Domain Registration Growth Continues

Despite all economic troubles, the number of registered domains kept growing during 2008. However, growth has slowed down quite a bit. Over the course of 2008, the growth rate of registered domains dropped from a 30% growth rate to a 15% growth rate. gTLD domains (like .com, .net, .org) went from over a 30% growth rate in 2006 to under a 10% growth rate in 2008. ccTLDs (country code domains) noticed a similar decline as their growth rate fell from 37% to a 26% growth rate. The majority of the newly registered ccTLDs can be attributed to specific TLDs like those for Russia and China.

Of course, it's important to emphasize that even a lower growth rate means that the number of registered domains is still on the rise! And much of the drop in gTLDs can probably be attributed to the introduction of new rules affecting the domain tasting industry.

The End of Domain Parking

Domain parking in the traditional sense is dying a slow but certain death. Earnings from parking revenue dropped significantly over the course of 2008; as both search engines and parking companies tried to maintain their profits during the economic downturn, domain owners found themselves at the short end of the stick. Alternative monetization solutions like mini-development or auto-development have sprung up for those who own dozens, hundreds or even thousands of domains and don't want to concern themselves with actual development.

The LLLL Craze Is Over

On November 2nd, 2007 the last available four letter dot com domain was registered. This was the start of what was going to be an unbelievable reseller bubble; many people argued whether this bubble would ever pop or not. In early 2008, some domainers started selling their lower quality LLLL .coms for $15 to $20 each. There were quite a few larger investors as well and they were hanging on to their domains in the hope of further price increases.

In the spring of 2008, things really picked up and at one point, the lowest quality LLLL .coms were fetching $35 to $45 per domain. Higher quality domains were regularly seeing end user sales.

Over the subsequent months, things slowed down. Lower quality LLLL .coms became very difficult to sell for more than $10 and we're almost back where we started. Still, it's only a question of time until things pick up again; it is possible that by 2010 or 2011 we'll see a second, more mature and sustainable price increase for LLLL domains.

LLL Domains Cool Down

At the start of 2008, low quality LLL .com domains regularly sold at $6,400 per domain. Within a few months, this minimum had increased to around $7,000 per domain. Then everything started to quiet down and the value of most LLL domains slowly decreased. At the end of 2008, low quality LLL .com domains were selling in the range of $4,500. That's still pretty good, but nothing like the predictions we heard from top domain experts in early 2008 that even the worst LLL domains would sell for more than $10,000 by the end of the year.

End User Sales Remain Strong

When the market was at its strongest in 2008, Fund.com sold for about ten million dollars in the most expensive reported domain sale of the year. DataRecovery.com also sold for a fair amount (over $1.6 million) in March, when the industry was at its peak. As if to demonstrate that the domain industry will tough out the hard economy, Kredit.de and Invest.com both sold for over a million dollars later on in the year when the economic crisis was already in full swing.

More recent transactions like FinancialAid.com selling for $480,000, SC.com for $300,000 and YP.com for a very nice $3,850,000 demonstrate that the domaining game will continue on even through harsh times.

2008 – A Year To Remember

It is likely that 2008 will go down in history as the year that the wholesale sector of the domaining industry hit an all time high and went on to drop very rapidly in the same year. At the same time, retail sales remained strong.

It is unknown what the future holds, but it seems that the worst is over and that the domainer-to-domainer market will slowly start to rebuild itself. The primary lesson for all domainers is that we should depend neither on other domainers, nor on parking companies for our monthly income.

The Components of a Seductive Bubble

A significant percentage of the domaining bubble was funded by the monetary expansion that started immediately after the dot com crash in the early 2000s but did not gain full speed until 2005. There was lots of easy money out there seeking investments; some companies in the domain industry obtained huge lines of credit to enlarge their domain portfolio, while individual domainers mortgaged their homes so they could acquire yet another valuable domain. Other domaining companies were even funded by venture capitalists who at the time thought that domains would be the next big thing.

Another part of the domaining bubble was built upon rapidly increasing enthusiasm on the reseller market. Many domainers believed that prices would only go up and that if they bought a certain domain today they would just have to wait a month or two before they could sell it at a significant profit. For several years in a row that assumption was true, and as word spread it attracted new domainers and reinforced the bubble.

Accepting Reality Means Attracting Profits

It is increasingly obvious that reality has set in. The easy money that characterized the last decade is gone. The get rich quick domainers who entered the market in 2006 and 2007 have either gotten rich or given up. And most domain prices have come down to an entirely reasonable level where it's good to be a buyer again.

A Unique Window of Opportunity

The best years in history to get into domaining would have been 1994 and 1995. Domains were virtually unknown and a few visionaries who refused to sell out early eventually made a killing. Another major opportunity opened up in 2001 and 2002. "Dot com" had become a dirty word and most people wanted nothing to do with Internet-related investments.

