Why places like AN and GD HAVE to fail..

[beatz]

Thought it would be worth it's own thread.

The main reason for places like Afternic and GD failing businesswise is very simple:

To the end buyer(and that's where the most money comes vs.speculators amongst themselves) just the idea of bidding on a domain is uncommon and strange.
An end buyer, if at all willing to pay for a domain doesn't want to undergo complicated handlings etc; all they want is to buy the name, hear an asking price,decide if they think the price is ok and if so, then simply buy.

I mean, if you're lucky enough and an endbuyer is willing to buy your name, how stupid to make it more complicated than neccessary by implementing an auction system, escrows and such.I bet that through domain auction systems like afternic more domain sales have been prevented than pushed.

Bottom line:

- If you wanna sell a domain to an enduser, make it as easy as possible for him and avoid domain auctions

- As a result of this it means that on places like AN the only buyers/sellers you will find are speculators amongst themselves where the buyers are used to only pay like 20% of enduser value for a domain which again is the reason for AN's low comission.

- In the end AN's biggest mistake was to think their main business would be comissions from END USERS.

Of course, in addition to that other stupid things have added to especially AN's and soon GD's failing like expensive fees, cutting the community sections like chat,boards etc(how stupid do you have to be to do that?!),cutting off phone support, and not to forget AN's "Worlds worst handling of Escrow in the last 100 years" award they truly worked hard for.

Most bottomish bottom line:

The idea/concept of * AUCTIONING * domain names in itself is wrong.

Cuz it can't work.

My 2 cents.

 

[Zoobar]

I think there mistake was believing there was a growing supply of $100,000+ domain names.

 

[Duke]

The idea/concept of * AUCTIONING * domain names in itself is wrong

I think you have some very valid points beatz. A few years ago it worked - but new thinking is needed today because the market has changed. I sell a lot of merchandise on Ebay. Lots of buyers there for what I sell so auctions work great. I tried Yahoo and there is never more than one bidder there, so auctions do not work - you have to set the minimum bid at the price you want to sell it for. Very possible that the same thing applies to the domain business today. I now set a price on the vast majority of names I list. As a buyer I only buy when the seller states the price they want (I can always offer less, but I have no time for the "who much can I squeeze out of you" game)

 

[zoltan]

beatz, good points. :agree:

 

[proproject]

beatz, great subject and great points all, but here are a few more.

1. Generally, buyers do not even know to look on the registered domain name sites. They are frustrated that all the good names are taken, then settle for a worse but unregistered domain name. End of story. Doesn't matter whether they would have been willing to pay $5,000 for a better name, or whether they like auctions or not.

NBS is strategically committed to being registrar neutral. You cannot register names on our site and as far as I know, we're the only exchange like that. That is a hint about how we hope to address this fundamental problem.

2. I'm sure most buyers did NOT like paying $49 just for the chance to make someone an offer - that policy had to run offers away more than just being an auction site!

3. Too many domain name sellers have ridiculous notions of economics. They think they are holding lotto tickets instead of normal properties. The market should correct this behavior over time, but it is a serious enough issue, that, as an exchange owner, I'm looking for a way to accellerate that learning process. Any ideas?

I have no answer yet, but what do you think your realtor would do if you told him you wanted to sell your (appraised value $100K) house for $2 million. You'd probably get a very fast good luck and goodbye.

BTW, just an image thing mostly, but we never call our site an "auction" site. The only mention of the word is on our home page for the search engines and there we say "like a domain name auction". Our members can list their names exactly as you prescribe: just set a reasonable asking price at which the buyer can make a purchase immediately.

I'm being long-winded, sorry. Maybe I'm just rationalizing a lot of hard work. :cry:

 

[FineE]

If one compares Great Domains to a used car lot this is what it would look like.

Picture a used car lot with say two million cars. Well over say 95% of them are totally worthless junkers with pools of oil under them, not even worth the towing fees to take them of the lot. Then there is an air conditioned show room in the middle of this wastland of junk with say 30 cars or so priced between $100,000 and $15,000,000.

So what about the 100,000 or so cars that are worth $1000 - $100,000? Are they really going to sell surrounded by two million junkers? Ask any used car dealer.

Great Domains came up with a good idea with thier "platinum" and "gold" showcases, the trouble is a silver for name valued at $10,000 - $100,000 and bronze for names valued $1000 - $10,000 showcase were badly needed. And then refuse to list anything under $1000! Keep the junk out.

I have yet to see a brokerage or auction site that will properly showcase a domain worth say $5000 without burying it among a mass of worthless domains.

 

[proproject]

Seems like Great Domains's paid placement system should achieve the result you desire. Since higher value domains would tend to justify the fees to get them listed at the top of their hierarchy, you should see the air-conditioned showroom at the top of the tree, first, and then, only as you take the time, would you get to the junk yard. I don't spend much time on Great Domains. Why doesn't that work?

NameBuySell is using a ranking system to address this problem, but I admit it is not even close to where we want it to be.

Roger

 

[FineE]

All "paid placement " means is that the owner of a particular pile of junk is willing to pay money to hype the pile of junk. It does not change the fact it is a pile of junk.

Back to my car analogy. Take an old junker that leaks oil and is not worth the towing fee. Then go to a used car dealer that sells cars in the $10, 000 - $30,000 range and offer to place it thier showroom for $100 / month!

I have had names that appraise at $10,000 and also a name that attracted a $10,000 offer and GD treats it no differently than say

sd7qlf-c90e-wr0jvofufroc-or09v965kvpadfp-ovcjje.org

The same can be said for AN and many other domain auction / sales sites.

