ICANN seeks comments on dotless domains

ICANNThis is my first domain-related post since October 2009 and no, I'm not going to regularly blog about domain names again in future. However, this particular issue is quite interesting in that it illustrates how domain investors are taking on a technological risk when buying domain names.

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No more domain names

Dear readers,

As many of you will know, I quit brokering domains a while ago - and I stopped actively trading domain names altogether in late 2009. Since then, I haven't published a new article on my blog and only sporadically did I comment on the pieces posted on other blogs. So I guess it makes perfect sense to officially announce that I am no longer in the domain business. Therefore, this blog will no longer be covering domain names. However, the more than 500 articles I wrote during the past few years will be archived in the "Domain Names" section on this blog, so you will always be able to go back and read them, if you wish to. Thanks for your understanding and thank you very much for having been a reader of my blog.



28% of one- & two-letter .DE domains grabbed by one company

DENIC eGLast Sunday I commented on DENIC releasing one- and two-letter domains as well as pure number domains, which were previously impossible to register. This Sunday I will have to comment on the actual results of the allocation process.

As it stands now, 28% of all one- or two-letter domains that were claimed and registered during the initial registration phase were acquired by one company only, Tec-Media-Service. The company successfully registered 193 of the short domain names. Realtime.at came in second with 48 domains and Key-Systems secured 19 domains at least. Most other DENIC members, however, were not successful. Even United Domains, which belongs to United Internet AG, was only able to register three short domains, two of which I wouldn't denote as premium domains. The newly released pure number domains, most of which are longer than two letters, were more uniformly distributed.

Why is it that most of the valuable domains ended up in the hands of a few selected domain registrars only? One answer is that those companies have been experienced in dropped domain catching, a task that requires a similar infrastructure as the registration of domains during an initial registration phase. More importantly, however, the lucky registrars knew how to play the system. Especially Tec-Media-Service had a good strategy in place: It worked together with 1API GmbH, a domain registrar located in Germany. 1API GmbH is accredited for all major gTLDs as well as the 80 largest ccTLDs (country-code top-level domains) and offering its domain registration services to other companies through its entities HEXONET GmbH (Germany) and HEXONET Services Inc. (Canada). Tec-Media-Services and 1API then cooperated with an estimated 20 to 30 DENIC accredited registrars by acquiring and pooling their domain registration queries. In order to ensure a fair domain registration process, DENIC only allowed a maximum of four domain registration queries per minute per registrar. By pooling the resources of up to 30 different registrars Tec-Media-Service and 1API have been able to indirectly send as much as 120 queries per minute. It is not known how much Tec-Media-Service paid for the other registrars' domain registration rights, but I have already heard rumors of registration rights having changed hands at prices around €10,000. Apparently, many smaller DENIC accredited registrars thought that selling their queries would result in more cash than establishing an expensive infrastructure of their own. In retrospective, this reasoning might have been correct. The numbers make it clear that only companies with the most advanced technological and organizational solutions have had a realistic chance of successfully registering the extremely sought-after one- and two-letter .DE domain names.

Domain marketplace Sedo took a similar approach by pooling the registration queries of an unknown number of registrars. But of the 3000 domains Sedo put up for auction on its website, it could only secure between 300 and 600. Most of those have been number domains of lower quality. Domains Sedo auctioned off include TV.de (€279,499), PC.de (€158,700) and DE.de (€144,277). None of these was later registered by Sedo, though.

Looking at the results of the initial registration phase, one can understand why many domain investors believe the allocation process was unfair and that insider trading was taking place. But according to DENIC, the pooling of registration rights is not illegal. Personally, I have to agree. It was foreseeable that most companies or investors would not be able to actually get the domains they wanted. As is always the case with valuable commodities, the buyers with the largest amount of cash on hand prevailed.

