HUGE DOMAINS SNIPING GODADDY CLOSEOUTS

[wwwweb]

So annoying Godaddy hasn't stopped Huge Domains from sniping Godaddy Closeouts with their automated tools, no way a human bidder can win a even closeout.

First they were sniping with the backorders, now you cut that out, and you are letting them snipe via automated tools.

So what do you say @Joe Styler , you want to even the playing field a bit, as your partners are bidding everything in a split second, from $12, to $11, and bidding everything else into the hundreds from a simple bid. I would rather pay a Huge Domains surcharge at checkout.


Huge Domains has an unfair advantage on the auction platform, essentially taxing every user for using it with their automated access advantages given to them thru the house.

 

[werty]

When building a portfolio, I would suggest trying to stay around the $20-40 range if possible.

What I was referring to is if you have a decent number of domains already, and you are just buying domains to replace the domains you sold, then I was saying (as an extreme example) $500 per name is a bargain if you are selling them at $3,500 or more. Ideally the price would be $100 or less.

After doing this for 15 years, I have about 7,000 domains. Some years I went up by 1,500+ names, other years I went up by maybe 100 names.

But now, if I'm selling 70 domains per year, even if it costs me $500 per domain to replace them, it is still only $35k. If my average sales price for the year is $3,500, my revenue before registration fees would be $245k.

Realistically though, my average auction cost has been $172.78 per domain for the last 3 months. But I've been focusing on purchasing what I'd consider Tier 1 & Tier 2 domain names otherwise I'd be spending much less per domain.

So the plan was to increase the prices to NameWorth suggested levels (where I feel it makes sense) and then try to get to $250k in annual sales from the current $130k-$140k. So hopefully I'll get there, or maybe I'll crash and burn because the prices are too high. But the first month is looking great so far and on track.

But based on the recent results, I would only suggest raising prices with a lease-to-own option.

I currently have about 2700 domains and sales rate should be closer to 2%. However, since last year, I decided to stop bidding. Don't consider it profitable so I just buy as cheap as I can and very rarely backorder very few on the top (snap and dropcatch)... And when I do, I will most probably not bid if it turns out to be an auction.

Even with the sample numbers you have posted (calculating sales, renewals, and purchases), one can see it's not as lucrative as it once was. At least when I started out 10 years ago, it was much better. I would go on buying sprees of 2-5 days and refill my inventory easily with many good deals. Now it seems one has to be year round buying (or trying to buy) in order to get some average/mediocre deals.

 

[NameBuyer.com]

Pretty sure you can't buy tier 1 names for less than $20K but I get your point

I just mean Tier 1 domains of $30,000 or more. If I buy InternetFriends//com for $2,550, I wouldn't want to sell for under $30k.

 

[werty]

I just mean Tier 1 domains of $30,000 or more. If I buy InternetFriends//com for $2,550, I'm not going to sell for under $30k.

But in theory 2,550 x 100 = 255k. Just to break even. I know you are saying of buying 1 and including it in your overall portfolio but nothing guarantees you are going to sell that 1 domain. PS not trying to grind your gears. Just saying why I don't see the profits with such purchases. Eventually the odds will play against such purchases.

 

[markfromslo]

Even with the sample numbers you have posted (calculating sales, renewals, and purchases), one can see it's not as lucrative as it once was. At least when I started out 10 years ago, it was much better. I would go on buying sprees of 2-5 days and refill my inventory easily with many good deals. Now it seems one has to be year round buying (or trying to buy) in order to get some average/mediocre deals.

It's definitely not as profitable as it once was, and it will be getting less profitable. These are my top ideas of why:

1. Ad-based websites based upon keywords has been decimated. Just cannot get the sites to come up on page one of Google anymore without extreme difficulty. Also, ad rates are down, and ad blocking are up.
2. Apps are taking the place of many websites, and these do not require domain names, and if they do people just get something like [brandname]app.com or get[brandname]. Domain name so important.
3. It's more accepted now to use another TLD, such at .io or .ai for example, than it used to be. Sure, a major brand wants the .com, but small to medium sized companies don't value it as much.
4. People are not searching Google as much as before for information. They now search Amazon and within social media apps for info.

I have about 2700 domains also. And I am letting more expire than I purchase. I'm trying to not purchase any new names unless something is really appealing. I like the larger cash flow from throttling my new buys. And I most definitely do not want to be left holding thousands of names when sales deteriorate further. Honestly, I think going full on in the domain market is a fool's game now and in the future.

