.
|
Jay
Westerdal
DomainTools.com |
I
mentioned that Gilmour was one of the new breed of bloggers that
surfaced in 2007. DomainTools.com chief Jay Westerdal, who also
writes an excellent blog that often breaks big news, feels that
medium took over center stage last year. "2007 was the
year of the Domain Blogger," Westerdal said. "A lot of
domainers got a blog and started speaking their mind last year.
This is an awesome thing for our market because it gives us a
lot more voices. The cost of having a blog is nothing and the
benefits are enormous."
"The
other emerging trend last year was headlined online auctions,
the sales in 2008 will eclipse all sales of 2007. The popularity
of auctions, new auction facilities opening up, and number of
domains changing hands is reshaping the industry. It is
also lending credence to the viability of the domain name market
and industry. Companies outside of the
domain industry are taking notice. This is seen in such
|
| public
areas as media advertisement where the domain name is
used in the advertising and pushes customers to the
product/company," Westerdal said. |
Looking
ahead to 2008 Westerdal told us, "Consolidation
will occur among the leaders and new companies will take shape.
The domain market will start becoming more mainstream and in
simpatico with internet/web industry blending the line between
them. Companies based primarily in web hosting and connectivity
will begin to take stronger interest on the domain name market
as it is the foothold of the industry. In the same sense, domain
industry companies will expand into other internet-based
products such as hosting and applications. Large portfolio
holders will begin developing more aggressively."
|
"I also predict Ron Jackson will get a blog in 2008 and
become one of the most read domaining blogs. I have been hoping
and praying for RSS feeds to hit Ron's content for a while. I
rarely visit this great site and RSS would help me follow the
site better," Westerdal said. (Editor's
note: Jay has been
on my case about this for a long time and I have to admit his
advice is sound. I will have to see what I can do about
making his predictions on these points come true).
"My other major predictions are that Verisign will raise
DotCom prices again in 2008 and domainers will get even madder
this time. This price increase will continue to hurt small time
domainers and compress earnings for large portfolios. IREIT wll
quietly fade as they sell off their entire portfolio in 2008.
Marchex will make a turn around in 2008 and go from $9 a
share to $16 dollars a share. DomainTools will triple in size in
2008," Westerdal said. |
Ron
Jackson |
Westerdal
also produces the Domain
Roundtable conference which, along with DOMAINfest
and T.R.A.F.F.I.C.
comprise a powerful trio of general interest domain
conferences that have had a dramatic positive impact on the
domain industry and the rise in domain values.
| T.R.A.F.F.I.C.
co-founders Rick Schwartz and Howard Neu are the guys who
pioneered the major conference space and they have put on a
remarkable series of shows with each |
|
T.R.A.F.F.I.C.
Co-Founders Rick Schwartz (left)
and Howard Neu at a party during T.R.A.F.F.I.C.
East 2007 in Hollywood, Florida |
succeeding conference
topping the one before. Of 2007, Neu said,
"As
I had predicted last year, the domain industry grew
up in 2007 to be a full-fledged legitimate contender for
investment funds throughout the world. This growing process was
culminated in the recognition by Steve Forbes at T.R.A.F.F.I.C.
East 2007 of the place in history that domain investment can
be and will be. In the process, WALL STREET took
recognition of the industry by attending and participating in T.R.A.F.F.I.C.
New York and creating a dialogue that was previously
lacking. This was especially reflected in the results of the
Domain Auction conducted by Moniker which realized over $12
million in domain sales and reported by the New York Post
and
New York Times. The resultant increase in domain values was
reflected in every auction of domains thereafter, whether at
T.R.A.F.F.I.C. or elsewhere." |
Neu
sees more of the same ahead in 2008. "I
believe that the industry will continue to grow and receive
widespread recognition as the mainstream investor learns more
about the nature of domains, what they are, how they work, how
they create traffic for web sites around the world, and how
Direct Navigation is beneficial and the Parking Companies become
more transparent as to where the money is coming from and where
it is going.
The Advisory Board of the World
Association of Domain Name Developers, Inc (WADND) will be
adopting Standards of Transparency for Monetizers to create
a new Seal of Approval to be awarded to those PPC companies that
provide the transparency that domainers require. There will
also be some excitement this coming year with a T.R.A.F.F.I.C.
West (Feb. 17-21) Road Rally in
Las Vegas and the first T.R.A.F.F.I.C. that will be
truly family friendly at Walt Disney World (May 20-24).
The year will be topped off with going back to New York (Sept.
