Is this a suitable analogy for domainers?

[domaino]

It's been interesting speaking to some domainers in the other thread I created yesterday, many of whom seem to be very knowledgeable. However, I've been thinking this through, and I'm trying to get to grips with the ethics behind domain acquisition, so hopefully someone can help me out.

This is business, so fairness probably shouldn't come into it - that said, there are such things as fair trading laws, best practices and ethics, so I'm going to run this past you anyway. It's the common real estate/land analogy, so let me know if you think it fits, or whether you would contest it.

A domainer is a lot like a land developer - they go about buying up all of the best land, which many people would like to live on, and they don't build anything; they just wait for the land to accrue in value. Many, many suitable offers come along, but the domainer doesn't accept one - many people come and go, many of who could have turned land into a house and a house into a home, but they are all refused, due to the needs of the few to acquire an inflated price.

Now:

1. 1. I'm not trying to insult anyone - I actually quite like the mechanics behind the industry i.e. ignoring the ethics - I bought and sold a few domains in my much younger years (I'm 27 now). Please don't interpret it as an insult, I'm simply articulating my perception, and it's one seemingly shared by a lot of people.
2. 2. I appreciate this doesn't describe everyone - some domainers can also be developers, and actually build something of substance on their asset.

From the average layman's perspective, if someone out in the physical world were to go around buying up all of the decent plots of land, and leaving the rest of us with the uninhabitable, there would be mass uproar.

I also think that if the tables were turned and the analogy were to be applied to a real life situation involving a domainer, he or she would probably declare "unfair conditions".

However, I have to say, and what's probably quite frustrating for legitimate domainers who see fit to develop their assets, is the analogy above is probably shared by the vast majority of people outside of the industry.

Thoughts?

---------- Post added at 03:27 PM ---------- Previous post was at 03:13 PM ----------

To add to this, I also don't understand the why, if you have a REALLY brandable asset like a VERY generic domain name, why you wouldn't develop it?

I've come across intelligent people on here - why would you want to spend your time waiting on the sale of an asset that has value and will likely accrue in value, when you could ultimately develop that asset and create a business worth multiples of the value of the domain? Not only that, but you could create a recurring revenue stream?

I own a few generic domains and ALL of them are being developed, in one way or another - two of them are in the very early stages one, after a year, is already bring in a decent amount of recurring income which can be pushed back into my main business.

Sure, the time has to be there, but IMO it's also part of the fun of it - you can create something using a brandable asset and build it into something that has much more value, and long-term recurring value. Say you owned [word].com - the market determines the domain is worth low $xx,xxx - you spend some time building a website, building some authority and a brand and you lose out short term. Over the next 2-3 years though, as you build the brand and an industry dominant position - partly due to the brand - you earn just as much, if not more, than you would have if you sold the asset.

Or is this what the vast majority of experienced domainers do?

I know it sounds pretty simplistic but that's part of my problem - I don't get why this approach wouldn't be taken if the domain has REAL value. Or is it merely a matter of speculating, buying something that you believe will have specific value to a person with the sole intention of selling it on to them when they are desperate to buy it?

 

[equity78]

I think many try to compare domains with real estate, sometimes it works and other times it doesn't.

I am not sure there would be an uproar unless you were talking about moving people. But and I cannot speak for Scotland but many invested in the 1950's in real estate in California, Nevada, Florida etc.. that they owned the land and waited for the developers to come. There was no uproar around investing in land.

Great domains like ideal real estate command premium pricing. Someone can take a view that all men and women should be able to find affordable housing where they desire to live, and that's not a bad idea. But the average person in this country cannot afford to buy a home in Manhattan or Beverly Hills.

Its the same with a start up that would like to own Mango.com or Blue.com, they will tell you the owner doing nothing with it and they have a great idea, Great ideas don't need great names, example Google,Yahoo,Linkedin,Twitter,You Tube etc...

They want that name because its a great name, and I think that's understandable to most.

Now I know the name you were trying to acquire was not in that category and pricing was high for an average name.

