Monte LIVE from the TRAFFIC Silicon Valley Show

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Monte: This is Monte Cahn, your host and we are live from the TRAFFIC Silicon Valley Conference and appreciate everybody hanging in there. We had to reschedule our show tonight because I was actually on a panel during our slotted spot at 7 o'clock Eastern Standard Time and so the folks back at the studio were gracious enough to hang out over overtime a little bit and help us out so we could bring a live event to life and have some good content to have in the archives and everything.

I'm real excited to report that there's a lot of exciting things going on here at TRAFFIC. I'll go over a recap at the end of my first guest interview and we're interviewing Keith Levinson tonight, who is the new owner Audio.com and a number of other high profile domain names, including Vibrator.com and some other sex-related names and adult names but he has a great portfolio and is making a big investment in the market in a big way and lot of his knowledge and experience and techniques I think is something that would value all the listening audience and help everybody be successful in the . . . on their strategy of acquiring domain names and making them successful. So Keith will be on right after the commercial break and with that, we're going to pay some bills and take a little break and be right back on with Keith Levinson. Hang on.

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Monte: Welcome back to Domain Masters. Again this is Monte Cahn and reporting live at the TRAFFIC Silicon Valley Conference and my first guest is somebody who just took a big casting net and put a little casting net or a big casting net across the Internet. Keith Levinson has made a successful business in the online ticket brokerage business before getting into the domain name business and he just made some big acquisitions and has a great deal of knowledge and skill around acquiring domain names for the right price and helping to look up the value of those domain names and is actively seeking very good investments for the future. Keith, you online?

Keith: Yes, I am Monte.

Monte: Well, thanks for joining us on the show and I know you're calling from your hotel; we've got you in your hotel room – I'm in the hotel lobby and you know, its exciting to be at a conference like this where there's 350 domainers gathered and obviously a lot of stuff getting done, huh?

Keith: Oh, it's such a wonderful event. I mean, all the parties involved for putting this together – Rick, Howard Neu – I mean, they've done a phenomenal job of putting a lot of good minds in a room. You know, minds that have faces and minds that have not been to one of these events before so it's definitely been very exciting.

Monte: Yeah, definitely, and after the TRAFFIC East Conference in Delray Beach, you know, they had about 70 days to plan this event; felt it would be a good idea to put a conference right in the heart of the investment community and kind of the start up community, which is right here in Silicon Valley and ironically, a lot of the VCs and bankers are here present along with a lot of the press and as a matter of fact a lot of them were featured speakers at the event and really are starting to buy into the fact that domain names are real assets and property and there's talks about how domain names are going to be financed over time and starting to be treated like real estate. What's your take on that?

Keith: Oh, it's absolutely the truth. I mean, I've spoken to and seen more people here from various forms of press and various different investment banks and venture capital funds. It should be very interesting to see when some of the articles start to appear, you know, in some of the magazines, the light that's shed on this industry.

Monte: Yeah, definitely.

Keith: Yeah, it should definitely bring new faces in this conference and in every conference going forward.

Monte: Yeah, yeah. I agree. So give us a little bit of background about yourself. I had the pleasure of meeting you after you became a customer of ours but you seem like you're on the ball and have a lot of experience in business in general but give us a little background about, a little bit about yourself and your business history and then how you initially started looking at domain names as a good future investment and a development opportunity for yourself.

Keith: Sure. I mean, I've been in the online entertainment field for about 26 years. I ran a company base out of New York called Admit 1, a ticket agency that became a rather large company . . . one of the partners up there. Had an interesting domain names years and years ago. It just got kind of caught up with my other job. I registered a few names back in '96, nothing extremely high caliber. Really didn't have the time, unfortunately – looking back at how foolish that may have been at this point – but let some time elapse and you know been in that business for quite sometime. About two years ago, I decided that the domain arena was intriguing to me again. I've always been a tech person. I've loved computers and being around the tech end of it. I started looking at drops in domain names again, realizing that there was definitely a market there and I started acquiring some domain names, some other domain names. Now I have about a thousand domain names, some of them as Monte mentioned before are some high profile names; many of those have been done in the aftermarket or on drops. And that's pretty much where it's come to. My acquisition of Audio was in the third quarter of last year. You can imagine that it's a pretty high profile domain name in the space. I am now getting ready to develop that website into a full portal, audio portal, which is a passion that drove me to the ticket industry originally was live music and entertainment. So this is a dream for me.

