Advertisement

NEW CGI Directory

Home Guides General Information Article

Domain Name Industry Reality Check! Domain Valuations, Domain Sales and Domain Monetization...

4.5/5.0 (6 votes total)
Rate:

Mike Cohen
January 21, 2009


Mike Cohen

This article was written by Mike Cohen of WannaDevelop.com and originally appeared on:

http://www.wannadevelop.com/articles/article8.html

 

 

Mike Cohen has written 1 articles for DomainInformer.
View all articles by Mike Cohen...

This article is a reality check for most people involved in the domain industry, specifically domain name holders/investors... It could have the effect of changing your life... Seriously! It involves so much stuff, covering both newbies, who are considered the up and comers and young bucks who have recently gotten involved with buying up domains, as well as the professional domainers with thousands and tens of thousands of quality and generic dot com domain names. In this write up I'll be discussing some of the issues related with domain names valuation, monetization, sales and some other domain industry related stuff. I'll be outlining some of the problems that exist in the domain industry as well as run through some of the solutions that I personally believe can easily be put together and make sense of things. Please note that this write up is pretty long. The last article I did was over a month ago and this one is the result of probably a couple of related topics/issues put together into one piece. It's appropriate though. The most important and good stuff is at the end, so grab a cup of coffe or something and have fun at it!

First things first... The domain hype, it's alive and well, still into 2009 and that is both good and bad. It's probably more lively than it was ever before which means there is more activity in the domain industry as a whole. More activity doesn't necessarily mean that more investors are making more money off of their domain names or people are getting richer than they were say in 2005 or 2006. It is actually the opposite in the current state of the market. The domain name parking phenomena is pretty dead, as revenues has been declining by as much as 50% over the past year alone and things are not looking any brighter for the rest of 2009 as well. So where is all the money? Where is all the wealth? Well, it is being spread around with many more people and companies than ever before.

The domain industry has come a long way since it's early days following the dot com bust in 2001 and 2002 which is when most and if not all of the premium and generic keyword domain names were snapped up by the sharks and major players of the domain industry... Sure, the domain industry has gotten the attention of many companies around the world, but still... It is only a tiny fraction of the business community that all the domain investors had assumed years back that it would. So what can we all take away from this? There is a lot more to go. A lot more to accomplish.

Things will get much worse than they will get better for people though. Trademark infringement is still going strong and it is an issue that will explode... Will 2009 be the year that it will blow up in people' faces and leave many paralyzed? It's possible! You won't know when or how it will hit you, but rest assured that it will. Trademarks are not good domain investments and were never a long term play. It was quick money. The quick and easy money is going to disappear. All of the smartest players of the domain game have already "cashed out" and the people left with the trademarks are mostly newbies or folks that simply choose to ignore everything and living in their own little bubble.

Many domain name holders have domain names that are absolutely worthless. What? You don't think so?! Well, just head on over to any of the domain name forums for sale sections and go over the domain names listed there. Do you see many domains that are worth the registration fee? Probably 90% if not more are worthless. Now, that is not to say that all domain names are worthless, it just goes to show you how stupid and careless people are that they have invested tens of thousands of dollars in hundreds or thousands of domain names without doing the appropriate research. The names never had a chance of being sold and absolutely zero potential. Those sellers are trying to "dump" the names before they expire.

There is more and more domain names expiring each and every day than ever before also it looks like and this trend will continue into 2010, 2011 and so on. Domain names have been bought up for each and every keyword in all of the most ridiculous ccTLD's and other non-mainstream TLD's such as .biz and info, that one was thinking could be resold and flipped for at least 2x but hopefully much more. Well, 12 month's later and still no buyers... Some people are in it for the long run, and they have been holding onto thousands of worthless domain names for years now. Those renewal fees start to end up. It is clearly evident that small time domain investors are cracking under the pressure and will be calling it quits soon.

Domain newbies have been feeding other domain newbies incorrect information for the past few years. This is a major problem in the industry. Most people that have gotten involved in the industry just as an "on the side" thing or hobby are burning through cash and doing so quiet well. Registering domain names that don't even make sense that will never make money being parked or have any chance of being resold even to recover the registration fee. Once again, just go to the appraisals or for sale section of any domain forum and see for yourself. People have the belief, but what good is that? It doesn't materialize to anything... You need to know who to listen to and who to trust when it comes to investing your money in stuff.