 

[Mister Funsky]

I just mean Tier 1 domains of $30,000 or more. If I buy InternetFriends//com for $2,550, I wouldn't want to sell for under $30k.

That is the key...correct pricing. I see so many names sold at 1/10 or 1/20 of what the sales price should be (talking retail here). If we (investors, flippers, etc.) would hold out for what a domain is worth, we would all benefit.

 

[NameBuyer.com]

But in theory 2,550 x 100 = 255k. Just to break even. I know you are saying of buying 1 and including it in your overall portfolio but nothing guarantees you are going to sell that 1 domain. PS not trying to grind your gears. Just saying why I don't see the profits with such purchases. Eventually the odds will play against such purchases.

This was in reference to the Tier 1 example ($30k or more). The price I have on it is $75k.

But to your point, that is correct. If you want to make a profit in the first year, then you would need to pick names you can 100x the return. If I'm replacing 70 Tier 3 domains I sold with 70 Tier 1 & 2 domains for $1,000 each (at $70k total), I'm still making a profit for the year if I 30x them, and I now have a ton of Tier 1 "whale food".

I'm trying to do a mix of domains I can 30x-100x to see if I can get some big sales. Plus, I'm currently paying $60k per year in renewals, so upping the quality of domains will make the renewal costs less significant as compared to overall sales, especially while upping the prices of my current inventory. Currently I have $60k in renewals with $130k-150k in sales, while I'm pushing to get to $80k in renewals with $250k+ in sales.

I'm just working at trying to get more Tier 1 sales. Will let you know if it works or not. But my $15k sale this month was from a $150 domain that I bought 2-3 years ago so it's looking alright.

Much of my influence came from Mike Mann and Rick this year.

Real Advice
https://twitter.com/DomainKing/status/1156858192711888896



Below is one of the most interesting videos I've seen on valuation. It has to do with Logo values, but the concepts can be applied directly to domain names. If you don't make it through the whole video, you should watch the last 20 seconds starting at 36:02.

 

[NameBuyer.com]

But to your point, that is correct. If you want to make a profit in the first year, then you would need to pick names you can 100x the return.

Just for comparison. Working off that same example, let's calculate the 2nd year in this scenario.

Let's say you sold 1 name for $75k in year 1. Giving you a loss of $180k ($75 -$255k domains purchased).

Now you have 99 domains that cost you $841.50 to renew for the 2nd year.

You purchase 1 domain for $2,550 to get back up to 100 domains.

So your total expenses for year 2 are only $3,391 ($842.50 + $2,550) and you have the same chances to get a $75k sale that you had in year 1. Where year 1 cost you $255k.

So if you can maintain a 1% sell through, your profit would be $71k for years 2, 3, 4 & 5.

 

[werty]

Just for comparison. Working off that same example, let's calculate the 2nd year in this scenario.

Let's say you sold 1 name for $75k in year 1. Giving you a loss of $180k ($75 -$255k domains purchased).

Now you have 99 domains that cost you $841.50 to renew for the 2nd year.

You purchase 1 domain for $2,550 to get back up to 100 domains.

So your total expenses for year 2 are only $3,391 ($842.50 + $2,550) and you have the same chances to get a $75k sale that you had in year 1. Where year 1 cost you $255k.

So if you can maintain a 1% sell through, your profit would be $71k for years 2, 3, 4 & 5.

Yes but no. IMO the higher you go in asking/sales prices, the lower the sell through rate. Also, I have noticed not just with my portfolio but from others as well, chances of selling a domain you hold seem to go down each year. So lets assume I am wrong and it's 1% for the sake of simplicity, the other 99 domains might not have or maintain that same rate imo. Most domains will never sell at all. It could be that of those 100 only 1-2 will ever sell.

So year 2, 180K + $3,391. Still in the red and without having funds to reinvest and grow. I am sure that at 75K you might go a few years without sales. Why not take that 255k and invest in a more liquid market? It's money stuck without liquidity.

And even if it where 1% every year, how many years to turn a profit? Assuming the same annual costs of $3,391 and assuming you get lucky with a 75K sale every year (not counting sales commissions if sold via third party). Small profit after 4 years (below 35k).... That's a very bad yield imo for a 255k risk. You can double that 255K in 4 years in other markets like real estate if timed correctly (not right now lol). But you get the point... Nothing surprising and that's assuming everything goes excellent with the wind on your back which is not realistic imo.

