Looking for Beef (.com)--Article about the state of domain selling

[izopod]

http://www.wired.com/news/business/0,1367,58763,00.html

By Joanna Glasner

02:00 AM May. 12, 2003 PT

Nowadays, not even the greediest of domain-name resellers expects to find a buyer willing to fork over the six- and seven-figure sums once paid for Web addresses like drugs.com or business.com.

However, a few sellers out there remain hopeful someone will put up at least $75 for the likes of spoonula.com or $200 for phonefetish.com.

Across the Web, such modest expectations are largely the norm among the handful of reselling sites still in operation that allow speculators to turn a profit on their pre-registered Web addresses.

Although a few domains still manage to fetch thousands or tens of thousands of dollars, resellers acknowledge that prices have mellowed out since the peaks of the dot-com frenzy. So have speculators' ambitions.

"Some of these $75 names are lucky to go for $75, probably," said Roger Collins, president of Afternic, a website that auctions off pre-registered domain names for a minimum price of $75.

The cheapest listings include, in addition to Spoonula, names like Verpisos.com, Atreju.com and Herbmeyerforcongress.org. A few have more ambitious asking prices, such as $20,000 for Jester.com or $6,000 for BigBoobHeaven.com, but aren't finding a flood of buyers.

Collins said he believes overall prices for domains have come down over the past two years, "reflecting basically the end of the bubble." A typical pre-registered domain now sells for a couple hundred dollars, while the top-selling domain -- Climaxgroup.com -- was listed as selling for $15,500.

Slimmer profit margins notwithstanding, Afternic is one of several sites attempting to make money selling pre-owned domains, a business largely driven by speculators who snap up compelling Internet addresses and attempt to resell for a larger sum.

"It's very similar to real estate," said Michelle Miller, director of business development at BuyDomains.com, which sells domains for fixed prices. To set prices, Miller said the company employs an appraisal formula that takes into account factors like the number of letters in a domain, pre-existing traffic to the site, the industry the name is associated with and sums paid in previous, similar transactions.

Today, Miller said, a typical "good" domain, which might contain a company name or popular phrase, goes for $1,500 to $1,800. An especially good domain, such as one containing a single generic noun, fetches a higher price, often between $10,000 and $30,000, which may explain why speculators provide the mainstay of BuyDomains' business.

When all is said and done, profit margins for successful sellers are still quite high, considering that registering a domain from the cheapest registries can cost less than $10.

But buyers aren't repeating their mistakes with the outlandish prices paid for domains like business.com, drugs.com and WallStreet.com, which sold for $7.5 million, $825,000 and $1 million, respectively, at the height of the dot-com frenzy.

While all these addresses are in active use, none have served to fuel the kind of high-profile businesses their buyers had anticipated. Business.com is a business search engine; drugs.com is a drug information site. WallStreet.com links to an online sportsbook and casino that originally bought the name to create a forum designed to let gamblers place wagers on stock movements without actually investing in stocks themselves.

Meanwhile, the idea that a snazzy domain name alone can provide the foundation for a flourishing business has gone the way of dot-com IPOs and 23-year-old Internet billionaires.

The changing business climate helped prompt the decision last September by Afternic's previous owner, domain-name registration service Register.com, to exit the reselling business.

Register.com had purchased Afternic three years ago for more than $40 million in cash and stock, but sold it to Collins last December for an undisclosed sum.

Since relaunching the site, Collins said he has been selling an average of about 50 domains a month. The site makes money by charging domain sellers either 10 percent of the sale price or $60 per transaction, whichever is higher.

While Register.com may be out of the reselling business, resellers still have to compete with the largest domain name registry, VeriSign. The company is in the process of rolling out a site for selling domains valued at less than $5,000.

At the same time, VeriSign has not given up on big-ticket domains.

On its reselling site, GreatDomains.com, the company currently is seeking buyers willing to pay $333,000 for beef.com or $25,000 for the rights to nicotine.com.

[Ed30]

Interesting article. The writer seems to presuppose that the best times have gone never to be seen again - I think this is wrong, especially if you are willing to hold onto good names for a number of years. The internet is still in it's infancy. To quote a popular phrase - "you aint seen nothing yet".

[QuantumBeam]

I agree Ed
Good things come to those who wait, work hard & pay there due's.

[shortcutgramp]

GREAT ARTICLE BUT WITH ANYTHING YOU HAVE TO PAY ATTENTION TO MARKET DEMANDS AND DO YOUR HOMEWORK!!

[izopod]

What killed Business.com and WallStreet.com were their business plans, not the names themselves.

[proproject]

As much as I appreciate the popularity of Wired, we did not even link to this article on our News page because of its negative view of the industry. I remember someone long ago complaining about reporters - how they have their story in mind before they call their first source to interview. Well, now I understand that point of view first hand. I was very optimistic about the DN aftermarket but I obviously did not influence the reporter much with that point of view.
Cheers,
Roger

[DaddyHalbucks]

As much as I appreciate the popularity of Wired, we did not even link to this article on our News page because of its negative view of the industry.
+++++++++++++

So, only tell the 'good' news and not the bad? That sounds like Arthur Andersen..

Seriously, if there are flaws in an article, rebut it, don't exclude it.

[dtobias]

On my own sites, I link to anything I think is relevant, whether positive or negative, and whether I agree with its opinion or not.

[proproject]

There are plenty of sources for DN industry news - that's not a service we offer. Our news page is a marketing page to give (usually new) visitors more information about us from other sources. It is not the place for thoughtful debate. Better to discuss such things on forums like this.