So what can you do to find out if the domain names that you are holding onto are worth a million dollars or worth $-7? What the hell, did you just say a domain to be worth minus seven dollars or something?? Yes, I did. Anyways, you should try to list your domains for sale at as many domain sales venues as possible. It includes forums, newsletters, auctions, etc. Price them fairly and "ask for offers" but set a reserve price and this will reveal the type of interest there is amongst your peers and give you an idea of what the domain name's current true market value is. If it is a good generic keyword domain name or one with obvious potential, you will see a lot of offers coming in obviously. If you do not get any offers, not a even a low ball offer that would cover the amount that you had to spend in order to acquire that domain name... Well, that means something is really wrong. What is wrong? Well, it may be one or two things --- probably the domain name or the price. The domain name may not be as good as you thought it was, after all, if your peers can't see the value or potential in it and follow up with an actual "buy out" and put their money where their mouth is or offer an acquisition of the domain.... It is worthless.

A lot of domain valuations on the forums and by other "professional appraisal" companies are nothing more than just one persons personal opinion, it is nothing more than text on your screen. The valuations are based on comparative data but each and every domain is quiet unique and they simply cannot be compared one to another. This is actually why so many newbies fail. They think that just because XYZ.com sold for a certain price, or XYZ.com is listed for a certain price then also XYZ.info can sell or it has any value. Simply not true! Get real!

So anyways, where was I... If you don't get any interest in your domain names at all... That tells you something --- failure. That word has a strong implication and sucks, I know... But yea, the domain is a crappy domain. There you have it. Because if the domain name doesn't earn you any money, whether it is setup as a website or parked or whatever... Whatever potential you may think it has, it doesn't hold much weight and doesn't mean a whole lot because potential doesn't pay the bills. Another possible reason for the failure could be that you did not market the domain name properly, or to the proper audience. Domain investors after all are looking at bargains and good investments. Domainer-to-domainer sales are at all time lows. All of the domain names that could be flipped and re-sold already have been over the past few years and te best of the best domains have landed with some of the biggest domain portfolio holding companies that aren't really buying all that much anymore. They are as you would say "set for life" and they do not need anymore domains. Their business is in monetizing the traffic and selling the domain names.

Do you really think that most of the people that go through Sedo, SnapNames or the various domain forums are fortune 500 companies? Get real! If you thought so... You have a lot to learn. Look, the domain learning curve isn't that difficult but the domain game isn't for everybody. It is for very unique individuals. It is for highly creative individuals and visionaries with entrepreneur spirit. Who said that domaining was easy? Ummm.. It may very well have been in 2001 or 2002 and into 2004 or 2005 but the opportunities have dried up. There isn't an endless amount of quality domain names out there this days available for registration or drop auctions and competition is as fierce as ever before.

You see, whoever told you that making money in the domain industry was easy only told you the half truth... It is not. All of the major domain players who have been involved for a while now will tell you that domaining is a full time job. The biggest and best domain investors spend anywhere from 10 to 15 hours per day. They dedicate themselves exclusively to what they do. This is what you gotta do when you strongly believe in something... It takes a lot of time and dedication and sooner than later you will know whether it was all worth it or not. Look, you can easily make a profit in the domain name game if you know what you are doing. You can buy a domain and be able to flip it the next day for 2x or 10x or even more. What? Are you surprised... You don't believe me?? You don't know how this is possible?

Everything is possible. Whoever told you that it isn't is probably the one doing it and ripping benefits from all those opportunities on the down low. You really need to know who to trust and whos advice to take when it comes to domaining, but at the end of the day, you can only trust yourself. Why would another business give another business good advice? Are they crazy? Haa... So you think the domain industry is different than any other industry? Not really, it is a business, and as with the rest... The same challenges apply here as well. If you can't make sense of things on your own of the domain industry, you may be in the wrong biz. It is not for everybody and let me tell you, the success to failure ratio of people "making it" in the domain game is definitely as high as it's ever been. People are realizing that all of their investments in worthless .biz or .info or numeric and acronym domains aren't even worth the reg fee! Consolidation isn't even a possibility for them... They are taking a loss and moving on. It is a "damn you" domain industry and thanks a lot for wasting my time and money. Peoples life's and dreams have been ruined thanks to the industry but you only have yourself to blame. It is your responsibility and solely the blame lays on your shoulder.

If you were silly enough to get "convinced" or maybe another interesting word that I should use more often, conned, by people and lured into bad investments, then you seriously need to brush up on how you go about doing business overall if you are doing so in very risky environment with very little information on what it is exactly that you are getting yourself into... If you are only now discovering that it's whats been happening... Well, that sucks, but the sooner you figure this out the better it will be in the long run. The sooner you identify the problem the sooner you can have it fixed and sometimes it is not too late. You have to be mentally strong as well as highly focused. Doing the domain thing on the side isn't "cool" anymore and just think about it... Does it make sense for you?