This can put things into better perspective (nothing special with those returns):

 

[markfromslo]

have noticed not just with my portfolio but from others as well, chances of selling a domain you hold seem to go down each year.

For me, my best selling names were purchased 8-12 years ago. I had seen the future and bought up lots of robotics, solar and virtual names. Plus, lots of pronounceable 4-5 char names. But maybe I just got lucky.

 

[wwwweb]

Ah, ok. I didn't realize they were up to that many. So, it should be even easier for them to buy if they have double the inventory.

With the big purchases, they may be filling inventory for their PremiumDomains.com site that is due to launch.

From a supply and demand perspective, the bigger they get, the more weight they'll have on causing prices to rise both in the aftermarket and retail pricing.

i think they could get more value in buying private portfolios, most likely what you guys own, if they are willing to pay $200-$500 for these names in auctions, why not just make a deal with people like you who hold what they are buying in a big batch?

That is why I think there is more to this relationship than we can see. If they are so hungry for names, why are they letting people dropcatch for $59? When they are paying $200 to godaddy? Why not only let the names that have 20 or more bids go to an auction, and keep the rest? They have all the registry connections already, why support their competitors?

The Uniregistry portfolio buy program
did not turn out to well because they are disciplined, but these guys like variety, and I know you aged namepros members have exactly what they are looking for...

If you got $200-$300 for 3000 domain portfolios would you guys sell?

Domaining at these prices is a newbies game. I am seeing names I sold many years ago, drop, and go back into auction and sell for 100x what I paid at the same venue years ago . Some I only got that 1 inquiry, and sold, which I was lucky because my cost basis was low. Now they go for 100x well that buyer needs to get a 3-10x multiple on their buy to sell it also, making it even harder.

I don’t know why these idiot buyers can’t see that they can get better value in talking to large portfolio holders, and buying from them instead of playing the bid up game at godaddy.

I mean 95% of the time, you are chasing a tier 3 name, you know it’s huge names on the other side when it goes from $12 to $200 in 0 to 60.

Namebuyer didn’t hit them hard enough, I make them pay the full $150-$200 if their bot wants it’s that bad.

We all know they can’t make money paying $200 for these names by the thousands

Although they have been gaming godaddy for years, they got a lot of good names when they were buying thousands of backorders, and placing backorders as soon as the auctions closed. Only thing was you could beat them to the punch by placing a backorder 2 seconds before the auction closed, and beat them on the lag. They got tens of thousands of great closeouts like this for under $20. Don’t assume they have always played fair, and even with the sniping today, they are getting a pass as someone is looking the other way not wanting to upset the balance of things.

 

[tonyk2000]

After being away from GD expired auctions for some time, I decided to try again. A few scenarios observed during the test (short time test, may not be significative) are below.

I would not list exact domains, as HugeDomains may be following this thread, no need to give them extra tips. Due to the same reason, most of amounts mentioned are not 100% exact amounts occured. Of course initial $12 bid is still $12, no changes here.

First scenario

*most typical case* - Candidates for closeouts, which were converted to auctions because of one initial $12 bid, placed in the last minutes.

Hugedomains joins as the second bidder almost instantly. In all cases, hugedomains used above-mentioned proxy bid (9-12% of the GD value). Making them pay smth. around this amount (or at least 8%-10% of the GD value) is possible then. I personally did this a few times, and they never disappointed me. They always won. In a couple of cases, I was trying to decide whether to let them have the domain for $100 (their current bid) or to force them to pay $200 (as GD value was $2000+). Even before I decided, somebody else (who looked and smelled like a bot) promptly joined and increased the hugedomains winning bid to $200. Fascinating. It was so elegant. I'd prefer to think that another bot was not looking to win the domain, but tried to make hugedomains pay as much as possible instead. Side effect: mentioned non-hugedomains bot became 2nd highest bidder (placed $195 bid and hugedomains outbid him with $200). I used bold font in the previous phrase, will later explain why.

