Major Business 2.0 Magazine Domain Article Now Online

[Duke]

Major exposure for domain business - Full text of article from the upcoming December issue of Business 2.0:

http://www.business2.com/b2/web/articles/0,17863,1132510,00.html?promoid=rss

 

[jimbaggs]

Beat me to it again, Ron. Great read! Everyone should check it out. And come to TRAFFIC Silicon Valley!

 

[greggish]

I particularly liked this quote of Rick's...

“I figure any moron in the world can generate work for themselves and tie up their time. I have one laptop, no employees, and no product whatsoever -- none! This is magic.”

-- Haha! What a guy!

 

[Duke]

I particularly liked this quote of Rick's...

“I figure any moron in the world can generate work for themselves and tie up their time."

Good quote, but I don't see why he had to single me out like that.

 

[Nova]

Looks like "domainer" should be in the dictionary soon.

 

[sasquatch]

This is the single "sexiest" media article on domain industry ever. It contained everything that one could hope to read: money (and tons of it), intrigue ("He’s the domainers’ Keyser Soze"), dreams ("He returns to his hotel room in the early morning to find a contract under his door. Total price: $4.2 million"), politics, (Factcheck.com > GeorgeSoros.com), big names ("Google & Yahoo"), and good times ("Finally, Schilling pulls out a roll of cash and pays up").

However, this also is the single most damaging article for domain buyers, since it will now force most sellers to be unreasonable and hold out thinking they too will get multimillion offers under their doors (disclaimer: while major portfolo holders and those holding individually superb names will continue to command their negotiating terms, vast majority of so-called other domainers will not be able to do so). Hence the double-edged sword of "sexy" articles of this kind.

 

[Duke]

"That’s why some domain names are commanding six- and seven-figure price tags [...] Private money manager Stuart Rabin is cutting those sorts of checks to domainers two to three times a week."

Hmm, let's see...I think I can still do the math...Duke, any way you can tap into some of the data behind this (if it's remotely accurate, of course)?

It is very accurate.

 

[JMJ]

This is the single "sexiest" media article on domain industry ever. It contained everything that one could hope to read: money (and tons of it), intrigue ("He’s the domainers’ Keyser Soze"), dreams ("He returns to his hotel room in the early morning to find a contract under his door. Total price: $4.2 million"), politics, (Factcheck.com > GeorgeSoros.com), big names ("Google & Yahoo"), and good times ("Finally, Schilling pulls out a roll of cash and pays up").

However, this also is the single most damaging article for domain buyers, since it will now force most sellers to be unreasonable and hold out thinking they too will get multimillion offers under their doors (disclaimer: while major portfolo holders and those holding individually superb names will continue to command their negotiating terms, vast majority of so-called other domainers will not be able to do so). Hence the double-edged sword of "sexy" articles of this kind.

There's still money to be made even if you don't own the big names. I have a two-word.biz and includes the - that I paid $7 for that made me $33 dollars today. Another I paid $7 for made me $13 today. Get enough of those and you aren't doing so bad. Not that I'm making anywhere close to what any of those guys are making but I do make a decent income for sitting at home on my a$$.

 

[Duke]

However, this also is the single most damaging article for domain buyers, since it will now force most sellers to be unreasonable and hold out thinking they too will get multimillion offers under their doors (disclaimer: while major portfolo holders and those holding individually superb names will continue to command their negotiating terms, vast majority of so-called other domainers will not be able to do so). Hence the double-edged sword of "sexy" articles of this kind.

No doubt the blade swings both ways Sasq. I think it will fuel the continuing rise in domain name prices, but the good ones have been out of my price range for years anyhow so from a buyer's standpoint it is a moot point for many of us. There are still some nice scraps to be found in the niches though and it is nice to see the value of what we already have rise.

 

[greggish]

I have 3 domains that I've been offered between 2-5K for. I was tempted, but now those are the names I am least likely to sell. Two of those three get regular typein traffic and I don't see that traffic ever going away. That money although its decent is not going to change my life, but having the opportunity somewhere down the line to really take advantage of those built in daily viewers can. I've started to look at it a little differently recently.