Monte: So, you mention that you get a lot of domain names in the drop and obviously, you do a lot of analysis before you're selecting these names and you've been able to acquire quite a bit of high profile names, so now these names, Audio.com and some of the other names I mentioned earlier in the adult space, you obviously went out and sought out the domain names from current owners.

Keith: That's correct.

Monte: So give us a little bit about your strategy and how you've been successful in the drop in such a competitive market and where you see your threshold in terms of the amount of money that you're willing spend on top of what's been going on in the active bidding process.

Keith: Sure. Usually most of the domains that I've acquired in the . . . that are not drops (I mean, drops require, of course, a lot of research) but the other names, I mean I will sit and brainstorm certain industries and certain things and come up with, you know, niches in those markets, basically. I mean, I look for, you know, products; I look for industries; and those . . . that's what brought me to Audio, you know, because its an industry and when I found Audio, which was about a little over a year ago, I mean I basically reached and you know, called the people, you know, sent an email first and it was probably among hundreds of other emails that was received by the parties; sent another email and eventually picked up the phone and called the people and you know, was told an outrageous number at first and you know, I was a little disappointed because the number was more than I really wanted to pay and I don't think the market was even there at that point but then, you know, I was persistent with the people and eventually situations happened and they decided that they wanted to move on the name and of course I'm under an NDA, I can't really disclose the price I paid for it but you know, we were able to come to terms and close the deal in Q4 of last year.

Monte: Now, help people out in terms of helping in the negotiation process, because you've acquired, you know, at least a couple portfolios now and this individual name. What's the best strategy that one can go into when negotiating something with such high profile as this and obviously you have huge plans from your former experience in the entertainment business, so you're going to make this a nice big portal and we can talk a little bit about that as well but see if you can help some of the people that are listening and what types of positioning one should take with a high profile domain name like this?

Keith: I definitely would advise not to pick up the phone or send an email that, you know, if you know the name is a big name, you know, not to send an email or pick up the phone and offer $100. I mean, it's a great way to really put you out of the realm ever of getting the domain name. I mean, if you put a number that's a comfortable price in mind, it's a good idea to start. You're never going to start at what you're going to pay. No one will ever do that, I don't think but you know, you put a number that's a reasonable amount . . .

Monte: So you get somebody's attention.

Keith: Yeah, exactly, to get somebody's attention. Especially when the market is, you know, is where it's at, at these days. I mean, we're all reading, you know, Ron Jackson's DNJournal, I mean, we're all pretty attuned that the market is maturing at this point to, you know, past where it was in '99 and you know, putting a . . . I mean, that's true that the person that you're talking to may or may not have that knowledge but I mean the domain name is important and if a person has any knowledge at all that it is valuable they're going to go out and seek it and you'll have a very high probability of losing that name, you know, in those first steps that you do are very important.

Monte: Right. Right. Now, what about the strategy on a portfolio? How does a portfolio differ in your acquisition strategy than a single domain name? For instance, the adult portfolio that you took out – what was the reasoning behind that? What were some of the ideas that you had and did that differ in terms of the negotiation nature or the acquisition nature than your other ones?

Keith: Well, again, I really . . . even though that portfolio wasn't a tremendous portfolio (it was 27 domain names) I really focused on . . .

Monte: Can you give us some of the highlighted cleaner names in the portfolio just so people know what they were? Cause they were pretty good names.

Keith: Yeah, sure. I mean, you have Vibrator.com, you have Latex.com, you had Vibratormart.com, Giantdong.com . . .

Monte: [laughs] It sounds like people are going to have a lot of fun with that.

Keith: Exactly [laughs].

Monte: [laughs]

Keith: But I mean there are definitely some traffic, you know, higher traffic adult names in there and I focused on those names and you know, put a price that I was comfortable with, you know, on the names, on the better names and really wasn't that concerned . . . listen, the guy has X amount of names and usually a seller in this position, in this situation, I mean, he kind of wanted to exit the adult business. He was in it many years before Google redid their algorithms and you know, things have changed in that industry pretty severely over the past couple of years but names like Vibrator, it doesn't matter. I mean, that's a direct navigation name that holds a lot of value because people will always be typing in those direct navigation names as long as there's a browser.

Monte: That's right. And plus, that name will put a little smile on your face.

Keith: [laughs] Oh, definitely . . .

