Monster: The domain industry is going through a
period of rapid evolution. The traditional economic
model of “buy and park” is breaking down very
rapidly, and the expectation that it might recover has now
given way to the reality that it almost certainly won’t.
This may come as a surprise to some, but I personally was
never a believer in parking. Even today, I am still blown
away to see amazing domain names being used as parking
pages rather than as developed sites. The evolution
is far from over.
how I got to this place, looking back, Healthcare.com
and Patents.com are two examples of domains where I
contacted the owners to understand their intentions for
the domains and ultimately collaborated with those owners
to develop sites, either as co-developer or investor.
Along the way, I learned a lot about domain development
and the steps required in order to transform a raw domain
name into a valuable online brand.
same time, I was also looking at scalable approaches to
domain development. I had the opportunity to make an angel
investment in what is now known as DevHub.com
as well as Internet
Real Estate Group. I was closely studying
various approaches to scalable domain development,
particularly as it relates to mapping useful content and
information to domain names. It was not obvious to
me at that time that anyone had a clear vision for domains
as the raw land of Web 3.0.
effect, Epik was the fusion of two ideas: (1) premium
domain development with (2) scalable domain development,
and (3) a vision for a better and more useful Internet. We
apply the best of what we learn about premium custom
development to a scalable, low-cost approach to domain
development which can be extended to larger numbers of
domains. We have overlaid this with a vision for Web 3.0
– what we call “The User-centric Semantic Web”.
Journal: At the 1st Annual Epik
Developers Conference, what kinds of specific
things will attendees learn that can help them
turn their non-producing domains into websites
that generate revenue? Also, who are some of the
experts you have lined up as speakers and
panelists to provide guidance on these topics?
we first started the planning for the Epik DevCon, we were
wondering would anybody come besides our most loyal
customers and partners. Well, I think we have answered
that question based on the list of confirmed attendees and
the continued interest among new registrants. We are
excited to put on this event. I am personally committed to
making sure that every attendee gets more out of it than
they put into it. The generous provisioning of Developer
Credit is just one example. It is also important to
understand that this conference is more than an event –
it opens a dialog that goes on before, during and
after the conference. We are equipping each attendee with
access to people, tools and technology to cost-effectively
apply our proven methodology to Acquire, Develop, Operate
and Sell domains and websites
Some of the speakers we have lined
up are hands-on veterans in each step of the value chain
of Acquire-Develop-Operate-Sell, and in many cases already
working with Epik and Epik Developers. In addition to
members of Epik executive team, attendees will hear from:
- Jay Lohmann of Tag
Team Creative (Online Marketing)
- Chris Pirillo of LockerGnome
- Chad Fisher of Pyramid
- David Fairley of Website
Properties (Selling a website)
- Colin Pape,
CEO Shopcity (Keynote speaker)
Allemann of DomainNameWire and DNWStats.com
(Blogger and domainer)
Our co-sponsors Godaddy and
Moniker are also bringing several of their top
people, and we look forward to their participation in the
conference, and the related dialog about the future of the
Journal: Many remain skeptical that
websites developed en masse can be of sufficient
quality to attract an audience and generate a
meaningful amount of revenue. How do you answer
those that say “Show me the money”?
We have been pretty public about the revenue performance of the
Epik-powered sites. Most Epik sites post their stats online for public view. So, we are literally, showing the money. As we introduce efficient marketplaces for buying and selling developed sites, I expect this transparency will increase.
As for mass development, I think that is a misnomer. What we are actually doing is
custom development using a platform-based approach. I have spent
millions of dollars – mostly of my own money -- developing and validating the development methodology.
As we saw the PPC model breaking down, and at the same time, capital markets shutting down, we believed that the next phase of domain monetization would need to be built around
real development, but at a cost that would make it practical for developing large portfolios.
Consider for a moment the value proposition of building a custom Epik portal. The price is
$249 per domain, and can be as little as $175 with volume. In my experience, a custom logo alone can cost that. At Epik, we build a site with custom graphics, original content, monetization and dynamic feeds -- all for $249.
Journal: With Epik,
you have obviously placed a big bet on large scale
development as a better solution than parking in the long
run. Does that mean you are ruling parking out as
an important revenue stream in the future?
Monster: For development-grade
domains, I think domain parking is a waste of time. It destroys the SEO value of domains. Sure, it may give you a pop in terms of revenue, usually because of legacy traffic or type-in. However, if the long-term plan is development, the act of parking is
counter-productive. There is a place for parking, and that is for monetizing the vast number of domains that do have traffic but have questionable development value. There are simply domains that get traffic for no obvious reason, and from no homogenous audience. By all means, park those.
In fact, the official conference T-shirt subtly integrates a no-parking symbol, in part because our fellow developers share our view that parking is no longer the preferred way to derive value from domain names.
Journal: There are innovative people in the parking business, so I have been a bit surprised that we haven’t
seen more mass development initiatives come from the parking companies themselves.
