Trying to understand sky-high valuations for obscure DNs

[domino66]

Long story short, I wanted a specific domain name that is a relatively uncommon english expression (I asked a handful of my friends about it, and very few of them had even heard of it before.)

But it was already owned by an entity called MDNH, Inc., which this Namepros thread says is Marchex, a huge domaining conglomerate. But it's currently just a link farm, so I figured it might be for sale.

I wrote to them to inquire about the domain name and their response was, roughly: "We don't typically sell our domain names, but if you want to discuss this one, you'll have to make an offer in the high five figures." FWIW, that namepros thread has a testimonial from someone who got exactly the same high $$,$$$ treatment from MDNH.

Obviously, a DN is worth whatever the market will bear, but I like understanding things, and I'm trying to figure out how a relatively obscure DN can justify a "high five figure" asking price if it's just a link farm. I don't even understand why that type of price tag makes any rational sense for a seller.

Link farms are hardly cash cows, right? So the only other possibility I could think of was that they're hoping that some big corporation will one day want to acquire it as a URL to develop. So I'm trying to understand the flaw in my assumptions:
- Can a mere link farm actually be generating so much money to justify a $75K+ valuation in and of itself?
- Is their strategy for monetization really just sitting on it for $10/yr and hoping a big company one day decides they want it (and want it so badly that a $75K+ price tag makes sense)?

 

[bmugford]

Marchex is a big domain company. They don't have any motivation to sell domains unless you are willing to make an absurd offer.

Brad

 

[tech4]

Candy.com was just sitting there parked on some template. Its price sold was $3million.

Obviously parking didn't make anywhere near 1% of that.

Fly.com was also another example.

So, sky high valuations have intrinsic value (ie. properties that are unique). If its not unique, no one would want it, I think you can agree with being unique.

The more common it is, the less of a price.
Parking and adsense doesn't measure a realistic value of what a domain can do.

Take gold for example, you can't eat it, you can't really do anything with it. For some reasons, its sitting there, is valued alot.

Other things like a baseball autographed in 1933 by some famous hall of fame... its smelly, looks like its going to break, dusty...is worth $1 million? Who would want it? Intrinsic and unique makes it worth it.

If you buy domain names base on traffic -they have to be typed in or a business. But in this case, you are not buying it for traffic or typed in value?

Or are you?

 

[alien51]

- Can a mere link farm actually be generating so much money to justify a $75K+ valuation in and of itself?

The link farm money could be just gravy sauce. Their main revenue is somewhere else.

- Is their strategy for monetization really just sitting on it for $10/yr and hoping a big company one day decides they want it (and want it so badly that a $75K+ price tag makes sense)?

Yes.

If you are getting a practically fixed income revenue somewhere else in the 6-digit figure, and given that domains just renew 10 bucks a pop per year, that domain could be sitting on their laps FOREVER.

 

[Erdy]

Thats a valid business strategy. If you own 10,000 domain names you can ask for $10,000 for ordinary domains. After all you don't need to make too many sales. The renewal fees are only $80K a year.

With so many domains you can bet that you will find many buyers who will want to buy a particular domain from you desperately and no replacement will do.

Selling 1 domain for $10K is much better than selling 10 domains for $1K each. The only reason why many domainers aren't following that strategy is because their portfolio isn't large enough to sit and wait for that many desperate buyers.

 

[domino66]

Marchex is a big domain company. They don't have any motivation to sell domains unless you are willing to make an absurd offer.

Brad

I guess it's this premise that I found surprising. I figured that their motivation is to get maximum value for the domains in their portfolio, right? Since everyone is agreed that that's not going to come from their link farm, I guess the answer to my original Q simply boils down to the fact that they think they'll get a higher offer down the line from someone else?

And if it's as straight-forward as that...well, I guess I'm surprised they think that someone would pay $75K+ for a relatively obscure (and long-ish) english expression.

 

[alien51]

What kind of price do you have in mind for that domain anyway?

This happened to me as well (in a lower price scale). I had 6,000 dollars in mind to sell the domain. But the buyer had 50 bucks in mind. Total disconnect. A sale with that kind of difference in value perception, is going to be extremely remote.

 

[domino66]

What kind of price do you have in mind for that domain anyway?

This happened to me as well (in a lower price scale). I had 6,000 dollars in mind to sell the domain. But the buyer had 50 bucks in mind. Total disconnect. A sale with that kind of difference in value perception, is going to be extremely remote.