Monte: [laughs]

Keith: I have quite a few friends that's its put smiles on their faces, too. [laughs]

Monte: [laughs] Now, now, tell us a little bit about what the future of Audio.com is going to be. Now you acquired the name, you paid a pretty penny for it and what are you going to turn it into, cause you know there's a lot of music sites, there's a lot of sites on the Web that one would find could be repetitive but I think that you have a pretty unique approach on what you're going to turn it into and perhaps you could share a little bit about the ideas.

Keith: Sure, sure. I mean, I'm going to make it a portal on audio. Now, audio's a very vast field. I mean we're going to be doing e-commerce, we're going to be doing streaming radio, we're going to do music downloads and ring tone downloads and we're going to definitely build some interfaces in podcasting. The podcasting interface is going to be a proprietary interface which we're going to . . . it's a little bit different than anything that's out there and hopefully we're going to be able to create a very good user experience in that area. That is definitely one part of the site that I'm trying to make as unique as possible. It's difficult on the music downloads and the ring tone downloads to do much stuff unique but that's pretty cookie-cutter clean; I mean, it's the same everywhere you go.

Monte: Right.

Keith: Now we're going to be doing, also, audio books downloads and we're going to also have an interface for audio conferencing. So as you can tell, its going to be a pretty, you know, pretty diverse site with the things that its handling and just, you know, the overall user experience is really what we're focusing on – we're going to try to make it so that it's the least confusing as possible and just the overall user experience is good.

Monte: Now, give us a little bit of an idea of the business part of it. How is Audio.com going to generate revenue with all those different pieces and what's going to be inherent in the site as a service that's going to be provided by the site and what are you going to outsource or link to? Or is everything going to be linked outside the site and you're going to kind of connect everything in a portal approach.

Keith: Ah, no. I mean, many things we're looking to do . . . I'm looking to build a brand with Audio.com, so I'm looking to keep as much stuff as possible inside the site and as much stuff proprietary in the site. In the e-commerce end which I didn't even mention before, I mean, that we may have to refer out because I'm not a brick and mortar shop as far as with supplying audio equipment. I don't want to get a warehouse full of receivers and power amps and car stereos.

Monte: Right.

Keith: You know, so that end we'll probably refer off the site. But as far as any of the other avenues with the ring tones and the music downloads, you know, that I'm trying to keep people in, you know, on Audio.com. Of course, there are revenue streams of all these products that we're doing and you know, we're going to be selling banner ads on many of the pages and I didn't mention that we're going have forums on there, but in the forums, of course, you know we will have, you know, banner ads in there too, so hopefully there'll be many channels of revenue that come in from audio.com

Monte: Right, right. And you're going to have something . . . you're going to make it both for the end user consumer and also for the professional musician as well, correct?

Keith: Oh, absolutely. I mean, we're working on a very interesting product on Audio.com and we have a partner that's we're going to be trying to do a virtual jam session where if you play an instrument on one coast you're going to be able, you're already able to put your instrument through your computer but lets say you play guitar – you'll set up your guitar so that you can play your guitar in New York and if you have another guy that plays bass in California, you'll be able to have a virtual jam session with these guys.

Monte: Oh, how cool.

Keith: Yeah. So that's part of the user experience that we have that I have in store for some of the people that visit Audio.com.

Monte: Yeah. And you can actually create . . . I guess its going to be really cool because you'll be able to create music and songs, not even in the same studio.

Keith: Not in the same studio; not even in the same country.

Monte: That's going to be wild. That's the way to get talented musicians from all over the world all together in a jam room and key people up and create, you know, online music and you know, you might be making marriages in heaven there that you don't even know about yet.

Keith: I hope so. I hope so.

Monte: Hopefully, you're going to be able to get a piece out of every single one of those hits. [laughs]

Keith: Yeah. I mean, I'm really, you know, I'm hoping, you know, it's a thing that hits close to home. I've been involved in entertainment a long time, you know. I'm a guitar player myself, you know. Years ago I was in bands so I mean this is stuff that, you know, really excites me because it's a thing that, you know, when you're a musician and you're musicianly inclined, I mean, there are people that you talk to or run into and you'd love to do things like this so it's a wonderful idea and I'm hoping that we can get the experience to be, you know, to be brought to levels that, you know, that, as high as we [inaudible]

Monte: Definitely, definitely. Well, give us a little bit about where you see the future of this domain name industry now that you're in it pretty good and obviously what we've learned from the TRAFFIC and maybe be can cover some of the TRAFFIC sessions that really mean a lot to where the industry's going ‘cause we heard from the investment community; we heard from, you know, the industry people in terms of PPC monetization, development versus PPC, than, you know, how valuable and how important appraisal is to lending on domain names and you know, doing things for the future in terms of financing. Give us your take on what sessions have been most important to you and where you think things are on target, off target and where the industry's going.