 

[Duke]

I have 3 domains that I've been offered between 2-5K for. I was tempted, but now those are the names I am least likely to sell. Two of those three get regular typein traffic and I don't see that traffic ever going away. That money although its decent is not going to change my life, but having the opportunity somewhere down the line to really take advantage of those built in daily viewers can. I've started to look at it a little differently recently.

Same here. With over 6,000 domains that I like, I could live with it if the acquisition phase was suddenly over for me, so I see the article as a positive. For someone who came in 6 months ago, has 50 domains and wants 500 more it would be a negative. Someone arrives late for every party. Most of us missed the first one when today's big players got the great domains in the mid-late 90's. Today's newcomers missed a party that was going on when I came in (low prices overall and new namespace opening up) that I am benefitting from today. But there are so many opportunities on the net and in domains they'll find their own party if they keep looking and so will the next wave that comes in a couple of years from now.

 

[Nova]

There's still money to be made even if you don't own the big names. I have a two-word.biz and includes the - that I paid $7 for that made me $33 dollars today.

Any "direct navigation," or mainly just SE traffic?

 

[JMJ]

I think too much emphasis is put on PPC when in reality the money is in selling and selling to those with plans of development. Let's use cellphones.com as an example. I'm not sure if it was an actual done deal and I'm assuming not but $4 million offers aren't going to come around often. He's earning $1300 a day roughly $474,500 a year now. If he put the dough in an account and got 8% interest never touching the principle he would make roughly $320,000. Or better yet reinvest and turn that 4 million into?

Anyone else find it strange that BD sold for half the price than Yun Ye and had more than triple the holdings? I do realize the whole quality over quantity but my world it doesn't work that way.

 

[sasquatch]

Anyone else find it strange that BD sold for half the price than Yun Ye and more than triple the holdings?

Nothing strange about it. Ult had more generic quality names, in addition to much bigger traffic.

By the way guys, the above article could be read easier and more coherently at this link > http://www.business2.com/b2/web/articles/print/0,17925,1132510,00.html

 

[JMJ]

Nothing strange about it. Ult had more generic quality names, in addition to much bigger traffic.

Yeah I figured someone would say that which is why I came back to edit my post but thats my point. It's not really about traffic on a few good names. It's about a whole bunch of names which draw traffic and attract multiple buyers interest in the long run. Atleast thats what has worked for me. Sure I could buy one real nice name. I could market the hell out of that name until I turned blue in the face and may or may not make a good profit. Or, I can buy a whole bunch of names which will most likely bring the same amount of traffic but attract a larger audience from a selling standpoint. I see the BD deal as a steal. Hell they made a nice chunk of change of my buyer on a name with virtually no traffic.

Lets use an example here.

I have $7,000
I go and buy a $7,000 name. Lets say theres nothing real special about this name other than it's one word and .com What are the odds that I sell that name for lets say $35,000 5x my purchase price within a year or ever for that matter?

Or, I go and buy 1,000 names with the $7k and shoot for 35k. I can tell you from experience it can be done with less than 7k investment.

 

[Edwin]

Another way of looking at a $1,300-a-day (and rising) domain name and a $4.2 million offer is to work out the annual % return. $474,500 a year and a $4.2 million purchase price means that the sales multiple is 8.85x annual income.

Since costs are $0 (well, $7), that's also 8.85x annual profit. In other words if the market stays the same or gets better the buyer will earn an absolute minimum 11.3% annual return on their investment, year after year, while continuing to hold onto an asset that is presumably rising in value itself.

But of course there are endless ways for the buyer to improve on that, from more optimization on the parking side to the negotiation of a stronger/better PPC revenue share deal, to partial or full domain development.

Seen that way, even such mega-deals begin to compare extremely favourably with other forms of investment, so it's not surprising to find that the deal flow is accelerating.

