Tuesday, June 24, 2008

Part 2 of 4: Extra Insights From The Author Of "The Domain Game"

In Part 2 of Fractional Domaining Blog's 4-part interview with David Kesmodel, author of "The Domain Game", Kesmodel discusses a wide range of topics, including: how he researched his book and how forthcoming domainers were; what surprised him as he learned more about the domain industry; who a 'typical domainer' is; how media coverage of the domain name industry has evolved; how important Geo Domains have been to the growth of the industry; and whether it's too late and all the great opportunities are gone...

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Neal R. Voron, of Fractional Domaining Blog:

Q6: How did you conduct research for "The Domain Game"? How cooperative and forthcoming were the domainers you contacted?

David Kesmodel:

A6: I interviewed as many people as I could, read a lot of old newspaper articles and books, and dug through UDRP cases, SEC filings, federal lawsuits and other public records. My abiding fear – really the fear of any non-fiction author doing his or her conscious best – was that I would screw something up and be the laughingstock of domainers and the publishing world. I didn’t want to be on Oprah for my big interview on domains and have her tear me apart for failing to understand that, you know, ICANN is based in Marina Del Rey, California, not Bakersfield. Some domainers were really cooperative. Others were, frankly, uncooperative. Others were in the middle. One problem is people are awfully busy these days, so they didn’t have a lot of time to gab with me. Another is, I think, people were terrified about what I would write.

Neal R. Voron, of Fractional Domaining Blog:

Q7: Was there anything that surprised you as you learned more about the domain industry? What and why?

David Kesmodel:

A7: Probably the biggest surprise for me was how critical “the drop” has been not just to people who got into domains in this decade, but for those who got into it in the mid-to-late nineties. It’s pretty amazing to think about how many of the world’s most successful domainers got domains pretty cheaply that someone else had owned and had let go on purpose or by accident. One person’s trash is another’s treasure, right? That’s what happened in this market in many cases. I just think that’s really fascinating and made the book a lot of fun to write. The other surprising thing was how some of these big companies in the space made some poor decisions about what domains to own. One example is iREIT, this powerhouse with financial backing from Perot Investments and Maveron LLC, that owned a bunch of names that resembled corporate trademarks of big companies. They have since cleaned things up, but it was shocking to me at the time.

Neal R. Voron, of Fractional Domaining Blog:

Q8: Based upon your research and experience, who is a typical domainer?

David Kesmodel:

A8: I like this question, because I tried to address it in the book. Domainers all have their own traits, of course. But they often share many of the same qualities. They tend to be independent-minded, have a tolerance for risk (some have an incredibly high level), are skeptical of the corporate world, like to work for themselves, have a strong drive to succeed so they don’t have to work for someone else, are incredibly curious, and – a big thread through my book – they are willing to sacrifice sleep and exist on stuff like very strong coffee. I think John Berryhill, the lawyer who represents many domainers, made a really poignant observation when he said the following. I quoted it in the introduction: “One of the reasons I love this crowd so much is these are all the wrong kind of people. These are not the people who went to the right schools, who had the right social connections.”

Neal R. Voron, of Fractional Domaining Blog:

Q9: David, it is mentioned on your web site that a news release about a $1 million domain sale in 2005 caught your attention. Was the business media unaware of what was happening in the domain name industry prior to then? Have you noticed any difference in the reporting of news about the domain name industry since that time?

David Kesmodel:

A9: Up until that point, few reporters in mainstream media had recognized that a new boom in domain names was under way. Many of us, and I include myself in this, were familiar with the big sales of the 1990s, like Marc Ostrofsky selling business.com for $7.5 million, so we understood that domains could be really lucrative investments. But we weren’t aware that, post-dot-com-bust, paid-search advertising had created this enormous new business opportunity for domain investors. Basically ever since Paul Sloan wrote his groundbreaking piece in Business 2.0 on the market, and I and a few others wrote articles here and there, there has been fairly extensive media coverage. A lot of tech and business reporters get what’s happening. Still, one of the things that drove me to write a book was that I felt many of the articles failed to cover the nuances of this market. Frankly, it’s hard to explain the complexity and intrigue behind this market in a 1,000-word article. And, sadly, you still have newspaper types who think domain investors are all cybersquatters.

Neal R. Voron, of Fractional Domaining Blog:

Q10: How important have Geo Domains been to the growth of the domain name industry?

David Kesmodel:

A10: I think they’ve been really important. Think of it this way: The biggest single financial move in this market that I’m aware of was when Marchex Inc. bought Yun Ye’s slate of about 100,000 names for $164 million. His list included some great geo domains like LasVegasVacations.com. And Marchex has invested in tens of thousands of other geo domains. That’s clearly fed the growth of the industry. Then there are companies like Castello Cities developing all sorts of city-oriented sites. And I argue in my book that locally oriented domains are an important new opportunity as people increasingly go online to find local services and travel information rather than flipping through those hefty phonebooks.

Neal R. Voron, of Fractional Domaining Blog:

Q11: Are all the great opportunities in Internet domain ownership gone? Is it too late for those individuals and businesses who are not in "The Domain Game" yet?

David Kesmodel:

A11: No, it’s not. I could go on and on about this. But here’s a key point. People often say well, aren’t all the good domain names taken? What they don’t realize is there’s a vibrant secondary market for domains, just like real estate and bonds and other securities are sold in secondary markets. So, yes, while you’re not going to go to Go Daddy and register shoes.com for $10, you just might be able to negotiate with the name's owner to purchase a domain you really desire. Or you can go on one of the many domain marketplaces and try to buy a name for what you think is a good price. You need to do your homework to make sure you are getting a good deal, but there are deals out there and an opportunity to either develop the name and reap substantial cash flow or flip it. Whenever a marketplace exists, where goods are bought and sold, there are opportunities for profit. Sure, there will be winners and losers in this, but that’s capitalism. One caveat – domains are not nearly as liquid as other investments. Another point: the World Wide Web is still pretty young – not 20 years old yet. And domain names have only been around since the early 1980s. So a lot of things are going to happen online in the coming years that will affect the value of domains.

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Don't miss Part 3 of our interview on Wednesday when Fractional Domaining Blog and David Kesmodel, author of "The Domain Game", discuss additional topics, including: opportunities for profiting from domain names; how much the comparison of domain names to real estate has impacted the success of domainers; observations and thoughts about Fractional Domaining; and the emergence of new business models like domain exchanges.

Join me all week as Fractional Domaining Blog continues with Parts 3 and 4 of our interview, followed by my personal review of "The Domain Game"!

Thanks!
-- Neal

1 Comments:

At July 22, 2008 at 6:40 AM , Anonymous Paul a domainer said...

Domain parking ist only interesting when the domains have a decent PageRank and the category is something to pay a lot for a click. One of my parked domains, brought me 0.14 per click that is decent but could be more.

 

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