Why ? Because every week domainers see average names sell for big money, Does not make their pricing logical but they see it and get afraid of missing the big sale.

Dudu.com sold for $1million, that does not mean Dodo,Didi,DeDe and Dada are worth $1million but people see that and raise prices for same letter CVCV.com, is it right ? It doesn't matter if its right, this is domaining and When the legend becomes fact, print the legend. I kid.

I think the hardest thing and I think Gifted Domains said it in your other thread, is something I agree with and have said for a long time, Who is the domainer ? you don't know.

Is it Michael Berkens, ? Marchex ? A guy who had two good domains from the mid 90's who needs cash fast ? An 18 year old who reads RicksBlog.com and just says no, until he gets the big offer.

Real Estate has transparency, laws, common practices, comparable sales data that actually matters.

But you are not wrong in your definition we all tweak it, and yes the outside world outside the domainosphere cannot stand domaining for the most part. Kind of like Elysium and Rick Schwartz is Jodie Foster, not sure who is playing Matt Damon.

 

[Traveler]

I think that is a fair analogy, but in the real world, people do go and buy land on speculation and hold it, without much if any uproar.

I'm a developer, so I do get frustrated when I see a name I want that has been taken and is being held for a kings ransom, but there are so many options out there, if I can't get the perfect domain I just hand reg a decent one and move on.

Especially now that google does not give a boost to exact match domains, most of the time I just look for something I can hand reg. At the end of the day, It is the development that is going to get it into the SERPs and make the money, not the domain itself. Mostly I just stick with the .com and register names that should not bleed much traffic to a different .com when they are developed.

 

[equity78]

To your second part what I read after I posted, most domainers are not developers that's why.

You need to know how to run a site and run a business. Buying domains does not give you that skill set.

 

[domaino]

I think many try to compare domains with real estate, sometimes it works and other times it doesn't.

I am not sure there would be an uproar unless you were talking about moving people. But and I cannot speak for Scotland but many invested in the 1950's in real estate in California, Nevada, Florida etc.. that they owned the land and waited for the developers to come. There was no uproar around investing in land.

Thanks again for the really detailed response, equity78.

The only thing I would say to that is that the extent of acquisition is likely a lot higher in this context; for example, a domainer, as is posted in another thread, going out any buying BostonBombings.com.

From an outsiders perspective, it's not snapping up a small amount of property in the hope of it accruing in value; it's going out and buying up ALL the land and inflating prices beyond any perceived market value. I think to a lot of people, and to me on occasion, the industry gives many of you a bad name mainly due to the fact so many people are so opportunistic with it - playing on people's desperation.

I also think that market values are quite likely inflated due to a lot of in-selling - again, I'm obviously an outsider, I don't know, but due to the amount of speculation which goes, domainers must trade fairly significantly with each other, which leaves the end user lagging way behind in terms of perceived market value i.e. additional trades of domains jacks up the value further, well beyond what an actual end user would be willing to pay.

Great domains like ideal real estate command premium pricing. Someone can take a view that all men and women should be able to find affordable housing where they desire to live, and that's not a bad idea. But the average person in this country cannot afford to buy a home in Manhattan or Beverly Hills.

Absolutely agreed - only slight issue is that a lot of domainers, even the example I was involved in, seem to want to build Beverly Hills on uninhabitable land...i.e. sell an asset well above it's market value.

 

[Dave_Z]

If anything, an analogy (at least) aims to help better understand an idea. In this case, comparing the act of buying and reselling domain names to doing the same for land should help to understand how it works or why others do it.

Of course, it doesn't mean anyone has to like that idea, he he.

 

[domaino]

I think that is a fair analogy, but in the real world, people do go and buy land on speculation and hold it, without much if any uproar.

Thanks for the contribution, Traveler

I think there's a fundamental difference though - the barrier to entry to the purchase of physical land is a lot higher than the barrier to entry for purchasing a domain name; it's a bit too accessible IMO.