Keith: Oh, that's so hard. There's been so many things that are on target so far at this conference. Let's start first with the PPC that you talked about. I mean, PPC has been spoken at many of these conferences already as being really just a rent that's collected on these properties and that couldn't be more the truth. You know. It really is the lowest level of income that comes in value of the person that's typing in that bar direct navigation net, that product, that's only going to get more valuable. You know, a lot of the typos, a lot of the trademarks, I'm in agreement with a lot of the panels that that is dated, its limited, and its days are pretty much numbered. I mean, as Google gets more sophisticated, all the search engines get more sophisticated, they will weed, probably weed out a lot more of that but you know, the . . . those . . . direct nav and randomable names, you know, companies really need brands. You know, I mean there's no better way for a company to open up an online shop and have, you know, product name or a very easy name.

Monte: Yeah. What are the two or three things that you picked up on that you didn't know before or that you walked away with even more excitement than you did when you walked in the door?

Keith: Oh, one thing is for sure, the people that came to this conference was just very exciting. Knowing that the industry is maturing the way that it's starting to mature. I mean, in reality, many industries take a very long to mature. I mean, television came about in the 1920's and wasn't mainstream until 1970's. At that time, you know, people just barely had color TVs

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Monte: . . . been kind of spoke about in theory and in kind of like dreamland and that is the domain names really being valued as an asset and then being able to actually take mortgage-type approaches to domain names in terms of lending both for purchases and for development . . .

Keith: Sure.

Monte: What have you got out of some of the folks that are here with that initiative and where do you see the change in where things were, I guess, about a year ago to . . . how do you think things line up in terms of real estate and domain names and is there anything that you feel that's going to make domain lending a reality in the near term?

Keith: Sure. I mean as this industry has been maturing, you know, its really starting to be referenced as you . . . I mean, I don't know how many of the panels, I mean the sessions that you actually sat in on, but they referenced it as online real estate everywhere, and it truly is real estate and it should be treated like real estate. It should be mortgageable, you should be able to put liens, you should be able to borrow money on it. I mean, as you know you have your escrow service; I mean, that should be even more put into the realm of the way domains should be held anyway if there's mortgages and stuff that go on these properties . . .

Monte: Right.

Keith: I mean, this is definitely a growing section and if some of the players that are here now are seeing the opportunities that can be created; and they're innovating these ways so they bring them to life. I mean, we have guys here that are definitely going to . . . mortgageability of domains is not very far away and borrowing on domains is not very far away. It'll be exciting to watch that grow up.

Monte: Yeah. Definitely, it will be. And that's showing a little bit more maturity in the market and also that the domain names are a stable investment. Even at the very lowest stages of PPC revenue, there's a common payment, a common and consistent payment stream coming in. And one could value that payment stream over not just one month but several months and make a determination of loan value and how much a domain name would be worth at a wholesale price in case there was a default in a loan and that kind.

Keith: Sure.

Monte: It's actually something that our company's going to start doing as we've been financing deals kind of independently through Moniker and Moniker's escrow service for over two years now. We're going to get into it in a big way and we recognize it as the domain name as a piece of real estate and we're going to get into that domain lending and mortgage business in a big way in the next couple months as well.

Keith: Best of luck in that and you know that comes from the heart.

Monte: Yeah, definitely. Well, in terms of your future strategy for . . . what's the first thing that you're going to do when you get home now, knowing what you got from the conference that you've been able to take from the conference and, you know, are you going to implement or change things or do anything different than before you got here or does it validate everything that you had in mind and had planned?

Keith: Oh no, it's pretty much validated everything that I had in mind. I mean, when I decided two years ago again to start dabbling again in domain names, I mean, I saw the growth of the Internet, watched, you know, watched the Internet start growing up and basically saw that this was going to happen, you know. It just originally when it spiked in '99, it just was too early. I mean, now the adult industry is really growing up and now that's starting to splash over to all mainstream and mainstream is still in its infancy. I mean it's got a very, very far, I think, years before it actually grows up to be, you know, to its full potential.

Monte: Yeah, definitely. I agree with you. Well, Keith, I really appreciate your time and I know its been a busy show for as it has been for us but I really appreciate you taking the time and taking some time with Domain Masters and telling us a little about your history and what's made you successful on the Web. I hope that some of the listening audience has been able to pick up a few things, which is our goal for the show, all the time is that somebody learns something, what they didn't know before about the domain name business and how to be successful. Is there any points or thoughts that you want to leave with before you hand up that you think that can help domainers be successful whether they're new in the industry or of course, seasoned?

