eNom Bought by Start-Up Led by Former MySpace CEO

[companyone]

A start-up headed by former MySpace.com chairman Richard Rosenblatt has bought domain registrar eNom, Inc., and is preparing a major push into domain-based advertising and commerce. Demand Media is backed by $120 million in funding from Wall Street investors and venture capital firms, and has been quietly acquiring a portfolio of more than 150,000 domains. Terms of the sale were not announced, as both firms are privately held.

The deal is likely to heighten investment interest in the domain name sector, which has been boosted by a trend trifecta - a surge in new domain registration, rising prices for resold domains and growing revenue from domain-based advertising.


eNom is the third-largest domain registrar with more than 6.4 million names under management. What is less widely known is that eNom is also the world's fifth-largest web hosting provider as measured by active sites - hostnames that contain content and thus are likely to be developed web sites generating hosting revenue each month. eNom hosts nearly 750,000 active sites, offering shared hosting plans priced at $7.80 a month.

The deal demonstrates that Wall Street and major corporation are watching the domain business closely in search of opportunities. "Media companies and advertising networks are now recognizing the central role a domain name plays in bringing users to Internet properties," said Paul Stahura, eNom founder and CEO, who will become president and COO of Demand Media.

Rosenblatt was previously CEO of Intermix Media, which last year sold MySpace.com to Rupert Murdoch's News Corp. for more than $650 million. He was also the founding investor and vice-chairman of Great Domains, as well as founder and CEO of iMALL, Inc, a publicly traded company which was sold to Excite@Home in 1999.

"There are interesting components of the domain industry that when properly put together can provide a very compelling platform for the next generation of media companies," said Rosenblatt. "Direct navigation traffic, combined with specific proprietary content and innovative marketing will unlock an entirely new realm of Internet media. We look forward to working closely with the domain industry as we build Demand Media into a global media enterprise."

That includes "selectively acquiring portfolios of premium domains that can be developed into niche media properties," the company said. Demand Media will focus much of its efforts on developing domains, adding relevant content rather than displaying a full page of contextual text ads, as is the common practice on domain parking services. To control costs, the company will rely on user-generated content, and has acquired eHow Inc., whiche create niche content through how-to sites and wikis that receive millions of unique visitors per month.

"For eNom's valued network of resellers and retail customers, the acquisition represents no changes to existing relationships," assured Stahura. "We will continue to offer domain name and related services under the eNom brand, which is one of the strongest in the domain-name business. eNom's resellers can be confident that the company will continue to build and enhance its infrastructure, enabling eNom to offer an even more robust suite of services." eNom said the deal could offer "new online advertising opportunities for eNom's clients."

http://news.netcraft.com/archives/2006/05/02/enom_bought_by_startup_led_by_former_myspace_ceo.html

 

[sasquatch]

What a stupid third-grade name for such an ambitious company. When you think that they could buy or come up with any name in this world, but they chose a name that sounds like it was made up by some pimply geek in 1991.

It's horrible when purpoted marketers can't even market themselves.

 

[LeeRyder]

what are you talking about?

 

[typeins]

eNom?.. Who cares what their name is... I'd much rather deal with a company based on their merit than on whether or not you think their name is worthy.. Or if you are referring to Demand Media... Well i wouldnt care what the company was called if i had a billion dollars to write out checks for domains with

 

[QuantumBeam]

interesting read.........

 

[pelican]

never ever thought that enom would be interested to sell off their business.... the amount must be very attractive....

 

[P10n33R]

Awesome, thanks for the good read. Will be following this story.

 

[moe8585]

Here is a related article:

THE WEB SITE www.flashgames.com has no staff, spends no money on marketing and despite its name, offers no games. All it offers is a list of links to other game sites. Yet it earns revenue of more than $150,000 a year selling online ads.
Flashgames.com is just one of thousands of Web sites that are cashing in on the online advertising boom in an unusual way -- by piggybacking on the ad-sales efforts of giant search engines Google Inc. and Yahoo Inc.

These sites' ability to make lots of money for little investment is now attracting attention from big players. A group of investors led by former MySpace.com chairman Richard Rosenblatt is expected to announce today that it has raised $120 million from investors to build a new company, Demand Media Inc., centered on generic domain names like these. The venture has already acquired 150,000 domain names -- including flashgames.com -- and plans to aggressively acquire more. But, conscious of the limitations of these bare-bones sites, it plans to add some low-cost content in hopes of making the business even stronger.

