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WHAT SHOULD WE EXPECT FROM DOMAIN AUCTION SITES?

(NOTE: This article is inspired by Michael Berkens’ (Em-Bee) blog.  Please read Em-Bee’s blog article first before reading my blog article.)

Since several auction sites charge a WHOPPING 20% for sales commissions, a lot of domainers wonder what these sites do for them to “earn” that compensation. That’s a big question ALL domainers should ask themselves before submitting domains to any auction site. What will that auction site DO FOR YOU to justify taking $10,000 if you sell a $50,000 domain?

If there isn’t any glitches in the sale, and both BUYER and SELLER are satisfied, that $10,000 isn’t questioned. HOWEVER, what happens IF the sale goes awry?

Helping create the system producing a $4million online domain auction gross, I’ve wondered about the results of a domainer regarding domain auction companies/services that handle my domain purchases/sales. My questions were based mainly on these factors:

WHAT DOES A DOMAIN AUCTION DO FOR YOU IN RETURN FOR THEIR COMMISSION?

1) EXPECTATION: A contract that asks compensatory rewards for “completing” a contractual intention in the eyes of the law, expects BOTH parties to the contract to “perform” to meet the contractual requirements. If SEDO has a contract stating they will “sell a domain” and handle the transaction for “compensation” – they’ve also included a clear statement that their duties are to fulfill that expectation for their compensatory “rewards” (10% – 15% – 20% sales commission). This is a clear statement of agreed compensatory payment to SEDO for “completing” the contract and service they provide for both BUYER and SELLER.

2) If one of the parties to this contract does not “perform” according to their agreement to the contract, then by law, there are “remedies” to “complete the contractual obligations” regardless if they are “omitted” in the contract.  In a lawsuit, the Court tries to find out what those “remedies” are. IMPORTANT CONSIDERATION: Since the force of the contract is delivered and held by SEDO (not by the two parties involved in buying/selling), then the onus is on SEDO to make sure the contract of the sale is upheld. SEDO can “fail to include specific language that doesn’t describe any remedy to make the contract for the sale legitimate to protect both parties to SEDO’s agreement”, but in a court of law, if they were added to a lawsuit asking for the remedy (regardless of SEDO’s indemnifications and non-liability waivers), most courts would find that SEDO was responsible for making sure the contract THEY proffered to the parties is completed satisifactorily.  They would be responsible for making this happen because THAT’S WHY THEY’RE TAKING A COMMISSION FROM THE SALE.  SEDO can’t claim “our commission is based on marketing the domain” because that’s NOT what their contract, as a complete agreement, states. SEDO doesn’t clearly and obviously tell the parties signing their contract to sell/buy domains, that SEDO isn’t “responsible for making the sale occur”. Seems like an unfair advantage (one that courts don’t take kindly to).

3) The proper “remedy” to a BUYER after a SELLER backs out of a contracted sale is that SEDO takes immediate legal action against the SELLER so that SEDO isn’t open for damages from the BUYER/s, who have an obvious “breach of contract” if SEDO doesn’t get that domain as promised.  SEDO has promised the BUYERS that there are products selling in an auction through SEDO’s mechanism (their website). This is SEDO’s “promise to perform” to both the BUYER AND THE SELLER. Both parties that sign up for SEDO (or any auction site) with the CONTRACTUAL BELIEF that domains being sold through SEDO are in fact, for sale, and within the SEDO contract, the SELLER agrees and is contractually BOUND to sell the domain at the price agreed, and that the BUYER will pay this price for the domain at the final bid price accepted by the SELLER. SEDO is controlling the deal from start to end, and is taking a compensatory reward for the contractual expectations THEY ARE PROMOTING.

Em-Bee, I agree with your attorney’s assessment of costs in filing a lawsuit (the games that can be played by those who have the money can make the term “justice” laughable for all those who’ve been there before. Simply put, if you want to retrieve your loss legally, you’ll probably pay three times the value of that loss by using the Court).

However, there are multiple outcomes to consider if you DO go forward with a lawsuit against both SEDO and the SELLER, especially if you have more than two other plaintiffs joining in.

- You can sue SEDO for “failure to perform” according to their contract, regardless if the contract doesn’t feature a “remedy” for the failure of the “third party” to perform.
- You can ask the court to simply honor the contractual duty to perform, and request that the Defendant (in this case, the SELLER) to show “reasonable cause” why they didn’t perform according to the basic intent of the contract, which was the sale and transfer of a domain name.  The process was promoted, administrated, and controlled entirely through one entity. SEDO.  That entity had control of both parties in the contract, and for that purpose, was charging the SELLER a sales commission for this “warranty of performance” (even if that warranty is not expressly mentioned in the contract. The intent of the contract is obvious.”)
- In legal terms, there isn’t a lot of “discovery” costs involved in a simple “failure to perform” contract. The judge will quickly see the offending party’s manipulations, and either fine them or even award the case to the plaintiff/defendant, depending on who’s doing the game-playing with the legal system. I highly doubt that a lawsuit to recover a domain bought in an auction would cost more than $30k-$50k unless the defendant was out of the country. If multiple plaintiffs sued (class action or otherwise) the true “selling party”, in this case SEDO, it would quickly change the way things were done in aftermarket sales.

