The Future of the Internet & All about Chris Chena
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Monte: Hello everyone. Welcome to Domain Masters. I'm Monte Cahn, your host. Just have a great show lined up tonight. I'm fortunate to have John Battelle on. John's was the former co-founder and editor-in-chief for the Standard Media and also for Wired Magazine, and we're going to talk to him about what he sees in the future of the internet. I saw him speak at WebmasterWorld Conference in New Orleans a couple weeks ago, and he's got some great insight on what's going on in the internet today and where it's going, and has a book out and everything. And I have Ron Jackson on after that to update us on his latest cover story about Christopher Chena, who's a big domain purchaser and who spent basically over $500,000 in domain names the last couple weeks, buying domain names, and talk about the cover story and also what's going on in the domain name sales arena. So hang on with me for a couple minutes. We're going to pay some bills, do a couple commercials, and be back on with John Battelle.
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Monte: Hello everybody. Welcome back to Domain Masters. My first guest tonight is John Battelle. John is an entrepreneur, a journalist, professor, and author who has founded or co-founded businesses, magazines, and a lot of web sites. Again, he's responsible for the industry standard from Standard Media. He is the former CEO and Chairman of that media publisher, and also the former co-founder and editor-in-chief for Wired Magazine. John recently completed work on a forthcoming book called The Search: Business and Culture in the Age of Google. John, welcome to the show.
John: Thanks for having me.
Monte: I really appreciate your time. I know it was kind of a hectic schedule for you and I know you're pretty busy, so I really enjoyed seeing you at WebmasterWorld and listen to you speak. You were the keynote speaker, and the reason I thought it was good to have you on the show is because we have an audience of several hundred internet folks, domainers, web masters, and SCOs, and your outlook on the internet is something that I think is important to people and people can gain a lot from. So, I'd really like to pick your brain for the next 20 or 30 minutes and find out where you came from on the internet and where you see the internet going, and how it might relate to the folks that are listening.
John: Great.
Monte: So, give me a little bit, just a brief history about how you got involved and got onto the internet, and when it was, and let's fast forward it to where you see things going and how people that are listening might get benefit from what you see as the future of the internet.
John: Sure. I'm one of the few fortunate folks not only to have begun my career in San Francisco Bay area where a lot of this action began, but to have done it at a time when a couple of key communities were forming in the mid-80s. One of them was the community around the Apple McIntosh, which was introduced in 1984, and another was the community around a little online service called The Well, which was really a prototypical online community where people were very, very passionate about any number of issues. And this was all done by the standard bulletin board system, dial-up kind of approach to networking prior to the web, and I was both a participant and an observer in both those cultures and in the late 80s began covering both those cultures as a technology reporter for a trade magazine. I sort of thought that there was something much bigger going on with technology and it's impact on culture than was being reported in the mainstream press, and so I went back to graduate school to focus on getting the tools to tell the stories in journalism. And when I got out, I had an idea to start a magazine, but no idea how to. And that magazine was Wired, and I was fortunate to sort of end up connecting with a gang of folks, and particularly the CEO, who had already secured some funding; and so we launched that in the early 90s to cover the story of technology and culture, and that really took off. I think we had one mention of the worldwide web in the first issue, which was January of 1993, and by the second issue, it was clear that this was kind of the centerpiece of the conversation, and by later in the 90s, 1996-1997, I had kind of come to the conclusion living in the San Francisco Bay area and seeing a lot of my friends starting companies in the web space, that this internet thing was here to stay. So I left Wired to start the industry standard to cover the impact of the internet on business. We chronicled the bubble and were sort of part of it in a way as well, the magazine was the fastest growing magazine in the history of publishing and probably the fastest to blow up as well.
Monte: [Laughing] I remember back in the good old days I used to get the updates on a daily basis via from the Standard and always was real interested in what was going on. So, uh, it really kept everybody that was in the early stages of the, I guess, the boom and the bust, what was going on with everybody.
John: Well, Wired actually in 1994 started HotWire, which is one of the first commercial online publishing ventures, and we introduced the banner as the standard way of providing advertising revenue. And that was either a good thing or a bad thing, depending on your point of view. We also had a search engine which we launched in 1995, called HotBot, which was popular during the period of time when search was sort of ascendant. All that was sold to Lycos shortly after I left, but I was quite aware of and thinking hard about search and online media even back then. And I put a lot of that thinking into the business plan for the industry standard, which worked very well for the first 3 years and very poorly for the last year and half. And when everything blew up on 2001, I kind of retreated back to Berkeley, and it had been 10 years since I graduated from Graduate School, and I was teaching there, when I started doing some classes on blogging. And I sort of viewed at that time blogging very much to be just an online publishing medium very much like those which we had done at the Wired and the Standard. And I sort of treated it that way; and as things came along, I recognized that there were some things about it that were quite unique and I got fascinated with that, and at the same time with search, which is sort of the two are cousins, because of how driven they are by links and I wrote a book about that with Google as the sort of the driver of the narrative. In the process of doing all that work, I came up with the idea for the business that I'm starting now, which is called Federated Media, which is sort of a publishing platform for bloggers who are serious about what they are doing and have brought together a significant audience.