2008) at a different venue and culminating in the first
international T.R.A.F.F.I.C. in Australia (November 2008) in
conjunction with Fabulous.com on the beautiful Australian
Gold Coast."
| That
brings us to Neu's partner, domain pioneer Rick Schwartz. As I
have done in years past, I am using Schwartz as my clean-up
hitter in this report. I do that for a reason. Schwartz has a
unique ability to put this industry into perspective. He is
recognized as a visionary because he has a record of being able
to look beyond the specific circumstances of the present day and
|
| predict
how things will play out years down the road. Predictions he
made about the rise in domain values a decade ago -
thought to be pie in the sky dreams then - have become reality
today.
Schwartz
says what is on his mind and let's the chips fall where they
may. That has earned him both loyal friends and dogged
detractors.
It also makes him what we in journalism refer to as "great
copy". As someone who came out of the TV business
Schwartz reminds me very much of Captain Outrageous - Ted Turner
who was
one of the most fascinating characters in my previous
profession. Like Turner, Schwartz is one of a kind. He has
been such an integral part of this business it is hard to
imagine it without him - it would be very much like switching
from watching color TV back to watching black and
white. He's
colorful, candid and controversial and that makes him the
perfect guy to close the show. |
Schwartz
gets some love from Dan Warner
at T.R.A.F.F.I.C. Silicon Valley 2006 |
"2007
was a BIG year. No question about it," Schwartz
began. "Payouts were up
dramatically for the first half of the year and even during
challenges of the latter part of the year have remained strong.
Domain Values continue to rise throughout the year as your
reporting indicates. I think the most significant change is all
the live auctions that are popping up after watching the
dramatic success of the live T.R.A.F.F.I.C. auctions. In 2007 34
of the top 100 sales for the entire year came from the
TRAFFIC/Moniker auctions. That is pretty significant. If you dig
a little deeper it will reveal that Moniker had a hand in nearly
50% of all the high ticket domains in 2007. There are many
moving parts in a live auction and if you are a seller you want
to be assured that you will receive the highest market value. If
you are a buyer you want quality names at an uninflated price.
When you can present a proper balance, everyone comes out a
winner.
Next
would be all the blogs that have popped up with Frank Schilling
leading the way. To watch and read and listen to all the top
domainers share their ideas and stories and views is a great
gift to all of us and hopefully will spill over in the
mainstream business world.
|
Steve
Forbes delivering keynote address at T.R.A.F.F.I.C.
East 2007 - Hollywood, Florida |
But
of all the things that happened in 2007, I think having Steve
Forbes come to speak to the domain industry in October was the
single highlight not only of this year but of my career in
domains. When I think back to where we came from and how
drastically the landscape has changed over the years, I believe
we will look back at that moment for years to come. Some of his
quotes are being used on many sites I see.
“Internet
traffic and domains are the prime real estate of the 21st
century. This market has matured, and individuals, brands,
investors and organizations who do not grasp their importance or
value are missing out on numerous levels.”
"I
have the CD from his speech and I listen to it over and over
again just trying to pick out great quotes and how those words
could have great value. I don’t think folks know how
|
|
genuinely
impressed Mr. Forbes was when he met us. He really got off on
what we all do. He has such a deep respect for entrepreneurs.
Especially for a group like ours that has taken great risks and
have a lot of successes to show. I think his appearance will pay
dividends for the entire industry for years to come. It
demonstrates that we are a serious group with a record of
accomplishments and not afraid to aim high. I have had contact
with Mr. Forbes a couple times since his appearance and I think
he knows that we are a group that is making and writing
history.
I think our paths will cross again."
|
"As
for business, 2007 had a lot of ups and downs but the end result was
a record breaking year on multiple fronts."
And
how about the year ahead? "No
question the industry is maturing and with that comes growing
pains and conflict," Schwartz said. "So while the best days are still in front of
us, the accomplishments will not be quite as sweet as the
earlier ones. They may be bigger, just not sweeter. Human nature
is kicking in and many will lose a sense of where they came from
and who they are. You can’t do anything about it unless you
know you are caught up in it. Normal has a way of changing. So
we will all be well served by keeping our eyes opened for
pitfalls that come with the territory."
"One of those pitfalls
will be addressed at T.R.A.F.F.I.C. We know the guys upstream are
making more money and we know domainers are getting less. So
TRANSPARENCY will be the focus and theme for our 2008 T.R.A.F.F.I.C.
shows. Isn't it just plain silly or worse that you count your
frickin' change from a $20 bill at McDonalds and don't use
the same due diligence when millions are at stake? How smart is
that? If you are told you are getting 65% then you have a right
to make sure that is the rate you are actually getting. You also
need to know if that rate is 65% of what they get paid or is it
after expenses?
|
Now
let’s shift gears and really mix it up. Everyone knows I am
about the most optimistic person you will ever meet. But my
optimism is never divorced from reality. Reality is what IS
whether we like it or not. I will probably take some heat for
what I have said and even more for what I am about to say, but
so be it. The following was a blog post I was going to make this
week. I think it would have more value here first.
