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April 03, 2015

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The State of the Industry January 2007: 15 Domain Experts Ponder What Happened in 2006 and Predict What’s Coming Next - Page 3

In addition to the big buys at the T.R.A.F.F.I.C. conferences, 2006 saw blockbuster sales of Diamond.com for $7.5 million and Vodka.com for $3 million. Roy Messer of Tallahassee, Florida made the Vodka.com sale to the Russian Standard Company (makers of Imperia brand vodka), with brokerage help from Sedo.com. 

Roy Messer
Sold Vodka.com for $3 million

Messer told us “As a domainer, I have optimism that the interest and value of domains is rising.  For me, 2006 produced one sale in seven figures and several other sales in six figures. I feel the publicity of reported sales will  have an "awakening" effect in keeping the momentum moving to even higher numbers as we enter 2007.” 

Messer added, “As long as we have at least two 800 pound gorillas (Yahoo and Google), I think PPC revenue will remain stable and possibly rise. My concerns are:

  1. What if one gorilla absorbs the other?

  2. What if the browser has changes that diminishes the "type-in"?

  3. Is the issue of click fraud under control?

  4. And then there's ICANN - who knows what direction they may take that could affect us all? 

But as I have optimism.com, I think in the short term, we domainers have happy and more profitable days ahead!” 

One key reason you see progressively higher sales in the aftermarket is that domain financing options have finally appeared in the market, making it easier to budget high dollar domains. That space is being pioneered by DomainCapital.com whose President, Robert Alfano, told us “nobody else is doing what we are doing, which is recognizing a domain name as an asset and lending against it. The various live auctions that Domain Capital partnered with Moniker on allowed us to see the ‘true value’ of a domain name and at the same time we were able to meet a lot of our clients face-to-face,” Alfano said.  

Robert Alfano
President, Domain Capital

“Domain Capital launched in late 2005 and we were thrown right into the deep end of the pool as we provided financing for the purchase of Sex.com (Editor’s note: believed to be at least $12 million). From there we were able to see the value Domain Capital could provide to this industry. We were able to meet a lot of great people and we were fortunate to do business with a lot great people. We can only hope that our services are looked upon as a helping hand to a growing industry, because we certainly have enjoyed being welcomed in and being a part of something so exciting,” Alfano said. 

With high demand for domains and new financing options available, the domain aftermarkets are superbly positioned at the heart of the current domain boom. With a strong management team and global presence, Sedo has been riding the crest of the wave.

Company co-founder and CEO Tim Schumacher told us “Sedo had a very good year in 2006. Compared with the previous year, we have more than doubled our revenue and the revenue which we generate monthly for our clients selling and parking domains through Sedo.com. 

For Sedo 2006, especially Q4, held many highlights: Vodka.com was sold for $3 million, Sedo's highest sale ever, we became the world's #1 domain parking provider according to webhosting.info, and probably the most significant event, our current public shareholder AdLINK increased its holding in Sedo to 75%, valuing Sedo at $184 million. For us, this is a big motivation to continue moving Sedo forward as the world's largest domain trading and parking platform in the coming years.” 

As for the industry at large, Schumacher noted “2006 was certainly a very exciting year for the domain name business. We saw a strong boom in all areas including registration, PPC/parking, buying and selling, but the fire was definitely fueled by the secondary market.”  

Tim Schumacher
CEO & Co-Founder, Sedo.com

“I believe that our industry, in the broader picture of the evolution of domain names, has moved into the two phases of secondary acquisitions and portfolio consolidation. We saw individual domain sales skyrocket, but also a wave of portfolio sales.”  

“One of the most successful (but also what came to be the most controversial) events of 2006, was the launch of the new .eu extension. This was a major event completely motivated by secondary market forces – speculators literally jumped onto this new namespace,” Schumacher said. 

Frederick Schiwek
VP, EuroDNS.com

Frederick Schiwek, Vice President of EuroDNS.com agreed saying, “I personally think that the most significant event was the .eu land rush with 1,600 registrars fighting for the best names. This event I think opened the minds of investors and registrars to believe in the value of ccTLDs."

“In the second half of 2006 we saw another interesting land rush, which was the .mobi. This land rush opened a door for domains on mobile devices and will make revenue from domains available everywhere. Then there is .asia which will start around April 2007, some new TLDs like .tel or TLDs that will become unrestricted, for example .kr (Korea) and .my (Malaysia) that will also push our industry forward and open new opportunities. In 2006 Europe was on the move, 2007 will be the year of Asia!," Schiwek said.

Meanwhile investors in the U.S. are starting to warm up to the American country code, .us, now that it is making some inroads with major corporations. Some recent examples include the Discover credit card company using Discover.us as their main site after being spun off as a separate company by Morgan Stanley. Also, Nestle's Pure Life water, a major bottled water brand in America now has their URL, Nestle-PureLife.us on the label of every bottle, and one of the world's largest makers of projectors and LCD monitors, BenQ, is using BenQ.us for their USA site. The URL is reportedly now plastered on taxis everywhere you go in Las Vegas. It will take adoption by more companies like these to achieve widespread recognition for the American ccTLD, but names like Discover, Nestles and BenQ are very nice bricks in the .us foundation.