I went into the process thinking I'd spend up to $500 on it. But their initial response to my inquiry (before I even made a bid) was "mid-to-high 5 figures".

I guess what was most surprising of all was that the email I got from them begin with a sentence to the effect of: "We generally don't sell our domains."

That's what I don't get. You're a DOMAINING company >>> Why do you buy domains if not to sell them!? For the link farm lunch money? It would be one thing if their reply started with "Yes, that domain name is for sale and we are asking for $$,$$$." But instead they decide to lead with "Well, our domains are typically not for sale."

Was that just a BS bargaining tactic? Do you think that's carefully chosen language they include to avoid charges of bad-faith cybersquatting that could forfeit a domain name?"

 

[Erdy]

I guess what was most surprising of all was that the email I got from them begin with a sentence to the effect of: "We generally don't sell our domains."

Actually I think that's a very good response on their part. It shows they don't need to make a sale but they might be interested if you make a high offer. It also shows they are not interested if you make a low offer. I would even expect them to say that the domain is not for sale.

If you want to sell a domain for a very high price tell the person who contacts you that it is not for sale. That's a perfect strategy. It throws the person off balance. Faces them with the reality that they might not get the domain name they desperately need. Puts them in a position where they want something but can't get. It pushes the buyer in a low and needy position. The buyer feels like a loser who wasn't taken seriously. The buyer is upset.

Now is the time to rise to the challenge, to be a man about it, to make themselves heard, to be taken seriously. The buyer comes back fighting:

- I offer you 5,000 USD.

That's exactly the type of response the seller was waiting for. Probably he will again say it is not for sale and will get a higher offer and the negotiation will continue.

 

[GiftedDomains]

@domino66 - my advice to you: if you are able to find alternatives to this domain name, then don't even continue with negotiations with such sellers.

i wouldn't even ask sellers like marchex, if i would see them in whois of a name.

ok they don't need the money and have this tactic. good for them. then i am not the type of buyer they are looking for and who would play their game based on their rules! í want to make a good deal based on my rules (or at least with rules which would satisfy both seller and buyer).

plus, these unrealistic arrogant replies just piss me off anyway.
i would look for other alternative domain names.

p.s. i bet they have an email template with

"We don't typically sell our domain names, but if you want to discuss this one, you'll have to make an offer in the high five figures." - and they just send this to each and every request they get. even if its for theworstdomainnameeverregistered987655421.com

you don't want to waiste your time with sellers who don't need/want to sell and have this attitude/tactic.

 

[Jawed]

That's what I don't get. You're a DOMAINING company >>> Why do you buy domains if not to sell them!?

This and similar responses are in fact sales tactics.

For the fact that there is a demand for the name, i.e. you do need the name in question, it doesn't seem to be that 'obscure'.

 

[alien51]

you don't want to waiste your time with sellers who don't need/want to sell and have this attitude/tactic.

I know you are upset. But you have to remember that a business transaction is a two-way street. If you don't want to waste (btw, it's waste, not waist-- just getting carried away by the grammar chat we had in the other locked thread, lol)-- if you don't want to waste your time with those kind of seller, i'm sure the sellers also feel they don't want to waste their time on lowball offers. The feeling is mutual, so to speak.

If you want to verify if they are using a template response, search for other domains owned by Marchex, then pretend to be a buyer for that other domain by sending them email. See if you will get the same introductory response.

Just make sure you send the email from a different email account, and from another computer with a different IP address. Send it after a week or two, to avoid suspicion. They might triple the price tag if they found out it's you again. lol

But instead they decide to lead with "Well, our domains are typically not for sale."

Marchex is the Tiffany of domains. You know if you go to Tiffany, you can't say to the sales clerk that you could buy a similar handbag for 20 bucks at Macy's.

 

[GiftedDomains]

I know you are upset. But you have to remember that a business transaction is a two-way street.

I am not upset. I am just saying that its not worth it to talk to these type of "sellers". You will always lose as buyer! You can't make a good (or even acceptable deal) with these type of sellers. And the OP is the buyer in this case, therefore my advice.

Of course if there is no other alternative to the domain name in this case and OP needs the name desperately, then its a bit different. but doesn't sound to me that its the case here.

I know that business transaction is a 2way street. I drive this street daily (both domains and my main biz) and on both directions. So i understand that from seller point of view, you want to get the max. price possible. But also as seller, i try to be realistic.