The
enemy within.
There
is no question that 2008 will be the most challenging year ever
for domain owners and investors. While domainers are having a
grand old time their livelihoods are in peril and few really
even want to know about it. Combine that with the abuse that
domainers themselves are guilty of and I will tell you that the
biggest
|
|
| threat
lays within the industry. Apathy, greed, wrong doing
will surely put us all in jeopardy. While we do these
things, our enemy is organizing and they will change
rules and laws that will take YOUR domains and the
earnings they currently make for you and your families
and are actively trying to shift those dollars to their
pockets for them and their families.
|
But
party on like a ship of fools my friends. My gift is seeing
things before they materialize. But hey, don't pay attention.
Don't believe it. Don't do anything. But I promise you that
some day in the next 3-5 years (Maybe much sooner) I will point
to THIS POST and let you know that there was an opportunity to
avoid it but you were too busy laughing at what I suggest. The
laughter no different than the day I "Wasted" my first
$100 and bought a domain name. So I am quite used to it.
The
forces are gathering. You have a choice to ignore this. But when
you do, ask yourself how
you are going to feel when your domains are in jeopardy? When it
is too late? When your domains are gone and the income along
with them?
|
Like
I said, the biggest threat may be from within. Let's face it - many registrars and others are just outright whores and their
practices are not only raising eyebrows, but rules and laws will
be put in place to try and control them and their abuses. While
doing so we may get smothered in the process. Some domainers are
no better. They focus on Trademarked domain names and that does
not help us either. Some think the problem is small. I will
respond to that once I stop laughing. It is out of control and
makes everyone look bad.
|
|
Schwartz
brought Ben Franklin to T.R.A.F.F.I.C.
West 2007 to help raise awareness for the
Internet Commerce Association (ICA) |
I
see what is going on daily when I get emails from the ICA. The
threats are everywhere. Forces against us are joining together.
If the domain industry does not get ahead of this we will all
see the day in which some unfair ruling will be used to take
your assets away from you. Those assets are worth a
fortune. No
matter what silly appraisal you have had, GREAT domains are
worth much more than what they say. The proof will be
obvious when you see the millions they will spend to get what
you have at a FRACTION of the fair market value.
There
are storm clouds gathering and it is serious. Choose to ignore
and you have only yourself to blame. The choice is easy, start
educating yourself now. Get the ICA
newsletter. Pay attention to
the decisions and why domainers are losing domains. Do whatever
you can to prevent what is IN PROGRESS. Or do nothing and start
looking for your next career and how to replace your incomes.
|
Some
will view this as doom and gloom. Some will view as the sky is
falling. My email will go bonkers. It is quite the opposite. The
value of domains are going up faster than you or I even know and
THAT is the reason we are a target. If the values were not
there, if the importance were not there, these folks would not
care about our assets. They validate the FACT that some of the
assets we own are PRICELESS. Unique assets, investments,
collectables, virtual real estate, storefronts, that
have gone up in value faster than any other investment in
history. Assets worth fighting for. Worth changing laws for.
They will spend MILLIONS to get what we own. They will spend
tens of millions. Just ask yourself one question. “Why would
they spend so much to get what we have?”
|
We
have insurance for everything we own. The house, the boat, the
car, the life, the health, the toys, etc. etc. etc. Yet for some
unexplainable reason domainers won’t insure their futures.
Won’t insure the very thing that pays for everything else.
Won’t insure that they are insulated from predators that want
what you own. You folks own “Mona Lisa’s” and these PRICKS
want it and they don’t want to buy it. They want to legislate
it away
|
|
from you. Tax it away from you.
STEAL your assets through
legal means and I am telling everyone in the industry that they
will WIN if you don’t step up and pay attention and support
efforts to insure our futures.
Steve Forbes related much of the
same message as this has been done throughout history. Ask any
of the top domain lawyers. Ask the top domainers. They all know
what is coming. You will all live to see the day that billions
of assets changed hands because some of the smartest folks on
the planet failed themselves and their families. This is the one
predication I don’t want to be right on. My job is to ring the
bell as loud as I can and get the industry to take this
seriously. Consider the bell rung."
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