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August 27, 2012

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Industry Heavyweights Find New Domain Monetization Gold in Old Vein: Why @Identity's Founders See Big Bucks in Email Addresses

By Ron Jackson 

When I got an email from Chicago.com owner Josh Metnick with a subject line that said "Something amazing is happening" I naturally sat up and took notice. Not only is Josh a giant in the geodomain space, he is not a guy who is given to hyperbole. Josh wanted to get on the phone to tell me all about it and he did indeed have an amazing story to tell - one that will be music to the ears of owners of top tier .com domain names - especially (but not limited to) geodomains. 

Metnick accidentally discovered that individuals and companies were willing to pay far more than he (or you and I) would have ever dreamed for memorable email addresses that identify where they live and do business - in his case Chicago. As the owner of Chicago.com Metnick found that he had just what they were looking for. 

Metnick shared his discovery with fellow industry heavyweight Ammar Kubba,  the CEO and a principle in Thought Convergence, Inc., whose portfolio of well-known companies includes TrafficZ, Aftermarket.com and DomainTools.com. Kubba said, "Josh mentioned some preliminary numbers and projections, and I thought that he was crazy...but then we talked some more and I started to see the light." Kubba decided he wanted in. The two formed a new company @Identity LLC, to build a platform enabling themselves and owners of other premier domains to tap this promising new source of revenue. 

Josh Metnick, Chicago.com
Co-Founder, @Identity LLC

Another long time Metnick friend, and fellow major city .com domain owner, Sean Miller of NYC.com, also played a key role, joining Metnick early on to help develop an automated email sales platform. NYC.com is now offering the service and the Castello Brothers are also gearing up to offer email addresses at Nashville.com.

Now, as domain veterans know, simply selling email addresses is nothing new. Other companies were doing that years ago, but those businesses, like the original iteration of NetIdentity (who sold email addresses tied to popular surnames in .com), charged a modest amount for what was regarded as a "vanity" service. The new wrinkle that Metnick discovered was that some customers, especially businesses, would value the right email identity much higher than would private individuals looking for an inexpensive vanity address. How much higher? Well, that is the amazing part of the story. 

Over the years Metnick had issued just a few email addresses at Chicago.com to employees, friends or people who assisted in the site's development. Out of the blue one day last summer, a man called Metnick and offered him $500 for an email address that would be his first name @Chicago.com. As it happens that name was one of the few Metnick had already handed 
out. Metnick asked the guy who had the address if he wanted to split the $500 and sell it. He said no. Metnick relayed the news to the person who inquired and he upped his offer to $1,000. But again - the guy with the address said no!

That might have been that - but it got Metnick thinking about the importance of email addresses in today's world. He realized he would never sell his own address at Chicago.com, one he has used as his universal email identity for nine years now. So he started actively marketing Chicago.com email addresses, initially offering new customers the use of one for $299 a year. To his amazement a local real estate company ordered eight email addresses at $299 each - giving him just under $2,400 in his first order.

As this was uncharted territory, Metnick decided to let the market determine what his rates should be. He added multiple-year options to his $299 annual base rate, offering three years for $749, five years for $1,049 or ten years for $1,949. He was shocked when one customer ordered five addresses for 10-year periods - an order worth close to $10,000

Metnick said he raised the prices four more times before landing at $4,000 for five years. A local business woman took her first name at Chicago.com for that price. A male businessman did the same, then a local entertainment company bit at that price. Metnick knew he was on to something and needed to build an automated system and start treating email addresses as identity assets like domain names are. The beauty of email addresses is that so many of them can be sold off a single great domain name. His phenomenal early results showed him just how much some people loved their city and wanted to cement their online relationship to it. 

Metnick reinforces his city's appeal to potential email address buyers who
identify with Chicago by commissioning this spectacular skyline photo for 
@Identity's Chicago.com page
where buyers can order email addresses. 