Monte: You have a unique approach with this new venture when it comes to blogging. I remember seeing your presentation, but you've kind of tied in multiple parties together to make this new vision of yours what I see is going to be something that's going to be very successful. Can you just elaborate on that a little bit?
John: Yeah, sure. Thank you. I certainly hope it will be. I sort of began to notice that the one thing that was very different about blogging was that it fulfills some of the hand waving and promises from the new media theorist point of view in the late 1990s. In other words, the internet was going to provide a low-cost alternative to traditional media models in terms of cost acquisition of readers, cost of distribution, cost of manufacturing, marketing, and all those kinds of hard costs which drive traditional media on the expense line to have to adopt business models which are very aggressive in terms of ownership of the Intellectual Property and in terms of their relationship to authors. So, the old mainstream model of media is one where you start a magazine, for example, the first thing you do is hire writers, and they work for you, and you own their words, and you then use them as a way to gather an audience, and once you've gathered the audience, you then go over to the advertiser and you say, I would like you to sell you this audience, and the advertiser argues with you about how much you want to sell it for, and you beg and plead and get on your knees and promise fancy dinners and bottles of Champaign if only they will buy. Finally, they either do or they don't. By then, you've spent $10 million. I'm not kidding. That's about the average cost of a monthly magazine startup. And that's very risky, so you get a very conservative industry basically in the publishing industry in a nutshell. And I noticed that, in the blogging world, after a few years, some voices were really starting to stand out as extremely well thought of. They had gathered either very large audiences or very influential audiences, or both, and they had spent not a dollar on any of those things that you might normally spend money on in a traditional media model. I was fortunate enough to be asked to help Boing Boing, a popular blog about a year and a half ago figure out its business model because its success had gotten to the point where [inaudible] the hosting bill had started to make the partners who were writing Boing Boing or part-time journals worry that they couldn't put food on their table because the [inaudible] Bill had gotten up to about $1,000; and they all were doing this as sort of part-time passion, and there was no money coming in because of it, right? So I helped them figure out an advertising model and I noticed these guys had, at the time I joined them, about half a million unique visitors a month, and that's almost 2 million now, and they were turning something like 8 or 10 million [inaudible], and I said Jesus, you know; and at it's best, best month the business I built for the Standard.com, it's best month did 500,000 visitors and 10,000,000 [inaudible] and I spent $16 million to build that. And these guys have done it for about $1,000 a month.
Monte: Which was basically hosting fees and….
John: Just hosting fees. That was it. You know, I think they maybe paid $60 to you know to [inaudible] type license or maybe they actually didn't.
Monte: Right. Right.
John: We're paying them now, but still, I thought to myself, gee this is interesting. It's a new successful approach to publishing which has some business model implications, and I thought to myself, what might a publisher look like in this era. I thought of myself really in Boing Boing's case as a band manager as opposed to an owner. Right? So, what I did was help them, the musicians, do what they do best and I managed the stuff that they maybe didn't want to do or weren't good at, like advertising, business development, figuring out strategy with regard to brand extension, or whatever, as well as help them think through some of the issues on the technology side, the partner side. You know, how do you work with the Yahoos of the world. Should you optimize your site for search, how do you think about issues of which platform you might use for your back end and so on and so forth. Those issues are, if you look at it from the sort of metaphor of a music label, those are the things that a music label does for a band, right. They'll provide access to a studio so the musicians can go into the studio and the musicians make their music, and there's engineers and producers on the other side of the glass helping the music be better, and then they'll provide the musicians with a revenue stream, which for music, of course, is sales of an album, but for blogs would be advertising sales for the most part.
Monte: Right.
John: Although later I can imagine other ancillary revenue streams as well. The difference between a music label and the business that I'm starting, is that the music label owns all the Intellectual Property rights of the musicians, right? But I don't own any, and the reason I don't own any is cause I don't need to spend all the money for up front marketing, and making CDs, and jeweled boxes, and shipping them around, and getting returns, and all that crap. So, FM, the business that I started, is really about providing a suite of services to bloggers and then turning around and aggregating a bunch of high-quality sites in particular areas, like technology and culture for example, aggregating them together, and facing the marketer and saying, hey marketer, if you're interested in having a conversation with the people that are passionate about these sites but you don't know how because you can't just go to Yahoo or AOL or someone and say I want 2 million men 18 to 34 in the last week of August. Right?
Monte: Right.
John: You would like to be able to do that with blogs, but they're too disaggregated, they're too disparate, they all have different voices, and they all have different people who represent them. It would be like trying to advertising to the audiences of bands through the musicians. Right?
Monte: Right. You have no demographics really of a blogging audience other than what they…you can guess at it based off of what they post, but [inaudible] you really don't know who's visiting.
John: Exactly. So FM is going to standardize all of that and run surveys and standardize the log analysis and all that good stuff in the background.
Monte: And FM is Federated Media Publishing.
John: Exactly.
Monte: Right.
John: And the idea is we are federated as opposed to owned, and the sites come together like a bundle of sticks. It's stronger than 1 stick, right? And that allows you also to negotiate a number of deals, for example, with the pay-per-click networks, right? You know, 50 sites representing tens of millions of uniques is a much more powerful force when you're dealing with Yahoo than one site that has half a million uniques.
Monte: Exactly.