DENIC to make million-dollar domains available for the first time

DENIC, the registry of Germany's .DE top-level domain, has announced that it is going to make one- and two-letter .DE domains available for registration in a few days for the first time. In addition to these, it will then also be possible to register pure number domains such as 123.de, which, unlike under .com, could not have been registered so far. As per DENIC's rules, it was not allowed to register domains without any letters or domains shorter than three letters under the .DE TLD. Those rules are now about to be changed after a 2008 Frankfurt court ruling involving Volkswagen has finally been confirmed by Germany's Federal Court last week.

Volkswagen has long been fighting to be allowed to register the domain name VW.de, because the company is commonly known under the acronym VW in Germany.

Only three two-letter domains had been registered by German companies during the short time frame before DENIC disallowed the registration of short domains years ago. Those three domain names were IX.de, HQ.de and Deutsche Bahn's DB.de. Following the court ruling in June 2008, I already speculated about DENIC relaxing its rules at some point in the future. It was only a matter of time until companies would be able to register all other short .DE domains.

Now that Volkswagen won against DENIC, the registry decided to completely do away with its rule instead of only allowing the car manufacturer to claim its domain name. I think that was the right decision, although it is still not clear how the domains will be made available exactly. It is expected that there will be a rush for these highly valuable domains, but chances of actually getting one of them are very low. It is also expected that major corporations will try to take possession of their short domains through legal actions. About all two-letter combinations are trademarked, so lots of companies will undoubtedly go after their acronyms with the help of their legal departments. The case of Volkswagen has shown to what lengths large companies will go to protect their brands on the Internet.

What surprised me and domain industry insiders, is that DENIC is going to expand the German name space on October 23, 2009 already. That is only five days away from this post and it leaves registrars with very little time to prepare for the thousands of domain registration queries they will be receiving for these sought-after domain names. For this special occasion all DENIC-accredited registrars were given a limited number of queries they may send to DENIC per minute in order to ensure equal opportunities for everybody. But smart companies are trying to play the system already. Domain marketplace Sedo, for example, has partnered with selected registrars in an effort to pool those limited domain registration queries and increase chances of successfully registering a domain. Sedo started a special online auction for the most valuable .DE domains that will be made available. Interested parties can place bids on the domains they want. The highest bidder of a domain will then get it if Sedo and its partner registrars are successful in registering it on behalf of the bidder. Bids on most two-letter .DE domains are currently in the low to mid four-figure range, but there are still more than four days to go until the auction ends and the domains will drop on the open market.

It will be most interesting to see how all this will play out, considering the high amount of money ready to be spent on these rare domain names. As said, the exact process is still not entirely clear. I hope DENIC will explain things better in the coming days, so that all interested companies and private investors will know how to best go about applying for the domain they want.

Tim Schumacher kommentiert den Domainhandel

In einem Gastkommentar auf der deutschen Webseite von Dow Jones kommentiert der Sedo-Geschäftsführer Tim Schumacher die jüngsten Entwicklungen im Domainhandel. Schumacher zitiert darin unter anderem einige hochpreisige Domains, die Sedo kürzlich vermittelt hat. Zum Beispiel sind das Call.com für 1,1 Millionen US-Dollar oder Kredit.de, die für nahezu 1 Million Euro verkauft wurde.

Interessant ist vor allem seine Sicht auf die aktuellen Verkaufschancen von Domains, denn Sedo kann hier natürlich auf eine große Datenbank mit Domainverkäufen zurückgreifen und damit aktuelle Marktentwicklungen verlässlich analysieren. In diesem Zusammenhang schreibt Schumacher:

In den letzten Jahren hat sich der Domain-Sekundärmarkt, also der Kauf und Verkauf von Domains, sehr positiv entwickelt. Im Jahr 2007 wurden über 27.000 Domains über unsere Plattform gehandelt, 2008 waren es knapp 37.000. Für 2009 gehen wir von einem Wachstum von über 10 Prozent aus. In den letzten drei Quartalen hat sich jedoch eine deutliche Tendenz zu Niedrigpreis-Domains gezeigt.