Keith: Just, find the right domain names, do your homework on them, try to get direct navigation names. And just, good luck with everything. It should be . . . I think you've got much, many more years of this industry at very good growth rates.

Monte: Right. Well, thank you very much and we look forward to working with you and helping your properties be successful in the future as well.

Keith: Thank you very much, Monte.

Monte: Okay. Take care, Keith.

Keith: Have a nice stay. Bye-bye.

Monte: Alright. Well, that was Keith Levinson and again for those of you who just tapped on or didn't catch the initial introduction [break in broadcast] Audio.com and pretty large acquisition, along with several portfolios and has been very successful in his planning process. Got a little busy signal going, we'll get rid of that. Okay.

So I just want to recap some of the highlighted conference events that happened over here at TRAFFIC because, again, this show was put together in about 70 days and I got to hand it to the organizers here, just to give Rick Schwartz and Howard Neu some credit. They planned this as kind of a little boutique show in between two of the major conferences that are already on the docket for TRAFFIC. Obviously, there's TRAFFIC East, which is in Delray (or has been in Delray) and then they do a TRAFFIC West show which has been in Vegas and been very successful. So it turns out that this has been such a successful conference and successful show and so much business gets done with domainers in the same room. 350 people showed up here and you know it was like standing room only in many of these events and they just did a terrific job of pulling it all together and I'm glad that some of the companies, including us, were able to help participate. The conference focused mostly around the approach of using domain names as financing leverage, increasing values, that kind of things. And several of the sessions involved some of the venture capital community as well as some of the banking community and one of the sessions that I got a lot of was a session that involved kind of an overview of the market and channel statistics and the future of the domain channel, which had a featured speaker, R.E. Baine from Millbank & Roy. And he really laid things out on where the market was going, how banks and financial institutions will look at e-valuations and ROI and generating profit in the business and where to seek investment and was pretty valuable, you know, session. We rolled into a session that involved domain acquisition, strategies in terms of acquiring domain names; I just got off a panel there and I got off of a panel in terms of how to valuate portfolios both for purchase, for acquisition, for sale and for tax credit situations where you can use your domain names and your domain portfolios as charity and receive tax credits and what you need to have in terms of covering yourself on that. There were some great panel discussions which Google, Yahoo!, Fabulous and Domain Sponsor and Revenue.net were all involved in and comparing their various systems in terms of generating revenue and traffic. There was a big Google party, we went and did a tour of Google. Of course, I've been there a couple times through SES and a number of other events here in the town of San Jose but got a special presentation and kind of behind the scenes look at Google that I never got before and it was pretty valuable as well.

Another valuable session was domain development, you know. The big question is while you're developing, you know, what are you doing with your domain names that generate revenue and profit, but there's a lot of domainers and institutions now that are assisting with the development of these properties and developing them out so that they can become a lot more valuable and start generating a presence on the Web and there's a couple development channels and panels that were very, very interesting and well attended as well.

Today, we had domain analytics session with Dan Warner at Fabulous and a bunch of success stories. One of the biggest items in the news of late was the purchase of sex.com and also the purchase of software.com. The folks that were involved with that purchase and that acquisition were Mike “Zappy” Zapolin and Andrew Miller from Internet Real Estate Group and they talked about the actual acquisition and the success story of acquiring software.com. It was an acquisition rumored to be around $3.2 million, I believe and it involved some creative financing to be able to acquire that property and they gave us a little bit of an idea of what they're going to do with it and you know, when a name like that, of that premier status is purchased, it's a big event in our industry. So, you know, they were also behind the scenes with the Sex.com purchase as well and we talked to Gary Kremin last week who was the seller on that end and I'll have some of the folks that represent the Sex.com purchase on next week as well.

So, it's been a really good show and we're going to end up with kind of a farewell dinner and then there's a [inaudible] board meeting tomorrow morning and I'm on a plane, on a red eye in about 3 or 4 hours so I'll be home and back in my saddle for next week's show as well. So, we will catch up with you next week. I appreciate everybody staying the extra hour to listen to the live broadcast and we'll be posting and getting some more information about the TRAFFIC conference very soon.

With that, I'm going to let everybody go. Be the Master of your Domain and we'll see you next week, same time, same place, on Domain Masters. WebMasterRadio.fm. Bye-bye.

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