August 2008                 DNJournal.com               The Domain Industry News Magazine

The DN Journal Newsletter is sponsored by DomainSponsor.com, The Leader in Domain Traffic Monetization.

Welcome to DN Journal Newsletter #25! This publication is sent only to subscribers who registered at DNJournal.com to receive our free monthly newsletter and email notifications when new articles are posted on our site. You may unsubscribe at any time by sending a removal request to editor@dnjournal.com.


When T.R.A.F.F.I.C. Returns to New York Sept. 23-26 Conference Co-Founder Rick Schwartz Will Be On the Warpath

After an extremely successful Broadway debut last summer, the T.R.A.F.F.I.C. conference returns to New York City September 23-26 for round two at the Brooklyn Bridge Marriott. Things in the domain business and the world at large are much different than they were at this time a year ago. Recognizing that fact, T.R.A.F.F.I.C. co-founders Rick Schwartz and Howard Neu plan to shake things up in a big way at the upcoming conference. 

In fact Schwartz got started early when I huddled with him and Neu to get the inside story on what is in store at the upcoming conference. Schwartz, who has never been a shrinking violet, let his frank opinions 

T.R.A.F.F.I.C. Co-Founders 
Rick Schwartz
(standing) and Howard Neu

fly on what he sees as the biggest problems facing the domain industry today and how T.R.A.F.F.I.C. plans to address them. What he has to say in this interview will undoubtedly ruffle some feathers but they are things he believes need to be said. 

Our conversation morphed into something much more than the usual conference preview, so whether or not you plan to go to New York, I think you will find this conversation to be of special interest as it touches on all areas of the domain business. As a result, this is the longest newsletter we have ever sent out, so pour yourself a glass of wine, settle into a comfortable chair and get ready for some fireworks.

DN Journal: What a difference a year makes. In hindsight, the 2007 T.R.A.F.F.I.C. New York conference may have been a high water mark for the domain industry, at least since the original boom a decade ago. Moniker set a live auction record with sales hitting eight figures, domainers were on center stage in the media capital of the world and optimism was at an all time high. Since then the general economy has tanked, PPC revenues have been halved by some accounts and, even though the aftermarket has held up well, domainers are getting more conservative with their money as they wait to see how the current economic turmoil is going to play out. T.R.A.F.F.I.C. had the wind at its back heading to the Big Apple in 2007. How are the two of you addressing the challenge of producing back to back hits in New York in spite of the strong headwind everyone has to deal with here in 2008?  

Rick Schwartz

Rick Schwartz: It’s a secret!! But I will reveal it right here, right now. We just keep putting one foot in front of the other and keep moving forward. Some listen to the news and get depressed and change how they do business and that becomes a recipe for disaster. We see opportunity no matter what the economy looks like and seize it. I am on record all year as saying I have NEVER seen such opportunities in all my life. Therefore 2008 has been a great year and I don’t see things getting worse. I only see things getting better. I would like to remind my friends in the industry that a guy we all know named Frank Schilling came into this industry during the last downturn of 2001-2002. He must have really goofed up by not paying attention to the news and how bad things were then!  

I think declining payouts is a separate but very serious issue.  I may have to go into the “Witness Protection Program” after I fully answer this during the course of this

interview. Much easier to tell people what they want to hear. You make a lot more friends that way but that is not my style and I see no value in BS’ing folks. I may not be right, but this is what I see and what I believe and only time will tell the answer.

Spending on newspaper ads are down. Spending on magazine ads are down. Spending on radio ads are down. Spending on TV ads are down. Matter of fact, if it was not for the election, spending would be down so much that I am sure that some would go out of business. Stay tuned for 2009. That is when you may see things become dire and companies begin to close shop - companies that have been around for 50 and 100 years. I would think newspapers may be the first to go. When you see the New York Times in trouble, times are a changing.

Meanwhile online ad spending is UP, not down. The payout decline to domainers is a self inflicted wound by people and companies in the industry that are abusing the system and domainers are not calling them out on it. Their “Partners” are putting their futures in jeopardy. It is a serious matter and the consequences may be stunning. One thing I do want to make clear. The value of domains has little if anything to do with earnings. Now it may be common practice to sell a domain for 5x or 10x but I have never bought into that nonsense and I have stated so numerous times on the record. That was a venture capital formula that had nothing to do with the true value of a domain name that many domainers swallowed hook, line and sinker. The least a domain should sell for if you are going to base it on “today’s revenue” is the LIFETIME earnings of that domain. That means if you are 35 and you figure you will live to 85, then 50X is your number before you even begin to negotiate.  

