Michael Berkens - The Untold Story Behind The Best Kept Secret in the Domain Business 

Michael Berkens
MostWantedDomains.com 
and TheDomains.com

By Ron Jackson 

Michael Berkens has been buying domains since 1997 and over the years he has become one of the most successful investors in the history of this business with earnings well into seven figures. After launching a popular blog at TheDomains.com in 2007 he has also become one of the most respected commentators on developments in this ever-changing industry. 

Even so, aside from his wife Judi and closest friends, few people know the story of how Berkens wound up in the domain business after abandoning a promising career as an attorney who also has a masters degree in tax law. That story has gone untold (until now) because the quiet Brooklyn native would rather walk barefoot on broken glass than talk about himself.

In fact, even though he had been in the business for years, almost no one knew who he was when he showed up at the first T.R.A.F.F.I.C. conference in Delray Beach, Florida in October 2004. At that show, DomainSponsor's legendary business development director Ron Sheridan told people that Berkens was "the best kept secret in the domain industry."

While it may haved seemed to some that Berkens suddenly appeared out of nowhere, his arrival in the domain business was the culmination of a well planned trip he has been on since childhood. Berkens always knew exactly where he wanted his path in life to lead so he set about building a road that would take him to his destination. 

Berkens's father provided the inspiration for Michael's journey but unfortunately the example he set was one that took years off his life. Michael was determined not to make the same mistake. "My dad started having major health problems when he was in his late 50s," Berkens said. "He was very heavy, smoked, and that certainly lead to several heart attacks he suffered which was very hard on the family. My dad died just a few years after they retired and my mom lived for 14 years more, quite lonely, although she lived with us for years, as well as years with other family members, but nothing could replace my dad."

"He was an estimator in the printing business and my mom also worked all of her life for banks and insurance companies. They were very loving parents who worked hard all their lives, raised their family in Brooklyn, and retired.  They never made much money -  it wasn’t a priority to them - and they hardly ever traveled," Berkens recalled.

That hard work allowed Berkens to earn his degree and plot the next step in his journey. "Almost as soon as I got to college I decided I wanted to become a lawyer. I went to Stetson in St. Petersburg, Florida because it was the only school in a warm climate that I could cover tuition and room and board with my $5,000 a year government student loan," Berkens said. 

"I did the law review thing, worked for the Dean part time and the rest of my time was evenly spilt between the library, playing ball and drinking with fellow students. After I graduated from Stetson I went on for another year to get a masters degree in tax law from the University Of Florida."

Berkens landed a job with a big law firm in St. Petersburg, but after he met his wife Judi she urged him to start his own practice. Michael did that and the two of them would go on to spend virtually all of their time together, at work as well as at home. In April the couple celebrated their 22nd wedding anniversary but Michael recalls the day they met as if it were yesterday.

Michael & Judi's menagerie started with this Maltese mommy and her three pups.

"Around the same time Judi talked me into leaving the law firm, I remember reading in the newspaper that GTE, at the time the local phone company, was going to start 976 number service in Tampa.  When I grew up in New York, I remembered seeing ads for 976 sports, weather, and “dial a joke” type of services. I thought I could put an answering machine in my law office give out some information, get people to call, and make money while I was working, sleeping, or on vacation," Berkens said.

"I recognized early on that although you could make a nice living as an attorney, you only got paid when you spent your time, and you only have so much time. Selling your time is a pretty scary way to make your living since if you get sick, you don’t work, and you don’t get paid.  If you go on vacation you don’t work and you don’t get paid.  If you spend time with your family you don’t get paid. So I figured I needed to find a business that would generate revenue when you weren’t working, when you were sleeping, on vacation, spending time with your family or simply unable to work."

The seed for this mindset was planted when he was still a kid in Brooklyn. "Seeing my Dad have so much downtime from suffering many heart attacks, and knowing that heart conditions to a large extent is heredity, really drove me to find a business that would provide income if I was unable to work.  I know I sound like a commercial for Aflac Insurance, quack!" Berkens laughed. 

"Before we knew it we were producing over 30 commercials a year, running spots all over the country on local stations and nationally on the USA Network and WGN out of Chicago. We expanded from our little office to our own building where we had 80 operators and had hundreds of commercials running coast to coast every night," Berkens recalled.

In 1997 Berkens discovered a new technology that would lead to his debut in the domain business. He still vividly remembers that moment. "While at a tradeshow for the 900 industry in 1997, a friend said "I want to show you something".  He brought me up to his room, opened his computer and showed me a live webcam feed.  He was on a dial up connection, 28.8, as we all were back then.  The picture changed like every 30 seconds, was very pixilated and very small. I watched for a few minutes and he said, “this is the future”.  

"One day in July 1999, DomainBank.net, maybe the 5th registrar to become accredited, went live and I sat and registered what I thought were the top 100 adult domains with explicit words. Their system was very primitive; I remember that you had to type in all the contact and other info for each domain.  I remember it taking like 15 minutes per domain," Berkens recalled.

"The next day I called the owner of the registrar, to make sure they were valid registrations and found out that there system was not eliminating domains that had already been registered by other people, so out of the 100 domains I thought I got, I wound up with only 35. But the next day I turned down offers as high as seven figures for the 35 domains." 

For the $70 that each 2-year registration cost him, Berkens would up seeing a phenomenal return on his investment without having to sell the names.  He noted that some of those domains have earned into seven figures over the years.

Berkens has been in the domain business long enough to have witnessed all of its ups and downs. In terms of PPC revenue and sales at the high end of the market, we are in a down cycle now. Despite the gloomier atmosphere brought on by the recession, some see new opportunities that were not there a year ago, similar to 2000 when the ".com bust" put a lot assets back on the market giving people like Frank Schilling and Kevin Ham an opportunity to get into the game relatively late and still thrive. However Berkens sees a fundamental difference this time around.

