Monte welcomes Ron Jackson back to the show!
Monte welcomes Ron Jackson back to the show!
6/14/2006 - Monte Cahn
Monte welcomes Ron Jackson back on the show. Ron and Monte talk about the rapidly increasing migration of advertising dollars from old-line media, like newspapers, to the internet. These two can talk domains all day long, so tune in and learn something!
[Commercials]
Monte: Hello, everyone. Welcome to Domain Masters. This is Monte Cahn, your host, and I am back from my vacation. God, I never knew how bad I needed a vacation until I was on one. I want to thank Victor Pitts for filling in for me while I was gone; I heard he did a great job last week and had a great show. If you guys missed it, please go to Moniker.com or WebMasterRadio.fm and download the archive and podcast it. I mean its all podcasted there in the archives.
Tonight, we’re going to have a great show. We’re going to have Ron Jackson on, the king of DNJournal.com. And I thought it’d be good just to have Ron on tonight. Usually, I get him on for 5 or 10 minutes here and there but there’s just so much to talk about, about what’s going on in the domain industry. He’s got a brand new cover story up about Art Goldberger who’s one of the lead domain attorneys. There’s a lot of trends going on with a lot of online advertising money going towards . . . or a lot of traditional advertising money moving over to the online side and Ron has some interesting statistics regarding that. And of course, domain sales have been on fire, between all three of the major companies: us, Moniker.com and Domain Systems; Sedo and AfterNick are all doing quite well on the domain sales front. And that’s just indicative about what’s going on in our marketplace.
I’m also going to go over . . . a lot of people are asking both on email and by phone and on chat about what the rules are and what’s going to go on for the next live auction. Those of you who didn’t have a chance to catch the live auction in . . . that we broadcasted live at TRAFFIC West in Las Vegas, we have another live auction scheduled for October for TRAFFIC East and its going to be a doozey. We’re not only going to do a live online auction with a live auctioneer at the event but we’re also going to do a silent auction at the event with live kiosks at our booth and those will be for the second- and third-tier names that don’t make it to the final cut of the live auction, which will be primarily geared to the premiers. And that way people have a chance to buy the other names that might be good value and we’ll have a silent auction; that will be an online silent auction. A real neat format, so we’re in the middle of building that platform right now. So we’ll talk a little bit about the rules there and I’ll try and answer any questions you guys post up on the chat room and help you out.
Ah, we’re going to take a couple of commercial breaks . . . actually take a commercial break, pay some bills, be on with Ron Jackson and stay tuned.
[Commercials]
Monte: Master of my domain; I love that skit. Welcome back to Domain Masters. My first guest doesn’t need much of an introduction because he is probably the media source for our entire industry: Ron Jackson. Ron, welcome on board.
Ron: Hey, Monte, glad to be on again. I’m glad to hear you got a chance to get away for a little bit of break and your back and off and ready to go now.
Monte: Yeah, yeah, definitely . . . I was so . . . I was so wound up between the back injury and then all the pressure at work and take care of three kids and everything going on. I definitely needed a break. And I was able to decompress; I ate the hell out of crabs in Maryland – I must have had them 4 days in a row.
Ron: I’m surprised you came back.
Monte: Yeah [laughs]. Well, I did miss Florida and I had to do the show, so I had to come back. People need me.
Ron: That’s a fact.
Monte: Yeah, definitely. Well, those of the listeners who have not heard your background, I’d like to reintroduce you, or have you introduce yourself, because it’s been awhile since you’ve been on as a feature. Actually, its been over a year.
Ron: Oh, I didn’t know that.
Monte: Yeah. I mean, I’ve had you on, obviously, with 5 and 10 minute spots just to cover the industry very quickly, but thought it was good to have you on your own show again because of everything that’s been going on, how your website, DNJournal.com has grown and how you’ve been able to just capitalize on the all the news in the domain industry and be basically the only source that’s reporting sales, that’s got your thumb on what’s going on in the industry and thought it’d be a good idea to give just a quick background and little bit of bio on yourself and then we can talk a little bit about what’s going on in the industry.
Ron: That sounds good. Well, I started out as a broadcaster, went to broadcasting school when I was a teenager right out of high school, and worked in radio for a few years and then moved on to television and was a television reporter for 18 years in Florida over in the Tampa Bay area, across the state from you, and finally, after doing that for a long period of time, I always had an itch to do a business of my own. I think at heart I’ve always been very entrepreneurial and I doubt that, as much fun as it was, I would have stayed in broadcasting if it weren’t for the fact that they gave me a lot of room to do what I wanted to do. I was what was called an enterprise reporter, which meant that you were kind of given your head to go out and do whatever stories you wanted and the only feedback you ever got was that, hey, that was a good story or you know, maybe you could do this next time or whatever. But you were pretty much on your own and that suited me just fine. But after doing that for so long, I just really wanted to do my own business and I had started in radio as a DJ so I opened a music store. This happened in the late eighties and we had that for 12 years and really, hit that at just the right time when people were replacing their vinyl collections with compact discs. So we would have people come in the store and rather than just buy like one album, they would buy whole stacks of discs; it was just phenomenal to be in the right place at the right time. And that’s where I was first introduced to domains. We had a major mail order business; in fact, we were one of the biggest mail order dealers in the world in the field of music collectibles and we had used national magazine ads to sell our merchandise, and that was a very expensive proposition, of course. And you were also very limited in what you could do, because you couldn’t afford to run color photographs; really, you couldn’t afford to run photographs of any kind, so the ads pretty much consisted of just typewritten lines of what the merchandise was and if you went too long it just ran into an incredible bill. So, the Web comes along in the mid-nineties and I got wind of that and registered a domain name, MusicParadise.com, which matched our business name; was the first one that I had in 1997. And that really revolutionized our business. We were all the sudden had world-wide reach; we had no limits on how long our advertisements could be. We could put full color photographs of all of our merchandise on and it was just phenomenal. So, we saw a boost in our business immediately and as more people came online, that just grew and grew and it reduced our advertising costs by about 80%, so, you know, it was just phenomenal. The only regret that I had is that it didn’t dawn on me at that time how much power there was within the domain name. I was just so focused on the music business and what it was doing for us in music that I wasn’t thinking, my goodness, look at the power in this thing. And if I’d started looking into domains at that point in time, I can’t even imagine where I’d be now.