Extra observation No 1: A half of domains I played with here (and placed the 1st $12 bid) were just... too average. They do have some sense, but normally I would not bother even to handreg such stuff, saying nothing about bidding. Moreover, I selected these "average" domains after my inhouse online+offline listfiltering script excluded them. In other words, to the best of my knowledge, there was nothing in these domains could allow an automated script to mark them as valuable for resale. So, I guess that hugedomains did not mark them for grabbing in closeouts, and, therefore, they joined just because somebody else showed interest. GD value for all domains in question was $1000+, so it is unclear would they autojoin auctions with GD value of 3 figures or less.

Extra observation No 2: Due to an average quality of domains I played with in this part, I did not try to outbid hugedomains. However, as noticed earlier in this thread, hugedomains would frequently stop and the human will win paying ~10-13% of the GD value. If so, hugedomains will become the 2nd highest bidder. Again, I used bold font in the previous phrase, and will later explain why.

Second scenario

*rare case, saw it two times only*

Also - candidates for closeouts, which were converted to auctions because of one initial bid, placed in the last minutes. However, hugedomains joined as the 3rd or 4th bidder. Due to unknown reasons, he used a proxy of just ~5%-6% instead. Which is why, for the purposes of analyzing test results, I categorized this case as rare.

One domain: many more bidders joined, and one of them won paying enduser price after some "war". Hugedomains was outbid very fast, and did not place any extra bids.

Another domain: two bots joined (or humans behaving like bots). I'd call them "BotAlpha" and "BotBeta". It looked like BotAlpha thought that BotBeta is hugedomains, and vice versa. Because each of them tried to let another one pay as much as possible, up to *9-12% of the GD value* which, as we know, is an usual hugedomains proxy. One of them won the auction, possibly inadvertently (as real hugedomains was using ~5%-6% proxy).

Third scenario

*Auctions with high activity (a lot of bidders, a few days actions length)*

Cannot say a lot here. Even if I liked the domain (not all cases), I was not willing to pay even the current highest bid, so I ignored almost all such auctions. I participated in maybe 2 or 3 auctions and placed just 1 bid (where the "current price vs quality" combination was somewhat acceptable). Naturally, I was outbid. Naturally, hugedomains was inside. He was also outbid, but his behavior was very interesting. He joined in last minutes (not a surprise), but, instead of his "normal" proxy (9-12% of the GD value) he applied the following formula: current high bid + $10 ($15, 20) - just to cover 2-4 extra steps. It is also curious that this proxy was in fact ~6% of the GD value, so he knowingly elected to pay less than he is usually ready to. And, he did this with domains of better quality. Why? Hmmm... maybe he joined just to use a chance to become the 2nd highest bidder?

Fourth,... scenario(s)

The test was limited, so there must be other HD-related scenarios I missed.

Closeouts

As expected. Anything valuable is grabbed by bots, most notably hugedomains. GoDaddy changed the closeout appearance time from random to strict (+ 5 sec. or so). How convinient for bots. GD claimed "equal access for all", but the reality is very different. As noticed a few pages before, hugedomains is now shown with bidder id 913933 and earlier it was 91932. Two bots? It would mean 2x chances to grab a closeout. Maybe hugedomains has 100 GD accounts and 100 bots, exclusively for closeouts?

The last but not the least.

What I marked in bold above (a few times). It looks and seems that on many occasions bots (hugedomains and others) are not actively trying to win, but are trying to become 2nd highest bidder instead. What if the price paid (the highest bid) is shared with the second-highest bidder, for selected customers if they are the 2nd? Under NDA. An extra incentive. Nothing illegal here, it also happens offline. Sometimes it is public, somewhat similar occured with ICANN nGTLD strings recently auctioned.

In other words, what if you outbid hugedomains (proxy $200 on 2K appraised domain) with $205, you pay $205 to GoDaddy, and GoDaddy pays revshare to hugedomains because they were the 2nd? It is just a conspiracy theory. No proof so far. And, in any case, it is not a wrongdoing from strictly legal point of view...

 

[wwwweb]

After being away from GD expired auctions for some time, I decided to try again. A few scenarios observed during the test (short time test, may not be significative) are below.

I would not list exact domains, as HugeDomains may be following this thread, no need to give them extra tips. Due to the same reason, most of amounts mentioned are not 100% exact amounts occured. Of course initial $12 bid is still $12, no changes here.

First scenario

*most typical case* - Candidates for closeouts, which were converted to auctions because of one initial $12 bid, placed in the last minutes.