"Those domainers who built huge portfolios by reinvesting their PPC earnings, are finding their income halved or worse. So most domainers without cash reserves have to either sell more domains than they are used to, and/or let domains drop as many simply will not be able to afford the registration fees. The free spending, low savings society we all lived in, changed overnight last year. Domainers are no exception."

"Many domainers re-invested all or most of their profits in more domains. Many domainers, like most Americans, had too little cash reserve in case times got tough. Well times are tough. I think PPC has seen its best days, but that’s not to say that another model will not come along that will one day equal or surpass PPC. It's’s not all doom and gloom," Berkens added.

"Will PPC ever return to its highest levels? I would say no, unless something breaks up the Google/Yahoo monopoly on PPC upstream providers.  This could be in the form of Microsoft's Bing.com becoming a player, the acquisition of Yahoo by Microsoft, or a brand new scalable solution comes to market to compete with PPC, thereby increasing the amount Google and Yahoo pays us to retain the traffic."

"The Internet, in and of itself, is ever changing.  Remember when Lycos and Alta Vista were major search engines?  It wasn’t that long ago. So when you ask if domainers need to be prepared for a permanent replacement for that income stream, I say domainers need to be prepared in general," Berkens said.

"When we first started domaining as a business, we made a decision to sell enough domains each year that my registration costs were met, so any income from traffic would be pure profit. We have achieved this for the last 10 years. Now many people are finally waking up to the idea of selling. So my advice is to try things, many things, everything."

"If you are parking your domains, try different parking companies, spilt your domains up and try them at several companies, try affiliate programs, try to find white label solutions like we did with LuxuryBedding.com, DiscountBedding.com and HomeFashions.com."

"If you’re selling your domains try several channels, SnapNames.com, Sedo, the Domain Distribution Network, NameMedia’s network (BuyDomains and the AfternicDLS), Bido.com, domain show auctions.  Try different strategies.  Some will work and some won’t. Sometimes you’re going to win and sometimes you’re going to lose. If you don’t try different avenues and sit tight you are going to really lose. Remember when it comes to monetization or sales, not every solution fits every domain," Berkens added.

"I have to admit I am quite surprised at how much time the blog takes though.  It’s not just finding stories and taking the time to write them, but responding to comments and managing the blog. At least once a month I think about not blogging anymore. Then there are other days, I think blogging its one of the best things I ever decided to do. The upside is it forces you to get educated on all the issues, to keep on top of everything going on in the domain and Internet world, and definitely keeps you sharply focused." Berkens said.

"I have also had a chance to meet and communicate with a lot of people in the industry that I otherwise never would have. There are amazing, very smart people involved in this industry and it’s been my pleasure to meet many online and have an open line of communication to bounce ideas off of them."

"We have dealt with many important issues and TheDomains.com has become a forum for great discussions between domainers, industry leaders, representatives from ICANN and VeriSign, many of the top domain registrars and registries, parking companies, even trademark holders - all joining in heated, yet informative discussions."

"Right now I think the industry is at a crossroads. There is just so much going on right now, from the possible introduction of hundreds or thousands of new extensions, the expiration of the ICANN contract with the U.S. Commerce Department in September, ICANN's proposed URS (Uniform Rapid Suspension system that could replace the UDRP), the possible lifting of price caps on domains, and the PPC issues we are all facing, just to name a few."

"So I’m going to stick around during these highly volatile times to try and shape some opinions, try to influence the outcome of these issues, and move the industry forward. On the other hand I don’t see myself doing this forever. We all know that life is short, time is precious, and it can all change in an instant," Berkens said.

Berkens mentioned the effort he has put into rallying support for the industry's trade association, the ICA. While his persistent message (and his personal financial contributions) have helped the organization immensely, he is disappointed that the industry as a whole has not done more.

"Today we have a bigger problem than even the lack of support for the ICA. I see a tremendous amount of disinterest by domain holders in any issue dealing with ICANN. Without a doubt any post I write about ICANN receives much less readership then many less important topics."

"The number one excuse I get for not joining the ICA is that is “costs too much ($295 a year).” Yet how many domainers submitted comments to ICANN on the URS, the biggest threat to domain holders ever considered by ICANN?  I counted less than 40 responses by domainers. Commenting to ICANN costs nothing, not a dime, just 30 minutes of your time. Yet few took the time to comment," Berkens noted.

"So, the cost to join the ICA is a red herring. The issue isn’t the cost; the issue is the disinterest by the vast majority of people that consider themselves domainers. This gets to the real question.  Are you a professional domain holder that conducts your activities as a business or are you just a guy who owns some domains? Domain holders need to decide if this is a business to them or something they just can make a quick buck off of until something else comes along," Berkens said.  

"Somewhere along the way we went from a society who looked at success stories and used them as inspiration to create their own, to one that looks at successful people and eagerly awaits and looks forward to their fall.  If you could get the honest answer of the American population, almost all would say they admire Donald Trump, almost all would love to be like him, enjoy the success he has, but almost all would say they would be happy if he lost it all."

"Everyone would love to have 100 great domains they could have registered in 1995. Everyone wants to have what Frank has. But 99.9% of the general population missed the boat and now they’re pissed off at the one’s who got onboard, who thought of it first, who beat them to the punch."

"People who own a lot of apartments are called “slumlords." People who take over public companies are called “corporate raiders." People who practice law and get large verdicts are called “ambulance chasers." People who have sudden success are dismissed as being “Lucky." People who own a lot of domains are call “cybersquatters." This is human nature," Berkens said.

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