 

[Nova]

Chalk up another point for .us. Inspired by the Business 2.0 article, I just typed "leatherjackets.com" into my browser, which you would think would be a nice little stand-alone "direct nav" name. What do you think - when the public finally learns that .us even exists, will it compete favorably in "direct navigation"? This may be just around the corner...

 

[JMJ]

If the numbers are correct. Buy Domains sold out for roughly $160 a name. Yun Ye if I remember correctly was around $1100 a name. Huge difference for supposed better quality over quantity. There's got to be some future stake in the deal noway they gave in that cheap.

Any "direct navigation," or mainly just SE traffic?

IBLs SE or an act of god I dunno what I do know is I made my money back the first day on each and if they continue they pay for the renewals on the remainder of my portfolio for the year and those don't have to make a dime. The whole point is it can be done with out "direct navigation" and without breaking the bank or loads of cash behind you. I'm a living example of that.

Also I might add I don't even consider PPC as income. Sure its an added sales pitch for me but I'm into selling. While some may go pay thousands for a traffic name and hope for 8x return. I prefer to selectively pick and choose $X-XX names and shoot for 50-100x+ over and over. In the mean time making a few dollars here and there on PPC.

 

[financialtraffic]

Time for a reality check. One national article does not an industry make. The domain business will continue to grow, but it's not going to change over night. The same thing happens to stocks when someone cracks a story on the latest "sleeper" strategy. People rush in, but then they find it's much more difficult than the article reveals. Consequently, they end up rushing back out.

The fact is -- most traditional business people are still and will continue to be leary of anything that ends in "dot com" due to the fact that so many lost so much during the frenzy of the late 90s through 2001, and on.

And, that's just fine with me.

 

[Duke]

If the numbers are correct. Buy Domains sold out for roughly $160 a name. Yun Ye if I remember correctly was around $1100 a name. Huge difference for supposed better quality over quantity. There's got to be some future stake in the deal noway they gave in that cheap.

My understanding is that Highland Capital bought only a majority interest, not the whole thing. Michael Mann still owns a big piece, but no longer has to be involved with the day to day operations which has freed him up to work with Grassroots.org, a charity doing some great things (I will be completing an article on them in the next few days).


By the way, I have the actual magazine in my hands now (the writer express mailed a couple of copies to me). Let me tell you that seeing this article in the magazine (with the play it is given) compared to reading the text-only version on the web is like the difference between seeing a movie in a great theater as opposed to watching it on DVD on a 13" TV set.

The slick glossy issue is twice as big as previous issues of Business 2.0 I have seen and right at the top - above the masthead - is the headline The Domain Name Kings - How They're Making Millions. That sits on top of a Cover Story profiling 30 of the world's top businessmen who are collectively worth $70 Billion (including Warren Buffett, Steve Ballmer, Carl Icahn and others). This issue will be read by some serious money people.

You go inside to the domain article itself, Master$ of Their Domain$, and it is illustrated with beautiful full color photos that really bring it to life. The first one is of Rick Schwartz standing in front of his home (with a luxury sedan and luxury SUV parked behind him). He is holding a computer generated sign that says www.property.com, the domain he bought for $750,000 this year.

Next photo is of Michael Bahlitzanakis who reportedly just sold Cellphones.com for $4.2 million (should have details soon). He is pictured in his N.Y. apartment (from which he works) and is also holding a sign saying www.Cellphones.com. Then there is a very nice color diagram of how the PPC system works.

Next photo is the 3 principals from iREIT.com (Mark Ostrofsky, Bob Martin and Stuart Rabin) holding signs representing 3 of their top domains, shot in Stuart Rabin's NYC office overlooking Central Park. They say they are pouring $250 million into domain names.

This article is going to impress the socks off of a lot of very well financed business people. IMO nothing previously written about the domain business in the mainstream press remotely approaches the impact this article will have on the industry and I think it will be a very positive impact for those who hold good domains.