Monte: Right, right. Well, that goes back even . . . well, that was 1997. But even when the bust occurred, which we talked about a lot, the last remaining assets for many of the companies, in fact, for most of the online businesses that went out of business – like e-Toys, Garden.com, Mortgage.com – the last standing asset that had any value was the that domain name.
Ron: That’s right.
Monte: As a matter of fact, just to be candid on the air, that’s what’s kept us in business during the bust. When all the cards were falling and the dot com boom and bust happened and dot com names were like, who’s going to go buy them now, even though it wasn’t a dot com name issue, it was more of an online business issue and how people raised funds when they didn’t have a legitimate business behind what they . . . behind their business ideas, that’s what kept us in business, was helping those companies that were in bankruptcy sell their last standing assets.
Ron: Right. And you know, there interesting thing is I had a bust in my future as well; I didn’t realize it in ’97 that that could even happen. In fact, the conventional wisdom in the music business was that it was recession proof business. Historically, people kept buying music whether the economy was up or down. But there was a sea change that was much more drastic than normal changes in business and that of course was the arrival of the Internet and downloading of music files and coupled with the fact that CD burners came along, where kids could come in our store, for example, and buy one CD and burn 20 copies for all their friends. So when that technological change occurred, our sales just plummeted. And it was repeated across independent music stores all across America. In the year 2000, when we finally closed our brick and mortar stores, we were one of about 3,000 independent stores that closed nationwide. And actually, the music retail business has been on the ropes ever since then. So, when we closed and I was looking for something else to do, really didn’t have anything in mind – I was just kind of casting around, what do I want to do next – one thing that stuck in my mind with how successful that website had been for us. In fact, we did continue for a couple more years as an online business only, but music was the wrong product at that point in time, unless you were selling downloads and that, given that whole issue, you had to be licensed and that sort of thing, which as a small player we couldn’t do. So in the spring of 2002, I picked up a computer magazine (I’ve always been a computer buff) and there was an ad in there that New Star had put, the .US registry, about .US opening up to American citizens to register. Previously, of course, it had been reserved for the government. And I thought, you know, Music Paradise performed so well with this and I had looked for other names at that time and even in ’97 I realized it was difficult to get really good terms, so I thought there’s probably some good cool names out there and I started poking around and in fact, at that time, I came in one month after the public rollout of .US and there was still some decent stuff around and I started kind of registering them and that’s how I stumbled into this business. I joined the forums and learned and made a lot of mistakes early on, like most people do, and registered the wrong kinds of names and went like 5 months before I ever sold them, before I finally got a grasp of the kinds of names that buyers were actually looking for.
Monte: Now, what was the first name that you ever sold and when was it?
Ron: Well, actually, the first sale was not a single name; it was a package of names. As I said I’d gone like 5 months with no sales and finally, I had put a list up, I think it was at DNForum, of about, I think it was 15 or 20 names that were for sale and one of the members there, who’s still very active (Dan Stager – people know him as Stock Doctor) contacted me and said, here, I’ll buy the whole lot. And this was, I mean, there was no money involved, but I was just so happy to sell anything. So that first sale there was about 10 or 15 domains and a very small amount of money. But I was just really happy to get a few dollars then. And after that point, when I figured out what you needed to buy (and I’ve written columns about the kind of things to look for), I went from zero sales in 5 months to today, I’ve had more than 1,800 sales since that point in time. I just totally turned things around. So there’s definitely a learning curve. But when you grasp what it is that buyers are looking for, you know, it’s . . . it’s just a fantastic business.
Monte: Yeah, it certainly is and speaking on the business, your website has really taken off since . . . I mean, when did you start DNJournal?
Ron: We went online on New Year’s Day of 2003; so we’re about 3 ½ years old now. And it really has exploded in the past year and of course, that just coincides with the general interest in the industry exploding over that same timeframe; particularly, with the attention that the business is getting now from all the mainstream media outlets. And when The Wall Street Journal and USA Today and Business 2.0 and all these people started writing about domain – something they do about every week now – they came to us, fortunately, because we ranked liked #1 in Google on domain news or people would refer them to us when they would contact them to follow particular story lines. So we became like the first source that they came to inside the industry to get background, so we were featured in all those articles and that’s driven our traffic up and its also, of course, pulled in a lot of advertisers at the same time. In fact, we’ve been in a situation for months now where all of our above the fold ads have been sold out and we have, you know, a waiting list because there’s just no where to put people.
Monte: Right, right. And, you know, there was other news sites that covered the domain industry, but they kind of just spun out. Wasn’t there Domain Name News . . .?
Ron: Well, that’s a common misconception that I hear a lot of people think that DNJournal is the only one or was the only one – there were actually many before us. There was . . . it was called iGoldRush was out, Demi’s Domain News I used to see; really quite a few before us. And there’s still plenty around today. But I think what happened is we were able to separate ourselves from the pack so convincingly that a lot of people think we’re the only ones and the reason, I believe that happened is because I was a professional journalist my whole life. I came out of that. So, I had, I think, an innate feel for the kind of stories that I knew people would want to read. My goal, when I write a story (like the current story on Artie Goldberger) is to tell a story, an entrepreneurial story that anyone can identify with. I don’t believe that it makes any difference if you even care about domains with a lot of our stories; you can start reading it and be drawn into that person’s personal story and you can, you know, draw parallels – oh, I can see how this guy got started in business and what he did – so I try to put things in there that anyone can take away positive things from it. So I think our writing separated us from the crowd and its continued to be the thing, you know, has set us apart. And I think the other thing that’s equally important in that is that I initially started as a domainer before a reporter, so it was a field that I then and still today operate in as a businessman, so I have a really good understanding and grasp of the whole . . . of the whole field. So it’s much easier for me to write about it. You could bring a professional reporter into this space and you . . . I mean, you see the current professional reporters at major outlets trying to cover this space and how wrong . . .
