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April 03, 2015

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T.R.A.F.F.I.C. East 2006: How Domain History was Made at the Westin Diplomat  

The T.R.A.F.F.I.C. East 2006 Domain Conference ended Saturday (Oct. 28) in Hollywood, Florida and by all accounts this 6th event in the T.R.A.F.F.I.C. series was the best one yet. The approximately 500 attendees were wowed by the new venue (the plush Westin Diplomat Hotel with roomy conference facilities directly overlooking the Atlantic Ocean), a string of informative seminars (including a face to face meeting with Madison Avenue) and the biggest live domain auction ever held. The show also served as the launching pad for a long awaited non-profit organization devoted to protecting domain owner’s rights (that bill being filled by the Internet Commerce Association)

2006 T.R.A.F.F.I.C. East Conference 
Westin Diplomat Hotel - Hollywood, Florida 

We’ll tell you more about that and take you through the conference week (Oct. 24-28) step by step, but first let’s lay one question to rest. For the past two years in our T.R.A.F.F.I.C. show preview articles, I have asked co-founders Rick Schwartz and Howard Neu  “Will you be able to top the last show?” The answer each time, including this past week, has proven to be yes and each time they have cleared the bar of higher expectations by a comfortable margin. So, I won't bother asking that question again.

T.R.A.F.F.I.C. Co-Founders Rick Schwartz 
(standing at podium) and Howard Neu
at T.R.A.F.F.I.C. East 2006

The first conference at the Marriott in Delray Beach, Florida in October 2004 earned rave reviews from the 125 first-time registrants. Every show that followed (two more in Florida, two in Las Vegas and one in Silicon Valley) grew progressively larger. The crowd last week was almost four times bigger than that at the debut show just two years ago. Many attendees commented on the large increase in the number of business professionals who now attend; Wall Street analysts, representatives from major investment groups, Madison Avenue marketers, IP attorneys and all the rest. As one speaker commented from the dais one day, “Wow, this crowd is dressed a lot better than it used to be!,” a wry reference to the recent past when most of the audience favored Hawaiian shirts, blue jeans and sandals. 

It’s another sign of the domain industry coming of age. It is also evidence that T.R.A.F.F.I.C. has become a high end brand – one that has consistently delivered excellence and one that we think has now proven it can be counted on to continue doing so in the future (which will include 2007 shows in Las Vegas next March, New York City in June and back at the Diplomat next October). Now, on with the show… 

The opening event for all attendees was the traditional 5:30pm Cocktail party Tuesday evening (Oct. 24). Earlier in the day, before many registrants arrived, the golfers in the crowd had gathered for a morning tournament sponsored by GolfCourses.com. For the first time, a pre-show afternoon Orientation session was also held for T.R.A.F.F.I.C. newcomers to get them up to speed on the history of the event and what was in store for them so they could hit the ground running. They were shown a video highlight reel from past conferences so by the time they arrived at the cocktail party, they were already familiar with the faces of many of the people who have helped fuel the show’s rapid growth. 

Scene from opening night cocktail party

The opening evening is designed to let people mingle and meet friends old and new. Many say the relationship building opportunities from these social events provides more value that any other aspect of the show, which is the primary reason the conference features daily cocktail hours and after dinner parties throughout the week. 

However when the sun came up Wednesday morning (Oct. 25) it was time to get down to business. Steve Sturgeon, a well-known Washington, D.C. attorney from DomainNameLawyers.com sponsored and gave a brief talk at the opening breakfast.

Attendees then moved to the conference room next door to hear a welcoming address from Schwartz and Neu. Moniker.com CEO Monte Cahn also took the podium to provide information on the live domain auction his company would conduct on Friday as well as their silent online auction that started during the show and continued after the conference closed, finally ending late Monday afternoon (Oct. 31).

In that opening hour, the crowd also heard from Pinky Brand, the director of new market development for the .Mobi registry. Brand explained the role the new extension is expected to play in helping bring a better Internet experience to the world’s millions of mobile devices (there are four times more mobile phones in use than personal computers).

Before the week was out, Brand would be an extremely happy camper thanks to unexpected six-figure bids on two .mobi domains that the registry put in Moniker’s live auction Friday. More on that when we get to auction coverage in this report. 