You may be thinking to yourself, what the hell do I know about domain valuations or domain sales... Well, my perspective on things is actually pretty good I'd like to think and unbiased towards any and all factors involved I think because I was just an "observer" for the most part of the industry when it was going through a very interesting transition and a whole lot of changes during the past four years, some pretty good, some pretty bad, 2005 - 2008. I took myself out of the game and shifted my focus on a much more stable work environment and industries that I was always very interested in that had even better opportunities than the domain industry. Yes there is life beyond domains and many good business opoortunities as well.. Shocked? But my involvement with domains was still on a daily basis, just not in the domain buying, selling and flipping. Being in marketing/advertising and development you deal with domains a lot. So, I let things settle down and now I am starting to make sense of things as of late 2008 and into 2009. I have recently gotten involved in the domain industry on a more consistent basis because I am seeing quiet a lot of opportunities with domain acquisitions as well as many others. I have gotten re-energized once again and I am feeling good about what I am doing.

There is always money to be made with domain names.. Always has and always will continue to be, but you need to be real cautious if you choose to stay involved in the industry. Why? Because the domain game has changed forever over the past year and if you have not noticed this then you probably shouldn't be involved in the first place. The domain valuations pulled out of thin air don't have much pull or anything else to em besides declining domain parking revenues and the whole "it has potential" argument.... It's gotten so old. It's a a pretty weak combination. There is tens of thousands of good domain names out there that are worth $xx,xxx and $xxx,xxx and so on but there is millions of domain names that are worth $-7.00 as well. While some parts of the domain industry will "cool off" in 2009, others will be more "hot" than ever before but that is normal. Just as with any other industry, it is nothing new... Every industry goes through cycles. Finding consistently and a balance is not so easy. Most parts of the industry will go through major changes in 2009 and one of those critical changes will be within domain parking.

So to finish off this write up, I'd like to end it with some positive stuff... How about some tips for selling your domains? You would love some... Ok, well --- You should be directly pitching your keyword domain names to businesses. That is where the money is. If you have a category killer domain name or one that is say "top five" within it's niche, you need to go ahead and approach all of those businesses and notify them that you are considering selling it. If they are interested, they will reply to you. You do not need to convince anybody... People know value when they see it. A good way to find potential businesses (buyers) for your domain name is to search your root keyword domain name on Google and contact each and every one of the companies that are advertising.

Another thing you can do is search for companies in the yellowpages.com --- There is an even larger database of businesses there... But how do you go about contacting them? Well, I've tried it all and believe me there is no one sure way or best way to sell a domain name. I've e-mailed, mailed, called, faxed and even met up with potential buyers. You should try each and every option... You never know! The truth is, it is not easy selling domains but when you do land a sale, it is the best feeling in the world. Just make sure that you are trying to sell and pitch the "right" domain name to the "right" businesses or otherwise you may be just wasting your time as well as theirs.

I've hand registered targeted keyword domain names for $7 and re-sold them the next day directly to end users (companies) for lots of money. I've bought domain names off the forums and flipped them the next day on another forum for a nice ROI for 5 mins of work. I've bought expired domain names and put in place lease agreements with companies within a month of acquiring the domain. The lease fee I collect more than covers the registration fee within the first month. Yes we are talking about $x,xxx. I've also re-sold domain names I paid only a few hundred bucks for $xx,xxx directly to companies. It is all still possible. I continue to do this into 2009 and in fact, as far as making money goes from domain sales I am doing better than ever before. Sure, it has to do with the "experience" and such but just goes to show you that hard work pays off.

So, what can you take away from all of this? Well... Domaining isn't easy. Get that outta your head. It is a lot of hard work... There isn't any easy money in domaining anymore. Don't believe the hype. Believe what you see with your own two eyes. Don't dream up big plans and whatever if you are just starting out. If you are struggling, in the truest sense of the word, then just stop domaining --- take a few steps back and really look at everything you are doing and try to make sense of things. As for all the professional domainers with thousands and hundreds of thousands of domains... It is time to get real, too. If you want to make the most money with domain sales, you need to price them fairly and approach the companies that may want to use your domain names. The waiting game is a bitch, and at the end of the day, it may just bite you at the end if you wait too long. Take advantage of the current momentum domains have and continue to be proactive as well as start development, and create even more value. The potential exists.. The opportunities are there, you just have to reach out and grab them. You got the good domain names? Great. You already got 50% of the work covered.

That may have been the longest write up to date!! I think it took me longer to fix all the typos I made than it took me to write, because I was writing so fast.... I'm good at typos:) Not sure all of the information makes sense as I touched on quiet a few different topics, but straight down as it came out, raw and unfiltered information and my personal opinions for you to digest and make sense of. 20/20 --- paragraphs which was my goal when I sat down and wanted to cover this issues. Thanks for reading...and good luck !

Written by Mike Cohen of WannaDevelop.com

               Hosting Bookmarks   


Submit Your Articles or Press ReleaseAdd comment (Comments: 0)  

Advertisement

Partners

Related Resources

Other Resources

arrow