John: That's true for solving comment span issues, working with standards bodies, you know, lobbying on behalf of or against particular policy issues that might affect independent publishing and all that good stuff. So, I've been thinking about this a lot, and I think there's something to it. I've been talking to a lot of marketers and a lot of bloggers and so far folks seem to think it's a reasonable idea.
Monte: What are the first blogs that you're going to be, like, I'm sure you have some lined up in your scope on what you want to bring up live first.
John: Yeah.
Monte: And then what advertisers you want to attract to those blogs, or I guess they come based off of the content of the blog; but give us an idea of who's really interested and who you're going to be going after.
John: Well, I haven't announced the folks I'm working with directly yet other than Boing Boing and my own site, which are sort of reflective of two categories of sites. Boing Boing is a broader kind of more general interest site, has a very large audience, and covers a very broad range of topics. My site is a search blog which covers a very vertical, very focused business topic, which is search industry, and you can expect that we're going to roll FM out in segments and focus on what I call an ecology of an audience. So, if the segment is technology/culture, then the ecology of an audience would be an audience that generally is one or two degrees within each other across the site, so that you could imagine that a site like Boing Boing might link to a site like search blog every so often, and vice versa. And there is an ecology of sites that we all sort of either link to or that our audiences might visit. And taken together, there is a broad ecology, so you might see some sites that are kind of further out there that are connected in one way or another. But we're going to have 10 to 15 maybe 20 sites that are all in the technology/culture area. Some of them vertical, some of them horizontal, but I unfortunately can't announce them at this moment. Let's move onto other segments. You can imagine entertainment, gaming media, travel, sports, and there are great, great sites in all these areas that are written by incredibly talented and passionate authors with great communities supporting them that have yet to figure out the business models and yet truly find their feet as true publications, and I hope to help them do that.
Monte: And now the advertising side, though. They gotta be, I'm sure you've spoken to a couple of those folks that are real interested in jumping on the bandwagon here. Are you able to share any names of those folks that are able to jump on, or that are interested in jumping on.
John: I have spoken to a lot of them. There is, I would say, a healthy interest. But at this point, it's just that. A healthy interest. I think the proxy really is Boing Boing, where we've been running advertising for over a year now and have effectively be sold out that whole year. And what's interesting about this is it's not the traditional approach to selling which, certainly from my point of view as a magazine publisher, I've had to live with for the last 15 years. Which is where, as I said before, you're begging.
Monte: Right. You're banging down the door, begging them, promising them tons of eyeballs, all that stuff.
John: Exactly.
Monte: Wherein a blog, it's there.
John: What I've found…right…with these sites is that they have what I call a very strong endemic advertising base, which is to say that, if you just put a link up on the site saying please support this site and become a sponsor, you will get a lot of queries inbound as opposed to you going out and beating down the doors of other people. The reason being that oftentimes, some of your advertisers are your best readers and they understand inherently the value of the conversation that's going on at a blog site and therefore are willing to join the conversation in a commercial way as long as it's within the bounds of what's appropriate. On the other hand, there are national advertisers, many of which I've spoken to, who are very eager to join the blog bandwagon but are sort of a little afraid of looking like they're jumping on a bandwagon and sort of being flat-footed or tin-eared about how to do it; and they recognize that there is a lot of power and passion in this new medium. They'd like to figure out how to be part of it, and FM is going to certainly try to help them do that.
Monte: Yeah. It's funny, because just a little bit over a year ago, I heard a number of industry experts, I won't name their names, but just talked about how blogging and the blog sites are just going to be dead, it was a dead form of medium. And, how untrue. So many misguesses have occurred in this internet space, and that's kind of where I wanted to pick your brain a little bit more on. You know, you obviously have a lot of experience from your past experience, and I wanted to get a little bit about your book that's coming out regarding, you know, the search age that we're in and the role of the two major players that are basically dominating the search. I know you're book has Google as named in the book, but of course, we have Yahoo search, and of course, shortly down the road is going to be MSN as Microsoft is going to jump into the space. So just give me a couple minutes on where you see the search market, where it's been, where it's going, and then I'd like to get some predictions from you on where you think this whole industry is going and where you see the success of the industry and how it's going to be on its feet.
John: In the book, I kind of use search as the operatic backdrop if you will for the story of the internet. It's a story that I've been involved in and covered for pretty much the merge in the public mind and the web I suppose is the best word for it, because the internet obviously is quite older.
Monte: Right.
John: Quite a bit older. But Google and Yahoo both are extremely interesting stories and I focused on Google for a number of reasons, and one of them being it's still unfolding in a way that is remarkable. I think Yahoo is a remarkable company, actually a more mature company in many ways. And Google is fascinating because it's the fastest growing company in the history of business according to Deloitte & Touche and ….
Monte: They seem to continue to reinvent themselves on a regular basis too, which is very interesting.
John: Indeed. Yeah, indeed. So in the book I spend a fair amount of time chronicling the history of both how we got to the point that the stage was set for Google to be successful, which I think is something that people tend to forget, and then how Google took advantage of that setting and took off. There was really a perfect storm in the late 90s which allowed Google to take off. You had a huge interest in the internet that was very new. A lot of enthusiasm and optimism. You had a lot of money available. You had an industry which had for the most part abandoned the very thing which made the industry what it was, which was search.
Monte: Right.