2008 and 2009 will be another two of those years where everyone believes the sky is falling while the visionaries of today are constructing the empires of tomorrow. Take this chance because the next window of opportunity might not come around until 2015/2016.

How To Start With Nothing

It's not easy to start with nothing. If you're low on cash and your friendly bank won't loan you other people's money so you can speculate in domains, you will have to start small, learn everything you can, observe those who are successful, then work hard and bootstrap your way up.

Start with a couple of domains, sell them at a profit and immediately reinvest your profits. Domain development is another option, but do not get sidetracked with this unless you decide it will be an essential part of your business strategy.

The opportunities are out there. A few years from now you can be the next domaining mogul, or you might be one of those people who will say, "If only I had been around in 2008. Things were different back then".

Will you take action or have you already given up?

The 33 year old superstar celebrated the birth of her and Brad Pitt's twins, Vivienne Marcheline and Knox Leon, by registering a total of 50 domain names (including 4 .mobis!), increasing her total number of domains owned to a respectable 258.

Domains registered by Angelina Jolie on July 12, 2008:

viviennemarchelinejoliepitt.biz, .com. .eu, .info, .mobi, .net, .org, .us
knoxleonjoliepitt.biz, .com. .eu, .info, .mobi, .net, .org, .us

viviennejoliepitt.biz, .com. .eu, .info, .mobi, .net, .org, .us
knoxjoliepitt.biz, .com. .eu, .info, .mobi, .net, .org, .us

viviennejolie.com, .net, .org
knoxjolie.com, .net, .org

viviennepitt.com, .net, .org
knoxpitt.com, .net, .org

knoxleon.com, .net, .org
viviennemarcheline.com, .net, .org

A number of domainers snapped up some of the remaining combinations that were left unregistered by Angelina:

knoxleonjolie.com, .net, .org
viviennemarchelinejolie.com, .net, .org

knoxleonpitt.com, .net, .org
viviennemarchelinepitt.com, .net, .org

viviennemarcheline.info, .mobi
knoxleon.info, .mobi

If you want to do your part to honor this month's most famous newborns, don't despair!

Still available (at the time of writing):

knoxjolie.biz, .eu, .info, .mobi, .us
viviennejolie.biz, .eu, .info, .mobi, .us

viviennepitt.biz, .eu, .info, .mobi, .us
knoxpitt.biz, .eu, .info, .mobi, .us

viviennemarchelinejolie.biz, .eu, .info, .mobi, .us
knoxleonjolie.biz, .eu, .info, .mobi, .us

viviennemarchelinepitt.biz, .eu, .info, .mobi, .us
knoxleonpitt.biz, .eu, .info, .mobi, .us

viviennemarcheline.biz, .eu, .us
knoxleon.biz, .eu, .us

If you or someone you know is expecting children in the near future, consider that there may be no better gift to set aside for your child than his or her own domain.

That's a very common complaint heard among today's domainers. Who wouldn't want to reach back through time and join the forefathers of domaining when they were just laying the foundation for their future domain empires?

In 1995, the Internet was just beginning to attract mainstream attention. In 2001, the dot com crash liberated tens of thousands of top domains. And as recently as late 2005, you could have registered tons of LLLL.com domains and sold them early this year for big bucks.

So, is it really too late?

Not at all. Just ask Michael B., a Bangkok-based Danish journalist, who snapped up the following LLL.com domains on Afternic last week:

ZLI.com – $500
PQT.com – $571
LLJ.com – $603
WJA.com – $735
RLU.com – $900

Michael paid a total of $3,309 for these domains. But their actual market value is in the mid five figures!

Who sold these domains at such a low price? iREIT, a "next-generation Internet media company that acquires, develops and monetizes high-quality domain names and web properties".

Last week, iREIT listed a small part (10,000+) of its portfolio on Afternic. NameBio reported on the fact this Monday, but by then most bargains were already gone.

Was iREIT aware of these LLL.com domains' market value? Probably not. Someone at iREIT for whatever reason made a decision to sell these domains (and quite a few others, such as say.org and gut.org) at a very low price.

That's not a one-time event. In fact, it happens all the time. Not everyone values their domains as much as domainers and potential end-users do. Many individuals, companies and even large corporations let valuable domains expire (or sell them for peanuts) simply because they no longer have any use for them.

As a domainer, you just have to be at the right place at the right time. That might be called "luck" by some, but in reality it boils down to hard work, actively working your market, keeping an eye on prices and trends, and having sufficient liquidity to make sure you can grab a bargain before someone else does.

It takes just a couple of deals like this to be able to retire. Michael could sell these five domains for $50,000 any day of the week. If he finds a few comparable deals in the future and keeps reinvesting his profits he'll be a domain millionaire in no time.