Monte: Oh, yeah, they’re tripping over their . . .
Ron: They constantly get it wrong.
Monte: They’re tripping over their puds when they try to write these stories . . .
Ron: They just don’t have an understanding.
Monte: Yeah, they don’t have an understanding . . . you can tell, you know, with the guys from Forbes and Business 2.0, they’re just . . . they’re just kinda . . . they’re very abstract and you know, try to make sure that all the different opinions are covered but they really miss the points lots of time.
Ron: Exactly [inaudible] . . .
Monte: But the good news is that a lot of the big, traditional media is now starting to cover our space more and more and it just pumps . . . I think it just pumps your site up even more when that happens, because you’re the online news media outlet and they always come to you anyway to find out what the scoop is.
Ron: And it’s a case of rising tide lifting all boats; everyone in the industry I think its doing well, so I just feel so fortunate because I stumbled into this field and I saw all the fascinating stories inside the field. That’s really what piqued my interest traditionally when I came into it. We didn’t start the magazine; I’d been in business for about 8 months before the idea of doing the magazine came along and the reason for doing it was that as I was meeting these people and hearing their stories – there were so many entrepreneurs in this space; almost every single domainer is an entrepreneur – and they have such fascinating stories, I said someone should be telling these peoples’ stories, because, again, I felt it was something that anyone would want to read whether they were in the business or not. So that’s why I started doing it. And its still to me the #1 attraction in this whole business is the people who are in it. I love being around this kind of people who take things and make something out of nothing like Artie did.
Monte: Yeah, yeah. And, you know, I approached the radio show almost in the same way, where we . . . I think its important for people to hear their stories. Everybody needs to hear how people got started in the business and what they are doing to make themselves successful and why they are believers in the industry that we’re in because people learn from that and there’s always a new point. There’s always something in one of your stories, one of the interviews that we do, that people can learn from and say, hey, I should be applying that business practice to what I’m doing and then, you know, bingo, it helps decrease the chances for success.
Ron: And one of the things I like about the kind of people that we have in this business is – and it’s a key tenet of a successful entrepreneur – is the persistence that they have. They can fail in maybe multiple endeavors, but they learn from those failures as they go along, and become a better businessman. So, so many people get discouraged. I know a lot of people come into this business and they don’t do well; they don’t grasp it or they don’t do enough research and learn how to do it and they think, oh, this is impossible and they leave the business. But you can learn from your failures and that’s one thing that a lot of these stories, you know, in part these people, they get knocked down, they just get back up again, they keep trying. And a lot of the people who have the greatest success (not just in our business but business in general) are people that have multiple bankruptcies and some of them have turned out to be billionaires. So you know, it’s just that personality that I just love.
Monte: Yeah, definitely, definitely. So, so, right now, there’s so much going on in the business. Let’s start off by talking about some of the domain sales and then we’ll take a short break and then cover some of the trends that we’re starting to see, which some real moves from traditional media is. And the good news is you have a good background and good education about what traditional media is, ‘cause you’ve been in it; and what’s really going on with online media and how things are moving over and why our industry is getting even more valuable and more important.
Ron: Now, that’s a very exciting topic because that movement of ad dollars from old line media like newspapers and over the air radio and even television, now, is bleeding dollars to online, but its that movement of money to our space that’s driving the values upward in domain names. Let’s talk a second about that before we go on to specific sales because it’s . . .
Monte: Well, actually, let’s just talk about it. Let’s just talk about the move from traditional media onto the online media and what’s going on now.
Ron: Well, it’s, you know, they . . . I guess we finally just reached a critical mass. Back when the bubble happened before, I mean, those values got so high because people – particularly the early pioneers – did see this coming; they just were a little ahead of themselves and then, you know, everyone rushed in with a lot of bad business plans. But what was originally seen in the late nineties is coming to fruition now because you’ve got this enormous number of users flooding online. And of course the advertisers are going to follow the users. And there’s so many advantages of online advertising, because you can track the exact response that you’re getting through your advertisements. When I was a retailer, we would take ads in music magazines and you know, I never knew if they were doing any good or not. If they were, you know, just a generic ad for our store, I did know when we were doing those kinds of ads with lists of product, you would know from sales how well they were doing. But other kinds – the kind of advertisement that most stores do is just your store name and logo and whatever and you never knew who was coming through the door, if they came through for the reason of the ad or just were just walking by or whatever, so you have that great trackability. I was just reading a story right before we came on the air that was really interesting to me and that is that in offices now in America the #1 . . . the medium with the #1 reach is now the Internet, which has surpassed radio and those who are listening to radio at work are generally listening to online radio instead of over the air radio and that’s really one of the really critical movement because advertisers have always coveted that ability to reach consumers where they work and they’ve never really been able to get in there and get them. But now people can actually be exposed to that without disrupting their work routine because a lot time there’s no sound, or if the business allows sound they can be listen . . . again, that can be an Internet source that’s bringing it there. So that’s bringing a ton of ad money in for that reason as well. And we just see one item after another, different statistics that have been coming out. But I’m going to bring up our lowdown section because we put a lot of these items up there in the last few weeks with statistics . . . well, here’s one, for example: its about the migration of ad dollars from old media outlets, especially newspapers, to the Web. It said the only silver lining for the newspapers is that online newspaper advertising rose. Their print publications are losing advertisers, losing classified ads, losing subscribers. But they’re starting to make some money online. Whether that’ll happen quickly enough for them to save them remains to be seen. But the volume of dollars moving over online is just . . . it just knocks your socks off. And that’s one thing that when we go back to media coverage of this industry that a lot of outlets don’t understand is that landing . . . you know, we get so much criticism for landing pages, terms like “cyber-squatters” used inappropriately. They don’t understand there’s just another advertising channel. Just like newspaper, radio, TV is. There’s an incident that happened yesterday (I don’t know if you’d read about this at the Targeted Traffic forum) but Business 2.0 Magazine has a blog and this writer (I think his name is Eric Schoenfeld) wrote a blog entry headlined “The New Cyber Squatters,” and he’s talking about domain investors who simply monetize their assets by using pay per click and he’s saying there’s something wrong with this. And misusing the terms “cyber squatters” which relates to infringing only on trademarks. So, he was just blasted unmercifully. There must have 20 or 30 posts on his blog, you know, pointing out how misinformed he was, that this is a legitimate ad channel like any other ad channel. Its such an offensive word to call a domain investor a cyber squatter; to me, its no different than using the “N” word in talking about a black person. Its just totally inappropriate and its offensive and not relevant at all to what the person is doing. [inaudible] . . .