Obwohl also in jedem neuen Jahr mehr Domains über Sedo verkauft wurden als im vorherigen, ist zu beobachten, dass in Zeiten der Wirtschaftskrise Druck auf die Preise einzelner Domains entstanden ist, so dass die durchschnittlichen Verkaufspreise deutlich gesunken sind. Als Referenz führt Tim Schumacher den durchschnittlichen Preis einer .de-Domain an, der 2008 noch bei 1.200 Euro lag, nun aber nur noch ca. 800 Euro beträgt.

Dies sollte keinen Anlass zur Panik geben, denn qualitativ hochwertige Domainnamen werden immer noch zu Top-Preisen gehandelt. Aber insgesamt dürfte die Anzahl dieser Top-Verkäufe etwas zurückgegangen und dafür Domains im Niedrigpreissegment gefragter sein. Ebenfalls ist wahrscheinlich, dass Domain-Verkäufer jetzt eher bereit sind, ihre Domains zu niedrigeren Preisen zu verkaufen, um zusätzliche Cash Flows zu erzeugen. Das aktuelle Klima sollte also vor allem Käufern von Domains gefallen, die fast überall gute Internetadressen zu günstigeren Konditionen erwerben können als noch vor der Krise.

Besonders gilt dies meiner Erfahrung nach auf dem US-amerikanischen Sekundärmarkt. Gerade als Europäer kann man dann doppelt sparen: Zum einen sind die Domainpreise real gesunken, weiterhin ergibt sich noch ein zusätzlicher Vorteil durch die Stärke des Euro.

Zwar mag dieses Kaufklima den ein oder anderen ermutigen, kräftig auf Shopping-Tour zu gehen, aber es muss auch weiterhin auf Qualität statt Quantität geachtet werden. Denn nur sogenannte Keyword-Domains haben einen langfristigen Wert für potentielle Endkunden, der auch in den folgenden Jahren noch bestehen wird. Gerade diese beschreibenden Domains sind es, die durch Type Ins reliable und für den Besitzer wertvolle Besucherströme generieren. Dies spricht Schumacher in seinem Kommentar auch an, indem er eine kurze Rechnung formuliert, die ich in ähnlicher Form bei Verkaufsgesprächen oft erfolgreich genutzt habe:

Der durchschnittliche Klickpreis (Pay-per-Click) für das Suchwort „Kredit“ bei Google, Yahoo oder MSN liegt aktuell in den oberen Rängen bei circa 4,50 Euro. Ohne die Domain müsste man [Anm.: für 5.000 Besucher] pro Monat 22.500 Euro an Werbeausgaben investieren. Diese Ausgaben kann man sich sparen, indem man die Domain kauft. Bei einem Kaufpreis von 892.500 Euro hätte sich die Domain schon nach etwa drei Jahren refinanziert. Und danach besitzt man die Domain kredit.de noch und sie generiert weiter Besucher, während beim üblichen Pay-per-Click-Modell das Geld als Werbeausgabe unwiederbringlich ‚verloren’ ist.

Traffic-Domains haben eben deshalb einen so großen Wert, weil sie regelmäßig und über sehr lange Zeiträume hinweg neue potentielle Kunden liefern. Diese Nachhaltigkeit und die zumeist hohe Qualität des Traffics stellen einen starken kompetitiven Vorteil dar, den generische Domainnamen mit sich bringen. Auch helfen Domains dabei, die Abhängigkeit von Suchmaschinen oder Online-Werbung - wie zum Beispiel PPC-Werbung - zu reduzieren und so langfristig Kosten einzusparen. Hochwertige Domains vermitteln somit nicht nur Neukunden, sie bieten auch ein erhöhtes Maß an Planungssicherheit. Weiterhin positiv zu bemerken ist, dass Domains im Zweifel wieder verkauft werden können, wodurch sich sofort große Zahlungsströme erzeugen lassen. Domainnamen haben sich in den vergangen Jahren als höchst zuverlässige, alternative Anlageform erwiesen, wobei Investoren auch von hohen Wertsteigerungsraten profitieren konnten.

Relevante Literatur:
- Domain-Namen im Internet (Tim Schumacher et al.)
- Handbuch Domain-Namen (Daniel Dingeldey, Florian Huber)