Like domains, certain email addresses are in greater demand than others, so Metnick started using variable pricing based on scarcity. First names, last names, commercial keywords, short names, etc. all command more than less desirable names. Metnick himself is stunned to have discovered this new means of monetization - one that he plans to roll out on some of his other domains including Illinois.com and TelAviv.com. "The answer was right in front of our face and we never saw it!," he marveled.  

I have to admit I was shocked myself. How could the value some buyers are ascribing to email addresses go through the roof compared to what we have seen paid for them in the past? 

@Identity Co-Founder Ammar Kubba

Kubba thinks he knows the answer to that question. "Technology has come a long, long way since the early days of vanity email and, with the proliferation of social media sites like Facebook and Twitter, the importance of online identity has risen to new heights," Kubba said. "In my opinion, the biggest problem with the early vanity email models was that they were trying to do too much, and the margins were too thin.  How could a company like NetIdentity possibly compete with the technology infrastructure of an AOL, Microsoft, Yahoo! or Google?"  

"Our model for @identity is different.  We're not trying to 

control the inbox. We don't want to control the inbox. We want to manage the identity layer, above the inbox.  We may be similar to a vanity email product, but we're also so much more (and so much less) than that."

"One of the primary differentiating factors in our product is that it's truly portable," Kubba continued. "An @identity email address is an address that you can keep for life.  We've all used various email providers throughout our business and personal lives, and, each time we switch, we have to notify all of our friends, family, and business contacts, print new business cards, update social profiles, etc. With an @identity email address, switching email providers is seamless. We're completely platform agnostic. You can use an @identity address with pretty much any email platform, including Gmail, Yahoo! Mail, Hotmail, Outlook and even iPhone and Android messaging systems.  Our technology platform is focused on ease-of-use and high deliverability, coupled with state-of-the-art spam, phishing and virus protection."

Kubba also see a lot of opportunities and synergies between the @identity product and his current companies. "Online identities (Twitter handles, Facebook pages, etc.) are already being monetized and sold in the aftermarket, so it's a natural progression that prime email addresses will follow suit," Kubba said. "At some point in the not-too-distant future, I can envision TrafficZ offering @identity widgets to our premium domain partners, Aftermarket.com creating a dedicated marketplace for email addresses and DomainTools logging ownership history of online identities."

Kubba says you may eventually see
email addresses joining domain names
in the inventory at Aftermarket.com.

Kubba said, "In addition to Chicago.com, we will be launching the @identity product on NewJersey.com, Beer.com, as well as a handful of killer prime domains owned by our beta partners (which we will announce soon), with other domains to follow. There is no shortage of interest from domain owners wanting to get on the platform... it's just a matter of prioritizing and managing the launches."

Kubba sees yet another new opportunity in the @identity model. "We could offer/upsell a matching sub-domain as an "add on" to the email address. For example, the buyer of ron @ chicago.com could  also choose to buy ron.chicago.com. There are definitely challenges with the model, but there are also tremendous opportunities that probably outweigh the challenges. The time is ripe for a new way of thinking about online identity, and this is the space where @identity will play and, hopefully, thrive," Kubba said.

NYC.com's Sean Miller concurred with Kubba's sub-domain theme, noting "[email protected] is a great email address, however that address makes a lot more sense when you also own the New York City domain name realestate.nyc.com. We call these "Prime Names" and our system flags them as such. These are not available for general registration and must be negotiated individually."

Miller is also a living testament to Kubba's obervation that changes in technology have completely changed the email address value proposition. "When Josh came to me last June, excited about email, my initial response was, been there done that. In fact, NYC.com's first business plan (1999) was built entirely around email as our business model. What we found the first time around was that although people loved the email address, competing in a commodity business was not a very rewarding nor a very profitable business," Miller said.