Hugedomains joins as the second bidder almost instantly. In all cases, hugedomains used above-mentioned proxy bid (9-12% of the GD value). Making them pay smth. around this amount (or at least 8%-10% of the GD value) is possible then. I personally did this a few times, and they never disappointed me. They always won. In a couple of cases, I was trying to decide whether to let them have the domain for $100 (their current bid) or to force them to pay $200 (as GD value was $2000+). Even before I decided, somebody else (who looked and smelled like a bot) promptly joined and increased the hugedomains winning bid to $200. Fascinating. It was so elegant. I'd prefer to think that another bot was not looking to win the domain, but tried to make hugedomains pay as much as possible instead. Side effect: mentioned non-hugedomains bot became 2nd highest bidder (placed $195 bid and hugedomains outbid him with $200). I used bold font in the previous phrase, will later explain why.

Extra observation No 1: A half of domains I played with here (and placed the 1st $12 bid) were just... too average. They do have some sense, but normally I would not bother even to handreg such stuff, saying nothing about bidding. Moreover, I selected these "average" domains after my inhouse online+offline listfiltering script excluded them. In other words, to the best of my knowledge, there was nothing in these domains could allow an automated script to mark them as valuable for resale. So, I guess that hugedomains did not mark them for grabbing in closeouts, and, therefore, they joined just because somebody else showed interest. GD value for all domains in question was $1000+, so it is unclear would they autojoin auctions with GD value of 3 figures or less.

Extra observation No 2: Due to an average quality of domains I played with in this part, I did not try to outbid hugedomains. However, as noticed earlier in this thread, hugedomains would frequently stop and the human will win paying ~10-13% of the GD value. If so, hugedomains will become the 2nd highest bidder. Again, I used bold font in the previous phrase, and will later explain why.

Second scenario

*rare case, saw it two times only*

Also - candidates for closeouts, which were converted to auctions because of one initial bid, placed in the last minutes. However, hugedomains joined as the 3rd or 4th bidder. Due to unknown reasons, he used a proxy of just ~5%-6% instead. Which is why, for the purposes of analyzing test results, I categorized this case as rare.

One domain: many more bidders joined, and one of them won paying enduser price after some "war". Hugedomains was outbid very fast, and did not place any extra bids.

Another domain: two bots joined (or humans behaving like bots). I'd call them "BotAlpha" and "BotBeta". It looked like BotAlpha thought that BotBeta is hugedomains, and vice versa. Because each of them tried to let another one pay as much as possible, up to *9-12% of the GD value* which, as we know, is an usual hugedomains proxy. One of them won the auction, possibly inadvertently (as real hugedomains was using ~5%-6% proxy).

Third scenario

*Auctions with high activity (a lot of bidders, a few days actions length)*

Cannot say a lot here. Even if I liked the domain (not all cases), I was not willing to pay even the current highest bid, so I ignored almost all such auctions. I participated in maybe 2 or 3 auctions and placed just 1 bid (where the "current price vs quality" combination was somewhat acceptable). Naturally, I was outbid. Naturally, hugedomains was inside. He was also outbid, but his behavior was very interesting. He joined in last minutes (not a surprise), but, instead of his "normal" proxy (9-12% of the GD value) he applied the following formula: current high bid + $10 ($15, 20) - just to cover 2-4 extra steps. It is also curious that this proxy was in fact ~6% of the GD value, so he knowingly elected to pay less than he is usually ready to. And, he did this with domains of better quality. Why? Hmmm... maybe he joined just to use a chance to become the 2nd highest bidder?

Fourth,... scenario(s)

The test was limited, so there must be other HD-related scenarios I missed.

Closeouts

As expected. Anything valuable is grabbed by bots, most notably hugedomains. GoDaddy changed the closeout appearance time from random to strict (+ 5 sec. or so). How convinient for bots. GD claimed "equal access for all", but the reality is very different. As noticed a few pages before, hugedomains is now shown with bidder id 913933 and earlier it was 91932. Two bots? It would mean 2x chances to grab a closeout. Maybe hugedomains has 100 GD accounts and 100 bots, exclusively for closeouts?

The last but not the least.

What I marked in bold above (a few times). It looks and seems that on many occasions bots (hugedomains and others) are not actively trying to win, but are trying to become 2nd highest bidder instead. What if the price paid (the highest bid) is shared with the second-highest bidder, for selected customers if they are the 2nd? Under NDA. An extra incentive. Nothing illegal here, it also happens offline. Sometimes it is public, somewhat similar occured with ICANN nGTLD strings recently auctioned.