We are going to close this year’s state of the industry survey with comments from pioneering domain investor and T.R.A.F.F.I.C. co-founder Rick Schwartz. Over the years, no single domain owner has displayed as much unwavering and contagious enthusiasm for this industry as Schwartz has. Much of what he predicted over a decade ago has now come to pass, so people tend to be all ears when he has something to say. If any one has earned the right to have the last word, it’s him. 

“First of all 2006 was just a terrific year by all accounts," Schwartz said. "It was a real break through year and I see that continuing into 2007 and beyond. That trend was most evident just the last few days of the year. The Time magazine piece on the information age (picking You as the Person of the Year), Google becoming a registrar and the widely reported 25% increase in online sales as compared with near flat sales in brick and mortar stores. This will just continue the shift of ad dollars to the net and leave less for traditional media. There are a LOT of dollars coming online and that will transform what we all do," Schwartz said. 

“While I see the industry as a whole doing very well and being recognized for the value we hold I also think there is a major downside. Domainers as a group have never had a very good reputation. But I fear it is going to go from bad to worse as we get every guy looking for get rich opportunities to invade the space in a very unproductive way."

Rick Schwartz
T.R.A.F.F.I.C. Co-Founder

"Some may ask why I say that. My answer would be a question. Do you know that a 5 year old girl opening a lemonade stand has a higher threshold for entering business than the new domainer that is heading this way? With a lemonade stand you need a table, you need a pitcher, you need lemons, you need water, sugar, spoons, cups and a sign. With a domain, you need $6 and change and you are the world's newest domainer!” 

“You may have not thought about it in this way before but when you take the time to do that you will see what is coming and it won't be pretty. While we have learned what is and is not accepted these folks that are coming will play by a book with no rules whatsoever. They will take trademark infringement to new lows. While we try and cleanse our portfolios theirs will be domains consisting of what we know is no longer acceptable. That said this is a necessary evil and one of the mile markers I have been looking for," Schwartz said.

"The main thing I personally see as a guy coming to the net with a 20 year plan and 20 year window is that window is now fully opened. The seed is germinated and the result is a thriving industry with a lot of interest coming our way. We are now in the zone as I would call it. This is the start of a domain awareness that will shake things to the core. An overnight success story a dozen years in the making.” 

Rick Schwartz with Ammar Kubba 
of TrafficZ (the lead sponsor for all 
2007 T.R.A.F.F.IC. conferences)

“We have some very sharp folks in our space. One brighter than the next and it is great to see this unfold and the genius behind many of these up and coming companies that are expanding and getting much stronger. I specifically refer to two companies. One in the Northeast and one in the Northwest - Name Media and Demand Media. Both companies with a strong, visible strategy and both on the march." 

"We saw several companies transform themselves to powerhouses and that is just going to spread. Simply put, the race is on and the forward momentum is something that can't be stopped. The other companies in this space are not about to sit back. They will show their strength in the coming year.”

”I have been a cheerleader for domains for a very long time and now it is like being on a ship for over a decade on the high seas and the one thing I can say is, "Land ho!" I see land and there is no question that we are entering a very interesting stage of domain name history. I am overwhelmed by what I see coming. A tidal wave of opportunity aimed right at all of us."

"We have a thriving aftermarket that is growing. The sale of Diamonds.com, Vodka.com and Cameras.com make quite a group and punctuates where we are and where we are heading. A domain auction that watched $5.3 million in domain names change hands in just 4 hours would have been unthinkable just a few years back. What will those numbers look like in a few years from now?,” Schwartz asked.

”As far as domains and values, they are going to continue going up for quite some time. As different industries and sectors understand the potential locked in a great domain, things will change and they are already changing one industry at a time.”

”We are pioneers of an industry heading into the annals of history. Pretty exciting stuff and it is a great place to be. What is coming will dwarf anything we have seen before. This is not just hopeful thoughts. These are thoughts based on certain mile markers we would pass at a given point in time to know we are on that correct path. That 20 year plan I talked about is a blue print I came up with that laid out certain events and when they would unfold and in what order they would unfold. It is not an end game after 20 years. After 20 years we will be in full throttle and I see that continuing for many years after.” 

“It is like a rose and being able to look at it and describe each petal before it blossoms and watch it in a time lapse so you could see it spring to life. This rose called the "domain industry" is just about to bloom and the best is yet to come. While it is sweet now, the picture I see coming to reality is nothing short of historic. The best part is there are so many different ways to be successful with domain names. Nobody has a monopoly on domain name success. The most successful domainers of tomorrow most likely don't own a single domain name today.”

”Some think I am overly optimistic with regard to domain names and virtually everything in life. But I have listened to the critics and naysayers for well over a decade and their predictions of doom and gloom were flat out wrong. All successes should be applauded as "a success for one is a success for all". If anything, I can look back and say I underestimated just how powerful and important domain names and traffic are in the scheme of things.”

Rick Schwartz gets some affection from 
Fabulous.com COO Dan Warner while stopping 
for a shoeshine at T.R.A.F.F.I.C. Silicon Valley

In closing, Schwartz said, "I see nothing but great things for 2007 and beyond. While we as domainers may be a little battle fatigued, don't let that cloud the vision of what is coming. The next 3 years will eclipse all of our expectations. As I write this I celebrate the first day of my 12th year in this business. The 20 year plan is several years ahead of schedule and my mission is to accelerate that in every way possible. My greatest hope for 2007 is that in a year from now we are all here, healthy, happy and have an even better quality of life than we do now!”


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