John: So search built the first internet and you know people went on line and the first thing they did is they went to the Netscape home page and went to the search box and said show me something. And Netscape built Yahoo and later built Google, and Yahoo then built Google up. So, I kind of tell all those stories and then the stories of the portal wars, where the portals really fought each other to keep people on their site whereas, search is all about moving people off.
Monte: Right. Right.
John: And it was the fact that search was pretty much abandoned after the innovations of AltaVista and Inktomi in the mid 90s that allowed Google to come in with a very clean interface saying where do you want to go? I'll take you there. And when people realized that there was an alternative that actually worked, it became a word-of-mouth, overnight success. And then they borrowed Overtures business model, which was thriving. People forget that in 2001, Overture was a far bigger company than Google and was a public company with healthy profits and really the stealth business model of the century, and Google adapted that model to their own service and really took off. And I write a chapter in there that tells the history of Overture which is fascinating. Bill Gross, who is the founder of Overture, is an extremely interesting guy.
Monte: Yep. I've met him myself, personally.
John: Yeah. So I think he started something like a dozen search-related businesses in his career; and so I tell that story and Yahoo's founding as well which, you know, Yahoo's and Google's founding are extremely similar to Stanford doctoral candidates, who got bored and decided they wanted to do something else, the only difference being really that one of them was editorially driven, a directory of sites, and the algorithmically driven, that would be Google [inaudible]. So if you look how the companied have evolved and compare them, it's actually quite interesting to see what they've become based on that early DNA and I do that in the book as well.
Monte: So the book. Tell us where people can get the book. Is it out yet? Now a couple of weeks ago it was available, but it wasn't, it was available on your web site?
John: It's available for preorder online at Amazon and people can go to my site and they'll see a little icon there where I'm pimping my book, as all good authors should.
Monte: And that's at BattelleMedia.com?
John: Right. BattelleMedia.com.
Monte: Right.
John: So you can order it there, and then it will be actually available or shipped in early September, which is an eternity for me, as things change in this industry so quickly. But I really do focus both on the history as well as the long view of where things might be going.
Monte: Great. Well it sounds like it's very interesting. So, you know, before we wrap up here, give us an idea of where you see this business going, you know, from a domain standpoint, and we haven't talked much about domain names, but you know I have a domain listening audience with a combination of web masters and SCOs. Give us your, you know, two cents on where you see the future of the domain-related business and the related businesses thereafter.
John: First of all, the domain and the SCO, SCM, and the related pay-per-click industries are really the tens and hundreds of thousands of individuals who are stitching together the fabric that will be the next version of the internet. Search is sort of the oxygen of the ecosystem and the domain and pay-per-click and SCO SCM businesses are sort of the nutrients, the seeds of the interesting new companies that are grown in that soil. And so it's a very, very interesting time I'd say, we really are you know. It's sort of like in 2001 the crops were burned and we've spent the last couple of years turning the soil.
Monte: Right. Now new seeds are put in and they're starting to sprout and grow.
John: It's really interesting. There's all sorts of new businesses, all sorts of new innovations and models, built on the backs of the platform that's the web, and I'm still in the process of learning the business, particularly domain business, which is very interesting. Seth Goldstein wrote a piece on his blog of transparent bundles, which talks about sort of media arbitrage and the role of the sort of domain parking lots paired with ad sense, which is a really interesting phenomenon. And also spent some time talking to Elliott Noss at Tucows about this. I don't have as much of it in the book as I would like, but I see it as the area that is least understood but probably extremely important. It's sort of the foundational ecology of the internet; and as to where things are going, I just think that the acceleration of the digitization of everything is only increasing and that probably the most important piece of that is mogul. And I don't mean that just like the opportunity is to start a business and push stuff back and forth on the phone, but rather the ability to take computing to wherever they are and to compute physical objects. One of my favorite examples related to search is if you were to go into a grocery store and wand the UPC of a particular product and instantly that sends a message to Google or Yahoo or any other service, that's understood and presumptive. Well, this is a UPC code, I'm sending it out through my local search platform of choice, and it's instantly bringing back prices in four stores within half a mile of me, telling me information about whether this product was made with child labor, or using green policies, or if it applies through some filter or setting that you set up about products you want to buy, whatever. The options and possibilities are limitless in terms just in that example of interesting businesses that can be built around that potential. And so I'm convinced it will happen, because it can.
Monte: Right. Right. Technology's there already.
John: Yeah. Everything is just pieces being put into place and that's the beauty of the web. You're starting to see the businesses that are built sort of snap-ons and where they're innovationalized is in their ability to innovate an assembly as opposed to in the late 90s where we had to build everything from scratch and everyone was sort of reinventing their own version of the wheel.
Monte: I agree. And you know the domain names are the foundation to all these web sites, all the blog sites, and that's the importance of having the right domain name and being able to cover yourself.
John: Absolutely.
Monte: I can talk more with you about that later, as we've been in the domain business for a long time. Before you go, maybe just give the listening audience a couple points on being successful on the web from what you've gained in your experience and where you see the industry going. I mean, just give us a couple things to make sure that people remember to do or to look out in the future a little bit and make sure they cover themselves. I always like to have my guests give a couple, two or three tips, my guest made successful and to share those with the audience so that they can take that and grow from it.
