What an industry "shakeout"...

I was involved in the domain biz a little over 2 years ago, and I recently tried to visit some of the sites I used to frequent.
So many of them are gone, it isn't even funny!

For an example, visit dnresources.com and click on some links. I think you'll find a good many (maybe 25%) are no longer valid links.

Oh well.

 

This should not really be surprising, since 80% of all small business fail, and the Internet is full of small businesses - particularly in the domain sales market.

There have been, and will continue to be, many small businesses who have never written a business plan, have no idea what it really means to run a business, and will either string out their Internet business until they are out of college and get a real job, or if they are lucky, until someone else buys up their customers and adds them to their potential revenue stream.

I recently exchanged a number of emails with a domain reseller who want out. He wants $20 a domain for each domain currently registered through him. I told him not a chance, I'll give him $3 a domain. He thought I was insulting him. I was simply quoting him a price that makes economic sense to me and my business plan. There is no guarantee that even 50% of his customers will renew their domains, and certainly not as much of a guarantee for following years. His business model has caused his influx of new customers to dry up. What's the business worth? These customers will most likely be shopping for a new domain management service very soon anyway...

It's not easy. It's not cheap, and it's always changing.

-t

 

[jimb]

also, alot of these people think that they will be successful on these little, individual reseller accounts. Now, some might be, but if you ever want a business to grow, you have to take control of your own business.

Resellers are good to grow on, but its neccessary that you then become independent of the competition. Because in reality, if you resell, you are part of the competition for the other guy

Alot of these people think the web is a "get rich quick" deal, where you can start anything and make millions.


Jim

 

The internet is not a magic wand - it can't make bad business plans generate millions.

Lots of companies sprang up run by people who had no experience or understanding in the field they chose (appraisals spring to mind, so do domain sales/broker sites). It goes without saying that the blind leading the blind leads to failure more times than not.

 

[jimb]

Originally posted by safesys

Lots of companies sprang up run by people who had no experience or understanding in the field they chose (appraisals spring to mind, so do domain sales/broker sites). It goes without saying that the blind leading the blind leads to failure more times than not.

Very true, espcially the places that charge $200.00 for them to guess at a price, that no one will ever pay. I have heard domains that mean nothing, can be given a price tag of $200,000+. Its crazy!


Jim

 

If you look back on the domain speculation business over the past two years, it's an interesting study in econimcs. It's sort of like the stock market, where the only ones who make money on every deal are the brokers, win or lose for the client.

The registrars made money.

The registries made money.

Some of the domain brokers and auction houses made money.

A few speculators made money.

Generally worthless domains piled up in the hands of speculators and did nothing. Many of those are being "snapped" up by the latest batch of domain speculators as the last batch lets them expire and drop.

What will be interesting in the next couple of years to see how many registrars survive in a declining domain speculation market. Margins today are thin, business practices are being scrutinized and the shady ones are being routed out.

It should be fun to be a part of if your balance sheet is healthy and you don't get sucked in by Verisign or other equally evil forces.

-t

 

Originally posted by jimb

I have heard domains that mean nothing, can be given a price tag of $200,000+. Its crazy!

Jim

Yep, "ego stroke appraisals" - designed to make people feel warm and fuzzy about their domains and to go back and have more appraised.

Its almost impossible to appraise domains as the number of buyers, their tastes, their budgets and the availability of other descriptive domains in their industry are just a few of the factors.

Domains that you'd think twice about registering can sell for large sums, and domains you'd think would be big sellers can sit and gather dust.

People should know if the domain is valuable or not based on the traffic it gets naturally and the number of enquiries they get for its sale. Having some inexperienced hope seller or, even worse, someone on afternic - appraise a domain is a real waste of time and effort and can give a very unrealistic picture of what goes on in the real world.