In other words, what if you outbid hugedomains (proxy $200 on 2K appraised domain) with $205, you pay $205 to GoDaddy, and GoDaddy pays revshare to hugedomains because they were the 2nd? It is just a conspiracy theory. No proof so far. And, in any case, it is not a wrongdoing from strictly legal point of view...

Wow, great research, some of the best insight I have seen on this bidding.

You backed up your instincts with facts, but I always got the sense they weren’t exactly trying to win also. Impulsive behaviour in bidding always tends to get the best of most.

Incentives to bid, or compensation for participation in an auction environment I would suspect would be highly illegal.

 

[werty]

i think they could get more value in buying private portfolios, most likely what you guys own, if they are willing to pay $200-$500 for these names in auctions, why not just make a deal with people like you who hold what they are buying in a big batch?

That is why I think there is more to this relationship than we can see. If they are so hungry for names, why are they letting people dropcatch for $59? When they are paying $200 to godaddy? Why not only let the names that have 20 or more bids go to an auction, and keep the rest? They have all the registry connections already, why support their competitors?

The Uniregistry portfolio buy program
did not turn out to well because they are disciplined, but these guys like variety, and I know you aged namepros members have exactly what they are looking for...

If you got $200-$300 for 3000 domain portfolios would you guys sell?

Domaining at these prices is a newbies game. I am seeing names I sold many years ago, drop, and go back into auction and sell for 100x what I paid at the same venue years ago . Some I only got that 1 inquiry, and sold, which I was lucky because my cost basis was low. Now they go for 100x well that buyer needs to get a 3-10x multiple on their buy to sell it also, making it even harder.

I don’t know why these idiot buyers can’t see that they can get better value in talking to large portfolio holders, and buying from them instead of playing the bid up game at godaddy.

I mean 95% of the time, you are chasing a tier 3 name, you know it’s huge names on the other side when it goes from $12 to $200 in 0 to 60.

Namebuyer didn’t hit them hard enough, I make them pay the full $150-$200 if their bot wants it’s that bad.

We all know they can’t make money paying $200 for these names by the thousands

Although they have been gaming godaddy for years, they got a lot of good names when they were buying thousands of backorders, and placing backorders as soon as the auctions closed. Only thing was you could beat them to the punch by placing a backorder 2 seconds before the auction closed, and beat them on the lag. They got tens of thousands of great closeouts like this for under $20. Don’t assume they have always played fair, and even with the sniping today, they are getting a pass as someone is looking the other way not wanting to upset the balance of things.

The reason they have all the registrar connections they currently do is because people "subsidize" them by paying $59 and more with the auctions. That's why they let you backorder. First, they are making a quick return buying at $8 and selling at $59 or even more if auction. Second, they know people can't afford $59 for all their domains everyday. Thus comes the "discount club" which then doesn't work because all the ones that get ordered there are for them; except very few they might let people have if their system determines it has a low sales probability or it isn't that good (not sure exactly). Years ago, when they only did dropcatching for themselves, you could beat them with a godaddy backorder and api software from time to time. The only reason they can have such a big and aggressive system, is because people are paying for it with the auctions and $59 backorders. That's why if everybody suddenly stops using dropcatch (it isn't going to happen just saying in theory), their system quickly crumbles and I am sure they would scale down on registrar connections.

 

[wwwweb]

The reason they have all the registrar connections they currently do is because people "subsidize" them by paying $59 and more with the auctions. That's why they let you backorder. First, they are making a quick return buying at $8 and selling at $59 or even more if auction. Second, they know people can't afford $59 for all their domains everyday. Thus comes the "discount club" which then doesn't work because all the ones that get ordered there are for them; except very few they might let people have if their system determines it has a low sales probability or it isn't that good (not sure exactly). Years ago, when they only did dropcatching for themselves, you could beat them with a godaddy backorder and api software from time to time. The only reason they can have such a big and aggressive system, is because people are paying for it with the auctions and $59 backorders. That's why if everybody suddenly stops using dropcatch (it isn't going to happen just saying in theory), their system quickly crumbles and I am sure they would scale down on registrar connections.

They don’t make money on the $59 backorders, they make money when the over eager bidders bid up names like fivenines.com to $36k, which is absolute insanity of a profit.