The next session focused on ICANN issues and featured Directi CEO Bhavin Turakhia who served as Chairman of the ICANN Registrars Constituency for two years, current Registrars Constituency Chairman Jon Nevett of Network Solutions and attorney Mike Zupke who is the registrar liaison manager for ICANN. They explained how ICANN works and urged attendees to get involved in ICANN matters (particularly by joining the organization’s Business Constituency) because decisions made by the domain name oversight body can have far reaching and even devastating consequences for domain owners.

Steve Sturgeon

Pinky Brand
.Mobi Registry

Directi CEO Bhavin Turakhia

Due to the amount of ground we have to cover in this article we can’t go into great depth about the content of each seminar, but to summarize, Turakhia and Nevett echoed the complaints many domain owners have voiced in almost unanimously opposing proposed new contract agreements for the .com, .org, .info and .biz registries that would give them unprecedented power to raise prices at a time when costs of the services they provide are dropping. 

Turakhia noted that the ground up policy formulation apparatus that ICANN currently has in place was not used, leaving the Internet community with no input in the contract process. As the only person on the dais who represented ICANN, Zupke did his best to present the organization’s side of things, but could not address many of the issues directly as they involved matters that are outside his area of responsibility at ICANN. 

After a lunch break, the afternoon session began with a wide ranging 8-man panel discussion about domain values and various ways to generate the best returns for your names. There was also debate about whether this is a good time to sell or hold one’s domains and the role development can play in unlocking domain value. The participants including domain owners, financial analysts and domain company executives. The owners group included veteran domain investors Rick Schwartz, Sal Shepherd and Grant Keiser. The company executives included iREIT Vice President Adam Dicker (who also owns DNForum.com), Fabulous.com COO Dan Warner and LeaseThis.com CEO Jonathon Boswell. RBC Capital Markets Managing Director Jordan Rohan and Milbank Roy VP Ari Bayme represented the financial community. 

Keiser and Shepherd commented on the versatility of a good domain name which can provide a revenue stream even if it is undeveloped or can be the base for a thriving worldwide business. Shepherd noted the importance of taking future growth into consideration before deciding to sell. For example, he pointed out that one of his properties, Atlas.com, made only $5 a day five years ago but was making $250 a day today. Schwartz added that you should look beyond PPC numbers and, if considering selling, take into account how much the domain is worth to the buyer’s business as that is often the most important factor in the value of a domain. 

Warner pointed out that while many prefer to buy and hold, selling selected domains can have a very positive impact on overall portfolio value and he showed several slides to illustrate his point. Rohan, Bayme and Dicker all liked the benefits of development. Bayme noted that this can open the door for you to sell directly to advertisers which can be far more lucrative than PPC (pay per click). Boswell presented a way to have your cake and eat it to which is to lease your domains. That allows you to keep the asset while potentially earning much more money than you can through PPC. 

Grant Keiser
Speaking at Wednesday seminar

Steve Hisey
VP, Oversee.net

Rohan also talked about how troubles at Yahoo.com are causing a reduction in PPC payouts, another reason to consider development as a way to protect yourself against fluctuations in the PPC model. Rohan also made a case for buying non .com extensions like .mobi and .tv, saying they could make sensible investments because buying the land around you can help protect the ground you hold. 

In the next session Wednesday, DomainSponsor.com presented a panel discussion on valuing portfolios and preparing them for sale. Steve Hisey, VP at Oversee.net (DomainSponsor’s parent company)  explained the steps the company takes a portfolio owner through in making a purchase of their domains. DomainSponsor executives Ron Sheridan and Jothan Frakes (who moderated the session) also helped answer questions and attorneys John Berryhill and Paul Keating discussed the best ways to structure a sales contract  and the tax implications of a sale.

I also have to note that during this session DomainSponsor’s Director of Business Development, Ron Sheridan, unveiled the cleverest promotional item I have ever seen. It is a set of two ink pens (sporting the DomainSponsor logo of course) that have a unique feature. When you are closing a domain deal, the details of which you would just as soon not have appear in DN Journal, each pen has a pull-out, attorney-approved non-disclosure form built in! DomainSponsor was giving the pen sets out at their booth and they were one of the hottest items in the exhibit area. 