Chris remains in the domain business, with gems like viajes.com (trips), clasificados.com (classifieds), amistad.com (friendship), paraguay.com and animation.com still in his possession.

Here's a quick translation of the official announcement which was released earlier today (Oct 18):

Acquisition of 80% of the Shares of Canal 13

This communication serves to inform the press and general public of a commercial relationship that was initiated on October 15 2007 with Teledifusora Paraguaya S.A. (Canal 13):

1. On the mentioned date, Christian Chena acquired 80% of the shares of Teledifusora Paraguaya S.A. (Canal 13, Radio Cardinal AM y FM)
2. One of the primary reasons of this acquisition is to make sure that this important medium of communications and source of work for local media professionals remains in Paraguayan hands, with the goal of improve all parts of the company and increasing its national production.
3. This communication is issued with the goal of guaranteeing the peace of mind of all TV viewers, employees and clients of Canal 13.
4. The remaining 20% of shares remains in possession of the family López Moreira, which is represented by Jorge Santiago López Moreira.

INFORMATION ABOUT CHRISTIAN CHENA

Christian Chena Núñez, a 29 year old Paraguayan entrepreneur, is one of the Internet pioneers in Paraguay. Founder and owner of Chena Ventures S.A. (Paraguay) and Chena Ventures, Inc. (USA), he looks back on a successful international career and wide experience in the e-business world, in particular in the development of e-commerce niches. Dedicated to the development of innovative business projects, his companies offer services in the areas of communications, technology, education and commerce, with vast experience in interactive media and online audiences.

Over the past few years, he has developed vertical portals and hispanic online channels, such as Juegos.com and a network of Spanish online games domains. Several of his popular portals were acquired this year for millions of dollars by large companies such as Marchex (USA), Fox Latinoamerica (USA) and Spill Group (Holland).

Even though Chena Ventures's specialty lies in Internet business and monetization of online traffic, the company has also developed business models that allow it monetize any kind of traffic. Owning the most popular websites in Paraguay as well as various sites that produce the largest number of worldwide sales and subscriptions in South America, Chena Ventures is recognized worldwide for its acquisitions of premium generic domains (juegos.com, viajes.com, clasificados.com, and dozens more), which were obtained thanks to notable financial investments, which are a fruit of the independent ambition that has characterized Chris Chena since his early youth.

Many of the most popular generic Spanish .com domains are today owned by Chena Ventures S.A. The businesses that were developed by its founder Christian Chena have been in the news in various publications in Germany, Japan, USA, Canada, Australia, Mexico, Spain and Paraguay.

Read more about Chris Chena at Chena.com or in DNJournal's July 2005 cover story.

Like many in this field, Kevin, originally a family doctor, had no idea that domaining would become his career. Having achieved initial success with a webhost directory (originally a part-time venture), Kevin started offering domain registration services and provided his clients with lists of available domain names. At the the time of the dot com bust, thousands upon thousands of registered domain names were not being renewed. That was good news for Kevin's domain list business, but made it difficult to keep track of things manually. So he built a better mousetrap.

Network Solutions, the sole retail registrar of .com domains at the time, published a root zone file twice daily. This file contained approximately 5 million names and did not show when domains would be expiring. Kevin soon found a way to turn this list into a list of domain names that would soon be available. He wrote a script to compare the current lists contents to the previous one. He determined that names that disappeared from the list would become available 5 to 6 days later in the middle of the night on the West Coast of the United States.

Armed with this exclusive knowledge, Kevin would spend the night attempting to register these domains, typing in multiple browser windows on multiple computers to improve his chances. Many times, he was successful. However, many times he was beat to the punch by other domaining pioneers. He discovered that programmers like Yun Ye (Ultsearch) had developed scripts to register desired domain names instantly upon expiration. Not to be outdone, Ham wrote his own scripts. His success rate increased, but he still felt he could do better.

Kevin Ham made a bold move by going directly to registrars to seek assistance. He helped them write software to grab domains quickly after expiration. In exchange, he paid registrars up to $100 for their help in padding his portfolio.

Kevin was amassing quite a selection of domain names. Most of those were simply blank pages, earning him nothing unless sold in the aftermarket. But then Frank Schilling told him about GoTo.com (later bought by Yahoo!), a search engine that would pay him to place pay-per-click ads on his sites. His first day with GoTo, he made $1,500.

In early 2002, Kevin Ham was bringing in more than $1 million a year. Still, there was more he could do. He began domain tasting, returning the domain names with little traffic for free and registering the most visited domains. In an effort to streamline the whole enterprise, he pulled his domain names from registrars and set up his own. He then founded HitFarm, an ad company designed to do what Yahoo! was doing for him, without the commission.