Especially now that google does not give a boost to exact match domains, most of the time I just look for something I can hand reg. At the end of the day, It is the development that is going to get it into the SERPs and make the money, not the domain itself. Mostly I just stick with the .com and register names that should not bleed much traffic to a different .com when they are developed.

From having in place quite a few exact match tester sites, I would contest that - Google has been doing away with EMDs for years now, it never seems to stick. Even Cutts in his explanation of the roll out of the EMD update said it affected 0.6% of web queries.

There are also tons of examples of EMDs retaining visibility in search with next to no backlink profile.

If you are at all interested, you can see my 10,000+ words contribution on this subject here: http://www.warriorforum.com/adsense...um/775079-emd-specialists-comment-please.html (I'm the one fighting off a certain well-known troll )

p.s. I'm really not a fan of the WarriorForum, but it's worth it every now and again.

Anyway, I digress - absolutely agree about hand reg, I've opted for that on a few occasions for clients.

 

[Traveler]

If you are at all interested, you can see my 10,000+ words contribution on this subject here: http://www.warriorforum.com/adsense...um/775079-emd-specialists-comment-please.html (I'm the one fighting off a certain well-known troll )

Thanks, I will take a look. From my personal experience I had a number of emd sites that went from hero to zero during the emd algo change. They are still #1 in Bing, but way deep in the SERPs in google. They are not mini sites either and had been at the top of google for years and continually updated. Luckily it was not a total loss and the emds that did survive more than make up for the earnings that were lost on the others.

I think there's a fundamental difference though - the barrier to entry to the purchase of physical land is a lot higher than the barrier to entry for purchasing a domain name; it's a bit too accessible IMO.

I tend to agree with that, if the registration and renewals where higher, that would free up a lot of domain names for people that actually want to make a site. On the other hand, that would increase my costs as well, so don't go spreading that idea around too much

 

[domaino]

Thanks, I will take a look. From my personal experience I had a number of domain names that went from hero to zero during the emd algo change. They are still #1 in Bing, but way deep in the SERPs in google. They are not mini sites either and had been at the top of google for years. Luckily it was not a total loss and the emds that did survive more than make up for the earnings that were lost on the others.

Yeah, me too, about three or four EMD tester websites dropped like a stone in 2012.

The thing about EMDs though is that they always still require a kick in the right direction, direct link builders obviously fling links behind them (relatively "dodgy" links); the vast majority of people will kick a heavy quota of exact match anchor text in there too.

From quite a bit of extensive research around this, I've found that a lot of the instances of EMDs falling from grace which have been reported to us by associates, friends of clients etc have typically fallen, we suspect, to their backlink profile and over utilisation of exact match anchor text. At least that's the more obvious correlation short of doing some really intense research.

2012 IMO was just a public relations bandwagon for Google - while a lot of successive algorithmic updates clearly had an impact, the one thing that the vast majority of the market seems to miss out on is that most generic queries are still backed up by paid links and what one could term, excessive anchor text optimisation.

However, Google has been so successful in terrifying webmasters (due to the fact, relatively speaking, a small sample of the trillions of web pages contained in Google's indexes have fallen from grace, and that's only because they screamed "kill me"), they feel that a single paid link behind their website could spell their fate and land them forever on the periphery of search. The truth is, Google is still a mechanical entity, and short of a manual review there's still a lot a savvy SEOer could get away with (whether or not you want to assume the risk is another thing entirely).

Really, all it takes is a simple search for a commercial orientated generic query i.e. "toys", "computers", "car insurance" etc, pulling the top 10 results and putting them into Majestic, and you will see 25-50% of the backlink profiles are still composed of junk links and excessive optimisation. We don't engage in any of the direct link building stuff, we're more manual prospecting, outreach, relationship building etc, that said I'm still adamant it works i.e. try blasting a ton of exact match optimised PBN links behind a YouTube URL, works a charm everytime.

I'm going way off topic here! /end

 

[Traveler]

I'm going way off topic here! /end

Yes you are, but that was good stuff, you have me thinking!

 

[domaino]

Yes you are, but that was good stuff, you have me thinking!

Ah good, glad it helped!