By the war try a search for "domain registration" on overture. The top listing is $5.09 a click. And it leads to the service of network solutions for $35 for the first year and $20 for the second year that is for a single .com registration

I will leave it to the reader to judge if the $5.09 / click price is an indication of the quality of the service provided.

 

[Kid Kool]

personally i think the reason these sites failed is because the service was terrible.

 

[crabby]

Originally posted by proproject
[ The market should correct this behavior over time, but it is a serious enough issue, that, as an exchange owner, I'm looking for a way to accellerate that learning process. Any ideas?

Yes. One way to correct this behavior over time is to dramatically increase the price for new registrations. A huge reason Afternic and Great Domains even exist is the fact that you can buy domains for soooooooooo cheap, as little as $7 USD.

 

[DomainNameFactory]

I agree. If a domain cost $100 a year, then very few would be held and not developed.

 

[proproject]

Originally posted by DomainNameFactory
I agree. If a domain cost $100 a year, then very few would be held and not developed.

Yes, but also many personal sites would not get created and existing ones would be abandonded if the cost were $100/year. I don't want to screw the poorest domain owners to make domains easier to buy for others.

Generally, speculation is not a bad thing in other markets. It is good when premium properties are quickly available (liquid) to customers with bigger budgets rather than the valuable property being in use by say a student's personal home page. Call speculators the name-space conservationists. The public should benefit from having the best stuff on the best names. And speculators should be helping this happen.

Unfortunately, speculation is not able to have that positive effect in this market very well, and one of my personal missions is to change that! Two main reasons it does not work:

1. the market is not fluid. It is slow and it takes much work to negotiate and purchase registered names.

2. sellers are not aware of their real cost of asking prices too high -- not selling at a lower price, i.e. opportunity cost. And that is also related to #1.

Roger

 

[Nic]

Question: "Why places like Afternic and GreatDomains HAVE to fail.. "

Answer : "Poor customer respect and support"

 

[proproject]

Originally posted by Nic
Question: "Why places like Afternic and GreatDomains HAVE to fail.. "

Answer : "Poor customer respect and support"

Question: Why do places like Afternic and GreatDomains have poor customer respect and support?

 

[FineE]

Question: Why do places like Afternic and GreatDomains have poor customer respect and support?

Answer: Because the vast majority of the domains on those sites do not warrant good customer respect and support.

Seriously providing good customer service costs money and if you run a brokerage or an auction the asset being sold must have enough value so that a reasonable brokerage or auction fee can pay the cost of providing good customer service.

Requiring $100 to register a domain is very unreasonable when the cost of providing this service has been proven to be under $10. But $100 is not unreasonable as a listing fee if each listing is reviewed by a human and a minimun standard is set. For example the word or phrase must have a minimun number of serach results in Google etc. A minimun of 1000 in search results for a .com would eliminate the vast majority of the junk out there. Higher requirements can be set for other TLDs etc.

As an alternative the seller could provide a third party appraisal yes from GD and require a minimum appraisal value of say $2000 before a name is listed

 

[proproject]

I love the valuation idea (search results)!

If you had a shop that offered only $2000 names and above, you would indeed have a very high-end boutique. But that might be just where the big budget shoppers would like to shop. You might be identifying a natural market segment. OTOH, maybe not. I'd love to see the business experiment.
Roger

 

[NameBox]

Part of the problem has to be the user interface. With 100,000s of listing, most of which were garbage, one would really have to dig deep to get to any quality.

 

[domainduck]

Some names sell and some don't.

Some stink to you and not to me. I'd pay $1000.00 for one that you wouldn't pay the reg fee for.

The difference between 1998 and 2002 is information. Then it was hard to find a domain name, now it is easy. Supply and demand.

Auctions do not work, appraisals do not work, common sense does not apply.

Domain name resellers are gamblers... that's what we love about it!

We need a domainers convention.

quack

 

[ilikebeer]

My two cents ...

I think the downfall of the AN’s and GD’s of the world is more fundamental.

I’ll be first to agree that the service was horrid at best … I think I had 13 auctions that passed reserve at AN that ended up in NO sale.

As much as we would hope/believe domains have broad appeal to the masses - they do not. I’m sorry if that hurts to hear, but it’s true.

I challenge anyone to go to an office complex and ask the first 25 people they see if they know what a domain name is. Chances are 4 out of the 25 might know; and of those 4, 1 might know that there is a secondary market for domains. For that brief moment in time (1998 – 2000), we could reg a name and sell it for many times it’s cost, which perpetuated in our minds the perceived long-term stability of the industry amongst our own little clique of investment risk takers.

Don’t get me wrong, good names will always sell for good money because when people go online and want to look at cars for example, they’ll instinctively type ford.com, cars.com, etc. They won’t be typing koolcarz.info – so if you’re holding a name of that ‘quality’ for the “market rebound” so that you can cash in - any rebound will happen without koolcarz.info riding the upslope.

 

[FineE]

Having said that, there is no doubt that we are in a slump in the domain market. Will it come back. Yes and driven by the fundamentals.

I agree with

I challenge anyone to go to an office complex and ask the first 25 people they see if they know what a domain name is. Chances are 4 out of the 25 might know; and of those 4, 1 might know that there is a secondary market for domains.

but most businesses do not have a website. Yet! and as for consumers even less.

There are about 30 million domain names registererd worldwide total. That is over 500 people per domain name world wide. The next domain boom will be driven by end users not speculators.