| 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
(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.
|