Kevin’s software was also grabbing plenty of trademark typos for him as well, resulting in claims of typo-squatting by trademark holders. Concerned about legal risks with tasting and typo-squatting, he has since abandoned the practices. He’s found a better way.

Many domainers may be aware that entering almost any domain name followed by the ccTLD .cm results in a search page full of pay-per-click ads. (Example, www.dailydomainer.cm) This, of course is a clever use of Cameroon’s .cm ccTLD to essentially typo-squat every .com domain name in existence, and even those not yet registered. What many domainers did not know until last week is that Kevin Ham is the man behind the curtain.

Cameroon, an African nation of 18 million with just 167,000 computers, was using a very small portion of its virtual real estate. Like hundreds of other domainers, Kevin Ham saw that .cm is a reasonable typo for .com. But Kevin was the only one to seize the opportunity – and he succeeded: His team worked to negotiate a deal with the government of Cameroon, which in turn created a wildcard DNS record to reroute any .cm domain name to Agoga.com. Of course, .cm domains that have actually been registered are not subject to the rerouting, but all other possible combinations of letters, number and hyphens are. Kevin then pays the government of Cameroon an undisclosed portion of his pay-per-click windfall.

The true genius of the system? He did not have to go out and register the millions of domains he is effectively parked on by using the wildcard. Since he does not own those domains, his legal liability to trademark holders is hazy at best. Noted domaining attorney John Berryhill agrees. "You can't really say that [wildcarding] is targeting trademarks. It captures all the traffic, not just trademark traffic."

It’s a scheme so innovative, Kevin Ham took out a patent on it. He’s currently working on deals to make similar arrangements with Colombia (.co). Oman (.om), Nigeria (.ne) and Ethiopia (.et).

What’s next for Kevin? He’s now working on developing some of his most marketable domains. He has started Reinvent Technologies to turn his top domains into valuable companies of their own. His first choice? Religion.com.

Read Paul Sloan's entire article here or get the current issue of Business 2.0.

Daily Domainer comments

The Man Who Owns The Internet is clearly a landmark story for the domain industry, second only to Masters of Their Domains (Dec. 2005), which had introduced Richard Rosenblatt and thousands of new domainers to the power of domains. While several commentators have focused their attention almost exclusively on the .cm stunt (mostly in a negative/jealous way), the article has already started attracting new capital and new faces to the domain industry.

Here's how it could work.

Domainers control a large portion of the web's traffic. According to Frank, the world's top six domainers alone receive more than 300 million unique visitors to their domains each and every month.

Right now, most domainer-owned domains are parked, which means that they show nothing but PPC (pay per click) ads provided by Google or Yahoo. If domainers were to set up uniform wikis with paid-search listings and relevant content on each of their domains, these sites would continue to receive the type-in traffic they already get.

Additionally, they would start to attract search engine traffic as well, which would be drawn to the domains due to the unique and relevant content appearing on them.

If domain owners reinvested all the profits from each of their sites into attracting more and more traffic (through PPC ads and other means), eventually the balance of power could shift from the search engines to these vertical sites.

How?

Increasing numbers of end users who are looking for information about, say, Antarctica will no longer enter "Antarctica" into Google but simply type Antarctica.com into their browser's address bar.

Initially, the balance of power would only shift for that one keyphrase, but if repeated over enough popular domains, end users would realize in increasing numbers that visiting a domain directly is often the most accurate way of finding relevant information about the keyword(s) contained in the domain.

Traffic to these domains would skyrocket and reinforce itself over and over again. At some point, a conglomerate of domainers could set up its own search engine and advertising network, and there is nothing that Google could do about it.

However, Frank points out that none of this actually has to happen for a massive shift to occur.

All it would take is for investors to finally understand the real secret of Google's initial success (excellent search results and cooperation with syndication partners), as well as the disruptive potential of domains to attract, inform, entertain and monetize their visitors all by themselves – without Google's involvement on either side of the equation.

As soon as investors "get" that, there are two possible outcomes:

1. Values of domains will skyrocket and domainers will be bought out by Google, Yahoo and/or Microsoft to the tune of billions of dollars.
2. Google, which is currently overvalued because investors do not see any alternative, will lose some of its market capitalization.

Sounds like a plan? Frank is not sure whether he actually wants to go for it:

If it's so simple, why not try to out-Google Google? [...] Why bother when your cup already overfloweth.. Many domain owners are content with revenues from Google or Yahoo so it's difficult to marshall the interests of all six parties to roll-out a uniform implementation. Still, as a Google stock holder — keeping a disruptive technology at bay by keeping its masters disagreeable is no foundation for $450+ per share.

The Daily Domainer first reported on the initial signs of domainers developing their own content networks two months ago. Back then, it was all about the "Death of Domain Parking". But Frank Schilling has taken this vision to the next level. What do our readers think: Can domainers give Google a run for its money?