If you don't want to waste (btw, it's waste, not waist-- just getting carried away by the grammar chat we had in the other locked thread, lol)-- if you don't want to waste your time with those kind of seller, i'm sure the sellers also feel they don't want to waste their time on lowball offers. The feeling is mutual, so to speak.

We have lowball offers. We have realistic offers. We have Ok offers. We have good offers. We have very nice offers. We have fantastic offers. We have unbelievable offers, etc...... these guys from marchex want unbelievable offers. if someone is stupid enough (or so rich that he doesn't care) to buy an exotic dictionary name for high xx.xxx then fine. but i doubt that OP (or you or me) want to be that one stupid guy!

Maybe they would even drop this name soon and OP can get it backordered.

yeah, sorry about "waiste". english is not my first language. i speak 5 languages and sometimes make few mistakes in most of them

If you want to verify if they are using a template response, search for other domains owned by Marchex, then pretend to be a buyer for that other domain by sending them email. See if you will get the same introductory response.

I guess i don't need to, because i received a similar reply in the past already. Also click on the link provided by OP in this thread. The same high xx.xxx offer for another domain in the other thread.

Marchex is the Tiffany of domains. You know if you go to Tiffany, you can't say to the sales clerk that you could buy a similar handbag for 20 bucks at Macy's.

but what if you see a Macy's handbag in the tiffany shop and they want to sell it for a tiffany price, just because its location is now there? - sorry this is not a good comparison. the domain is the same domain. no matter who owns it. it doesn't change its quality or price just because owned by marchex!

---------- Post added at 07:01 AM ---------- Previous post was at 06:27 AM ----------

just to avoid misunderstandings: this business model from marchex is fully legit. they can do whatever they want. they can keep all of their domains forever or sell them only if someone is willing to pay astronomic prices. if it works for them, why not?? seams like it works for them, otherwise they would be bankrupt.

but please don't expect the average domain joe to accept their system and asking prices and escort marchex.

 

[alien51]

But also as seller, i try to be realistic.

Being "realistic" can also differ from seller to seller. But since this is Marchex we are talking about here, I'm sure it is realistic to them that they don't need your 500 dollars. Thus, the 5-figure front door sign.

but what if you see a Macy's handbag in the tiffany shop and they want to sell it for a tiffany price just because its location is now there? - sorry this is not a good comparison. the domain is the same domain. no matter who owns it. it doesn't change its quality or price just because owned by marchex!

That's true.

However, a domainer living in his parents' basement garage will probably need that 500 dollars sooner than Marchex would. That's the difference.

Perhaps one thing you could do is send your bid offer to Marchex with a note saying 'in case you can't find any buyers for this domain anytime in the future, I'm willing to pay 500 dollars for it no questions asked, but no more than that. Send me email when that time comes'.

Atleast you're the one who made the final take-it-or-leave-it ultimatum on this price negotiation. lol

but please don't expect the average domain joe to accept their system and asking prices and escort marchex.

Yes, it is really tough being an average joe.

One of my biggest mistakes in life was drinking the Cognac and Martini i found inside the mini bar in my hotel room years ago. You have no idea how much they billed me for that. Until now, i can't figure out why mini bars are so expensive when you can buy exactly the same stuff at a fraction of the cost down at Walmart.

 

[infosec3]

Your frustration is understandable, however, the unmotivated seller strategy seems to be a common driving force of big figures sellers or sellers that possess a valuable portfolio.

I remember reading that what drove the price for ireport.com so high was that Rick consistently refused the offers made. It happens all the time.

In reference to your point that it is an obscure name or extension, well, domaining is not an exact science or an industry with a standarized pricing. This is why we wake up every week or every month to the surprising fact that djslekrfkesruuibxjfn.net (fictitious, but who knows)sold for $500,000.

 

[GiftedDomains]

of course the "unmotivated seller strategy" is good. you see that in all type of businesses. if you (as seller) reply with something like

"howdy! of course my domain name is for sale!!! many thanks for your interest!! its really a very good domain!! i am ready to give you a very good price!! please tell me what you want to pay",,,,, then you are simply stupid.

but replying with high xx.xxx for obscure dictionary words, you just embarrass yourself either, no matter if you need money or don't.
imo this is the same BS level as offering 100 dollars for a LLL.com

there is a limit to everything. on both sides (lowball offers which suck too, but also these type of BS replies)