Folks that overlooked the Orlando show missed what many describe as the best T.R.A.F.F.I.C. yet. The bottom line is that EACH and EVERY T.R.A.F.F.I.C. has been the best show yet. Howard and I have our reputations on the line each and every time. All eyes are on us. It is hard to believe after 12 shows we keep surpassing whatever we did at the previous show. New York won’t be different. It will be spectacular and those domainers and companies that show up in New York will be rewarded with opportunity after opportunity while others are running scared.

There is only one way to overcome current economic conditions and that is to be bullish and proactive and go out of your way to seize opportunity. Those that always say they “can’t afford to come” are shortsighted. I don’t say that to insult anyone. I say it to motivate them. I have said many times, “They can’t afford not to come.” I can’t tell you how many folks have come to T.R.A.F.F.I.C. for the first time and tell me after the first NIGHT or first DAY that the show has already paid for 

Schwartz and wife Alina at
T.R.A.F.F.I.C. Orlando - May 2008

itself. That their lives have been transformed. That they can’t believe how much business they have done. That they are so happy to meet the other folks in the industry. Success rubs off and no other place has the energy and quality folks that T.R.A.F.F.I.C. has. Hang with winners and you become a winner. Really not rocket science.  

Howard Neu: New York, London and Tokyo are the financial hubs of the world, so it goes without saying that New York is the place for T.R.A.F.F.I.C. East to be in 2008. Last year we were in New York in June, but we decided that the fall is the best time to take advantage of the buzz and hum of business and investment in the Big Apple. That's why this year's Florida conference was at Disney World in May and T.R.A.F.F.I.C. New York is in September. The climate is right for big business deals, renewed investment interest (especially with the stock market full of Bears), and the financial world to take notice of the one investment that keeps increasing in value exponentially, domains. That is why we are focusing on the Aftermarket by having 5 (count 'em 5) domain auctions with some of the best domains available anywhere competing with each other to go to the highest bidder. Also, our auctioneers will be the best that the U.S. has to offer.

Howard Neu and wife Barbara at
T.R.A.F.F.I.C. Orlando - May 2008

DN Journal: The theme for this show is “Beyond PPC”. Tell us why you settled on that theme and how you will carry it out in the informational sessions during show week.  

Howard Neu: We believe that the time is ripe for domain investors to actively explore avenues other than PPC in order to best monetize their domains. Though we will have fewer seminar and panel sessions than usual due to the additional auctions, they will contain information delivered by speakers who have never addressed domainers at T.R.A.F.F.I.C. or anywhere else that is of the utmost importance to all domain entrepreneurs and provide real alternatives to business as usual.

Rick Schwartz: GOOGLE IS GOING TO DROP THE DOMAIN CHANNEL LIKE A HOT POTATO if this "Industry" does not wake up. We can do it ourselves or you will wake up to nothing because Google does not need to deal with these issues and liabilities. The impact may take 

years to recover from. What makes me crazy is I am set for life. If another penny never came in...GREAT RIDE and off to the sunset. I have less to lose than most others and I am more concerned. Makes no sense! Folks dismissed my words earlier this year. But now there is evidence. The largest PPC company in our space has laid off 10% of their workforce. Are more cuts coming? 

Two public companies in our space largely dependent on PPC have declining earnings and there stocks are at or near 52 week lows. Growth companies that are no longer growing. THAT should be a concern for everyone. This is the tip of the iceberg.  In March I asked a crazy question. “I wonder which PPC company will be the first to do a Bear Stearns?” May not be such a crazy question after all. Some have already quietly disappeared. Can you name them? It seems it may be working its’ way up the ladder.

Here is what Mike Berkens posted on his Blog and there is no way I can say it better:

“Those domainers who registered trademark domains, taking the short money are killing the industry.

The registrars who continue to sell trademark domains, most recently the .me registry, are killing the industry.

Auction systems like TDNAM.com which allow the sale of trademark domains through their system are killing the industry.

Who is going to stop it?

Maybe Google 
By killing the industry.”  

So when I see where we are and the direction we are going...everyone in this industry better have a “Plan B” that is ready to go. As long as the PPC companies continue to monetize CRAP traffic that is WORTHLESS, trademarked traffic that should not be monetized and anything else they can make a penny with, this industry is going to pay a price. Take out the crap and earnings would not drop, they would skyrocket. The problem is there is 10x the amount of CRAP traffic as opposed to “Potent” and “Targeted” traffic.  Saying this does not make me a popular guy.