John: Oh, I think transparency is one of the sort of things that seems to be I think in almost every successful company is the ability to have an open and honest dialog with your customer base, whether in publishing, which is my field, that means your audience and your advertising partners, but it really works for any business. It is sort of being open and explaining why you're doing things and inviting your community to help you build your business. We have a phrase that we use in the Web 2.0 Conference that we run in the fall, called the architecture of participation. Where we've noticed that successful businesses actually open their business up in some way to allowing their customers to build the business.
Monte: Right. That could be done through feedback and having ideas in an open forum to suggest improvements, or are you looking for….
John: It's that as well as architecting your business to let your customers build your business. The most sort of well understood example of that is affiliate marketing strategy, of course, where your customers then find customers for you. But there are many, many other ways, search being probably the granddaddy of them all, because really, if you look at Google, it's just an architecture of participation business where they use links as a proxy for everybody's votes. So everyone is participating in Google by linking to things right?
Monte: Right.
John: Whether they know it or not, and so the architecture of participation idea I think is central to any web business, as is this idea of innovating and assembling and realizing that most good things out there now fundamentally are free. It's not really getting the process of locking out other people as it is taking a resource which is almost universally available, and making it, assembling it, providing it, offering it, and servicing it in a way that's unique. And people forget and I remind people in the news business all the time that news is free. You know?
Monte: Right.
John: No one has a monopoly on stuff that happens in the world. It just happens, and you're either there or you're not. And if someone is there who can tell you about it, then they're the people who can “own the news” so to speak. So it's really not about whether or not you have news. It's about how you package it, assemble it, deliver it, think about it, analyze it, what your voice is. I think that if there's another thing that the web has really taught us is that companies need to have a voice, a unique point of view, an approach that resonates with their community. If you're going to be in business, you're going to be a leader of a community of customers; and so, if you're a leader, you need to have a voice. And that's important to develop.
Monte: That's great. Well, and is the Web 2.0 Conference, is that open to anyone that wants to attend?
John: It is. Yes. All you have to do is request an invitation. It's sort of our way of moderating the input there. But, you just request an invitation on the web site itself, which is WEB2con.com or you just search Web 2 Conference or something, and I'm sure it will come up.
Monte: You're the one who's putting on the conference?
John: Yeah. I'm the program chair, which means that I'm responsible for the content of the show and I'm also a partner in the event.
Monte: Great. Great. And the dates of the show are?
John: October 5-7 in San Francisco.
Monte: In San Francisco. And the expected audience in terms of number of people going to be attending. What are you expecting?
John: Oh, 500-700 last year. That's what we had, I think we actually hit closer to 700 last year. And I really called the audience the architects of the web, these are the folks who are actually building the next generation of businesses on the web.
Monte: Right. So it's something you should attend. Well, John, I really appreciate…..
John: Oh, thank you very much for having me.
Monte: Oh, yeah. Definitely. And again for all those who are interested, go to BattelleMedia.Com. You can put a pre-order in for the book. B-A-T-T-E-L-L-EMedia.com. And also check out the Web 2.0 Conference coming up in October. John, thanks again for your time; and I look forward to having you on the show sometime in the future. Maybe do a recap of the conference.
John: That's sound like fun.
Monte: Okay, great.
John: Take care.
Monte: Stay tuned folks. We're going to take a brief commercial break and come back on with Ron Jackson from DN Journal.
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Monte: Hey folks. Welcome back to Domain Masters. What a great opportunity to speak with John Battelle. I didn't know if I was going to get him on. I worked for the last several weeks since the WebmasterWorld Conference to get him on. He's a very busy guy, obviously. His insight of the web is pretty cool, and where he's been and where he's going is also pretty cool. I saw a great presentation at the WebmasterWorld Conference. My next guest is not to be outdone either. My friend and editor-in-chief, and founder of DN Journal, Ron Jackson, is on board. Ron, what's going on?
Ron: Well, I just wanted to say first of all I really enjoyed listening to John. As a web publisher myself, like hearing that guy speak was really awesome. And I think when you heard what he had to say about the economics of putting a real world magazine out there, you know why DN Journal is strictly an electronic magazine. It's about $10 million to start a print magazine. I think we started in 2003 with a $15 template and a $25 hosting account and a lot of sweat equity.
Monte: Yeah. Definitely. I mean, he's seen the successful magazine and one that looked like it was going to be successful and miserably flopped. Which was The Standard. I remember it was such a cool magazine, and then what happened was, they started filling up so much with advertisements and contents started going away to save their butts when the web crashed.
Ron: Right. I subscribed to both of those as you probably did as well. I loved both of those publications; so again, it just made a very fascinating interview.
Monte: Yeah. Definitely. And his insight on the web, on the things that will make web sites successful its key, I mean it's not rocket science; but having your customers build your web site for you and build your successful business by either giving feedback and focus and driving the direction of where your business needs to go, and that's kind of where this blogging business is going. People are really putting some really cool content out there, and the advertisers are just going to flock to them, because it's relevant content and the audience is there already.
Ron: It seems like every few months we see some new development like that, that's almost world changing in the scope that it has and the potential that it has. Blogging really for me had just been, you know, kind of an old school guy. I would just back in the rear view mirror and didn't pay much attention to it; and then all of a sudden I'm seeing cover stories on Business Week about it and you start realizing what the potential is, and it's this is another one of those things that makes this such an exciting time to live in and such an exciting business to be a part of.