My statement was if they are in such need of domains why not grab those $59 domains for themselves, if they are paying hundreds at godaddy for them.

 

[tonyk2000]

Incentives to bid, or compensation for participation in an auction environment I would suspect would be highly illegal

The more I think about it, the more I realize that it may be true (not necessary illegal, GD has a great team of lawyers and they undoubtfully did all the "homework"). Indeed, I've seen enough evidence of non-hugedomains bots trying to bid up alleged hugedomains bot, forcing him to pay his "normal" 9%-12% proxy. So, other bots must have been programmed to do this. Now, what is their incentive? Are they good samaritans acting on behalf of all our community? Their behavior is risky, as they cannot "lose" in all cases. Somtimes they will win and will have to pay. It is risky even for us humans playing with hugedomains bot.

The only incentive I can think of is: 2nd highest bidder revshare.

If smaller bots have access to such an incentive, then the largest bot in the house - hugedomains - also has access to it. And he of course noticed what other bots are trying to do with him. Which, btw, may explain his occassional unusual behavior (using lower 5%-6% proxies in auctions where he joins as the 3rd (4th etc) bidder. Normal risk management...

 

[werty]

They don’t make money on the $59 backorders, they make money when the over eager bidders bid up names like fivenines.com to $36k, which is absolute insanity of a profit.

My statement was if they are in such need of domains why not grab those $59 domains for themselves, if they are paying hundreds at godaddy for them.

If you spend I think it's 5 figures or more every month on GD auctions, you can get API access. That's why there are other bots too just not that much (most people can't spend that; including me). I agree their game has seemed fishy for a few years now and it's nothing new. I think the size they want to grow to requires them buying as much domains as they can and the drop might not even be enough. Or maybe they are using other domainers picks to find better domains and they get better sales with those (because more than one person has seen value in it). Or maybe it's all a lie and they get paid a "market maker" fee or some other type of incentive like mentioned multiple times. All I know is that nobody here likes them, including me.

 

[wwwweb]

The more I think about it, the more I realize that it may be true (not necessary illegal, GD has a great team of lawyers and they undoubtfully did all the "homework"). Indeed, I've seen enough evidence of non-hugedomains bots trying to bid up alleged hugedomains bot, forcing him to pay his "normal" 9%-12% proxy. So, other bots must have been programmed to do this. Now, what is their incentive? Are they good samaritans acting on behalf of all our community? Their behavior is risky, as they cannot "lose" in all cases. Somtimes they will win and will have to pay. It is risky even for us humans playing with hugedomains bot.

The only incentive I can think of is: 2nd highest bidder revshare.

If smaller bots have access to such an incentive, then the largest bot in the house - hugedomains - also has access to it. And he of course noticed what other bots are trying to do with him. Which, btw, may explain his occassional unusual behavior (using lower 5%-6% proxies in auctions where he joins as the 3rd (4th etc) bidder. Normal risk management...

The demand for closeout domains selling for $200 plus dollars is not natural, it is out of whack, the people who know domains inside out for years can sense this with their instincts. It is causing an artificial hysteria internally within the wholesale market.

One incentive is they are allowing them to game any closeout of their choice over human bidders, as their is no way anyone can compete, and they have turned a blind eye to this practice.

There are many ways to compensate like offer low commissions on sales done thru their channels, maybe cashback on certain spend targets, there was always the pushback to hide bidder id’s, never understood why.

 

[werty]

The demand for closeout domains selling for $200 plus dollars is not natural, it is out of whack, the people who know domains inside out for years can sense this with their instincts. It is causing an artificial hysteria internally within the wholesale market.

One incentive is they are allowing them to game any closeout of their choice over human bidders, as their is no way anyone can compete, and they have turned a blind eye to this practice.

There are many ways to compensate like offer low commissions on sales done thru their channels, maybe cashback on certain spend targets, there was always the pushback to hide bidder id’s, never understood why.

The truth is in any industry it all comes down to money. If they make more money with Huge Domains inflating everything, they are going to favor this no matter what. I used to make a solid income from GD auctions until huge domains stepped on the gas pedal like 3-4 years ago. They started outbidding me in everything overpaying considerably. But I know I am not the only one that has experienced this. Thus I just buy differently these days but still miss those days one could actually bid and find good deals at GD. The good news is the sharks can't survive without the little fish. At some point, and I think it's close, something will pop. The prices domains are selling for to resellers isn't sustainable.