Monte: [inaudible] . . . just like that word; it shows ignorance for people who really are not educated about what’s going on. You know, obviously, that assimilation is pretty . . . that’s pretty accurate. People are now throwing around the word “cybersquatter” right and left and don’t even know what that means.
Ron: Right. And this is a respected business publication. For him to put that out there, you know, other people who don’t know any better are going to pick that up and run with it. So it was really great to see domainers say, you know, enough of this and just go in and call him out on it. Of course, it was his blog, so he was able to stop, you know, the flood of criticism that he was getting. I know I heard about it last night; unfortunately, it was late after we finished our domain sales column and I sat down and composed a long post. But by the time I had tried to post it he had closed it off so that no one else could come in. But the people who did respond were very eloquent in what they had to say. And I think that we need to do more of that. We really have to be vigilant and not let mainstream reporters get away with continuing to propagate stereotypes that don’t apply to domain investors. We need to be . . . we should be treated just the same as any other investor is.
Monte: Right, right. As a matter of fact, for the first time, we’re going to be . . . or the domain platform is going to be visible at SES, which I’ve been fighting for 2 years to have, you know, the domain and the direct navigation channel covered at SES as a valuable or a viable search engine strategies topic and so Danny Sullivan just emailed me the other day and we’re going to have a panel and a intro and the value of direct navigation. And it’ll be pro and con positions on that but for the first time its going to be introduced at the . . . at this major conference, which now we’re . . . now we’re on not only at the domain conferences covering this topic but also Webmaster World introduced this about a year-and-a-half-ago themselves, so they were one step ahead of the curve. I think what we’ll see, as more and more people get educated and then find out the true value of direct navigation and these type in domain names and now valuable they really are to the advertiser, which is now about between 10% and 15% of all search revenue generated on the Web, is the result of natural type in traffic. And its growing by about 15% to 20% per year. So that gives you some aggressive numbers about how fast the domain name, the online type in domain name traffic is growing and valuable to advertisers. I think we’ll see a quick turnaround on that.
Ron: No doubt about it. And look at the people who are putting their money into the business now. You’ve got Howard Schultz, who’s the founder of the Starbucks chain; Ross Perot; the Jacobson Family; New Yorker - all big investors in IREIT. I mean, these are, you know, major captains of business in America. And then you’ve got reporters out there throwing a word like “cyber-squatter” around and applying them to people like this. It’s just ridiculous. So they just end up making themselves look silly by saying that. I have a feeling, after the way Eric got blasted for his post, that he won’t be using that term in that way again, unless it is definitely related to trademarks. But you know it is an educational process and again, mainstream reporters have a hard time getting their arms around it but you know, its going to be a step-by-step process but I think we’ll get there.
Monte: Yeah, yeah, definitely. Well, the good news is more and more advertising dollars are going towards online advertising and you’re so right about the trend moving towards online radio, or Internet radio, and that’s one of the reasons why the folks at WebMasterRadio.fm have done such a good job. They’ve really taken advantage of that movement and put on some really great content shows, not only with Domain Masters but you know, shows that have the top experts in the entire industry, both for search engine optimization and online marketing and affiliate conversion and of course, domain success and all these things that help someone be successful when they bring their business online. These types of shows, these types of networks, these types of online media are so valuable because you can take everywhere you go; you know, you can pod . . . you can download it to your iPod, to your MP3 player, listen to it on the airplane, plug it into your car stereo, you know, its jus very cool, you know; its just the beginning.
Ron: And they have an instant global reach, which is really what blows me away, ‘cause I came up in radio and the first radio station I worked at when I was a teenager was a little 500 watt AM station in a little town in Ohio; when you drove out of the parking lot, you lost the signal [laughs]; you know, their power when out when you went out about a 100 yards. And now, with the Internet, any radio operation can reach a global audience, so when they put out a quality product, it’s a much more powerful and valuable franchise to me than any local radio station operation is; they’re in the right place at the right time and its only going to become more and more important.
Monte: Yeah, definitely. Hey, lets take a little bit . . . lets take a commercial break and lets come on and lets cover a couple of the big stories and the big news . . . what I’d really like is your perspective on the demand media field, with [inaudible] and see what you know about that and then we’ll talk about some of the domain sales before we wrap up.
Ron: Okay, sounds good.
Monte: Okay, stay tuned. We’re going to take a commercial break, be right back on with Ron Jackson from DNJournal.
[Commercials]
Monte: Master of my domain. Ron, you’re the master of your domain, aren’t you?
Ron: Well, more or less. I don’t know, my wife has a lot of say in things, though. [laughs]
Monte: [laughs] I know; they certainly are co-masters, I guess, of our domains. [laughs]
Ron: [laughs]
Monte: So lets talk a little bit about some other news that we didn’t really get to cover in the past. The demand media movement onto our space and the folks behind that; that was introduced or just a word was let out. And of course a couple of the guys attended the last TRAFFIC conference in Vegas. What’s the . . . what’s the latest on them and have you heard any news, rumblings about their actions or acquisitions or what’s going on with them?
Ron: Well, I haven’t heard a lot more since the initial deal. And what we’re talking about, of course, is Richard Rosenblat, who was one of the founders of MySpace.com; probably the most successful social networking site. Bought eNom and got some other . . . one of the big registrars and put together tens of millions of dollars of investment dollars to buy domain assets. To me, the message I took from that is here’s a guy who made all of that money from selling MySpace so he’s sitting on this pile of cash. So, he’s sitting there and thinking, what am I going to do with this? And the fact that he decided to put, you know, a huge chunk of that money into the domain space tells you something. I mean, there’s a lot of places you can invest your money and this is a pretty knowledgeable guy and he didn’t see anywhere that he thought was better to put that kind of money than into the domain space. So, you know, they came in and got the registrar and I’m sure they’ve got other . . . you know, talking to people about buying portfolios. They’re a little bit late into the game. You’ve got Internet readout that’s just going wild with all the money that they have behind them. [inaudible] . . .