 

[alien51]

Hoarding of goods, is only applicable when there are rules against hoarding. When it comes to domains, i believe there is a generalized rule against cybersquatting.

If i am not mistaken, i have read WIPO rulings in the past when the judge has determined that the domain owner has no "legitimate" interest in the domain and he is forced to give it up.

And also, if we will remove the stereotyping associated with domain extensions, you are supposed to have atleast 5 TLD varieties of the domain which you can register: COM, NET, ORG, INFO, and BIZ.

You can share the same domain name, unless you trademark it. After all, why would ICANN allow different extensions to exist if people cannot use identical domain names among each other ??

 

[SearchEngineZ]

For me specifically (dropped domains), I liken it to being an antique dealer. They pick up pieces for cheap because the owner doesn't want them, and figure they are worth a lot more. A piece might sit in the shop for a long time, but when the right buyer comes along, the profit is good.

 

[biggie]

:talk:


Hi

from what I've seen over the years, "development" of domain names was an "evolutional" thing, for the "every day domainer".

there were and always have been, those who were deving on the side, either doing big or small projects.

however, for the average domainer, developing is too much work

also, newbie and novice developers alike, often fall victim to seo schemers and are regularly being confused with/by "blog" postings of Google's algo changes, ie: loss rank on emd's, etc.


so to that extent, there are just as many hazards going the dev route than it is to just buy and resell, without that extra overhead.

true the potential benefits from deving some domains are much greater than reselling them.

time is a factor, in one's need for funds, which makes reselling the quickest option


as for how this "industry" is perceived on the outside, once you join...you're no longer an outsider.


so, what they think is irrelevant, until they submit an offer.


to the extent you can compare domains to realestate or vacant land and there be no uproar about domain hoarding.


those with no voice or those in the silent majority are never heard, so it doesn't matter, until they rise up.


call it "virtual-gentrification"


imo....

 

[lincolndsp]

op 95 percent of people (especially faitly young) where i live cannot afford to buy an apartment upfront, even hard to take a loan on a 25 per annum interest rate

i'm informing you - there is no uproar!

 

[-NC-]

if someone out in the physical world were to go around buying up all of the decent plots of land, and leaving the rest of us with the uninhabitable, there would be mass uproar.

Can you please let me know where there is some habitable land I can purchase for reg fee?

 

[Kate]

From the average layman's perspective, if someone out in the physical world were to go around buying up all of the decent plots of land, and leaving the rest of us with the uninhabitable, there would be mass uproar.

There are fundamental differences.
First of all, the supply of domain names is infinite - but quality is in short supply.
That's why it is wrong to compare domaining with ticket scalping.
The FCC forbids the hoarding of toll-free numbers for speculation purposes because they are a scarce resource. The practice is still widespread though, but it's not forbidden to speculate on domains because the scarcity doesn't exist. Only the quality is scarce.

Not being able to afford a coveted domain name is not a life-threatening situation. Nobody has ever died of cold or hunger because they could get a domain. But being evicted from your home or deprived of food is something different.
In the eyes of Joe Public domainers are scum, but truth is, their activities cause less harm than the 'real' economy.

To add to this, I also don't understand the why, if you have a REALLY brandable asset like a VERY generic domain name, why you wouldn't develop it?

Plenty of reasons: lack of skills, time, dedication. Not every domainer is good at development. Of course, many domainers own hundreds of domains, it's impossible to develop so many at the same time. And if you're asking why we own hundreds of domains, it's simply because we seize the opportunities. If we come back in 5 years, the domains will be gone. Ask the whiners what they were doing in 1996: it's not our fault if they didn't see the light back then

 

[Jasonn]

what kind of person wants to restrict who can own domains and how many they can own? its a free market and if no one bought them, it wouldn't exist.

 

[meursault]

I thought it was all about easy money?

*edit* The prospect of easier money at least

 

[lincolndsp]

^^ have a million dollar fee every year for renewing domains (big portfolios) and now manage to sell the names to be in black, easy money?? maybe from the layman's point of view who knows about domains from godaddy commercials.