 

[NameBuyer.com]

Yes but no. IMO the higher you go in asking/sales prices, the lower the sell through rate. Also, I have noticed not just with my portfolio but from others as well, chances of selling a domain you hold seem to go down each year. So lets assume I am wrong and it's 1% for the sake of simplicity, the other 99 domains might not have or maintain that same rate imo. Most domains will never sell at all. It could be that of those 100 only 1-2 will ever sell.

So year 2, 180K + $3,391. Still in the red and without having funds to reinvest and grow. I am sure that at 75K you might go a few years without sales. Why not take that 255k and invest in a more liquid market? It's money stuck without liquidity.

And even if it where 1% every year, how many years to turn a profit? Assuming the same annual costs of $3,391 and assuming you get lucky with a 75K sale every year (not counting sales commissions if sold via third party). Small profit after 4 years (below 35k).... That's a very bad yield imo for a 255k risk. You can double that 255K in 4 years in other markets like real estate if timed correctly (not right now lol). But you get the point... Nothing surprising and that's assuming everything goes excellent with the wind on your back which is not realistic imo.

This can put things into better perspective (nothing special with those returns):

Show attachment 127616

It was an extreme example from the beginning, I was just trying to point out that whether you are buying domains at $40 each, $100 each, or $2,500 each, there is eventually a point of return.

For me, I probably built up 80% of mine from the $10-$50 range. But I've talked to another investor that has only bought in the $500-$1,500 range and went for big sales. His revenue in the past year with under 100 domains was 1/2 of what mine was with 7,000 domains and his renewal fees were less than $850, instead of my $60k. So, there are many strategies that seem to work.


Back to my main point. If you are using your revenue to replace domains like HugeDomains, it is just like inventory on a shelf.

If I sell 70 domains a year at $3,500 each, and replace them by buying 70 equal or better quality domains at $200 each, I'll never have a problem as long as I'm not spending all the domain income on personal things.

I agree, trying to build/grow a portfolio like this would be expensive, as it would cost you $200k just to get 1,000 domains at $200 each. But once the machine is running, why not? It would be $14k replacement cost for $245k in sales. More times than not, you can put that $200 domain up for more than $3,500.

Theoretically, as domain investors, if we all made our own mini HD business models we should also be averaging $3,500+ per sale and beating HD in auctions because we have no overhead. Right?

 

[werty]

It was an extreme example from the beginning, I was just trying to point out that whether you are buying domains at $40 each, $100 each, or $2,500 each, there is eventually a point of return.

For me, I probably built up 80% of mine from the $10-$50 range. But I've talked to another investor that has only bought in the $500-$1,500 range and went for big sales. His revenue in the past year with under 100 domains was 1/2 of what mine was with 7,000 domains and his renewal fees were less than $850, instead of my $60k. So, there are many strategies that seem to work.


Back to my main point. If you are using your revenue to replace domains like HugeDomains, it is just like inventory on a shelf.

If I sell 70 domains a year at $3,500 each, and replace them by buying 70 equal or better quality domains at $200 each, I'll never have a problem as long as I'm not spending all the domain income on personal things.

I agree, trying to build/grow a portfolio like this would be expensive, as it would cost you $200k just to get 1,000 domains at $200 each. But once the machine is running, why not? It would be $14k replacement cost for $245k in sales. More times than not, you can put that $200 domain up for more than $3,500.

Theoretically, as domain investors, if we all made our own mini HD business models we should also be averaging $3,500+ per sale and beating HD in auctions because we have no overhead. Right?

Yes, I understand. That's why I have been emphasizing my strategy is short term vs investing. My experience is in short term sales not investing. In fact, from time to time I sell domains to other known domain investors and I've seen them sell some for five figures 2-3 years later. My average purchase price for .coms is around $20.67 with about a 2% sales rate (although this year might fall between 1-2% but still getting the ROI I need). However, my sales are usually $2k or under. That's the quality I go for but again I want a 100% ROI every year which I seem to get. I just want to grow my money with the best yield possible. I don't have the best domains but as long as I hit my numbers it's all good. I can take 10k and take out 20k within 1 year. That's what I look for in this business. I do compensate with other extensions to make sure I hit 100% every year because getting .coms has gotten increasingly harder (even hand regs).