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SEE INTO THE FUTURE OF NEW KEYWORD DOMAINS – THERE’S BIG MONEY WAITING

SUCCESSCLICK™ SET TO REVEAL SECRETS FOR FUTURE DOMAIN SUCCESS

Many domainers are aware that I am a “future trend” domain investor. When I think of getting “treasures”, I think of selling a domain I bought for OOTB prices or even $2000 or less, that I can flip in the future for 1000% profit or more.

It’s apparent that some of the auction houses, including RICK LATONA, also have their eyes directed forward: (Credit to Ron Jackson’s Interview):

LATONA:  “The breakout will most likely come in 2011 but for our part, we will be positioning ourselves in 2010 for the inevitable,” Latona said. “New markets mean new players. Expect to hear of people that you had never heard of before. Somewhere out there, there is someone sitting on a killer portfolio of future value domains waiting to pounce. I will be waiting with open arms.“

I’m sure Rick’s arms are outstretched waiting to embrace me soon, and everyone will be surprised, except me. I’ve always believed that pigs can fly – you just have to believe it and see them being loaded onto cargo planes.

The point is, you can profit with the future, too. If you’re investing in domain names and don’t have $50,000 to spend on a domain (could be your wife likes to put your money in CD’s and mutual funds…arggh), you can still make good money spending several hours researching some future trends with phrases you can nab for $7.50 OOTB.  Don’t get me wrong, if you’re buying a domain for $50k at retail price and you have $200k behind you to build that domain out to own your competition (this refers to domainers only, not established businesses), then balls to the wall on that.

However, there’s nothing like flipping a domain bought at OOTB pricing for 1000 times that cost. It’s not that hard.

This is my beta lead-in for my email subscription service I’ve just installed at my blog.  There’s a touch more I have to wrap up before launch, but it should be soon. I’ve spent very little time on my own projects since 2003 because I liked helping my clients with their domain/marketing/design issues. I’ve enjoyed working with clients in all areas of business with their domains, because I have learned almost every aspect of business promotion and monetization using domain names. That’s like a continuing Masters Degree in “Domaining” for me, which I can pass on to you or your company.

Sign up for our NAMEPROSPECTOR™ Newsletter (or just call it the “Successclick Newsletter”) and stay tuned for more info!

WHAT IS A DOMAINER’S RESPONSIBILITY?

(Fueled article by Lou Mindar post on Elliotsblog.com) This article was written in the hopes that some unfortunate advice given lately by someone who should know better is not taken to heart by domain investors who may not know better or do know better and need to be reminded.

As a domain investor and consultant, an environmentalist and a businessman who believes in responsible and ethical business practices, I feel the need to write this article. It might be unpopular, but it might also encourage some professional domainers to find the courage to stand up and comment here in support. Let your morals dictate your responses (NOTE: I don’t publish anonymous comments. You can use your handle if I know you and I will publish your remarks.)

A few weeks ago, a successful domain investor known to most domainers wrote an article disparaging domainers buying domains that he labeled “pigeon shit”.  I’m not sure how he knows who’s buying what and how he used a scale for measuring domains to be “pigeon shit”, or even which domainers he’s referring to. To me, it seemed odd for someone who’s made millions$$$ in this business (especially as a producer of top-level domain events that many domainers paid to attend) to take the time to write a broad affront to so many domain buyers.

I don’t have to mention his name, but I am worried that hundreds of domainers may buy into his misguided advice, or even worse, the domainer-haters will use his rhetoric to fight against domainers to continue making the domain industry look like a place filled with soul-less opportunists. (Not implying that this domainer has no soul)

This issue has to do with this famous domainer’s claim that there are still “typein” or “PPC” domains to be bought as new registrations (OOTB – “Out Of The Basket”).  I agree with him on this point, but where we differ is the type of domains being purchased.  This important domainer’s assertions as I perceived them was: “Those who don’t agree with me are buying “pigeon shit” domains,” if I read his blog article correctly.  It’s hard to fight against his comments, because he is clearly experienced, successful, and correct in some of his assessments of the financial world, including domain investments.

However, when you read these types of missives from this writer: “Don’t argue against PROOF just to argue! Time to LEARN!”, you have to wonder what the newcomers to the domain investment business are thinking: “Should I speak out? I need to make money, I don’t want to make enemies in this business, maybe I’ll just follow along and agree with this commentary, even though I have some against-the-grain questions.” Then, these new domainers, or even seasoned domainers, may make a mistake that ruins them, as El-Silver points out in one of his latest blog articles.