Monte: Yeah. Definitely. So you have an exciting new cover story I hear and see on DN Journal of a really key domainer. Why don't you tell us a little bit about the story and about Christopher Chena.
Ron: The story that has turned out to be one of the popular that we've ever printed; I think it was also very timely, because Chris was in the news as the buyer of 8 of the top 10 domains on our top ten list in a single week. That's never happened before, and honestly, I don't know that it would ever happen again. That's an incredible group of domains for a single individual to go out and get. He spent over $500,000 that week to pick up names like Paraguay.com and, my Spanish is going to fail me here even though I had a couple of years of it back in high school, but Empleo.com, which is jobs in Spanish; Universidad, university; Ventas.com, which is sales. Before he even bought those he already owned the Spanish keywords for games, and travel; so he was building really a Spanish empire there from his home base in Paraguay that has already taken off, and just turning into an incredible colossus in that part of the world. The amazing thing about it is that Chris is only 27 years old; so, I think that's why his story resonates with so many people. Five years ago, he's a guy with not much money, nothing but a computer, and all he really had was a great work ethic and a love of computers and the internet. And so, anyhow, when he made that purchase that particular week, I thought this is really a great time to go out and let people know more about who this guy is, because they've seen his name pop up repeatedly in the sales reports over the last year or two. So, I spent a lot of time talking with him and all the way back to his childhood growing up in Paraguay where his family is a typical, very hard-working family in that country that was just striving to be middle class, which in America that would be like this is a middle class country, trying to reach the upper class. But in nations like that, you just want to have a lot of the basics of life that we take for granted and he talked about when he was maybe 8, 9 years old, all the other kids were into soccer and fights, and that sort of thing, but he was much more introspective. Interested in science and literature and those sort of things; so when he was 13, his father bought him his first computer, and that just opened up an entire new world for him. And he has, since that age, has thrown himself into the particular field, learning animation, programming, design, everything he could possibly learn about computers. By the time he was 21, he opened up his first company, and that took off immediately. All the corporations were just stunned that they could find those services within their own national territory. So, Chris has a business that just blossomed; and I think so many people enjoyed this story because he's also such a nice guy and so humble about this success that he's had. If you read that article, he credits just about everyone in the industry except himself for what he's been able to accomplish. So, in addition to that rags-to-riches story that we all love, seeing that happen to a guy that has the nature and personality that he has I think made it something really special for a lot of people.
Monte: Yeah. Definitely. And I had the pleasure of meeting his brother-in-law at T.R.A.F.F.I.C. West, Cote Carson; but he's also a super nice guy. He's in the business with Chris, and they have a hell of an operation there. And I understand that they're also in the farming business and some other things as well.
Ron: It's a remarkable story, and it's quite a lengthy article so, you know, there's no way I can really take you through all the fascinating corners of this career that he has. And this guy's just starting. It's going to be amazing to see where he's at 10 years from now. So, definitely, I would encourage people if they get an opportunity to read that, I haven't had anyone yet who has read that that hasn't come away saying wow, that was really an inspirational story, and just kind of like recharges your batteries to get out there and do something special.
Monte: Yeah. It basically says who would ever think that a millionaire, somebody who's spending this kind of money and that successful comes from a, I wouldn't say it's a third world country, it's definitely not a very wealthy country, and it's not the typical place that an internet guru would spring up from. So, it‘s a credit to him and his country and the business that he's doing.
Ron: Well, there's no doubt about it. You might think that what has become the premiere Spanish network would have developed in maybe one of the better known Hispanic countries, like Spain or possibly even Mexico, but Chris basically started as a one-man band and gathered some good people around him, but I do think that that's just another feather in his cap that he was able to do it where they didn't have the infrastructure there to do a lot of the things that he wanted to do. He said Paraguay was one of the last countries in South America to even get internet access. So, the guy kind of had the deck stacked against him, but somehow managed to succeed against all those odds.
Monte: Yeah. Definitely. So bring us a little bit more towards some of the other sales that just occurred over the recent week and maybe over the last couple weeks. I know the group that Chris purchased, but maybe you can recap some of what you're seeing on the sales front as it's getting pretty active again.
Ron: Well things have held up exceptionally well. 2005 has been a great year. I kind of keep waiting for it to take a little breath somewhere along the line and it just doesn't happen. I would have thought this week would have been it if we were going to have one, because being involved in PPC, you know that the July 4 weekend is one of the slowest in terms of internet traffic. So a lot of people saw their PPC revenues drop off. And I kind of thought well maybe the buyers will take a little holiday here too because they leave the offices like early Friday, a lot of them don't come back till Tuesday or even Wednesday. The buyers are still out there. Instead of being on the beach, they were out searching for good buys and we had a lot of solid sales again this week. Distributor.com was the top sale that was reported to us. There actually were some bigger ones that weren't released, including one that I know as in the six-figure range. Outlaws.com was right behind that. I don't know if I mentioned Distributor.com went at $35,000 at Afternic, Outlaws.com just behind at $33,583, and right behind that Gustavio.com at $30,250. We even saw a .org in the top four. Autos.org went for just under $20,000.