I’ll have 90% of the folks against me before I start. But that won’t stop me from seeing what I see and doing something about it before it is too late. Plus it should anger folks when domainer's earnings are being sacrificed because some bean counter at the PPC company is only worried about THEIR margins. 

I am not saying all PPC companies do this. But some are SO obvious and domainers must be blind not to see it. I do loads of experiments on traffic and some providers that are widely used suck when it comes to earnings. But those that don’t experiment don’t know. Pretty hard to justify payouts with 400% swings from one provider over another. Those that think I make this stuff up don’t experiment. Start experimenting and you may find out the reality of things.  

Things may not be so good right now. But ask yourself what happens to all these companies if Google were to stop monetizing that 90%? Can you say collapse?  

Here is the bottom line. There is going to be a new solution come to domainers that will knock PPC out of the box unless things change. I am going to do everything I can to make that happen until our “Partners” act like partners. Until then, they have REAL REASON to be concerned. PPC companies provide a service, but without our traffic they have nothing. Is that service really worth 50% of our revenue? 35%?  Until now we have seen huge growth in the PPC companies. It is the domainer fueling their growth while sacrificing our own. Ya think a PPC company running a show will say stuff like that?? They will do nothing but protect their revenue streams. 

I think the biggest problem is coming. What will happen to these companies when the majority of the traffic they have is no longer accepted? It’s going to be ugly, very ugly. Consolidation is coming. Crazy talk you say? Tell me that a year from today! Tell it to your families when the checks keep getting smaller. Why do I say this? Because I believe it and regardless of what others do, I am preparing for it. All I can say, is I hope I am wrong. I really hope I am wrong. I would rather be laughed at for being wrong than go through what I see coming.

I have not even mentioned registrars that are abusing domainers in ways that I just can’t believe. Now they want to grab your expiring domains and keep them for themselves instead of releasing them to the market place. Does anyone in this industry know what conflict of interest is? Maybe they will conveniently forget to send you all those reminders to renew. If they can get your prize domains, is there a reason for them to go out of their way to notify you over and over again to renew a $7 product that may be earning thousands or worth millions? All I can say is it is time for domainers to grow some balls and stop remaining silent. In my life I have watched pilots lose control of the airline industry and look what we have. I have watched doctors lose control of the medical industry and look what we have. I have watched teachers lose control of the education system and look what we have. Domainers are about to lose control of the domain industry and look at what you HAD!  

Networking session at T.R.A.F.F.I.C. 
Orlando May 2008

DN Journal: Networking, the opportunity to interact with fellow domain professionals as well as people from related industries like search and development who can help you further your own business, remains the primary reason most people attend T.R.A.F.F.I.C. How will networking opportunities be facilitated and enhanced at the 2008 New York show?  

Howard Neu: We will once again have at least one and possibly two speed networking sessions that we have developed and others have copied. We are making sure that the hotel has a number of areas where people can sit and talk business and make deals in 7 and 8 figures. We are planning parties with TrafficZ and Parked where the music and noise will not be so loud that you cannot hear yourself, let alone the person attempting to shout in your ear as is prevalent in so many other shows. We are reserving break-out rooms for any person or company that wishes to rent for a day or 1/2 day during the conference to meet with customers and make deals.  

Rick Schwartz: Howard and I have made a concerted effort to bring in Search people and publishers. We are working directly with the folks that put on the SES show as well as Webmaster World. Once folks are exposed to what we do it takes away many of the stereotypes they have heard and real business can be done. So those coming to New York will be meeting new faces with new solutions and that is what it is all about. Besides that we are working on other “Outreach” programs to include more and more sectors. Something we don’t advertise. But we spend money trying to include their sectors.

DN Journal: It’s clear you are not standing pat while external forces have changed. You have opened up the live auction platform to multiple players, opened sponsorships up to competitive bidding and moved the show itself across the bridge from Manhattan to Brooklyn. Tell us about the reasoning behind these moves and why you think it will make things more interesting and the trip to New York worth making?  

Rick Schwartz: Folks think that New York has many hotels to choose from. That is not accurate. Only five hotels in the city can meet our needs. The Hilton is not available for the dates we needed this year, last year or next year. The Sheraton is just a dirty hotel that is unfit for a T.R.A.F.F.I.C. event in my opinion. The Hyatt that we were at last year had several shortcomings plus they had a problem telling the truth. Additionally, employees of the hotel had sticky fingers and stole from the exhibitors like Rebel.com who were giving out genuine CROC sandals to the attendees. The Hyatt took no action even though an eye witness made a police report identifying hotel workers with the theft and making Rebel jump thru all types of hoops and waste time to make reports that the Hyatt failed to act on. Howard and I actually reimbursed Rebel for their loss when the Hyatt refused to. The Hyatt was the single worst hotel we have ever worked with on multiple levels.  