Many stories and comments regarding “pigeon shit” domains were discussed on this domainer’s blog in the last week or so, and there were unkind references by the blog owner about the “morons” who dared question him. Wow. Okay, I can appreciate his passion. But then this domain celebrity showed us the great domains he bought as OOTB’s for an example of what he was trying to prove regarding new PPC domains. Here’s two of the domains he bought and displayed for us:

BPSPILL[dotcom] and BPOILSLICK[dotcom]. He lists them on his blog, along with the less than $25 revenue he earned in typein traffic from those domains.

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MICHAEL BERKENS SCORES A JOKE ON THE DAILY SHOW!

Hi Gang,

Just a quick little post here.

Michael Berkens posted a great article about BP (British Petroleum) buying up adwords to get top positions on Google searches. I mean, BP is insanely (blatantly) buying the keywords for “gulf oil spill” and “Bp oil spill” and many others in order to get people searching on the terms to come the THEIR WEBSITE. Yeah, the destroyers of the southern ocean for America, buying adwords to keep people from going to other sites that might actually offer help to those who want to repair BP’s criminal negligence.

Here’s the weird thing:

You know when you’re on to something when Jon Stewart of “THE DAILY SHOW” actually features a comedic sketch regarding BP’s outrageous google keyword purchases. No, I’m not fooling here. It actually was featured on last night’s Daily Show. (search Google for “Bp Oil spill”). Click the link above if you haven’t seen this. It will make you laugh, sadly.

Here’s the killer, and big points to Em Bee:

Jon Stewart says at the end of the segment on the BP oil spill:

“We are SO F*cked!”

Em Bee had just commented in an answer to my comment that he owns (like the pro he is) “WeAreF*cked.com”.

Now, tell me the Daily Show writers didn’t read Em Bee’s article, and his comments, to come up with THAT one!

Congrats, Em Bee, and I know this recognition comes at a cost you don’t want. But you called it, and everyone who understands has noticed…

Kudos to Em Bee.

WHAT IS A “MINISITE” AND WHY DO YOU LOVE/HATE THEM?

Hi Gang,

I went retro to review some notes I had written last year when a lot of bluster and fluster was being whipped around attacking “minisites”. (I was also inspired by Elliot’s excellent domain site buildout articles lately). Several smart domainers asked the detractors: “Just WHAT is a MINISITE?” Remarkably, after reading 20 blog articles and over a hundred comments, nobody, including myself, has defined what a “MINISITE” is. I still don’t know what that is.

Why doesn’t someone DEFINE what a minisite is, in detail, once and for all?

I’ve seen some “on target” comments from some domainers saying there are those domainers who create limited developed sites in preparation or anticipation of building out larger sites that establish a solid presence on the net.  So how can you “rate” an unfinished project? Is it a “minisite”? Does anyone want to call a website they’re building a “minisite”?

This brings us to the breakdown of the monetization pieces that form the puzzle of a good generic domain that doesn’t get profitable typeins.

Here’s the facts:

1) You parked your domain at a Parking Service (PS) and watched it for a month or two. If you didn’t get more than 100 unique monthly visitors and $.75 a month in PPC revenue, did you realize immediately that you have a domain that needs to be re-evaluated for its worth, because you have a domain that isn’t “self-supporting”? (A quick way to determine if PPC parking your domains is [temporarily] financially smart is to check the monthly rev performers in your report down to $.75. Simply multiply $.75 by 12 months and you have $9.00 a year in revenue – enough to renew the domain if you’re at the right registrar).

2) Most domainers portfolios have 90% of their domains NOT PERFORMING through PPC (PS) landing pages. That means hundreds of thousands of domains owned by domainers need to be evaluated on something different than PPC income. The most glaring change that has occured in domain investing since 2007 is:

Very few domainers actually asks for “multiples” on a domain they want to purchase anymore. Nobody with a knowledge of this business today decides on a domain based on non-transparent PPC revenue. It’s fairly common knowledge that basing your purchasing interest solely on PPC income means you don’t know the domain business. I would confidently state that most successful PPC domainers have lost over half their monthly income since 2008. Because of that, it’s all about potential brands, end-user sales, CPA’s or serious buildouts by the domainer. A domain at a parking page depending on PPC’s is really just losing a lot of money by not expanding into other monetization areas, regardless of how much PPC they’re earning.

3) There are about 300 lucky domainers with one word popular domains who can rest easy (temporarily) because they’ll always know that their domain has great value on several different monetization platforms, including the “top” rev choice, the true “lazy man’s” way to riches – PPC.  However, they rest on the PPC income until they decide when and how to pull the monetization level up for the domain. However, for most domainers, it’s a tight squeeze for their domains to find the monetization bulls-eye because they don’t get that typein traffic that makes it all “so easy”.