Monte: Oh, wow. That's a nice sale.
Ron: It is a beauty. $19,644 was the total on that one at ZEDO. So, it's just barreling along at such an amazing difference from where we were 3 years ago when essentially we were going through what a lot of people called a depression in the industry. I don't know, what a year and a half, two years now, we've just been rocketing along.
Monte: And on our front, we've had several good handfuls of six-figure sales, but again we can't report them. But I am seeing the same thing on our side at DomainSystems and Moniker, there are some portfolios in the works and some multiple domain name deals being purchased and a lot of private sales going on that are very high. We're about to do one that's in the seven figure range, and it's actually over seven figures, $1.25 million dollars for a single word adult name. So it's getting very interesting again. It's like going back in time a little bit for sure. What about some of the other extensions besides .org. What's going on with .biz., .us, .info.
Ron: Well, .biz has been to me the surprise of the year because like a lot of people, when that extension it didn't appeal to me at all. We had a lot of people say that it sounded cheesy, you know, you hear that lot. And again, I'm an old school guy, it's not a word that a corporation would use or an old-line business, at least in my way of thinking. But time has a way of passing you by, new generations come along and have their own dialect. So it's been a huge surprise to me how it's being adapted, but more so by, a lot of people thought it be large corporations that would buy it for business-to-business use rather than say business-to-consumer. But where I'm seeing so much action is with small businesses. You mom-and-pop stores in various locations around the world who've been priced out of the .com market are apparently looking at this as a viable alternative. In fact, on our new extension chart, where we followed .biz, .info, and .us, .biz was the number one domain on the chart for the 5th consecutive week, with WhitePages.biz which sold for just under $5,000 this week. It ended up at $49,095. And a sale at Afternic and .info is still doing well. .info dominated that space last year. Now .biz is giving it a run for the money this year, but if you look at our year-to-date chart, the top 50 sales of the year, there's still more .infos in there than any of the other two extensions, but then you have .us which has its bragging rights, because if you look at the top of the chart, 3 of the very 5 highest sales are all .us, and actually it would be 4 of 5, except one that Sedo sold last week in five figures, Mails.us went at five figures, but they weren't able to release the exact price due to a non-disclosure agreement, so it didn't get charted. So all three of those extensions have got things that can make their followers pretty happy.
Monte: Right. Right. What else is going on in the news? Any word on your side or anything that you've picked up on the .net extension and what's going on over there?
Ron: I haven't heard a lot about it other than what everyone knows that the price is going to drop a little bit. I think the base, well, you're a registrar, it's going to be about $4.50 I think wholesale?
Monte: Yeah. The cost to registrars is actually $4.75. It will be $4.75, and then of course, there is an ICAN fee tacked onto that; but it will be lower than the .com price.
Ron: Do you think most of the registrars will sell it at a lower price then, or would they just keep them about the same.
Monte: Well, I know that we're going to lower the price on them a little bit here at Moniker, because the .net infrastructure is so important for those of you that don't know that there are more DNS servers on .net servers than there are on .com servers. As a matter of fact, every major Fortune 500, or the majority of the major Fortune 500 companies have their DNS operating on the .net platform for their DNS. And so that's why that decision to keep the extension at the registry was probably made. They didn't want to disrupt that particular infrastructure, because it's such a critical piece of keeping critical live web sites up, companies like Microsoft, Oracle, and AOL, all operate DNS on a .net platform and not on a .com platform, which is very interesting.
Ron: Right. Exactly. Imagine [inaudible] like the general sales market, the domain community seems to be split kind of right down the middle on .net. There's one side that really hates it and thinks you just lose way too much traffic to the .com they don't have an interest in it. And then there's the other side, that continues to feel it's the second best extension and that it has some good commercial possibilities. Looking at our sales this year, I do have to say that we've seen some pretty attractive .net sales this year; so as far as commercial, viability, it definitely doesn't seem to be going anywhere. I personally kind of fall in that camp that I'm a little uncomfortable with it using it to develop, because I am afraid of that leakage to the .com. So, you know, it's an extension that's always bandied about and I don't know that we're ever going to come to a consistent consensus as to what people think about it.
Monte: Yeah, it's been an extension that's been, you know, squeezed in the middle of a .com and a .org world, and I actually think it's going to revive a little bit; and I do highly recommend that anyone that has a brand, any kind of important brand or any important domain name, if the .net extension is not registered, go register it right away to cover yourself; because it is the third most registered domain name. I mean it goes back in history from being the alternate extension to .com and although .de, the German extension, has taken over the second place position in terms of number of registrations, it still maintains a third place position, and then of course .org shortly thereafter, and then .co.uk.
Ron: I will tell you something that I've seen just anecdotally in following the drops each day. There are a lot of domains that I look at that are dropping that, that are only registered in the .com, that domain that's dropping is the only one that's registered. And I've noticed that immediately after a lot of those domains are picked up, when I go back and check on them, the person who picked it up immediately registered the .net just as you're saying. I'm seeing that more in the past month than I've ever seen it before.