Meanwhile the Marriott, which is actually in walking distance of Manhattan and directly across from the Financial District, is a 4 diamond award winner that has recently been completely renovated. Plus the food will be much better. Nobody does it better than Marriott. We would have picked the Marriott last year but decided the first T.R.A.F.F.I.C. should be in Manhattan.  

As for opening things up...not an easy decision to make but T.R.A.F.F.I.C. is in business to further the industry not just further the interests of one sponsor or one company. Opening things up will make this year’s show even better than the last one. The excitement level is already off the chart. Having multiple companies promoting multiple auctions can only increase awareness of the domain channel. Competition makes everyone raise their game a notch and the marketing efforts as well. Moniker will still have the “Premiere” auction but Rick Latona is going to raise the bar for everyone. I can’t say all he has planned, but it is significant. It starts with the 2008 champion auctioneer that will be calling the action. This guy won’t be putting anyone to sleep. It will be hard to keep pace. Things are going to move VERY fast and the excitement level will be something that will be talked about after the show.  

Marriott at the Brooklyn Bridge
Site of T.R.A.F.F.I.C. New York 2008

I also know that Ammar Kubba and his Thought Convergence crew are all over this with their new Aftermarket.com brand that will make its debut in New York. All three companies will offer online bidding as well. I am sure Monte Cahn (Moniker CEO) has heard the chatter and I am sure he and his crew will rise to the occasion. They are not going to relinquish their lead without a fight.  

So this is shaping up to be a very interesting set of circumstances and attendees are going to be part of the single most exciting event the industry has ever seen. It is going to be a spectacle that will be talked about for a very long time. Once again it is Howard and I that are taking the risk to break the status quo. T.R.A.F.F.I.C. has set the tone and direction of the industry since 2004 and everyone else always plays catch up. It is not by accident. Of the 175 or so speakers we have had at T.R.A.F.F.I.C., almost every single one spoke at T.R.A.F.F.I.C. first. That’s leadership. That’s trailblazing. That’s making a difference. Same with the topics discussed at T.R.A.F.F.I.C. and then repeated at other venues.  

As for sponsor bidding, it just opens things up for more competition and also new companies coming into our industry. I believe the bidding will heat up after each show and I trust the market itself to find the right pricing levels.  

Howard Neu: New York City is comprised of five Boroughs, not just Manhattan. Our venue was picked because it is the absolute closest venue to the Financial District, China Town, Little Italy and all of the other attractions that New York has to offer. It is literally a five-minute drive or 15-minute walk to Wall Street. It has the added attraction of certain clubs and restaurants that can only be found in Brooklyn, which has become the place to be for "New Yawkers".  

Rick Schwartz and Ammar Kubba 
of Thought Convergence (TrafficZ)

DN Journal: Another thing that has changed since last year is that the parent company of your lead sponsor TrafficZ (Thought Convergence) purchased the parent company of the Domain Roundtable conference (Name Intelligence), putting TrafficZ/TC directly into the conference business. How will this affect their involvement with T.R.A.F.F.I.C. going forward?  

Rick Schwartz: We have a very good working relationship with TrafficZ and I expect them to be involved with T.R.A.F.F.I.C. for years to come. Let’s face it, we have helped to lift companies to higher levels. Some forget, some don’t. Ammar does not forget. He came to our 2005 show in Las Vegas in a van. T.R.A.F.F.I.C. helped to transform his company and for that we 

have a special relationship and friendship. It is really what we want to do for all companies that participate in T.R.A.F.F.I.C.. Help them do more business and grow their companies and in turn grow the industry. 

Howard Neu: TrafficZ has been a great partner for the last two years in helping to make each T.R.A.F.F.I.C. a success. They have been easy to work with and their word, unlike others, is gold. They have pledged to us that they will do nothing to compete with T.R.A.F.F.I.C. and will schedule Roundtable so as to not affect attendance at T.R.A.F.F.I.C. Whether they intend to continue to be our prime sponsor is up in the air, but I'm sure that we will be the first to know.  

DN Journal: While a Roundtable produced by TrafficZ/TC represents a change of ownership rather than the introduction of still another new conference, at least one new show is planned for 2009 during Mardi Gras in New Orleans (produced by Parked.com and their sister company, Modern Domainer Magazine). You’ve obviously been hearing about “show fatigue” as the conference calendar has filled up in recent years. How do you combat that and persuade people that it is worth traveling to another conference and to T.R.A.F.F.I.C. specifically?  