Monte: . . . They took out Napster, by the way, for those of you who knew what Napster was. But they took out Napster; it was private information at the conference but later came out. We kind of knew about it since all their names were here but . . .
Ron: And you’ve got Internet Real Estate, which sounds like IREIT but that’s a different group in Boston – Andrew Miller and Mike Zapolin’s group also, which got a head start. But, I mean, Rosenblat’s group’s really well-financed and they bring a lot more money into this space and its all part of this ongoing consolidation that we’re seeing now, where these major players are in a rush to roll it up, because there’ll only be only so many survivors at the end. So its going to be really interesting to play out but I haven’t heard a lot since they did the original deal other than they are here now, so I haven’t heard much about what they’re doing. But there’s no doubt that they’re going to be a really important player.
Monte: Yeah, definitely. Well, who else is on the news front?
Ron: Well, in news . . . I think probably the biggest news in the past week that we were following was the hearing on . . . the congressional hearing and unto the ICANN-Verisign agreement, which took . . .
Monte: You know what’s so ironic? Is Champ Mitchell, who’s the CEO of Verisign, who still owns, they still have a 15% stake in that registrar, standing up against the agreement. Its very bizarre to me.
Ron: I took the exact same thing from that one, when I was reading about the testimony that was given that day that Network Solutions CEO kind of turned on Verisign there. And really, in very strong language. We had exact quotes and the lowdown – something to do about being unconscionable or something like that; but I mean, he really blasted them. And like you said, they . . . up until 2003, Verisign owned them. But that’s just one example of the depth of feeling against approval of that agreement. Because everyone that holds domain names, its going to cost them a ton of money in the years ahead. And its really not right. I mean, it’s a monopoly situation. If everyone’s agreed that if its put out for bids, there are other registries that have said they’ll operate it at lower cost. So why should you have to accept higher costs? And these are not like fly-by-night registries; these are people, you know, with proven technology . . .
Monte: Yeah, like Affiliates . . . I think Affiliates is just doing a kick-ass job of . . .
Ron: Yeah.
Monte: . . . of running a registry, by the way. They’re offering good discounts to their registrars (which are us) and we’re offering those discounts to our customers. They’re finding a way to manage all the new extensions that are coming out; they’re taking care of the .MOBE launch and doing just a great job. That registry has definitely proven itself as being a solid foundation and a good example – I’d love to see them take over .COM or .NET or both or whatever in the future.
Ron: Of course, they already run .ORG and they run .INFO; they’re great technologically, so, you know, this is America. Open the thing up to competition. That’s how, you know, consumers benefit from it. But I see no merit to this thing getting approved at all. I’m glad that Congress is looking into it. And now the task is going to be to convince the Department of Justice to not approve it. Right now, the way the Congressional Hearing ended was that the congressmen (there was a panel) will take written submissions with, you know, comment from other people and of course, you’ve got the Verisign side trying to stack that, you know, with their people, but fortunately, there’s an organization, CFIT, at CFIT.info that’s working on the other side, so there’s, you know, a glimmer of hope, you know, that that thing can be stopped.
Monte: Yeah, yeah, definitely. We’ve sent in our letters to our congressmen and our house representatives as well against the price hikes; and those things do work. I used to think that they never read the documents, but the lobbyists who’re in charge of collating all these documents for us have all assured us that they are on top of and they’re openly speaking out against what they’re trying to do.
Ron: Right. I guess the other thing news-wise that we haven’t talked about are some of the most recent sales – and there have been some significant ones. Just this week, the top sale that was reported was Multi.com at $250,000 and that ranks among the 12 biggest sales of the year. And the second biggest Geo domain this year, Macau.com, was the larges at $550,000. And in addition to that sale, we saw the largest .INFO sale ever this week, which was Casino.com . . .
Monte: Casino.info, you mean.
Ron: Isn’t that a perfect example of [inaudible] . . .
Monte: [inaudible] . . . a natural slip and you’re already saying .COM again.
Ron: And it’s, also, you know, people tied that in. .COM, you know, has this fantastical lead. But, you know, at the same time (and we’ve talked about this before) the very success of .Com is bleeding over and responsible for a lot of the success of these new extensions. And it’s the reason why you can see new records in .INFO, because the .COMs are so sought after and it becomes such a premium brand that it has priced a lot of the smaller players out, so by necessity they’re turning to some of these options. Casino.com, ah, .info, rather (I did it again) sold this week for $35,127 and interestingly, that’s the second time that name sold, almost exactly 2 years ago at the end of May in 2004, it had sold for $20,899 so you had a 14 . . . the owner at that time had a $14,000 increase in his investment in 2 years – about a 60% increase, which isn’t a bad ROI.
Monte: No, not at all; not at all.
Ron: Another thing that we saw this week is how the .EU is doing. A lot of people wondered if there were be an aftermarket for that and we have 16 names on our country code chart this week and 5 of those were .EUs, which was more than anything else except .DE, which also had 5. And they’re decent prices. I mean, this thing just came out of the gate and here it is already selling out three- and four-thousand dollar sales all over the place. And we’re seeing that in country codes, new extensions. I’m amazed . . . of course, I look at the wholesale pricing more, because I’m out there still trying to buy keyword names and its amazing to see where the wholesale prices have gone, even in the new TLDs just in the past year. One year ago in .US, there were hundreds of three letter combinations that dropped and really premium ones. And people scooped up, scooped those up with like desk top scripts and even hand registrations at $7 each. Now here we are one year later and I would say the average on those is $150; better combinations will go $200 and $300. And a lot of these are things people picked up. I mean, we’re talking small dollars in .COM terms but if you’re looking at ROI dollars, you know, you have about 30 times your investment in a 12 month period, it’s just . . .