"We will be taking billboards and turning them into content Web sites," says Mr. Rosenblatt, who ran MySpace.com's parent company Intermix Media Inc. and negotiated its sale to News Corp. for more than $650 million last year. Mr. Rosenblatt, a serial Internet entrepreneur, is co-founding Demand Media with Shawn Colo, a principal at Spectrum Equity Investors. His backers include Spectrum, Oak Investment Partners and Generation Partners.

Sites like flashgames.com used to be considered "cybersquatting," a longstanding Internet tactic where entrepreneurs register domain names either associated with a particular subject or a company and then try to sell the name for a quick profit. These new-generation sites go a little further, reaping ad revenue. Demand Media says it will not buy trademarked domain names.

Owned until recently by two Australian entrepreneurs, flashgames.com draws people -- about 240,000 a month -- looking for a Web-based game that uses flash- animation technology. The links that the would-be gamers find on flashgames.com are actually paid ads placed by Google or Yahoo, both of which sprinkle ad links all over the Web, paying the host sites a cut of the revenue they receive when anyone clicks on one of their links. So when someone finds flashgames.com, and then clicks on a link to another games site, flashgames.com gets paid.

Analysts estimate these types of site, known as "domain parking," generate about 5% to 10% of search-engine revenue, putting the industry's annual revenue at about $600 million. "The profit margins are extraordinary," says RBC Capital Markets analyst Jordan Rohan. He predicts industry revenue could double to $1.2 billion within three years.

Still, given the sites' meager offerings, some in the industry worry that these domains may not have staying power. Even finding one of these sites is a matter of luck. Web surfers have to type its full name into the address line of a Web browser, although some browsers automatically add a dot-com to the end of something they type. But most parked domains don't generate enough traffic to show up at the top of search-engine rankings.

"This is grandma type of navigation," says Matt Bentley, chief strategy officer of Sedo.com LLC, a domain-name parking business. "It's probably not currently being done by a lot of sophisticated people."

In line with Mr. Rosenblatt's plans to add some cheap content to his sites to give visitors a reason to come back, Demand Media has already purchased San Francisco-based eHow Inc., which provides niche content, and will buy more content companies. But he isn't planning to invest heavily in content -- Mr. Rosenblatt says his goal is to have "immaterial"content costs. Instead he plans to rely heavily on content contributed by members of the public, which could range from reviews and blogs to photos. Such "user-generated content" powered the growth of Web sites such as MySpace.com, now one of the most popular destinations on the Internet.

To provide the technology for offering upgraded content, Demand has also purchased eNom Inc., a large domain name registrar based in Bellevue, Wash. With better content, Mr. Rosenblatt says, the Web sites will appear higher in search- engine listings and thus attract more visitors. That in turn, will hopefully translate into more clicks on the links -- and more revenue.

"These domain names are really the raw land of the Internet," says Fred Harman, managing director of Oak Investment Partners, one of Mr. Rosenblatt's backers. "Richard is a real-estate developer, taking the raw land and developing it . . . We're trying to liberate these domains from the cybersquatters and actually put them to good use."

Demand Media isn't the only company trying to turn domains into a meaningful media business. Publicly traded Marchex Inc., which owns 200,000 site names including Debts.com and CollegeGuide.com, is in the process of upgrading its portfolio of Web sites to include more content.

Last year, Marchex added weather forecasts, maps and demographic information to 52 Web sites that it owns with ZIP code names, such as 29445.com -- the ZIP code for Goose Creek, S.C. Marchex said traffic to the enhanced Web sites more than doubled during the five-month period ending Jan. 31, driven in part by the fact that better content increased the site's rankings among search engine results.

Other big players are also realizing the need to bolster their domain holdings. YesDirect Inc., Waltham, Mass., is pursuing a strategy of adding content to some of its premium sites, such as sportsunlimited.com. And Houston- based Internet REIT Inc., which owns more than 400,000 domain names, has added content and social networking features to some of its premium sites such as africanamericans.com, americanrevolution.com and mutualfunds.com.

​

http://www.mediainfocenter.org/story.asp?story_id=92513467

It looks like this will drive up the prices of domain even farther.