Rick Schwartz: I am going to do what nobody else will. I am going to speak out and share what I see even when it is not popular. T.R.A.F.F.I.C. is the only show for domainers run by domainers. Do folks really believe a PPC company is going to bring you the next big thing that will earn domain owners more money at the expense of traffic to their platforms? So right out of the gate our motive is to find the best solutions and their motive is to keep you where you are. 

Show fatigue sets in when you waste your time and accomplish nothing. T.R.A.F.F.I.C. may be a lot of things, but wasting time is not one of them. Amazing how the top players in the industry just keep coming back. They don’t do it for their health. They don’t do it to be cool. They don’t do it because they are bored and have nothing better to do. They do it because major deals are struck at T.R.A.F.F.I.C. and everyone knows that is what sets us apart. When you bring great people together, great things happen. I have said this from the very first show and that is still the “pixie dust” that makes T.R.A.F.F.I.C. king of the hill despite all the challenges we have had. There is just something in our formula that nobody has been able to duplicate even though they have tried and tried.  

Howard Neu: We are looking forward to Parked's Mardi Gras conference and have spoken with them that we intend to be there and partake in the festivities. I have been to New Orleans, but never during Mardi Gras. It is planned primarily as a party and social event and will not be competing with T.R.A.F.F.I.C. in any way. As the industry changes, so does T.R.A.F.F.I.C. to reflect those changes. That is why we are always at least one step (and frequently more than one step) ahead of any so-called competition and will continue to be the "Gold Standard".  

DN Journal: I mentioned show fatigue as a syndrome some show goers have reported, but how about the two of you? You got the ball rolling in the fall of 2004 and you have been producing major shows non-stop for four years now, maintaining a very high level quality with each outing. Yet you also have other interests to take care of including your own domain portfolios, other business interests and your families. Rick said he was ready to step away after the crowning success of New York 2007 but later decided 

Howard Neu

he wasn’t ready to ride into the sunset yet. How have you avoided burnout, kept your energy level up and what motivates you to keep doing it (some will say money of course, but both of you can live comfortably  the rest of your lives without the conference business)?

Howard Neu: Thank you for the kind words. Contrary to some opinions, we DO work hard at keeping T.R.A.F.F.I.C. the best in the business. It might sound trite, but we really get a thrill seeing people succeed in this business because they attended one or more T.R.A.F.F.I.C. Shows. We are also pleased that our primary sponsors and partners like Domain Sponsor, TrafficZ and Moniker have become bigger and better due to their association with T.R.A.F.F.I.C.  Now that we are licensing shows to other countries, with the first being T.R.A.F.F.I.C. Down Under (coming up Nov. 18-20 on Australia's Gold Coast), put together so ably by Dan Warner and his crew at Fabulous.com, that T.R.A.F.F.I.C. has now become the international Gold Standard for trade shows around the world. I am really excited about going to Australia in November to see how others have taken our product and moved forward with it in other venues. 

We are also looking forward to T.R.A.F.F.I.C. West 2009 as we return to the Silicon Valley in April to spotlight Developers and SEO-SEM at the conference.

Rick Schwartz: We live and breathe domains. I still wake up before 6AM every day. I am excited to get up in the morning and see what each day brings. Burnout comes and goes but for whatever reason I am driven to get to a higher ground. To have domains recognized for the value they  posses. The great luxury of being a domainer is when you do have burnout, you can get away and recharge the batteries. My batteries are fully charged and can’t wait to have our best show ever in New York.

We never started T.R.A.F.F.I.C.  to make money and we won’t end it because of the money. Howard and I have taken over half a million out of our pockets to promote and further the industry. We did not have to do that. But there is a higher calling here. It is partly selfish because I am doing everything I can to raise awareness and values of my own portfolio which in turn raises the value of everyone’s portfolio. That said, T.R.A.F.F.I.C.  won’t go on forever. It IS a limited edition. I am signed up until we have our Orlando show in January 2010. Then we will see where we are, if the original mission has been accomplished and decide to do more or just ride into the sunset……….

*****


The DN Journal Newsletter is supported by Escrow.com - The Safe Way to Buy and Sell Domain Names Online.



Thank you for requesting our newsletter, reading and continuing to visit us at DNJournal.com. Your support is truly appreciated!

Sincerely,
Ron Jackson
Editor/Publisher
DNJournal.com

 
The DN Journal Newsletter is produced by DN Journal - The Domain Industry News Magazine located at www.DNJournal.com. Contents may not be reproduced or redistributed without expressed written consent from Internet Edge, Inc. (Copyright 2008)

-Hit Counter