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?  

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.  

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.

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.”  

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!  

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.  

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".  

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: 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.

*****