May 2007                 DNJournal.com               The Domain Industry News Magazine

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  Here Comes Summer: Will Domains Sizzle or Sink?

As I write this, America’s Memorial Day weekend (and the unofficial start of summer) is dead ahead and I can’t help thinking what an interesting summer this is going to be. Events 
continue to unfold at warp speed in the domain business and no one really knows how it is all going to play out over the next few months. 

In what I think will prove to be the most significant event impacting the summer season, domains became the cover story for a mainstream business magazine for the first time with Paul Sloan’s article on Kevin Ham in the June issue of Business 2.0. Ham is a 37-year-old Vancouver, Canada based entrepreneur who has built a domain empire worth an estimated $300 milllion. 

Sloan is the writer who penned the first major magazine article on this business, Masters of Their Domains, in the December 2005 issue  

kevin_ham.03.jpg

Kevin Ham
(photograph by Michael Llewllyn
for Business 2.0 Magazine)

of Business 2.0. That piece resulted in tens of millions of dollars in new investment flooding into what, prior to that, had been an industry that was off the general business world’s radar. Demand Media co-founder and CEO Richard Rosenblatt said reading that piece led him to start his company and go on a shopping spree that saw him buy registrars eNom and BulkRegister and take on management of the .TV registry from Verisign. 

Paul Sloan
Business 2.0 Magazine
Editor-at-Large

I don’t think there is any doubt that Sloan’s latest piece on Ham will generate a second wave of big money investment in this space. In fact, just a couple of days after the piece came out, I am already seeing signs of it as I am getting calls to do consulting sessions with private venture capital funds that I have not worked with in the past. New money wants to know if there is still time and a place where they can get in. 

This issue of Business 2.0 will still be on the newsstands when the T.R.A.F.F.I.C. conference rolls into New York June 19-22 for what will undoubtedly be the most important show in the history of that event. The magazine article insures that the spotlight will be turned up several notches on what was already a high profile event. The show is meant to take the domain value story to Madison Avenue and drop it on their doorstep. Many major players in the Big Apple will want to be there to see what all the hubbub is about, especially after reading Sloan’s article. This could be a once-in-a-lifetime opportunity to finally burn the unlimited potential of great generic domains into the consciousness of corporate America.  

On the flip side of the coin, the Business 2.0 article could also have some negative impact as it puts the issue of possible trademark infringement front and center in a way that could create a backlash that will harm the innocent as well as the guilty. Ham appears to have done everything within the current rules in building his fortune, but there are currently debates raging on all of the major domain forums as to whether or not some of his methods were ethical. He was one of the first to take advantage of domain tasting (catching expiring domains and testing them for traffic, then return those with no visitors to the registry for a full refund) and wild-carding of an entire registry (Cameroon’s .cm) to take advantage of typo traffic from those attempting to reach .com domains. 

Some are calling Ham a genius for figuring out legal ways to capture valuable traffic, while others think that some of his methods, especially the .cm arrangement, amount to cybersquatting and should trigger new laws or regulations that address the situation. At the moment this is a case of new technology and know-how coming into existence before legislators and regulators have had to time to determine if they should be part of the picture. 

In a Wild West environment like we still have in the domain world, it is inevitable that courts, regulators like ICANN and lawmakers will play an increasingly large role in the future of this industry. Owners of generic domains need to be very vigilant to make sure that any new legal or regulatory developments aimed at solving trademark issues do not result in unfair laws, policy or penalties against the vast majority in this industry who run clean businesses based on generic domain development or monetization.  

We would like to see more interaction between leaders from the domain and trademark industries so they can work together and find mutually agreeable solutions that will protect the interests of both sides. A major step in that direction has already been set up with the International Trademark Association’s issuing of an invitation to Internet Commerce Association Legal Counsel Phil Corwin to speak on behalf of the domain industry at a meeting of top U.S. trademark holders in Orlando this fall. 

These are just the latest twists and turns in an industry where the rate of change and growth remains mind-boggling. Today’s environment is much different than the one I was fortunate enough to stumble into exactly five years ago this month, but I still can’t think of a more exciting place to be. I think we’re all incredibly lucky to have this opportunity to shape an entire emerging industry – one that centers on the very foundation (domains) of the most powerful communications medium ever invented. 

There's gold in them thar domains!

Though so much has happened over the past decade, the potential of great domains has barely been scratched. In my conversation with the principals in one private investment firm interested in the space today, they were focused on the pay per click returns from type-in domain names – but there is so much more than PPC value there and we are starting to see that value being unlocked. Alternate monetization methods such as lead generation and selling traffic or banner space directly to advertisers promise to multiply returns many times over in the years ahead.  

There is also an inherent brand value in many memorable domain names, regardless of their traffic level. For most end users, traffic is not even a consideration and the idea that a domain could have traffic before they even build a website on it is a foreign concept to most of them. They value a name related to their business that will stick in customer’s minds so they can establish the online presence that is critical to all enterprises, large and small, in today’s business world.  

Yes, this young industry has some problems and it has some growing up to do but I think in the end it is going to mature and reach its full potential. Some battles will have to be fought along the way to keep what you have rightfully earned, but anything valuable comes with a price. I’m just glad we’re among the fortunate few who get to be part of this business.

2008 DOMAINfest Global Dates Announced and Amsterdam Wrap-Up On the Way

I just got word today that DomainSponsor has set the dates and location for their 2008 DOMAINfest Global Conference. The good news is that the show is returning to the Renaissance Hotel in Hollywood,California where the debut DOMAINfest Global event was held (to rave reviews) this past January. Mark your calendars now for January 21-23, 2008

Also, by the end of the month we expect to publish a wrap-up on the DOMAINfest Regional event that was held in Amsterdam, Holland last week. I was unable to attend due to a previous commitment in Philadelphia but arranged to have recordings and professional photos from the event sent to us. Those are due here in a few days and we'll go through them to put together a piece on the Amsterdam experience for you. Word is a great time was had by all.


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