NameMedia has been a notable exception with their
SmartName stores platform and Parked.com,
wisely I think, hedged their bets by buying WhyPark.com, allowing them to plant their feet firmly
in both camps. However most of the large scale development platforms have come from
new competitors. I know you don’t speak for the parking companies, but you have followed the industry closely so I wondered why you think this has been the case?
development is not something that you just wake up one day and do. It is actually
hard and encompasses a lot more than technology or securing a good ad feed. I think the parking industry got head-faked by the
minisites/AEIOU attempts which did not get much traction. Those models did not work because they created static sites which the search engines quickly
| stopped ranking due to
lack of original or fresh content. So if you viewed “Development” through the lens of static
Wordpress sites, it would be easily to conclude that it was not worth pursuing. The parking companies are now on the wrong side of history, and it remains to be seen whether they can adjust fast enough for it to matter.
Journal: I know that your personal view (and that of Epik as a company) is that the trail doesn’t end with a revenue-producing website. From the start of the cycle, you have had a strategy for
cashing out in place. That is different from the way domain investors thought when parking was at its peak. The idea then was keep the domains as cash cows and enjoy the milk (PPC profits) forever. Tell us why an
exit strategy has always been part of the domain life cycle you champion.
Monster: Yes, that’s right. When we talk about the
Domain Lifecycle, we do incorporate an exit. That exit can take many forms, including return on capital employed from cash flow, but more typically will involve a sale to an end-client who values the recurring organic traffic of a well-executed site.
I believe Exits are absolutely part of the economic model of building an
Epik site. From time to time, owners will get offers, particularly for their top-performing site. And while buyers may have a challenge valuing a domain name, there are well-established conventions for
valuing a business. For example, a domain may have a $1,000 appraised value on the basis of its theoretical traffic from exact search and CPC. That same domain that generates $1,000 per year (~$20 per week) in cash flow, can support a
4-5X multiple to a financial buyer, and materially more to a
|We do know that many of our
developers, including the largest developer, Kenny
Hartog, have no interest in selling. They are building large portfolios of income producing
properties. They are doing this in order to have sustained passive income through
Epik-managed websites. The beauty of building on Epik is that the setup fee is a one-time investment. No further investment is required on the part of the owner. As a result, the owner can wait for the right offer to come along while Epik continues to add value to the
Journal: One of the most interesting trends I’ve seen in the past year is the
| a degree at least, of
domain revenue streams and their resale values. While PPC earnings have plunged, we’ve seen a
rebound in the domain aftermarket this year. Why do you think that has been the case – more end user buyers who care about domains for their
brand value rather than traffic, people seeing potential in other ways to monetize beyond parking (including easier development systems), or is there something else at work?
Monster: I think it is fundamentally an
SEO story. People who park domains are singing the blues because their type-in traffic is down and their EPC is down. What they miss is that the
real value of the domain is not in the type-in
traffic, but in the SEO potential. Google messed with the Parking business model but it is also offering tremendous upside if a domain owner is willing to
take the next step.
As for the decoupling, I believe we are seeing a wave of
entrepreneurial developers seeking out the domains that can be developed. They have seen first hand that their SEO and content work is much harder to defend than having a domain name that can pretty much give them a
lock on a page 1 listing as well as a much more memorable brand name.
Schwartz (center) sold Candy.com to
Melville Candy Company represented by Joe
Melville (left) and Greg Balestrieri
|Take a look at
Candy.com, the domain that Rick Schwartz famously sold for
$3 million. While we can debate whether Candy.com is the #1 place to buy candy, they are
#1 on Google. That did not take them all that long and odds are good that Candy.com will be #1 on Google for a
long time to come so long as their site continues to perform well.
What amazes me is that major companies like
Amazon.com have no apparent SEO strategy beyond their own content. On Google, sites like
IceCreamMaker.com are beating William Sonoma for ice cream maker, and
Bra.net is beating Victoria’s Secret. At some point, large companies are going to look at their PPC expenses and conclude that they
missed the boat when it comes to organic traffic.
My personal forecast is
that in about 18 months, Epik will power 100,000
stores in a nearly equivalent
of category niches. Each one of these niche stores will have a
passionate owner that cares about his or her site is performing. And when you consider that super-developers like Kenny Hartog alone own
1,400 of these stores, it becomes more obvious why I foresee a
land rush for development.
Journal: One final
question about the upcoming conference. When this interview is published
(August 28) there will be a little over two weeks left before the conference gets underway
September 15th in Seattle. I understand that the host hotel
has sold out. If someone makes a late decision to attend, are they going to be able to find accommodations nearby?
Monster: Thankfully there is an
abundance of good hotels in Seattle. One can literally walk from one end of downtown to the other in about 15 minutes.
Suggested hotels with
availability include The Westin, Hotel Max,
The Sheraton and The Fairmont Olympic. The
Silver Cloud Inn at Lake Union is less expensive and a
good choice for budget travelers. Hotel Max is offering a web
special of $138 on Expedia. The Sorrento
is also offering $167 rooms on Expedia and is a
If anyone is having difficulty finding a room, please contact us and we’ll be happy to help.
Kristine Oliver (Kristine@epik.com) will be happy to research available rooms, though most people are having good success with
Expedia. We will also continue to blog about hotel deals to the extent that we secure them.