Monte: Oh, its just huge. And I remind people that cook to start looking at these investments, at these domain purchases the same as they look at other investments. And look at your current investments with real estate and CDs for banks and the stock market (which is just, you know, a roller coaster right now) and if you can get a 20% return on your domain purchases. And it seems kind of silly if you buy a domain name for $10 and you can turn around and sell it for $12 and that’s a 20% return and how small that is – people don’t look at that in the same way for some reason but that’s really the way that people need to look at those returns. If you can turnaround and generate 20 bucks a year on your investment on your investment or $5 a year, in addition to what it costs you to register it, those are good buys. That means you paid for your registration for the year and made 5 bucks – you’ve made 50% on your money.
Ron: Oh, there’s no doubt about it. And I’ve seen a big shift in opinion. We’re seeing some really major players that are coming out and saying that the return on investment can be better in some of the new TLDs, perhaps, than .Com; and that’s not taking anything away at all from .Com – its just saying that .Com has gotten really expensive, so its harder to find a good buy there. Mark Ostrovsky, who was president at IREIT, at the podium in Seattle, said he thought the ROI on the same dollar amount in .INFO would return more than the same dollar amount invested in .COM. For example, if you’ve got $5,000, he thinks you would make more by buying keywords in .Info with your $5,000 than trying to put $5,000 in .Com, because what is $5,000 going to buy you in the .Com space. So it is one of those areas where the little guy can still play and make himself a really nice return on his investment.
Monte: Right, right. And I agree with that and there’s a couple reasons for that. If you were looking at a market where the buyers and sellers were stagnant, I probably wouldn’t agree as much. But because so many people are getting online every week and there’s a need to new identities and new addresses every single day and the demand . . . or the supply is decreasing in the .Com, .Net, .Org space, its only natural that these other extensions will take shape and increase in value. And one extension that I’m particularly excited about (which not a lot of people still are, you know, on board with or don’t understand it) is .Mobe – I think its very cool, you know, the way they’re positioning it and I think it is going to be very successful and we’re a very big supporter of it and I think that application is just going to dominate online or the handheld phone and PDA market for looking and viewing websites.
Ron: And, of course, that’s a gigantic space, because there are many, many more handheld devices, particularly when you count in cell phones, than there are computers.
Monte: I think its . . . what is the ratio – its either 4 or 8.
Ron: I was going to say 4; was the first number that popped through my mind.
Monte: Yeah, for every computer there’s 4 handheld devices that people own.
Ron: Right.
Monte: Right, right.
Ron: And it looks like it may follow a parallel to .EU. I just noticed in one of the forums the first grumblings about trademarks being applied for to claim generic names in .MOBE and that shows you there’s a lot of speculator interest already at this point in time. Of course, there were a lot of people that felt that happened to the nth degree in .EU that a lot of these names were taken that shouldn’t have been. And whether, however you feel about that, it shows, you know, there’s a lot of people who believe that they’re going to be worth having. They’re going to an awful lot of trouble to try to position themselves to try to get a hold of their names.
Monte: Yeah, definitely. And we’re in Phase II of trademark filing for .Mobe. We’re having a pretty successful run at it. We have, you know, thousands of names that have been registered already through our online application and we’re going to be opening up for pre-registration of land rush in just about a week or two. So people can start registering . . . or pre-registering their chance to get a .Mobe name at land rush, which will be August 19th I believe. But we’re going to open it up early because we do see the demand piping up.
Ron: It makes a lot of sense and its something else . . . it relates to something else I saw today. Newspapers are desperate to find someway to keep their readers and I read that some of them are rolling out a new handheld device to read the newspaper on. This was actually attempted with e-books and it failed because the device was too expensive and there wasn’t enough content to download. But the commentators that were writing about this new thing that the newspapers were going to do felt that it was doomed to fail because they felt everything was going to converge around the cell phone. People are not gonna want to drag around three or four different devices. So, they’re going to want that cell phone, they can read their paper on it, surf the Internet, make their calls, take photographs. So having one extension that is married to that handheld device is, you know, just great common sense.
Monte: Yeah, definitely. What else on the domain sales front?
Ron: Well, we had . . . I guess the thing that’s striking me more than anything is here we are in the second week of June – we’re supposed to be in the summer doldrums, and it’s just not happening. It didn’t happen last summer either. I mean, things are just booming to the extent that even with so many people gone off on vacations now and kids out of school, the buyers are still in the market every week. We had a lot of really healthy sales this week. You guys had the second and third strongest sales on our charts. The AcquirePlacemantles.com at $76,000; PasadenaRealEstate some people commented on – they thought $44,000 was a lot of money for that. I don’t think it is, by the way; Pasadena, California is a very, very upscale area in Los Angeles. That won’t even buy you a screened porch on one house in Pasadena . . .
Monte: Yep, yep. That actually is . . . that’s where Idea Lab is based in Pasadena. And of course, Rose Bowl.
Ron: Yeah. Research Marketing is in Pasadena. So, I didn’t see anything wrong with that deal at all. I though one of the best buys of the week, at Sedo, was Tie.com – T-i-e.com. I mean, there’s a great product, easy to ship at low cost and look how every man in America who has to wear . . . a lot of domainers don’t have to [laughs] ‘cause we can work at home, but look at how many men in America have to buy ties and go to work – that domain went for $30,000. I thought that was a really great deal.
Monte: Well, that’s a . . . yeah, that’s definitely . . .
Ron: And we’re talking about a three-letter domain. That’s a real word. Those are really rare. They’re so . . . even though the prices have gone really high and continue to escalate every year, if you really hunt around, you’ll also occasionally, you know, you’ll see some bargains on the list here and there, too.
Monte: Yeah. We had, of course, like every week we can’t report a lot of the sales we make but we had a particularly high week of portfolios that went . . . which I wasn’t able to report but what’s in the process which I’ll be able to report next week is a big .CC portfolio purchase.
Ron: That’s interesting.
Monte: Yeah. And that surprised me. But they’re pretty good .CC extensions. They’re like two-letter .CC names. So that was a pretty interesting purchase and for a decent amount of money. And also looking at all kinds of creative financing transactions that are going on and sold another large adult portfolio so lots of things are happening in the space still that are making us . . . making the industry rock, that’s for sure.