4) IMPORTANT FACT THAT MANY DOMAINERS WISH TO OVERLOOK LIKE THEIR DADDY’S CHEATING WAYS: Today’s reality for domainers is that we need to find another source of monetization for those non-performers because PPC has revealed its non-transparency, and their overall control over you and your domains. It’s a unilateral agreement for anyone parking their domain looking for PPC. You don’t even know what you SHOULD be earning, you just have to take what they give you. Personally, I don’t base my domain purchasing investments this way, and neither should you.

5) BOTTOM LINE: The only true way to get the absolute best value from your clearly generic keyword domains is to develop or sell them to an end user. Period. This has been my rant since 2004, and still is.

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“TOMMY BOY” MOVIE IS FUNNY DOMAINING BUSINESS TALE

Hi Gang,

I just wanted to repeat something that I heard Tommy Callahan (Chris Farley) say in the movie “Tommy Boy” that affected me and formed my understanding of business. This movie is filled with more hilarious but realistic quotes of any movie ever made.

Here goes one of them, about staying strong, ignoring the naysayers and maintaining loyalty:

SCENE: Tommy and his friend Michelle (played sweetly by Julie Warner) are sitting in a small sailboat on a very calm lake:

TOMMY: (his father just died) My dad gave me this boat, and he’d come out here late at night when there was no one else on the lake. He’d be over there on the shore and he’d yell “quit playing with your dinghy!”…. I’m going to really miss him.

MICHELLE: Your father was a great guy. ……(sincerely)…  I’m really glad you brought me out here.

TOMMY: I can’t believe you wanted to!  Although it’s pretty fun. If we had some… wind, heh heh I can’t believe there’s no wind, you need wind because….it ummm…

MICHELLE: … helps push the sail…

TOMMY: Yeah!

MICHELLE: So, what are you going to do now? (in reference to Tommy running his late father’s business, Callahan Brakes)

TOMMY: I don’t know, but… I gotta do something. I don’t know what.  Man, do I sound like an idiot.

MICHELLE: No…

TOMMY: Sorry about this wind. I can’t believe there isn’t any wind out here, this is ridiculous.

MICHELLE: No.. it’s great… it’s very… peaceful.

YOUNG BOYS APPEAR ON SCENE: (Shouting from shore): Hey Tubbo! You ain’t moving! (derisive laughter from them)

TOMMY (Shouting back): Yeah, we need a little wind here!

BOYS: No! You need to drop a couple hundred pounds, blimp!

TOMMY: (to Michelle) Heh heh… rascals.  (To boys on shore) I guess that’s YOUR theory!

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THE CHEF COOKS UP ANOTHER TASTY DOMAIN DINNER

GODROPS.COM RE-LAUNCHING ITS SITE

April 23, 2010 – It was announced several months ago the site GoDrops.com was going to get an overhaul. The construction work is complete and GoDrops.com is ready for its re-release. A partnership formed between Jason Cupp of GoDrops.com and Patrick Ruddell of ChefPatrick.com has come together to create a new and improved version of the site.

In 1998, frustrated with his inability to land any generic .com’s, Jason created a script that helped him track names that were dropping, giving him a list to choose from. At some point he decided to publish this list, which is where the idea for GoDrops.com came from. He successfully ran the site since, but in late 2009 realized it needed help monetizing and marketing. This is when he partnered up with Chef Patrick who has shared some of his creative ideas and input, redeveloping what is the all new GoDrops.com.

Patrick offered a little insight saying, “Jason created something really solid with GoDrops. This is a great service that domainers can use to get an edge, giving them an opportunity to snag some great names that might not have been available to them otherwise.”

One of the major changes with the re-release is a membership program. It costs $19.97 per month to join giving its members daily access to the hand selected pending delete domain names list. In addition, paid members have access to domain stats, such as value, age, CPC, searches and frequency. Paying members will have access to drop data 24 hours in advance and 5 days in arrears. Previously members had to come to the site between 2-3pm EST only in order to have access to any drop lists during the live chat session. There will also be a members only forum available for questions, comments and conversations.

With the re-launch came more extensions. There will be nine extensions available to start – .com, .net, .org, .us, .info, .biz, .me, .tv and .ca. More extensions will be added monthly.

A great feature that remains is the live chat session. This is the only site offering this feature in conjunction with the release of the drop list live. It adds a fun social aspect to the service.

There is still a free service available for non-paying members. Those individuals will continue to have access to only the .com and .net lists without the extra benefits the paid members get and only as the drop is happening. The live drop and chat session runs from 2pm EST to 3pm EST.

The GoDrops team would like to send out a BIG thank you to Name.com for providing all the raw drop data and discounts for GoDrops members and also Estibot.com for providing the statistical data.

For more information and to sign up please visit GoDrops.com