Monte: Right. Right. I mean in an age where brand and long-term value of domain names is so important, especially after you hear John Battelle talk about how domain names are the foundation of the industry, you don't want to leave any open extensions in my opinion, but definitely cover your .net, your .com, your .org, definitely cover your TLD's for that. And of course, the upcoming extension that's driving everybody crazy in excitement and also in controversy is the .xxx extension. And that's due out in the Fall, or the 4th quarter actually. And we talked a little bit about it over the previous shows, we're going to be a lead registrar on that extension; but there's a lot of controversy around that extension; and I think it will be pretty popular when it finally comes out.
Ron: And right on the heels of that we're going to have .eu rolling out.
Monte: Yep. .eu and of course we have .jobs, .travel, you know, all coming out; and for those of you that didn't hear me talk about it last week, .travel, .jobs, and .xxx are called sponsored TLDs or STLDs, which means that they will have some criteria in order for you to be able to register those domain names. They're going to be sponsored by a particular registry group that will have criteria that you must fill out in terms of a form and qualify the fact that you have the right to own that. They're not going to let it open to the open public; so you'll have to fill out some extra information to prove that you are, in fact, in the industry and they'll do some checks.
Ron: Have you heard with respect to .eu, how restricted that will be in terms of Nexis, how much they're going to enforce a local presence in order to register .eu?
Monte: The word is that it's going to be open to anyone. The argument behind that, because it's not considered a country code. It's considered a region code, it's kind of a new platform because of the European Union. But anyone who does international business, basically what I'm hearing, will have access to a .eu extension and it could be registered all around the world. Now, how they're going to preference European presence versus non-European presence, I have not heard the details of that yet; but I will find out for sure. You know, I probably will have someone from the .eu group on either next week or the week after to talk about that extension and what's coming.
Ron: It would be really fascinating, because that's going to be the next one that's going to be a generally open extension. So that's where you're probably going to see another one of these big land rushes that we haven't seen now for a few years since .info and .biz came along and .us was opened up to the general public.
Monte: Right. Right. So, after this cover story, which sounds like a doozy, what do you have in line for August, or have you not thought that far, and you'll let us know what else is going on at DN Journal before we wind up today.
Ron: We usually try not to set things in place too far ahead, because the way things change, it's just unbelievable. I hate to lock myself in say to go to a person or a group and say we're going to run you here, and the other person here, or the other story here, because it's just such a fast-moving industry, that we like to be able to grab a hold of something that's timely. Just in Chris' case, where he was in the news just two weeks ago, we kind of dropped another idea we had and said we need to go with this and it worked out great. So, actually, for August, we don't have anything set yet; but there has never been an instance where there's been a shortage of ideas. We have several that we bandy around, and we'll pick the best one of those as we get close to the time that we need to actually get down to the brass tacks and write the thing.
Monte: Great. Great. Alright, well, Ron, I really appreciate your time today and having you on the show and giving us an update on what's going on at DN Journal and the latest cover story. But I'll make sure all of you that are listening, if you want to learn about one of the top domainers in the entire world, about Chris Chena, go to DNJournal.com and read the cover story. Also, it's a great place to go on a weekly basis when Ron posts the weekly sales that are allowed to be reported anyway. That comes out every Tuesday, correct Ron?
Ron: Every Tuesday night, usually around 8:30 to 9:00 p.m. EST is when that's posted.
Monte: Right. And I know a lot of the forums post the sales as well and keep everybody informed about who has the latest sales going on. So it's a great resource to find out what's going on with sales and appraisals and also the latest and greatest in the industry. So I really appreciate your time, Ron, and look forward to having you on again in a few weeks. We're getting close to another conference. Coming up T.R.A.F.F.I.C. East, Delray Beach, and so I'm sure you'll be covering the heck out of that in October.
Ron: We'll definitely be there. Looking forward to that. That thing is so much fun to be there. And I can't even imagine what it's going to be like this year. I'm sure the size will be at least doubled, and I can already feel the energy level building right now. It's one of those things you just can't wait for those dates to roll around and get in the middle of it.
Monte: Yeah. Definitely. Alright, well we'll catch up with you in a few weeks and definitely appreciate your time tonight.
Ron: Thank you, and thanks for having people like John on and the other guests that you bring to the community and let us hear them. It's really a treat.
Monte: Yeah. Definitely. And I'm going to try to bring the best guys on that I possibly can. So, thanks again, Ron.
Ron: Sure thing.
Monte: For all of you that are listening, we have I think the latest archives online now, I think up to, a lot of people were asking for the accountant special that I had on regarding how domain names are treated for tax purposes and forming corporations. I do have that on from Evan Brody. That's on our web site at Moniker.com. It's also available on WebmasterRadio.FM. And we are beginning the archive, or the transcription process, I think we have the first couple shows up that are transcribed in text for those of you that would rather read than listen. But everything is downloadable to PodCast and you can download our shows onto your MP3 player or your Ipod or anything. So, and listen to it while you're on the road in case you didn't have time to listen to it during the show. And some of the upcoming events, we're going to be out in the San Francisco area, actually San Jose for SCS in August, I think it's August 5-7 I believe, or August 7-10, I think it is. And we'll be broadcasting live from SCS which is the search engine strategies conference; and we'll be broadcasting live there and get the latest and greatest in what's going on in the land of search. And a couple other shows coming up. So with that said, I really appreciate everybody's time and the listening audience and the participating in the chat room. Come back and see us next week at Domain Masters, where you need to be the master of your domain. I'll see you next week. Thank you.
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