"However, as Josh and I discussed it further, my thinking quickly changed. This was for a few reasons:  

Sean Miller, NYC.com

1: First was the insight that we could uncouple the identity ([email protected]) from the service. Email as a service is a commodity.The identity, however, is a finite resource in terms of name space. There can be only one [email protected]. Pricing these identities as discrete assets, rather then as commodities, allows someone who really wants a particular name to actually find and purchase the name they want. I know many executives here in NYC with ridiculous emails like [email protected]. I mean, these identities may not always be on their corporate business cards but they use them all the time. And any serious professional understands image and presentation are important. A short, memorable, professional email that links you immediately and indelibly to your city is a killer app for networking. With @nyc or @chicago, giving out your email becomes a unique, effortless and impressive branding moment, not a chore. 

2: Second was the realization that you can use your city identity with any email service. This was not possible ten years ago. Today, however, if you were to buy [email protected] you can use that email to send and receive from just about any of your existing email accounts. Whether 
that is with Gmail, Yahoo, MSN, your internet service provider or even your company email system they all allow you to "alias" another email identity and send and receive from that email. That was really a lightbulb moment. With @nyc.com or @chicago.com your online identity is not tied to your job email, your internet provider, or the email brand of the moment. If you ever want to change email providers your @nyc or @chicago email identity travels with you. It is an identity you own. You don't lose it because you left your job or hate the new email service your email provider has imposed on you.   

3: Third there is just something in the digital air right now. Online identity is becoming a critical piece of the next generation web. For millions of people in our respective cities, owning an @chicago or @nyc identity allows you to merge your real world life with a multitude of online services. We are only two to three years away from widespread adoption of online transactions EVERYWHERE. Here in NYC you can already buy your groceries with your NFC enabled phone. This kind of pervasive online everywhere life necessitates a tight integration of online identity and real world identity. And i don't know about you, but i just don't feel like i'm a Yahoo, a Gmail, a Facebook or a Twitter. I'm a New Yorker! Moreover, I suspect that four hundred years from now New York City and Chicago will still be here. I'm far less certain about Facebook, Gmail or Twitter.  

For New Yorkers an NYC.com 
email address
makes perfect sense.

4: Finally, despite twenty years of relentless innovation, email remains the root identity on the web. Email is central to everything you do online. Anytime I buy something I am asked for my email. Even to get my iPod or phone to work properly I need an email. I begin and end my day with email...even this interview is being done via email! 

Miller added, "An astounding fact: the total number of page views on the internet equals only 25% of all legitimate email sent! (source: http://blogs.smartertools.com/2011/08/29/the-value-of-email/). Simply put, Email, even after discounting the volume that's spam, is used far more than Facebook and Twitter. Combined. And when i say far more, i mean by an order of magnitude. Daily activity on Facebook is currently around 60 million status updates. Twitter sees about 50 million tweets per day. Email? 188 billion legitimate non-spam messages daily! For a good infographic on the importance of email relative to services like Facebook, Twitter and even search on Bing and Google, see this link: http://smartertools.files.wordpress.com/2011/08/infographic_abs_final.png.  

"Put another way, you don't need a Facebook identity to signup for email. I challenge anyone to do the reverse!" Miller said.

Image: Stuart Miles / FreeDigitalPhotos.net

The importance and appeal of attractive email addresses are starting to show up in still more ways. If you use Apple's FaceTime video calling feature on the latest iOS 5.0 software you will see that you "dial up" your contact through their email address, rather than a number. It makes sense, especially when you consider  that the reason domain names were created in the first place was because words were easier to remember than the numbers in IP addresses.

If you have a premium geodomain or generic domain name, the obvious question for you is what would be involved if you wanted to put your domain on this new platform. Metnick said, "We are only working with a select group of prime generics at this point, but we plan on opening up the platform to a broader demographic later this year. Costs are structured as a setup fee and a rev share from there."  Metnick said the first order of business will be clearing a a backlog of around 

200 city .coms that are already committed to coming onto the platform. Apparently a lot of people agree with Metnick, Kubba and Miller that they have stumbled onto to something that could be really big. Who would have ever guessed that something might be the simple but unique identifier that so many of us have been taking for granted for so long - email addresses. 


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