I was meeting some friends on Saturday and somehow we got to talk about domain names. It was probably me who started the topic, as always, but anyway… The point is, my friends were not easy to convince that domain names were actually valuable assets and relatively safe investments (if you do the necessary research). When I told them the usual arguments like “Domains have gone up in value faster than any other commodity ever known to man” (Thanks, Rick!), “Generic domains drive lots of type-in traffic to its owners’ web sites”, “Direct navigation traffic converts better than search engine traffic” etc., they said there was certainly truth in these arguments, but still they were not really convinced that domains were an investment as good as I claimed. So, I thought, how could I convince them? What would be the best way to explain to them that domains will continue to appreciate in value for many years to come? The arguments mentioned above are all true, but maybe they were just the wrong arguments for that audience. (I should note that most of my friends went to business school.)

After thinking a little while, I had the idea to back my claims up with plain and simple economics. Here is a summary of what I told them, including graphs I quickly drew on napkins that evening (now “excelized” for you ;)):

Continue reading ‘The Economics of Supply and Demand’

Internet security company McAfee published an extensive report on domain typosquatting. The report analyses some example domains from different categories, takes a look at the increase in typosquatting and then proposes methods for combating typosquatting. I’ve said it before: typosquatting is a serious problem that investors of generic domains are facing, because they suffer from the bad public perception caused by cybersquatters. On the other hand, large corporations are monetizing typos and trademark-infringing domains, too. Earlier this month, I posted about Verizon making money from typos, for example.

From McAfee’s website:

Clearly, typo-squatting affects everyone who spends any time or earns their living on the Internet.

The surge in typo-squatting is contributing to whiffs of parasitism associated with the booming business of buying and selling domain real estate.

Some in the industry dispute the negative cast being given to domaining. A senior executive for Sedo, a major parking service, was quoted saying that “We want those pages to function as alternatives to search engines.”

To be clear, though, McAfee does not rate yellow a generic site like cellphone.com or typos of generic keywords like lirics.com. We reserve our yellow rating for typo-squatters of well-known brands, companies and sites.

Ultimately, in our view, typo-squatters fail the added-value test. Parked typo sites filled with pay-per click ads don’t help the consumer find the site he was actually looking for. And they don’t help the company build and brand their product in the way they see fit.

Sahar has done a good job commenting on McAfee’s report already, so I’m not going to write more about this, as I agree with what he’s saying. Click here for Sahar’s blog post on this topic.

Rick Schwartz has posted the true story behind his purchase of Flowers.mobi on his blog today, explaining why he decided to invest $200,000 in this one-word .mobi domain name. There have been lots of discussions about DotMobi on domain forums and blog in the recent weeks, including this post by Jay Westerdal which set off this week’s .mobi firestorm. (As it turned out, Jay’s research had not been accurate and he later apologized to Rick and Moniker.) Rick took all this as reason to provide domainers with the true story behind Flowers.mobi and gives insight into why he decided to purchase this domain, although it has been a risky investment.

So let me take you inside my mind over a year ago when I bought flowers.mobi. First of all I never registered a single .mobi domain during the sunrise period. My interest was not there until about a week before the auction or whenever Moniker announced the premium domain list. See, when I speculate with domains of ANY extension, I focus on one word domains or 2 very meaningful word domains. But if I am going to speculate on any extension other than dotcom, I am going to buy premium domains. So I decided to wait until the Moniker auction at TRAFFIC because that was going to be the first time that PREMIUM names with that extension would become available. I immediately picked flowers.mobi as the most valuable domain on the list and one of the premiere domains in the space should .mobi take off. So I decided before the auction I would bid up to $100k to get it.

Read the whole story here.

VeriSign (NASDAQ: VRSN) announced its strategic direction for 2008 at their annual analyst day held today in New York. The company is going to focus on its core activities, namely, domain names, the selling of web certificates (SSL), and identity protection services. As a result of this strategy, the company will divest its communications, billing and commerce businesses.

“The combination of focus and disciplined execution will provide the foundation we need to generate improved shareholder returns,” says Bill Roper, CEO. “We have leadership positions in great businesses with high growth, attractive economic returns and significant barriers to entry.”

In its third quarter results (PDF), VeriSign reported that its Internet Services Group made $236 million of revenue (up 21% from 2006). It also stated that the number of active domain names in .com and .net was about 77 million, representing a 5% increase over this year’s second quarter and a 25% increase over the third quarter in 2006. The consistent growth of VeriSign’s Internet Services Group makes it only logical for the company to focus on further growing and consolidating these core businesses. By divesting some of its other business units, VeriSign can also acquire more capital to reinvest in its DNS management, web certificate and identity protection services.

Agoura Hills, CA (PRWEB) November 13, 2007 — California-based Domain Development Corp (www.ddc.com), a comprehensive monetization and full-scale domain development service, today announced that Sean P. Moriarty has been appointed the company’s new President. Moriarty comes to DDC from Yahoo!, where he was in charge of managing Yahoo’s off-network domain monetization business.

Today’s announcement comes as DDC continues to develop its domain portfolio and enhance its product offering with the launch of version 2.0 of its Power Parking technology. In addition, DDC recently made news when they facilitated one of the largest domain sales of all time, a $9.5 million private transaction. This landmark domain sale extended DDC’s presence within the rapidly growing domain industry.

“Sean’s experience, proven leadership and extensive knowledge of the domain space provides an invaluable advantage to DDC as we continue to grow and innovate,” said Ken Lawson, company founder and CEO. “Sean and I share common goals for creating a leading-edge domain management service, and I am excited to work with him to make DDC the most competitive platform in the market.”

Over the past 10 years Mr. Moriarty has worked in consulting and sales leadership positions in private equity backed emerging growth companies: Vividence (acquired by Keynote Systems) and PlaceWare (acquired by Microsoft). For the last four years, Sean has worked at Yahoo! where he managed the consumer software channel and subsequently the domain channel. In addition to managing all of Yahoo’s key domain partnerships, Sean was integrally involved in the product development and marketing strategy that enabled Yahoo! to maintain its leadership position in domain monetization.

Moriarty commented, “I am excited to be back in a small company environment, working with an intelligent and passionate team that is nimble and focused on execution. Our mission is to enhance the experience of parked sites for visitors, owners and advertisers. In addition, we plan to continue to build on our comprehensive development efforts as we evolve suitable domain names into internet businesses.”