Ron: Uh huh. I don’t even say this or not – but are these portfolio sales that you’re making being made to these companies that are well financed and have a lot to invest or are those individuals that are buying whole portfolios.
Monte: Uhm, right now they’re individuals that are buying whole portfolios. But I’ve seen some interesting things going on with . . . there’s some extra middlemen getting involved with a lot of the negotiations and processing of these transactions; kind of [inaudible] of buyers and sellers, besides us; and they’re getting paid, instead of in cash, they’re taking part of the domain inventory. So they’re actually valuing the domain inventory over cash in some cases when they’re doing the transactions, which is also a very good sign for our industry because when you’re taking an investment, like taking stock in the market that you’re selling stuff in for future value, and I’m starting to see a lot of creative deals that way, where people are taking a piece of the inventory or taking a piece of the pie in a domain-ownership transaction. Like this . . . one of the portfolio sales that we just did was a 56 three-letter domain portfolio deal. The deal was that the guy that put the deal together, between us and the buyer and seller, took 5 of the 56 names. Pretty interesting.
Ron: Yeah, that’s very smart, I think.
Monte: Yep, yep. Definitely.
Ron: I think another . . . I don’t know if I should insert here because you’re watching the clock there, so let me . . . you let us know . . .
Monte: Well, I just wanted to . . . well, you know, a good wrap up of the domain sales. We’re going to go a little bit longer but there’s been a lot of questions . . . well, first of all, you have the pleasure of reporting on and accurately covering on two very successful live domain auctions thus far and of course we are going to be having our third live domain auction at TRAFFIC East and we’re pretty pumped up about it. And, we’re also going to be doing a silent auction at TRAFFIC East at the same time, so there’s going to be a lot of domain names that are going to be definitely trading. We sold $2.2 - $2.1 million of domain names in the live auction at TRAFFIC West. There was 58 transactions completed out of 162 names up for bid after it was finally cut down.
Ron: People can see how successful that was because our charts were dominated with those names for about 3 or 4 weeks, as they closed; you know, you had your high bids in and then depending on the financial structure and paperwork that had to be done, maybe 6 – 8 of them would complete each week and they were phenomenal names that because they were dispersed over a month’s time, it might have lost some of the impact in realizing those all sold in one place in about 2 – 3 hours . .
Monte: Yeah, yeah. [inaudible] . . .
Ron: [inaudible] that was awesome too . . .
Monte: That was the great thing is that, you know, that trading of $2.1 million of domain names transferred hands basically, you know, did a deal in 3 hours, you know, with a live auctioneer and for the first time (and I don’t claim this for the first time in our first auction because it was a limited audience) but I do believe in this last auction that we did for the first time we did have a market sitting in the room. In other words, a market is where values are probably set and fair prices paid for the names that were being sold because there was enough players in the room that could determine a market value and then bid across the room. In the first auction we did, although it was also a market, there was one-third the audience to determine value, so some prices might have high, some prices may have been too low; we don’t know. Then this auction, I’m confident, that proper market prices were paid for the majority if not all the names that actually went up for sale.
Ron: Yeah, I think that’s true. And it was such an exciting event. I was sitting in the front row and my wife was with me; we knew this was going to run about 3 hours and she said, you know, I’m going to leave in about 15 or 20 minutes – I just want to get a . . . just kind of see what this is all about. And, you know, she’s not a domain person but you were there live in person as these things were being sold; she ended staying the whole 3 hours and just like was really into it watching the action. I know there was some criticism . . .
Monte: Well, you didn’t notice, Ron, but I had her handcuffed to the chair down below.
Ron: Ahhh, that explains it. [laughs]
Monte: [laughs]
Ron: I know you had some feedback . . .
Monte: I used your handcuffs though. [laughs]
Ron: [laughs] Oh, let’s not go there. [laughs]
Monte: [laughs] I’m just kiddin’ ya’.
Ron: You know, some people listened to that on WebMasterRadio.fm and they thought that it sounded disorganized or this or that but if you were there live and seeing the interplay going on between bidders and the auctioneers, its really a pretty amazing experience. There really wasn’t any downtime and what sounded disorganized over the radio wasn’t nearly that kind of a problem. I mean, obviously, there were glitches in that long thing as you go along but I thought it went really well and has me excited about seeing how this is going to go in October. We fielded a ton of inquiries too that I forwarded on to you of people who heard about it, read about it, maybe heard you live or whatever, and want to be involved in October, so I think you’re going to have a phenomenal event.
Monte: Oh, yeah; we’re building . . . well, getting back to the whole radio broadcast. I listened to the re-broadcast of that – I thought it was fine. Being there and I coordinated the whole entire event and obviously stood up there and made sure things flowed along and of course we did have a couple things, we had a couple mistakes you always do and some of those . . . when you’re taking 5,000 names and weeding them down to 150 or 160 to auction and then trying to get the most value for the buyers and the fairest . . . most value for the sellers and best deals for the buyers all at the same time, you do run into some situations where things don’t go all the way smooth. But I thought it went fine and we learned a lot again from the second event which we applied to the third event which is going to be . . . you know, one of the things that we did in the first event was we sent out a list . . . you know the very first event, there was a about 900 names submitted in total and there were some names weeded out of there that couldn’t be put up for whatever reason and then people were given stickers and they were asked to put their stickers based off of the popularity of those domain names and then those were the domain names that ended up in the auction that day. That list got huge, obviously, for the next time, because it was so popular the first time around. So then we couldn’t do stickers, we had to go . . . everybody submitted their names online and then people had to download the list online to determine what names they were interested in and submit those to me via email and then that was the list that ended up at auction. The piece that was missing was what price range were those domain names in. Even though people expressed interest, some names were in the millions and some names were in the hundreds. And so people knew a domain name like Auction.com was going to sell for $8 million, you know and they expressed interest, then we could expect that someone was going to be bidding on a name and probably a capable and able buyer at that particular price. We didn’t do that. We didn’t let people know what the reserves were prior to the auction. So this time around what we’re going to do is we’re going to put names in price categories by reserve price. So we’re not going to tell people what the reserve price is, because that defeats the purpose of having an auction and having the market decide what the values are going to be ultimately but we’ll be able to put names in for one to ten thousand dollars in the reserves and names between $10,000 and $20,000; and $50,000 and $100,000 and so on and so forth and we’ll put names in a category that are over a million. So that way if somebody’s interested in a name over a million dollars, they’ll express that interest and we’ll bring that name to auction and we’ll know that there’s at least one or two interested parties at that level and they’ll be able to bid and purchase at that level; instead of being laughed at when a name like Auction.com, which is worth every bit of $8 million, comes up for bid but everybody laughing because the price is so high, no one’s going to put out $8 million at an auction like that without knowing . . .