Ron Sheridan, DomainSponsor.com
 demonstrates his non-disclosure pen

In the final session of the day,  a new non-profit organization devoted to protecting the rights of domain owners, the Internet Commerce Association, made it’s debut. Previous efforts to organize domain owners haven’t made much headway, even though registrant’s rights and assets are increasingly coming under attack from parties that want to take away what you have. The ICA looks like they could change that. The five founding members of the organization represent some of the industry’s strongest companies, iREIT, Oversee.net, Sedo.com, Name Administration and the World Association of Domain Name Developers (the company that produces the T.R.A.F.F.I.C. conferences). Each of those entities has made a substantial financial commitment to the ICA and a legal counsel and Washington, D.C. lobbyist, Philip Corwin, has already been hired.

Frank Schilling, Name Adminstration (left) and Philip Corwin, 
Counsel for the Internet Commerce Association

You can get a very good idea of the ICA stance on important issues current facing domain owners by reading a letter that Corwin sent to the ICANN Board of Directors on Oct. 31. In his opening paragraph Corwin pointed out, "The website ownership community represented by ICA has risked large amounts of capital in order to develop domain names as the first new form of property of the virtual age. These professional registrants are the source of the fees that support registrars, registries, and ICANN itself." Corwin goes on to detail the problems the Internet community has had with lack of transparency and accountability at ICANN and suggests ways the organization can address those issues and restore confidence among domain registrants. 

The industry needs to take steps to insure that the fruits of our work are not stolen by others. Corwin noted that the train is leaving the station and you have to decide if you want to be on it or under it. The ICA will soon be opening its doors to new members as it seeks to build a broad base of support throughout the industry. We will let  you know about important developments with the group as time goes on.  

Tom Gardner sitting between Diana 
(left) and Alina Schwartz at dinner

Gardner begins his keynote address

Wearing his famous Motley Fool jester's cap

While the ICA session brought the business day to a close, another nine and a half hours of activity was still ahead with a cocktail party, a dinner sponsored by DomainSponsor featuring keynote speaker Tom Gardner, co-founder of the Motley Fool, and the big after dinner DomainSponsor party that went on until 3am Thursday morning. 

Gardner proved to be one of the most entertaining and informative speakers we have heard in a long time. The Motley Fool, co-founded by Tom and his brother David, is one of the most successful financial media companies in the world. My wife and I sat with Tom during dinner and it was fascinating to hear how the brothers had built their company from scratch when everyone told them they were crazy. It’s a refrain just about every domain owner has heard and can identify with. Gardner certainly has a kinship with domain investors and he has great admiration for the foresight they have displayed in finding and mining a rich vein of Internet gold that just about everyone else in the world missed. 

Gardner told me he was a fan of small cap stocks (which have returned 18% annually in recent years) and that he was going to close his speech by making a prediction of success for a domain world equivalent of a small cap stock. Just before he got up to to go to the podium, he told me that because of the explosion of video on the Internet .tv would be his pick for future price appreciation. I didn’t get a chance to tell him that the .tv registry keeps most of the potential profit from .tv domains by charging extremely high annual renewal prices for what they classify as “premium” domains.

When Gardner closed his speech with the prediction of stardom for .tv and started taking questions from the audience I got up and asked him if he knew about .tv’s unique pricing structure. Without skipping a beat, Gardner  looked out at the audience and said, “Did I tell you how much I like .info!?” That drew a raucous round of laughter, one of many he earned with the charm and wit  he displayed throughout the evening. 

After Gardner’s address it was time to walk across the street for the DomainSponsor party, held at a scenic outdoor bar at the edge of Florida’s Intracoastal Waterway. The event, always a centerpiece of the week at T.R.A.F.F.I.C., presented another great opportunity to meet new people and learn about what they were doing in the domain space. It also the perfect occasion to catch up with old friends and compare notes. 

While a fair number of people were still on hand for the 3am close, I reluctantly had to throw in the towel around 1am so I could catch a few hours of sleep before the next 18-hour day began bright and early Thursday. 

Scene from DomainSponsor Party


Continue to Page 2 

  • John Berryhill Exposes Dumpster Fraud

  • If You Had a $100,000 to Spend On Domains - What Should You Buy?

  • Rick Schwartz Lets Madison Avenue Have It With Both Barrels

  • It's Party Time Again!

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