Ron: Right.
Monte: That kind of stuff won’t happen again. We’ll know right away who’s interested at what level and those name will be up for auction and then there won’t be any surprises and laughs when, you know, the name is offered at an opening bid for a certain price and then sells for much higher.
Ron: I want . . . instead of laughs you’re going to get, like, gasps when something sells, because you’re going to have the people in there who are qualified and already know the price, so you’ll probably see some very stunning sales at that event.
Monte: Oh, yeah, definitely. We’re . . . you know, we hit $2.1 million; our goal was to go to 5 or more at this event and it’s going to continuously increase and I did meet with Howard and Rick and we’re going to do three to four of these events a year and its going to help the market immensely as these things establish and increase in value and sell and transact at these prices; that’s what’s going to invite the outside investment world into our industry and then just make it that much stronger and then there’ll be platforms and new businesses built off of this type of, uhm, you know, these domain names that are being purchased that were never conceived before. And so that’s the real purpose of doing these, is that when investment dollars in the millions of dollars comes into the market in a single day over a three to four hour period, that’s good for our business. For everybody that’s in our business.
Ron: Your talking about . . . and these values are, you know, like art works are drawing at Christy’s and Sotheby’s, so now there’s no reason at all that there shouldn’t be a domain world counterpart to that. Our assets are already being valued in those kinds of ranges.
Monte: Yeah, yeah, definitely. We’re going to have an online platform where people can submit their names for sale and where people can vote on what names they want to buy at and so its going to be kind of cool. Its all going to flow online; so we’re building that platform as I’m talking. We have it all speced out and now I’m going to be starting the development and we’ll have it ready by auction day.
Ron: I hear an early buzz that in addition to the auction for the TRAFFIC show in October that Rick is talking about a primary theme being kind of a rebuttal to some of the themes that we saw, for example, at TRAFFIC in Las Vegas, where you had a lot of the financial people trying to convince portfolio owners that this is the right time to sell, that values aren’t going to get higher, that they should accept, you know, like five times earnings or whatever and he’s going to flip that around and challenge that notion, which should lead to some interesting fireworks, so I’m really looking forward to October. The auction’s going to be awesome; it sounds to me like the stage is being set for, you know, some real drama to unfold there.
Monte: Oh, yeah, definitely, and we’re also going to help the conference get some of the top online ad agencies onto the campus and onto the show as well. We’re right now, I’m personally involved in (and my partner, Eric and some of our contacts) are going to go out and get probably several of the Top 10 ad agencies in the entire world at that conference so they can get an idea of what’s going on, how valuable online domain navigation traffic is worth to them and why they should be attending and participating and even giving their input on panels and educating us on what they’re looking for, for the future.
Ron: Well, I’m glad to hear that because, you know, as TRAFFIC West was concluding, I was at a board meeting where they were discussing upcoming shows and there was some sentiment that perhaps (even though it was already set) that the Miami show at the Hollywood Diplomat maybe should be moved back and New York moved into that slot to reach Madison Avenue and I was thinking, why would you need to do that? Would these people rather go a couple blocks down or would they like to have an excuse to come down to South Florida in . . . near the end of October. I didn’t really see where that would be a big problem. . . .
Monte: Yeah, that’s what we decided to do, is to bring them down. You know, to have them . . . to extend invitations and have them come down and we know that they will come. Because its now a platform in which a lot of their advertisers are making money and getting customers to convert, so why not have them be there face-to-face.
Ron: Right, absolutely. They will love it; its going to be the right atmosphere to, you know, to present the domain story to them in the right kind of atmosphere. To me that makes perfect sense.
Monte: Okay, great. Well, Ron, its been a real pleasure having you on. Another great show with you and great to have you on as the only guest ‘cause we had a lot of good things to talk about with what’s going on in our industry; what’s going on with online traditional media moving onto online media; the new extensions; the new sales. And everything else that’s gone on and its always great to have you.
Ron: Well, I really appreciate the opportunity to be on again; its always fun. And looking forward to seeing you in person as soon as possible.
Monte: Yep, we’ll see you in Miami. Oh, by the way, the Affiliate Summit is coming up; we’re going to be attending that show. That is, I believe, the first week in July. I’ll post that in forum. Those of you that are in the affiliate business that have all or have any affiliate websites, you should be at the affiliate summit. We’ll be there; we’re the only registrar that will be there. And there’s a lot of people that are learning how to make a lot of money with their affiliate business at the Affiliate Summit. So everybody should be at that show and be in attendance, that’s for sure.
Ron, thanks again for being on this week, and have a great evening.
Ron: Thank you, appreciate it.
Monte: Alright, folks. That wraps up another good week of Domain Masters. Remember, archives are at Moniker.com and WebMasterRadio.fm. Also please make sure you catch the other shows on the WebMasterRadio.fm Network; there’s some great shows. There’s actually a couple new shows that have come onboard. Please go and listen to them. They’re great and you’ll learn a lot of stuff for your business. Please send suggestions to me, Monte@moniker.com; anything you want to listen to on our next and future shows. I’m always looking for good content and good guests to have on, both domainers and people in our industry, people we can learn from and that’s what’s important about having these shows, so that everyone of you gets to learn about what makes us all successful at this business and everybody does it well.
With that, be the master of your domain and I am master of my domain, and I’ll see you next week. Take care.
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